| Delaware | 4899 | 56-2408571 | ||
|
(State or other jurisdiction
of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification No.) |
| Joshua N. Korff | Marcus J. Williams | William H. Hinman, Jr. | ||
|
Kirkland & Ellis
LLP
|
Davis Wright Tremaine LLP | Simpson Thacher & Bartlett LLP | ||
|
Citigroup Center
|
2600 Century Square | 2550 Hanover Street | ||
|
153 East
53rd Street
|
1501 Fourth Avenue | Palo Alto, California 94304 | ||
|
New York, New York
10023
|
Seattle, Washington 98101 | Tel. (650) 251-5000 | ||
|
Tel.
(212) 446-4800
|
Tel. (206) 622-3150 | Fax (650) 251-5002 | ||
|
Fax
(212) 446-4900
|
Fax (206) 628-7699 |
| Item 16. | Exhibits and Financial Statement Schedules. |
| 1 | .1 | Form of Underwriting Agreement. | ||
| 3 | .1 | Third Amended and Restated Certificate of Incorporation of Clearwire Corporation.* | ||
| 3 | .2 | Amended and Restated Bylaws.* | ||
| 4 | .1 | Form of stock certificate for Class A common stock. | ||
| 4 | .2 | Amended and Restated Stockholders Agreement dated March 16, 2004 among Clearwire Corporation and the parties thereto.* | ||
| 4 | .3 | Registration Rights Agreement dated November 13, 2003 among Flux U.S. Corporation, Clearwire Holdings, Inc. and Hispanic Information and Telecommunications Network, Inc.* | ||
| 4 | .4 | Registration Rights Agreement dated March 16, 2004 among Clearwire Corporation and the parties thereto.* | ||
| 4 | .5 | Registration Rights Agreement dated August 5, 2005 among Clearwire Corporation and certain buyers of the Senior Secured Notes.* | ||
| 4 | .6 | Investor Rights Agreement dated August 29, 2006 among Clearwire Corporation, Intel Pacific, Inc. and Motorola, Inc. | ||
| 4 | .7 | Securities Purchase Agreement dated August 5, 2005 among Clearwire Corporation and the buyers of the Senior Secured Notes, as amended February 16, 2006.* | ||
| 4 | .8 | Indenture dated August 5, 2005 among Clearwire Corporation, Clearwire LLC, Fixed Wireless Holdings, LLC, NextNet Wireless, Inc. and The Bank of New York, as Trustee, as supplemented February 16, 2006.* | ||
| 4 | .9 | Form of Senior Secured Note, due 2010.* | ||
| 4 | .10 | Form of Warrant.* | ||
| 5 | .1 | Opinion of Davis Wright Tremaine LLP. | ||
| 9 | .1 | Voting Agreement dated August 29, 2006 between Clearwire Corporation, Intel Pacific, Inc., Intel Capital Corporation and Eagle River Holdings, LLC. | ||
| 10 | .1 | Advisory Services Agreement dated November 13, 2003 between Flux U.S. Corporation and COM Holdings, LLC.* | ||
| 10 | .2 | Indemnification Agreement dated November 13, 2003 among Flux Fixed Wireless, LLC and Flux U.S. Corporation.* | ||
| 10 | .3 | Form of Indemnification Agreement.* | ||
| 10 | .4 | Letter Agreement dated April 1, 2004 between Clearwire Corporation and Ben Wolff.* | ||
| 10 | .5 | Letter Agreement dated April 26, 2004 between Clearwire Corporation and Nicolas Kauser.* | ||
| 10 | .6 | Letter Agreement dated April 27, 2004 between Clearwire Corporation and R. Gerard Salemme.* | ||
| 10 | .7 | Employment Agreement dated June 28, 2004 between Clearwire Corporation and Perry Satterlee.* | ||
| 10 | .8 | Letter Agreement dated March 2, 2005 between Clearwire Corporation and John Butler.* | ||
| 10 | .9 | Clearwire Corporation 2003 Stock Option Plan, as amended.* | ||
| 10 | .10 | Agreement dated March 5, 2003 among Nextel Communications, Inc., Digital Radio, LLC and Craig O. McCaw. | ||
| 10 | .11 | Amendment to Agreement dated March 5, 2003, dated October 3, 2003, among Nextel Communications, Inc., Digital Radio, L.L.C. and Craig O. McCaw. | ||
| 10 | .12 | Agreement and Undertaking dated November 13, 2003 between Flux U.S. Corporation and Craig O. McCaw. |
II-1
| 10 | .13 | Master Spectrum Acquisition Agreement dated November 13, 2003 between Flux U.S. Corporation and Hispanic Information and Telecommunications Network, Inc.* | ||
| 10 | .14 | First Addendum and Amendment to the Master Spectrum Acquisition Agreement dated March 29, 2004 between Clearwire Corporation and Hispanic Information and Telecommunications Network, Inc.* | ||
| 10 | .15 | ITFS Capacity Use and Royalty Agreement dated November 13, 2003 between Hispanic Information and Telecommunications Network, Inc. and Fixed Wireless Holdings, LLC.* | ||
| 10 | .16 | Spectrum Access and Loan Facility Agreement dated May 24, 2005 among Clearwire Corporation, Hispanic Information and Telecommunications Network, Inc. and HITN Spectrum, LLC.* | ||
| 10 | .17 | Warrant Agreement dated November 13, 2003 by and between Flux U.S. Corporation and ITFS Spectrum Advisors LLC.* | ||
| 10 | .18 | Letter Agreement dated March 29, 2004 from Clearwire Corporation to ITFS Spectrum Advisors LLC.* | ||
| 10 | .19 | Spectrum Acquisition Consulting Agreement dated February 1, 2005 by and between Clearwire Corporation and ITFS Spectrum Consultants LLC.* | ||
| 10 | .20 | Letter Agreement dated February 1, 2005 from Clearwire Corporation to ITFS Spectrum Consultants LLC.* | ||
| 10 | .21 | Amendment and Consent dated February 1, 2005 between Clearwire Corporation to ITFS Spectrum Advisors LLC and ITFS Spectrum Consultants LLC.* | ||
| 10 | .22 | Second Amendment and Consent dated April 26, 2006, by and among Clearwire Corporation and ITFS Spectrum Consultants LLC.* | ||
| 10 | .23 | Spectrum Option Agreement dated March 29, 2004 between Clearwire Corporation and Hispanic Information and Telecommunications Network, Inc.* | ||
| 10 | .24 | EBS Capacity Use and Royalty Agreement dated September 15, 2005 between Hispanic Information and Telecommunications Network, Inc. and Clearwire Spectrum Holdings LLC.* | ||
| 10 | .25 | Form of Subscription Agreement dated August 18, 2006. | ||
| 10 | .26 | Market Operation, Spectrum Lease and Sublicense Agreement dated October 22, 2004 by and among the Sprint subsidiaries listed on Schedule R-1 and Fixed Wireless Holdings, LLC. | ||
| 10 | .27 | Stock Purchase Agreement dated September 30, 2004 among Craig Wireless Honolulu Inc., Craig Wireless Nevada Inc., Craig Wireless Systems Inc. and Fixed Wireless Holdings, LLC, as amended on November 30, 2004.* | ||
| 10 | .28 | Stock Purchase Agreement dated October 22, 2004 between Clearwire Corporation and Kenneth A. Jonsson, as amended on January 11, 2005.* | ||
| 10 | .29 | Subscription Agreement dated March 8, 2005 between Clearwire Corporation and Bell Canada. | ||
| 10 | .30 | Master Supply Agreement dated March 16, 2005 among Clearwire Corporation, Clearwire LLC, Bell Canada and BCE Nexxia Corporation. | ||
| 10 | .31 | Side Agreement dated March 16, 2005 between Clearwire Corporation, Eagle River Holdings, LLC and Bell Canada. | ||
| 10 | .32 | Credit Agreement dated July 19, 2005 between Clearwire Corporation and Bell Canada, as amended February 2006.* | ||
| 10 | .33 | Security Agreement dated July 19, 2005 between Clearwire Corporation and Bell Canada.* | ||
| 10 | .34 | Movable Hypothec Agreement dated July 19, 2005 between Clearwire Corporation and Bell Canada.* | ||
| 10 | .35 | Purchase Agreement dated June 6, 2005 among Wireless One of North Carolina, LLC, WaveTel NC License Corporation, WaveTel, L.L.C., WaveTel TN LLC and Fixed Wireless Holdings, LLC.* | ||
| 10 | .36 | Equipment Lease Agreement dated June 30, 2005 between Clearwire Corporation and 6311458 Canada Ltd.* |
II-2
| 10 | .37 | Purchase Agreement dated September 9, 2005 between Baypoint St. Louis, LLC, Clearwire Corporation and Clearwire Spectrum Holdings LLC.* | ||
| 10 | .38 | Purchase Agreement dated September 9, 2005 among St. Lou E, LLC, Clearwire Corporation and Clearwire Spectrum Holdings LLC.* | ||
| 10 | .39 | Vendor Agreement dated September 27, 2005 between Best Buy Purchasing LLC and Clearwire LLC. | ||
| 10 | .40 | Subscription Service Addendum to Vendor Agreement dated September 27, 2005 between Best Buy Stores, L.P. and Clearwire LLC. | ||
| 10 | .41 | Co-Marketing Agreement dated September 14, 2006 between Circuit City Stores, Inc. and Clearwire US LLC. | ||
| 10 | .42 | Purchase and Sale Agreement dated October 24, 2005 between Nextel Spectrum Acquisition Corp. and Clearwire Spectrum Holdings LLC, as amended on December 12, 2005. | ||
| 10 | .43 | Stock Purchase Agreement dated November 7, 2005 between the shareholders of WinBeam, Incorporated and Clearwire Spectrum Holdings LLC.* | ||
| 10 | .44 | Purchase Agreement dated November 8, 2005 between Comspec Corporation and Clearwire Spectrum Holdings LLC.* | ||
| 10 | .45 | Bundled Wireless Broadband Services Agreement dated November 23, 2005 between Clearwire LLC and America Online, Inc. | ||
| 10 | .46 | Subscription Agreement dated June 30, 2006 between Motorola, Inc. and the Clearwire Corporation. | ||
| 10 | .47 | Side Agreement dated June 30, 2006 between Motorola, Inc. and the Clearwire Corporation. | ||
| 10 | .48 | Amended and Restated Limited Liability Company Agreement dated July 12, 2006, between Clearwire US LLC and Shichinin LLC. | ||
| 10 | .49 | Loan Agreement dated August 21, 2006 among Clearwire Corporation, the several lenders from time to time parties thereto, JPMorgan Chase Bank, Merrill, Lynch, Pierce, Fenner & Smith Inc. and Morgan Stanley Senior Funding, Inc.* | ||
| 10 | .50 | Guarantee and Collateral Agreement dated August 21, 2006 made by Clearwire Corporation and certain of its subsidiaries in favor of Morgan Stanley Senior Funding, Inc.* | ||
| 10 | .51 | Common Stock Purchase Agreement dated June 28, 2006 between Clearwire Corporation and Intel Pacific, Inc. | ||
| 10 | .52 | Mobile Wimax Network Collaboration Agreement dated June 28, 2006 between Clearwire Corporation and Intel Corporation. | ||
| 10 | .53 | Stock Purchase Agreement dated June 30, 2006 between Motorola, Inc., Clearwire Corporation and NextNet Wireless, Inc. | ||
| 10 | .54 | Reserved. | ||
| 10 | .55 | Wireless Broadband System Services Agreement dated August 29, 2006 between Motorola and Clearwire US LLC. | ||
| 10 | .56 | Wireless Broadband System Infrastructure Agreement dated August 29, 2006 between Motorola and Clearwire US LLC. | ||
| 10 | .57 | Wireless Broadband CPE Supply Agreement dated August 29, 2006 between Motorola and Clearwire US LLC. | ||
| 10 | .58 | Side Letter Agreement dated June 28, 2006 between Intel Pacific, Inc., Eagle River Holdings, LLC and Clearwire Corporation. |
II-3
| 10 | .59 | Master Royalty and Use Agreement dated July 31, 2006 between Clearwire Spectrum Holdings II LLC, Chicago Instructional Technology Foundation, Inc., Denver Area Educational Telecommunications Consortium, Inc., Instructional Telecommunications Foundation, Inc., North American Catholic Educational Programming Foundation, Inc., Portland Regional Educational Telecommunications Corporation, Twin Cities Schools Telecommunications Group, Inc., and other licensees who may become parties to the agreement. | ||
| 10 | .60 | Master Royalty and Use Agreement dated October 4, 2006 between Clearwire Spectrum Holdings II LLC and Hispanic Information and Telecommunications Network, Inc. | ||
| 10 | .61 | Membership Interest Purchase Agreement dated August 9, 2006 among Clearwire Spectrum Holdings II LLC and the parties thereto. | ||
| 10 | .62 | Purchase Agreement dated August 8, 2006 between SpeedNet LLC, Clearwire Spectrum Holdings II LLC and Clearwire Corporation. | ||
| 10 | .63 | Educational Broadband Service Long Term De Facto Transfer Lease Agreement dated December 22, 2006. | ||
| 10 | .64 | Office Lease Agreement dated October 12, 2006, between Carillon Properties (Landlord) and Clearwire Corporation (Tenant).* | ||
| 10 | .65 | Securities Purchase Agreement dated December 7, 2005 among BASA Holding Iberia S.L.U., Clearwire Corporation and Clearwire Europe S.A.R.L.* | ||
| 10 | .66 | Investment Agreement, dated December 7, 2005, by and between Banda Ancha S.A., BASA Holding Iberia S.L.U. and Clearwire Europe S.A.R.L.* | ||
| 10 | .67 | Indemnification Agreement dated December 7, 2005 among BASA Holding Iberia S.L.U., Clearwire Corporation and Clearwire Europe S.A.R.L.* | ||
| 10 | .68 | MAC Telecom Stock Purchase Agreement dated August 2, 2006 between Clearwire Europe S.A.R.L., and the individuals and entities listed on the Exhibit thereto.* | ||
| 10 | .69 | MTH Stock Purchase Agreement dated August 2, 2006 between Clearwire Europe S.A.R.L., Axel Beghin, Charles du Bunsen, Nicholas du Chastel and Matthew Ridgwell.* | ||
| 21 | .1 | List of subsidiaries. | ||
| 23 | .1 | Consent of Deloitte & Touche LLP.* | ||
| 23 | .2 | Consent of Davis Wright Tremaine LLP (included in Exhibit 5.1). | ||
| 24 | .1 | Powers of Attorney (included on signature page). |
| * | Previously Filed. |
| ** | Flux U.S. Corporation changed its name to Clearwire Corporation effective February 24, 2004, and as a result all references to Flux U.S. Corporation in this index are now to Clearwire Corporation. |
| | To be filed by amendment. | |
| | Confidential treatment requested. |
II-4
| By: | /s/ Craig O. McCaw |
| Title: | Chairman of the Board of Directors and Co-Chief Executive Officer |
| By: | /s/ Benjamin G. Wolff |
| Title: |
Co-Chief Executive Officer and Co-President |
|
Signature
|
Title
|
|||
|
/s/ Craig
O. McCaw Craig O. McCaw |
Chairman of the Board and Co-Chief
Executive Officer (Principal Executive Officer) |
|||
|
/s/ John
A. Butler John A. Butler |
Chief Financial Officer (Principal Financial and Accounting Officer) |
|||
|
/s/ Nicolas
Kauser Nicolas Kauser |
Director | |||
II-5
|
Signature
|
Title
|
|||
|
/s/ R.
Gerard
Salemme R. Gerard Salemme |
Director | |||
|
/s/ David
Perlmutter David Perlmutter |
Director | |||
|
/s/ Peter
L. S.
Currie Peter L. S. Currie |
Director | |||
|
/s/ Richard
Emerson Richard Emerson |
Director | |||
|
Arvind Sodhani |
Director | |||
|
/s/ Michael
J. Sabia Michael J. Sabia |
Director | |||
|
/s/ Stuart
M. Sloan Stuart M. Sloan |
Director | |||
II-6
| 1 | .1 | Form of Underwriting Agreement. | ||
| 3 | .1 | Third Amended and Restated Certificate of Incorporation of Clearwire Corporation.* | ||
| 3 | .2 | Amended and Restated Bylaws.* | ||
| 4 | .1 | Form of stock certificate for Class A common stock. | ||
| 4 | .2 | Amended and Restated Stockholders Agreement dated March 16, 2004 among Clearwire Corporation and the parties thereto.* | ||
| 4 | .3 | Registration Rights Agreement dated November 13, 2003 among Flux U.S. Corporation, Clearwire Holdings, Inc. and Hispanic Information and Telecommunications Network, Inc.* | ||
| 4 | .4 | Registration Rights Agreement dated March 16, 2004 among Clearwire Corporation and the parties thereto.* | ||
| 4 | .5 | Registration Rights Agreement dated August 5, 2005 among Clearwire Corporation and certain buyers of the Senior Secured Notes.* | ||
| 4 | .6 | Investor Rights Agreement dated August 29, 2006 among Clearwire Corporation, Intel Pacific, Inc. and Motorola, Inc. | ||
| 4 | .7 | Securities Purchase Agreement dated August 5, 2005 among Clearwire Corporation and the buyers of the Senior Secured Notes, as amended February 16, 2006.* | ||
| 4 | .8 | Indenture dated August 5, 2005 among Clearwire Corporation, Clearwire LLC, Fixed Wireless Holdings, LLC, NextNet Wireless, Inc. and The Bank of New York, as Trustee, as supplemented February 16, 2006.* | ||
| 4 | .9 | Form of Senior Secured Note, due 2010.* | ||
| 4 | .10 | Form of Warrant.* | ||
| 5 | .1 | Opinion of Davis Wright Tremaine LLP. | ||
| 9 | .1 | Voting Agreement dated August 29, 2006 between Clearwire Corporation, Intel Pacific, Inc., Intel Capital Corporation and Eagle River Holdings, LLC. | ||
| 10 | .1 | Advisory Services Agreement dated November 13, 2003 between Flux U.S. Corporation and COM Holdings, LLC.* | ||
| 10 | .2 | Indemnification Agreement dated November 13, 2003 among Flux Fixed Wireless, LLC and Flux U.S. Corporation.* | ||
| 10 | .3 | Form of Indemnification Agreement.* | ||
| 10 | .4 | Letter Agreement dated April 1, 2004 between Clearwire Corporation and Ben Wolff.* | ||
| 10 | .5 | Letter Agreement dated April 26, 2004 between Clearwire Corporation and Nicolas Kauser.* | ||
| 10 | .6 | Letter Agreement dated April 27, 2004 between Clearwire Corporation and R. Gerard Salemme.* | ||
| 10 | .7 | Employment Agreement dated June 28, 2004 between Clearwire Corporation and Perry Satterlee.* | ||
| 10 | .8 | Letter Agreement dated March 2, 2005 between Clearwire Corporation and John Butler.* | ||
| 10 | .9 | Clearwire Corporation 2003 Stock Option Plan, as amended.* | ||
| 10 | .10 | Agreement dated March 5, 2003 among Nextel Communications, Inc., Digital Radio, LLC and Craig O. McCaw. | ||
| 10 | .11 | Amendment to Agreement dated March 5, 2003, dated October 3, 2003, among Nextel Communications, Inc., Digital Radio, L.L.C. and Craig O. McCaw. | ||
| 10 | .12 | Agreement and Undertaking dated November 13, 2003 between Flux U.S. Corporation and Craig O. McCaw. | ||
| 10 | .13 | Master Spectrum Acquisition Agreement dated November 13, 2003 between Flux U.S. Corporation and Hispanic Information and Telecommunications Network, Inc.* |
| 10 | .14 | First Addendum and Amendment to the Master Spectrum Acquisition Agreement dated March 29, 2004 between Clearwire Corporation and Hispanic Information and Telecommunications Network, Inc.* | ||
| 10 | .15 | ITFS Capacity Use and Royalty Agreement dated November 13, 2003 between Hispanic Information and Telecommunications Network, Inc. and Fixed Wireless Holdings, LLC.* | ||
| 10 | .16 | Spectrum Access and Loan Facility Agreement dated May 24, 2005 among Clearwire Corporation, Hispanic Information and Telecommunications Network, Inc. and HITN Spectrum, LLC.* | ||
| 10 | .17 | Warrant Agreement dated November 13, 2003 by and between Flux U.S. Corporation and ITFS Spectrum Advisors LLC.* | ||
| 10 | .18 | Letter Agreement dated March 29, 2004 from Clearwire Corporation to ITFS Spectrum Advisors LLC.* | ||
| 10 | .19 | Spectrum Acquisition Consulting Agreement dated February 1, 2005 by and between Clearwire Corporation and ITFS Spectrum Consultants LLC.* | ||
| 10 | .20 | Letter Agreement dated February 1, 2005 from Clearwire Corporation to ITFS Spectrum Consultants LLC.* | ||
| 10 | .21 | Amendment and Consent dated February 1, 2005 between Clearwire Corporation to ITFS Spectrum Advisors LLC and ITFS Spectrum Consultants LLC.* | ||
| 10 | .22 | Second Amendment and Consent dated April 26, 2006, by and among Clearwire Corporation and ITFS Spectrum Consultants LLC.* | ||
| 10 | .23 | Spectrum Option Agreement dated March 29, 2004 between Clearwire Corporation and Hispanic Information and Telecommunications Network, Inc.* | ||
| 10 | .24 | EBS Capacity Use and Royalty Agreement dated September 15, 2005 between Hispanic Information and Telecommunications Network, Inc. and Clearwire Spectrum Holdings LLC.* | ||
| 10 | .25 | Form of Subscription Agreement dated August 18, 2006. | ||
| 10 | .26 | Market Operation, Spectrum Lease and Sublicense Agreement dated October 22, 2004 by and among the Sprint subsidiaries listed on Schedule R-1 and Fixed Wireless Holdings, LLC. | ||
| 10 | .27 | Stock Purchase Agreement dated September 30, 2004 among Craig Wireless Honolulu Inc., Craig Wireless Nevada Inc., Craig Wireless Systems Inc. and Fixed Wireless Holdings, LLC, as amended on November 30, 2004.* | ||
| 10 | .28 | Stock Purchase Agreement dated October 22, 2004 between Clearwire Corporation and Kenneth A. Jonsson, as amended on January 11, 2005.* | ||
| 10 | .29 | Subscription Agreement dated March 8, 2005 between Clearwire Corporation and Bell Canada. | ||
| 10 | .30 | Master Supply Agreement dated March 16, 2005 among Clearwire Corporation, Clearwire LLC, Bell Canada and BCE Nexxia Corporation. | ||
| 10 | .31 | Side Agreement dated March 16, 2005 between Clearwire Corporation, Eagle River Holdings, LLC and Bell Canada. | ||
| 10 | .32 | Credit Agreement dated July 19, 2005 between Clearwire Corporation and Bell Canada, as amended February 2006.* | ||
| 10 | .33 | Security Agreement dated July 19, 2005 between Clearwire Corporation and Bell Canada.* | ||
| 10 | .34 | Movable Hypothec Agreement dated July 19, 2005 between Clearwire Corporation and Bell Canada.* | ||
| 10 | .35 | Purchase Agreement dated June 6, 2005 among Wireless One of North Carolina, LLC, WaveTel NC License Corporation, WaveTel, L.L.C., WaveTel TN LLC and Fixed Wireless Holdings, LLC.* | ||
| 10 | .36 | Equipment Lease Agreement dated June 30, 2005 between Clearwire Corporation and 6311458 Canada Ltd.* | ||
| 10 | .37 | Purchase Agreement dated September 9, 2005 between Baypoint St. Louis, LLC, Clearwire Corporation and Clearwire Spectrum Holdings LLC.* | ||
| 10 | .38 | Purchase Agreement dated September 9, 2005 among St. Lou E, LLC, Clearwire Corporation and Clearwire Spectrum Holdings LLC.* |
| 10 | .39 | Vendor Agreement dated September 27, 2005 between Best Buy Purchasing LLC and Clearwire LLC. | ||
| 10 | .40 | Subscription Service Addendum to Vendor Agreement dated September 27, 2005 between Best Buy Stores, L.P. and Clearwire LLC. | ||
| 10 | .41 | Co-Marketing Agreement dated September 14, 2006 between Circuit City Stores, Inc. and Clearwire US LLC. | ||
| 10 | .42 | Purchase and Sale Agreement dated October 24, 2005 between Nextel Spectrum Acquisition Corp. and Clearwire Spectrum Holdings LLC, as amended on December 12, 2005. | ||
| 10 | .43 | Stock Purchase Agreement dated November 7, 2005 between the shareholders of WinBeam, Incorporated and Clearwire Spectrum Holdings LLC.* | ||
| 10 | .44 | Purchase Agreement dated November 8, 2005 between Comspec Corporation and Clearwire Spectrum Holdings LLC.* | ||
| 10 | .45 | Bundled Wireless Broadband Services Agreement dated November 23, 2005 between Clearwire LLC and America Online, Inc. | ||
| 10 | .46 | Subscription Agreement dated June 30, 2006 between Motorola, Inc. and the Clearwire Corporation. | ||
| 10 | .47 | Side Agreement dated June 30, 2006 between Motorola, Inc. and the Clearwire Corporation. | ||
| 10 | .48 | Amended and Restated Limited Liability Company Agreement dated July 12, 2006, between Clearwire US LLC and Shichinin LLC. | ||
| 10 | .49 | Loan Agreement dated August 21, 2006 among Clearwire Corporation, the several lenders from time to time parties thereto, JPMorgan Chase Bank, Merrill, Lynch, Pierce, Fenner & Smith Inc. and Morgan Stanley Senior Funding, Inc.* | ||
| 10 | .50 | Guarantee and Collateral Agreement dated August 21, 2006 made by Clearwire Corporation and certain of its subsidiaries in favor of Morgan Stanley Senior Funding, Inc.* | ||
| 10 | .51 | Common Stock Purchase Agreement dated June 28, 2006 between Clearwire Corporation and Intel Pacific, Inc. | ||
| 10 | .52 | Mobile Wimax Network Collaboration Agreement dated June 28, 2006 between Clearwire Corporation and Intel Corporation. | ||
| 10 | .53 | Stock Purchase Agreement dated June 30, 2006 between Motorola, Inc., Clearwire Corporation and NextNet Wireless, Inc. | ||
| 10 | .54 | Reserved. | ||
| 10 | .55 | Wireless Broadband System Services Agreement dated August 29, 2006 between Motorola and Clearwire US LLC. | ||
| 10 | .56 | Wireless Broadband System Infrastructure Agreement dated August 29, 2006 between Motorola and Clearwire US LLC. | ||
| 10 | .57 | Wireless Broadband CPE Supply Agreement dated August 29, 2006 between Motorola and Clearwire US LLC. | ||
| 10 | .58 | Side Letter Agreement dated June 28, 2006 between Intel Pacific, Inc., Eagle River Holdings, LLC and Clearwire Corporation. | ||
| 10 | .59 | Master Royalty and Use Agreement dated July 31, 2006 between Clearwire Spectrum Holdings II LLC, Chicago Instructional Technology Foundation, Inc., Denver Area Educational Telecommunications Consortium, Inc., Instructional Telecommunications Foundation, Inc., North American Catholic Educational Programming Foundation, Inc., Portland Regional Educational Telecommunications Corporation, Twin Cities Schools Telecommunications Group, Inc., and other licensees who may become parties to the agreement. | ||
| 10 | .60 | Master Royalty and Use Agreement dated October 4, 2006 between Clearwire Spectrum Holdings II LLC and Hispanic Information and Telecommunications Network, Inc. | ||
| 10 | .61 | Membership Interest Purchase Agreement dated August 9, 2006 among Clearwire Spectrum Holdings II LLC and the parties thereto. |
| 10 | .62 | Purchase Agreement dated August 8, 2006 between SpeedNet LLC, Clearwire Spectrum Holdings II LLC and Clearwire Corporation. | ||
| 10 | .63 | Educational Broadband Service Long Term De Facto Transfer Lease Agreement dated December 22, 2006. | ||
| 10 | .64 | Office Lease Agreement dated October 12, 2006, between Carillon Properties (Landlord) and Clearwire Corporation (Tenant).* | ||
| 10 | .65 | Securities Purchase Agreement dated December 7, 2005 among BASA Holding Iberia S.L.U., Clearwire Corporation and Clearwire Europe S.A.R.L.* | ||
| 10 | .66 | Investment Agreement, dated December 7, 2005, by and between Banda Ancha S.A., BASA Holding Iberia S.L.U. and Clearwire Europe S.A.R.L.* | ||
| 10 | .67 | Indemnification Agreement dated December 7, 2005 among BASA Holding Iberia S.L.U., Clearwire Corporation and Clearwire Europe S.A.R.L.* | ||
| 10 | .68 | MAC Telecom Stock Purchase Agreement dated August 2, 2006 between Clearwire Europe S.A.R.L., and the individuals and entities listed on the Exhibit thereto.* | ||
| 10 | .69 | MTH Stock Purchase Agreement dated August 2, 2006 between Clearwire Europe S.A.R.L., Axel Beghin, Charles du Bunsen, Nicholas du Chastel and Matthew Ridgwell.* | ||
| 21 | .1 | List of subsidiaries. | ||
| 23 | .1 | Consent of Deloitte & Touche LLP.* | ||
| 23 | .2 | Consent of Davis Wright Tremaine LLP (included in Exhibit 5.1). | ||
| 24 | .1 | Powers of Attorney (included on signature page). |
| * | Previously Filed. |
| ** | Flux U.S. Corporation changed its name to Clearwire Corporation effective February 24, 2004, and as a result all references to Flux U.S. Corporation in this index are now to Clearwire Corporation. |
| | To be filed by amendment. | |
| | Confidential treatment requested. |
EXHIBIT 4.6
EXECUTION VERSION
INTEL/CLEARWIRE CONFIDENTIAL
INVESTOR RIGHTS AGREEMENT
THIS INVESTOR RIGHTS AGREEMENT (the "AGREEMENT") dated as of August 29,
2006, is by and among Clearwire Corporation, a Delaware corporation (the
"COMPANY"), Intel Pacific, Inc., a Delaware corporation ("INTEL"), and Motorola,
Inc., a Delaware corporation ("MOTOROLA") (Intel and Motorola individually, an
"INVESTOR," and collectively, the "INVESTORS").
WHEREAS, the Investors have acquired and hold as of the date of this
Agreement shares of Class A common stock, $0.0001 par value (the "CLASS A COMMON
STOCK"), and Class B common stock, $0.0001 par value (the "CLASS B COMMON
STOCK"), of the Company, including those shares purchased by Intel under that
certain Common Stock Purchase Agreement dated as of June 28, 2006 (the "STOCK
PURCHASE AGREEMENT"), and by Motorola under that certain Subscription Agreement
dated as of June 30, 2006, or other securities convertible into shares of Class
A Common Stock; and
WHEREAS, the Company wishes to grant certain registration rights with
respect to the shares of stock of the Company issued to the Investors, as
provided further herein.
NOW THEREFORE, in consideration of the promises herein contained and other
good and valuable consideration, the parties hereto agree as follows:
1. Definitions. As used in this Agreement:
(i) the term "ACT" means the Securities Act of 1933, as amended, and
the rules and regulations thereunder;
(ii) the term "AFFILIATE" of any specified Person means any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "CONTROL" (including, with correlative meanings, the terms
"CONTROLLING," "CONTROLLED BY" and "UNDER COMMON CONTROL WITH"), as used with
respect to any Person shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person whether through the ownership of voting securities or by agreement or
otherwise.
(iii) the term "COMMISSION" means the Securities and Exchange
Commission or any other federal agency at the time administering the Act;
(iv) the term "COMMON STOCK" means any and all classes of the
Company's common stock as authorized pursuant to the Company's Amended Restated
Certificate of Incorporation, as may be amended or restated from time to time;
(v) the term "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder;
(vi) the term "HOLDER" means an Investor, as long as such Investor
owns Registrable Securities, any Affiliate of an Investor, and any Permitted
Transferee of an Investor to whom the registration rights conferred by this
Agreement have been transferred in compliance with Section 14;
1
(vii) the terms "REGISTER," "REGISTERED" and "REGISTRATION" mean a
registration effected by preparing and filing a registration statement in
compliance with the Act (and any post-effective amendments filed or required to
be filed) and the declaration or ordering of effectiveness of such registration
statement;
(viii) the term "PERMITTED TRANSFEREE" shall mean (i) any Affiliate of
an Investor or other Holder, (ii) any Person who acquires at least 5,000,000
shares of Registrable Securities from an Investor or other Holder;
(ix) the term "PERSON" means an individual, corporation, limited
liability company, trust, partnership, general partnership, or other entity;
(x) the term "REGISTRABLE SECURITIES" means (A) any Class A Common
Stock, (B) any shares of Class A Common Stock issuable upon conversion of any
Class B Common Stock of the Company, and (C) any Common Stock of the Company
issued as a dividend or other distribution with respect to, or in exchange for
or in replacement of, the shares of Class A Common Stock or Class B Common
Stock, in each case, held by any stockholder of the Company from time to time,
including the Holders;
(xi) the term "REGISTRATION EXPENSES" means all third-party expenses
incurred by the Company in compliance with Section 2 and Section 3 hereof,
including, without limitation, all registration and filing fees, printing
expenses, accounting fees and expenses, fees and disbursements of counsel for
the Company, the underwriters and one special counsel for the selling Holders,
if any, blue sky fees and expenses and the third-party expenses of any special
audits incident to or required by any such registration (but excluding
underwriters' and brokers' discounts and commissions);
(xii) the term "WARRANT HOLDERS REGISTRATION RIGHTS AGREEMENT" means
that certain Registration Rights Agreement, dated as of August 5, 2005, by and
among the Company and the holders of warrants to acquire shares of the Company's
common stock who are parties thereto, as it exists on the date hereof; and
(xii) the term "WARRANT HOLDERS SHELF REGISTRATION" means a
registration of the Company's securities effected pursuant to Section 2.1 of the
Warrant Holders Registration Rights Agreement.
2. Company Registration.
(a) Right to Register. Whenever the Company proposes to register any
of its Common Stock under the Act, whether for its own account or for the
account of others (other than (i) a registration relating solely to employee
benefit plans, (ii) a registration relating to a corporate reorganization or
other transaction covered by Rule 145 under the Act, (iii) a registration on any
form that does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities, or (iv) a registration in which the only Common Stock
being registered is Common Stock issuable upon conversion of debt securities
that are also being registered) and the registration form to be used may be used
for the registration of Registrable Securities (a "PIGGYBACK REGISTRATION"), the
Company will: (a) give prompt written notice thereof to each Holder (which shall
include a list of the jurisdictions in
2
which the Company intends to attempt to qualify such securities under the
applicable blue sky or other state securities laws) and (b) upon the written
request of a Holder given within twenty (20) days after mailing of such notice
by the Company, the Company shall, subject to the provisions of this Section 2,
use commercially reasonable efforts to cause to be registered under the Act all
of the Registrable Securities that the Holder has requested to be registered.
(b) Right to Terminate Registration. The Company shall have the right
to terminate, withdraw or delay any registration initiated by it under this
Section 2 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration. The Company shall
give written notice of such determination to each Holder that has elected to
include securities in such registration and, in the case of a determination to
terminate or withdraw the registration statement, the Company shall be relieved
of its obligation to register any Registrable Securities in connection with such
registration statement, and in the case of a determination to delay
effectiveness, the Company shall be permitted to delay effectiveness for any
period. The expenses of such terminated, withdrawn or delayed registration shall
be borne by the Company in accordance with Section 3(a)(iv).
(c) Priority on Registrations. Each Holder acknowledges and agrees
that its rights under this Section 2 shall be subject to cutback provisions
imposed by a managing underwriter under Section 2(d). If, as a result of the
cutback provisions of the preceding sentence, a Holder is not entitled to
include all of its requested Registrable Shares in such registration, then the
Holder may elect to withdraw its request to include any or all of its
Registrable Shares in such registration.
(d) Underwritten Offerings. In the event of an underwritten offering,
the Company and each Holder shall make such arrangements with the underwriters
so that such Holder may participate in the offering on the same terms as the
Company and any other party selling securities in such offering. The Company
shall not be required under this Section 2 to include any of a Holder's
securities in such underwriting unless such Holder accepts the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
it (or by other persons entitled to select the underwriters) and enters into an
underwriting agreement in customary form with an underwriter or underwriters
selected by the Company, and then only in such quantity as the underwriters
determine in their sole discretion will not jeopardize the success of the
offering by the Company. Notwithstanding any other provision of this Agreement,
if the managing underwriter(s) determine(s) in good faith that marketing factors
require a limitation of the number of shares to be underwritten, then the
managing underwriter(s) may exclude shares (including Registrable Securities)
from the registration and the underwriting, and the number of shares that may be
included in the registration and the underwriting shall be allocated, (i) first,
to the Company for securities that the Company proposes to register for its own
account; (ii) second, to any stockholders of the Company who exercised a
contractual right to demand that such registration statement be filed, on a pari
passu basis based upon the Registrable Securities held by such stockholders;
(iii) third, to each of the Holders requesting inclusion of their Registrable
Securities in such registration statement and to any other holders of incidental
or "piggyback" registration rights requesting inclusion of their Registrable
Securities in such registration statement, on a pari passu basis based upon the
Registrable Securities held by such holders; and (v) fourth, to other securities
of the Company to be registered on behalf of any other holder. Any Registrable
Securities excluded and withdrawn from such underwriting shall be withdrawn from
the
3
registration. Notwithstanding the foregoing, each Holder acknowledges and agrees
that the allocation provisions set forth in this Section 2(d) are subject to
adjustment in certain circumstances to allow the Company to comply with its
obligations to the holders of Transfer Restricted Securities under the Warrant
Holders Registration Rights Agreement; provided, however, that to the extent
that the cutback provisions set forth in Section 2.2b of the Warrant Holders
Registration Rights Agreement have the effect of limiting the number of the
Holders' Registrable Securities included in any underwritten Piggyback
Registration in a manner that is disproportionate to the other holders of
incidental or "piggyback" registration rights (each, a "LIMITED PIGGYBACK
REGISTRATION"), any Registrable Securities that may be included in any future
underwritten Piggyback Registration by holders of incidental or "piggyback"
registration rights shall be allocated first to the Holders until such time as
such Registrable Securities of the Holders requested to be included in the
Limited Piggyback Registration but not included as a result of the foregoing
have been included in such Piggyback Registration and, only thereafter, will the
remaining Registrable Securities available to be included in such Piggyback
Registration be allocated to the Holders and any other holders of incidental or
"piggyback" registration rights on a pari passu basis based upon the Registrable
Securities held by such holders. For any Holder which is a partnership or
corporation, the partners, retired partners and shareholders of such Holder, or
the estates and family members of any such partners and retired partners and any
trusts for the benefit of any of the foregoing persons shall be deemed to be a
single "Holder," and any pro rata reduction with respect to such "Holder" shall
be based upon the aggregate amount of shares carrying registration rights owned
by all Persons included in such "Holder," as defined in this sentence.
3. Demand and Form S-3 Registrations.
(a) Demand Registration.
(i) Request by Holders. If the Company shall receive at any time
after six (6) months after the effective date of the Company's initial public
offering of its securities pursuant to a registration filed under the Act, a
written request from the Holders of a majority of the Registrable Securities
then outstanding that the Company file a registration statement under the Act
covering the registration of Registrable Securities pursuant to this Section
3(a), then the Company shall, within twenty (20) days after the receipt of such
written request, give written notice of such request (the "REQUEST NOTICE") to
all Holders, and effect, as soon as practicable, the registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of the Registrable
Securities as are specified in such request and any additional requests by other
Holders received by the Company within twenty (20) days after receipt of the
Request Notice, subject only to the limitations of this Section 3(a); provided
that the Registrable Securities requested to be registered pursuant to such
request must have an anticipated aggregate price to the public (before any
underwriting discounts and commissions) of not less than Twenty-Five Million
Dollars ($25,000,000).
(ii) Maximum Number of Demand Registrations. Notwithstanding the
limitations set forth in Section 3(a)(i), and in addition to the rights set
forth therein, the Company is obligated pursuant to this Section 3(a) to effect
one (1) demand registration for Intel and its Permitted Transferees and one (1)
demand registration for Motorola and its Permitted Transferees; provided,
however, if all of the Holders' Registrable Securities that were requested to be
included in a registration pursuant to this Section 3(a) were not included in
such registration
4
as a result of cutback provisions imposed by a managing underwriter pursuant to
Section 3(c) or otherwise, then such registration shall not count against Holder
as a demand registration under this Section 3(a)(ii) and the Company shall be
obligated to effect one (1) additional registration pursuant to this Section
3(a).
(iii) Deferral. Notwithstanding the foregoing, if the Company
shall furnish to Holders requesting the filing of a registration statement
pursuant to this Section 3(a), a certificate signed by the President or Chief
Executive Officer of the Company stating that, in the good faith judgment of the
Board of Directors of the Company, it would be seriously detrimental to the
Company and its stockholders for such registration statement to be filed at such
time and it is therefore essential to defer the filing of such registration
statement, then the Company shall have the right to defer such filing for a
period of not more than ninety (90) days after receipt of the request of the
Initiating Holders; provided, however, that the Company may not utilize this
right more than once in any twelve (12) month period.
(iv) Expenses for Withdrawn Registrations. Notwithstanding the
provisions of Section 5(a), the Company shall not be required to pay for any
expenses of any registration proceeding begun pursuant to this Section 3(a) if
the registration request is subsequently withdrawn at the request of the Holders
of a majority of the Registrable Securities to be registered, unless the Holders
of a majority of the Registrable Securities then outstanding agree to forfeit
their right to the demand registration pursuant to this Section 3(a) (in which
case such right shall be forfeited by all Holders of Registrable Securities);
provided, further, however, that if at the time of such withdrawal, the Holders
have learned of a material adverse change in the condition, business, or
prospects of the Company not actually known to the Holders at the time of their
request for such registration and have withdrawn their request for registration
with reasonable promptness after learning of such material adverse change, then
the Holders shall not be required to pay any of such expenses and shall retain
their demand registration right pursuant to this Section 3(a) notwithstanding
such withdrawal.
(b) Form S-3 Registration.
(i) After the Company is eligible to register Registrable
Securities on Form S-3, each Holder shall have the right to demand the Company
effect a registration with respect to all or a part of its Registrable
Securities on Form S-3 and any related qualification or compliance. Any such
demand shall not be considered a demand registration request pursuant to Section
3(a). Upon receipt of written request, the Company shall, as soon as
practicable, (i) give written notice of the proposed registration to all other
Holders, and any related qualification and compliance, and (ii) effect such
registration and all such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution of all or such
portion of such Holder's Registrable Securities as are specified in such request
together with the Registrable Securities requested to be included by any other
Holders who notify the Company in writing within 10 business days after receipt
of such notice from the Company; provided, however, that the Company shall not
be obligated to effect any such registration, qualification or compliance
pursuant to this Section 3(b):
(A) if Form S-3 is not available for such offering by the
Holder;
5
(B) if the Holder, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose to
sell Registrable Securities and such other securities (if any) at an aggregate
price to the public of less than Five Million Dollars ($5,000,000);
(C) if the Company shall furnish to the Holder a certificate
signed by the President or Chief Executive Officer of the Company stating that,
in the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its shareholders for such Form S-3
Registration to be effected at such time, in which event the Company shall have
the right to defer the filing of the Form S-3 registration statement no more
than once during any twelve (12) month period for a period of not more than one
hundred eighty (180) days following receipt of the request of the Holder under
this Section 3(b);
(D) if the Company has, within the 12 month period preceding
the date of such request, already effected one (1) registration on Form S-3
pursuant to this Section 3(b); provided, however, if all of the Holders'
Registrable Securities requested to be included in the prior registration were
not included in the prior registration as a result of cutback provisions imposed
by a managing underwriter pursuant to Section 3(c) below, then the Holders shall
have the right to demand one (1) additional registration on Form S-3 during such
12-month period; or
(E) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance.
(c) Underwriting. If the Holders initiating the registration request
under this Section 3 (the "INITIATING HOLDERS") intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
then they shall so advise the Company as a part of its request made pursuant to
this Section 3 and the Company shall include such information in the notices
referred to in Section 3(a)(i) or Section 3(b)(i), as applicable. In such event,
the right of any Holder to include his, her or its Registrable Securities in
such registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall enter
into an underwriting agreement in customary form with the managing underwriter
or underwriters selected for such underwriting by the Company and approved by a
majority in interest of the Initiating Holders. Notwithstanding any other
provision of Section 3, if the underwriter(s) advise(s) the Company in writing
that marketing factors require a limitation of the number of securities to be
underwritten then the Company shall so advise all Holders of Registrable
Securities that would otherwise be registered and underwritten pursuant hereto,
and the number of Registrable Securities that may be included in the
underwriting shall be reduced as required by the underwriter(s) and allocated
(i) first, to each of the Holders who exercised a contractual right, pursuant to
Section 3 to demand that such registration statement be filed, on a pari passu
basis based upon the Registrable Securities held by such Holders; (ii) second,
to any other holders of incidental or "piggyback" registration rights requesting
inclusion of their Registrable Securities in such registration statement, on a
pari passu basis based upon the Registrable Securities held by such holders; and
(iii) third, other securities of the Company to be registered on behalf of any
other holder. If, as a result of the
6
cutback provisions of the preceding sentence, a Holder is not entitled to
include all of its requested Registrable Shares in such registration, then the
Holder may elect to withdraw its request to include any or all of its
Registrable Shares in such registration. Any Registrable Securities excluded and
withdrawn from such underwriting shall be withdrawn from the registration.
Notwithstanding the foregoing, each Holder acknowledges and agrees that (a) the
allocation provisions set forth in this Section 3(c) are subject to adjustment
in certain circumstances to allow the Company to comply with its obligations to
the holders of Transfer Restricted Securities under the Warrant Holders
Registration Rights Agreement, and (b) the obligation of the Company to effect a
registration pursuant to Section 3 is subject to the Company's covenant under
Section 2.1 of the Warrant Holders Registration Rights Agreement not to register
any securities for certain holders in advance of registering the Transfer
Restricted Securities pursuant to such agreement.
4. Registration Procedures. In the case of each registration effected by
the Company pursuant to Section 2 or Section 3, the Company will use
commercially reasonable efforts to effect such registration, including:
(a) Prepare and file with the Commission a registration statement with
respect to such Registrable Securities and use commercially reasonable efforts
to cause such registration statement to become effective (provided that before
filing a registration statement or prospectus or any amendments or supplements
thereto, the Company shall furnish to the counsel selected by the Holders of a
majority of the Registrable Securities covered by such registration statement
copies of all such documents proposed to be filed, including each preliminary
prospectus, which documents shall be subject to the review and comment of such
counsel);
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
a period of not less than thirty (30) days and comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement during such period in accordance with the intended
methods of disposition thereof by the Holders holding the securities covered by
the registration statement as set forth in such registration statement;
(c) Furnish to each Holder promptly, and in no event more than five
business days after the same is prepared and filed with the Commission, such
number of copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such Holder may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Holder;
(d) Use reasonable efforts to register or qualify the Registrable
Securities covered by the registration statement under such other securities or
blue sky laws of such United States jurisdictions as the Holder thereof may
reasonably request and do any and all other acts and things that may be
reasonable necessary or advisable to enable such Holder to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
Holder, provided that the Company will not be required to (a) qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify for this subparagraph, (b) subject itself to taxation in any such
jurisdiction or (c) consent to general service of process in any such
jurisdiction;
7
(e) Notify each Holder promptly, but in no event more than two
business days after the occurrence of the event, at any time when a registration
statement under the Act that registers any of such Holder's Registrable
Securities is effective, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of such Holder, the Company will prepare a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus shall not contain
an untrue statement of a material fact or omit to state a fact necessary to make
the statements therein not misleading;
(f) Cause all such Registrable Securities to be listed on such
securities exchange or market on which the Company's Common Stock is then
listed; and
(g) Furnish, at a Holder's request, on the date that the Holder's
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to this Agreement, if such securities are being
sold through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (A) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to a Holder, if Holder
requests registration and (B) a letter dated such date, from the independent
certified public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering, addressed to the underwriters, if any.
5. Registration Expenses; Delay.
(a) Expenses of Company Registration. The Company shall pay (i) all of
the Registration Expenses and (ii) all transfer taxes and brokerage and
underwriters' discounts and commissions attributable to the securities being
sold by the Company. Each Holder shall pay all transfer taxes and brokerage and
underwriters' discounts and commissions attributable to the Registrable
Securities being sold by such Holder.
(b) Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation of this Agreement.
6. Requirement to Discontinue Disposition. Each Holder agrees that, upon
receipt of any notice from Company of the happening of any event of the kind
described in Section 4(e), such Holder will discontinue disposition of its
Registrable Securities pursuant to such registration statement until such
Holder's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 4(e), or until such Holder is advised in writing by
Company that the use of the prospectus may be resumed, and has received copies
of any additional or supplemental filings that are incorporated by reference in
the prospectus, and, if so directed by the Company, such Holder will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies then in such Holder's possession, of the prospectus covering such
Registrable Securities which are current at the time of the receipt of such
notice.
8
7. Information from Holder. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Section 2 or Section 3
with respect to a Holder's Registrable Securities that such Holder furnish to
the Company for inclusion in the specific registration statement (and any
prospectus included therein) such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of Holder's Registrable
Securities; provided that the use of such information shall be limited to the
specific registration statement (or any prospectus included therein) for which
it was provided and shall not be used in any summary or free writing prospectus.
8. Indemnification.
(a) The Company agrees to indemnify and hold harmless, to the extent
permitted by law, each Holder, its directors and officers and each person who
controls the Company (within the meaning of the Act) and any of such person's
agents or representatives, its legal counsel and accountants, any underwriter
and any controlling person of such underwriter, and its legal counsel against
all losses, liabilities, claims, damages and expenses ("LOSSES") caused by (A)
any untrue or alleged untrue statement of material fact contained in any
registration statement in which such Holder is participating, or any prospectus,
preliminary prospectus, summary or free writing prospectus, or any amendment
thereof or supplement to any of the foregoing or any omission or alleged
omission of material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are caused by or
contained in any information furnished in writing to the Company or any
underwriter by such Holder expressly for use therein or results from such
Holder's failure to deliver a copy of the registration statement or prospectus
or any amendments or supplements thereto after the Company has furnished such
Holder with the number of copies of the same requested by such Holder or (B) any
violation or alleged violation by the Company of the Act, the Exchange Act, any
state securities laws or any rule or regulation promulgated under the Act, the
Exchange Act or any state securities laws in connection with the sale of
securities by such Holder pursuant to any registration statement in which such
Holder is participating, and the Company, in each case, will reimburse each such
Holder, officer, director, controlling person or other aforementioned person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such losses, liabilities, claims, damages or
expenses or action as such expenses are incurred; provided, however, that the
indemnity agreement contained in this Section 8 shall not apply to amounts paid
in settlement of any such Losses if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld).
(b) Each Holder, severally and not jointly, will indemnify, to the
extent permitted by law, the Company, its directors and officers and each person
who controls Company (within the meaning of the Act) and any of such person's
agents or representatives, its legal counsel and accountants, any underwriter
and any controlling person of such underwriter, against any Losses resulting
from (A) any untrue or alleged untrue statement of material fact contained in
the registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent that such untrue statement or
omission is contained in any information or affidavit so furnished in writing by
such Holder expressly for use in such registration statement, or (B) such
Holder's failure to deliver a
9
copy of the registration statement or prospectus or any amendments or
supplements thereto after the Company has furnished such Holder with the number
of copies of the same requested by such Holder; and each such Holder will
reimburse any person intended to be indemnified pursuant to this Section 8(b)
for any legal or other expenses reasonably incurred by such person in connection
with investigating or defending any such losses, liabilities, claims, damages or
expenses or action as such expenses are incurred provided, however, that (i) the
indemnity agreement contained in this Section 8(b) shall not apply to amounts
paid in settlement of any Losses if such settlement is made without the consent
of the Holder, which consent shall not be unreasonably withheld, and (ii) the
obligations of such Holders hereunder shall be limited to an amount equal to the
net proceeds to each such Holder from the sale of Registrable Securities in the
transaction giving rise to the Losses.
(c) The indemnification provided for under this Agreement will remain
in full force and effect regardless of any investigation made by or on behalf of
the Indemnified Party (as defined herein) or any officer, director, or
controlling person of such Indemnified Party and will survive the transfer of
Registrable Securities. The Indemnifying Party also agrees to make such
provisions, as are reasonably requested by an Indemnified Party, for
contributions (in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party on the one hand and of the Indemnified Party on
the other in connection with the actions that gave rise to any Losses) to such
party in the event such Indemnifying Party's indemnification is unavailable for
any reason; provided, however, that in no event shall any contribution by a
Holder under this Section 8(c) exceed the net proceeds to such Holder from the
sale of Registrable Securities in the transaction giving rise to the Losses.
(d) Each party entitled to indemnification under this Section 8 (the
"INDEMNIFIED PARTY") shall give notice to the party required to provide
indemnification (the "INDEMNIFYING PARTY") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld) and the Indemnified Party may participate in such
defense at the Indemnified Party's expense (unless the Indemnified Party shall
have reasonably concluded that there may be a conflict of interest between the
Indemnifying Party and the Indemnified Party in such action, in which case the
fees and expenses of counsel shall be at the expense of the Indemnifying Party),
and provided further that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Section 8 unless the Indemnifying Party is materially prejudiced
thereby. No Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of the Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation. The
Indemnified Party shall furnish such information regarding itself or the claim
in question as an Indemnifying Party may reasonably request in writing and as
shall be reasonably required in connection with the defense of such claim and
litigation resulting therefrom.
(e) If the indemnification provided for in this Section 8 is held by a
court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any Losses, then
10
the Indemnifying Party, in lieu of indemnifying such Indemnified Party
hereunder, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, liability, claim, damage or expense, in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and of the Indemnified Party on the other, in connection
with the statements or omissions which resulted in Losses, as well as any other
relevant equitable considerations; provided, however, that in no event shall any
contribution by a Holder under this Section 8(e) exceed the net proceeds to such
Holder from the sale of Registrable Securities in the transaction giving rise to
the Losses. The relative fault of the Indemnifying Party and of the Indemnified
Party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the Indemnifying Party or by
the Indemnified Party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(f) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement
entered into in connection with any underwritten public offering contemplated by
this Agreement are in conflict with the foregoing provisions, the provisions in
such underwriting agreement shall be controlling.
(g) The obligations of the Company and Holders under this Section 8
shall survive the completion of any offering of Registrable Securities in a
registration statement under Section 2 or Section 3 and otherwise.
9. Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may permit the sale of
restricted securities to the public without registration the Company agrees to:
(a) keep public information available as those terms are understood
and defined in Rule 144, at all times from and after ninety (90) days following
the effective date of the first registration under the Act filed by the Company
for an offering of its Common Stock to the general public;
(b) file with the Commission all reports and other documents required
of the Company under the Act and the Exchange Act at any time after it has
become subject to such reporting requirements; and
(c) so long as any Holder owns any Registrable Securities, furnish to
such Holder upon request, a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 (at any time from and
after ninety (90) days following the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Act and the Exchange Act (at any time after it has become
subject to such reporting requirements), a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents so filed
as such Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing such Holder to sell any such securities
without registration.
10. "Market Stand-off" Agreement. If requested by the Company or an
underwriter of capital stock or other securities of the Company in connection
with the Company's initial public
11
offering, each Holder agrees not to sell or otherwise transfer or dispose of any
capital stock or other securities of the Company, excluding capital stock
acquired in the Company's initial public offering, held by such Holder during
the 180 day period following such initial public offering, provided that all
directors and officers of the Company and stockholders owning at least 2% of the
Company's capital stock agree to the same transfer restrictions. Any provisions
allowing for discretionary waivers or termination of the transfer restrictions
in similar agreements by and among the Company and any of the Company's
directors, officers, shareholders or representatives of the underwriters shall
also be offered to the Holders. If requested by a managing underwriter in
connection with the Company's initial public offering, such Holder shall execute
a separate agreement to the foregoing effect. The Company may impose
stop-transfer instructions with respect to the shares (or securities) subject to
the foregoing restriction until the end of such period.
11. Rights Granted to Other Investors.
(a) [***] This Section 11(a) will terminate upon the closing of a
firmly underwritten public offering of any of the Common Stock.
(b) The Company shall not grant any registration rights relating to
its securities after the date hereof without the written consent of the
Investors holding a majority of the Registrable Securities held by the Investors
unless such rights are subordinate to or pari passu with the rights of the
Investors under this Agreement.
12. Termination. The registration rights set forth in this Agreement shall
terminate and not be available to each Holder on the earlier of (i) the date
that the Registrable Securities then owned by such Holder can be sold without
restriction in any 90-day period pursuant to Rule 144 under the Act and (ii) the
date that is five (5) years following the consummation of the Company's initial
public offering of its Common Stock. In addition, the registration rights set
forth in this Agreement shall terminate upon the transfer or assignment of all
of the Registrable Securities held by all Holders to parties who are not
Permitted Transferees. Upon termination pursuant to this Section 12 the Company
shall no longer be obligated to provide notice of a proposed registration to
such Holder.
13. Notices. All communications provided for hereunder shall be sent by
first-class mail or facsimile and (a) if addressed to a Holder, addressed to the
Holder at the address or fax number set forth below such Holder's signature, or
at such other address or fax number as such Holder shall have furnished to the
Company in writing or (b) if addressed to the Company, to the address or fax
number set forth below the Company's signature or at such other address or fax
number, or to the attention of such other officer, as the Company shall have
furnished to Holder in writing. Notices sent by first-class mail shall be deemed
received three days after the date of deposit of such notice in the United
States mail. Notices sent by facsimile shall be deemed received upon receipt by
the notified party's facsimile machine.
14. No Assignment. This Agreement is personal to each Investor and shall
not be assignable, by operation of law or otherwise to any third party, except
as set forth herein. Notwithstanding the foregoing, any Permitted Transferee of
an Investor shall be entitled to the rights granted hereunder, provided that the
Company is given written notice at the time of said
[*** Confidential Treatment Requested]
12
transfer or assignment identifying the name and address of the Permitted
Transferee and that the Permitted Transferee assumes in writing the obligations
of the Investor under this Agreement.
15. Descriptive Headings. The descriptive headings of the several sections
and paragraphs of this Agreement are inserted for reference only and shall not
limit or otherwise affect the meaning hereof.
16. Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of Delaware.
17. No Inconsistent Agreements. The Company will not on or after the date
of this Agreement enter into any agreement with respect to its securities that
conflicts with or would limit the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof.
18. Amendments and Waivers. Any term of this Agreement may be amended and
the observance of any term may be waived (either generally or in a particular
instance and either retroactively or prospectively) only upon the written
consent of the Company and each Investor. The failure of any party to insist on
or to enforce strict performance by the other parties of any of the provisions
of this Agreement or to exercise any right or remedy under this Agreement shall
not be construed as a waiver or relinquishment to any extent of that party's
right to assert or rely on any provisions, rights or remedies in that or any
other instance; rather, the provisions, rights and remedies shall remain in full
force and effect.
19. Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
13
IN WITNESS WHEREOF, the parties have caused this agreement to be executed
and delivered as of the date first above written.
COMPANY:
CLEARWIRE CORPORATION Address:
5808 Lake Washington Blvd. NE, Suite 300
Kirkland, WA 98033
By: /s/ Benjamin G. Wolff Facsimile No: (425) 216-7900
--------------------------------- Attn: Broady Hodder, General Counsel
Name: Benjamin G. Wolff
Title: Co-President & Co-CEO
INVESTORS:
INTEL PACIFIC, INC. Address:
c/o Intel Corporation
2200 Mission College Blvd., RN6-46
By: /s/ Arvind Sodhari Santa Clara, CA 95054-1549
--------------------------------- Attn: Intel Capital Portfolio Manager
Name: Arvind Sodhari Fax Number: (408) 765-6038
Title: President
MOTOROLA, INC. Address:
1475 W. Shure Drive
Arlington Heights, IL 60004
By: /s/ Don McLellan Facsimile No: 847-632-3020
--------------------------------- Attn: Kevin Gilbert
Name: Don McLellan
Title: Corporate VP With a copy to:
1303 East Algonquin Road
Schaumburg, Illinois 60196
Facsimile No: (847) 576-3750
Attn: General Counsel
and
Winston & Strawn LLP
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Oscar A. David, Esq.
Fax: (312) 558-5700
[SIGNATURE PAGE TO CLEARWIRE INVESTOR RIGHTS AGREEMENT]
EXHIBIT 9.1
EXECUTION VERSION
INTEL/CLEARWIRE CONFIDENTIAL
VOTING AGREEMENT
This VOTING AGREEMENT (the "AGREEMENT") is made and entered into as of
August 29, 2006, by and among Clearwire Corporation, a Delaware corporation (the
"COMPANY"), Intel Pacific, Inc., a Delaware corporation ("INTEL"), Intel Capital
Corporation, a Cayman Islands corporation ("INTEL SUB"), and Eagle River
Holdings, LLC, a Washington limited liability company ("EAGLE RIVER").
WHEREAS, the Company and Intel have entered into, or will enter into
contemporaneously herewith, a Common Stock Purchase Agreement (the "PURCHASE
AGREEMENT"), under which Intel has agreed, or will agree, to purchase, and the
Company has agreed, or will agree, to sell to Intel shares of the Company's
Class A Common Stock, $0.0001 par value per share (the "CLASS A COMMON STOCK"),
and Class B Common Stock, $0.0001 par value per share (the "CLASS B COMMON
STOCK" and, together with the Class A Common Stock, the "COMMON STOCK"), subject
to certain terms and conditions;
WHEREAS, Intel Sub is the holder of shares of Class A Common Stock and
Eagle River is the owner and holder of shares of Class A Common Stock and Class
B Common Stock;
WHEREAS, in connection with the transaction contemplated by the Purchase
Agreement, Intel and Intel Sub shall have the right to designate and elect
certain member(s) to the Company's Board of Directors ("BOARD") as provided in
this Agreement;
WHEREAS, the execution and delivery of this Agreement is a condition
precedent to the obligations of Intel under the Purchase Agreement; and
WHEREAS, in order to induce Intel to enter into the Purchase Agreement and
purchase shares of Common Stock thereunder, the Company and Eagle River desire
to enter into this Agreement with Intel and Intel Sub.
NOW, THEREFORE, in consideration of the foregoing premises and certain
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties agree as follows:
1. Agreement to Vote. Each Holder (as defined below) hereby agrees, on
behalf of itself and any of its affiliates, subsidiaries, parents, stockholders,
members, partners, heirs, executors, representatives, successors, transferees,
and assigns, to hold, or cause to be held, all of its Shares (as defined below)
subject to, and to vote, or cause to be voted, all such Shares at any regular or
special meeting of the stockholders of the Company (or by written consent) in
accordance with the provisions of this Agreement. For purposes of this
Agreement, (i) the term "SHARES" shall mean any shares of the capital stock of
the Company, including, without limitation, the Class A Common Stock, Class B
Common Stock, any securities of the Company issued with respect to, upon
conversion of, or in exchange or substitution for such securities, and any other
voting securities of the Company, in each case, whether currently owned or
hereinafter acquired, owned of record or beneficially, directly or indirectly,
or to
1
which voting power is possessed or shared, and (ii) the term "HOLDER" shall mean
(1) Eagle River and any person or entity to whom Eagle River may from time to
time transfer, sell, convey, or assign any Shares, (2) Intel and any person or
entity to whom Intel may from time to time transfer, sell, convey, or assign any
Shares, and (3) any person or entity to whom the Company may from time after the
date hereof to time issue and sell shares of Class B Common Stock or any
securities convertible into or exchangeable for shares of Class B Common Stock.
2. Election of Directors. Each Holder shall vote, or cause to be voted, at
any regular or special meeting of the stockholders of the Company (or by written
consent) its Shares in any election of directors of the Company, as may be
necessary to elect as a director or directors:
(a) two (2) individuals designated or nominated by Intel, who shall
initially be Arvind Sodhani and David (Dadi) Perlmutter, but only if Intel,
Intel Sub, and their respective affiliates own or hold, in the aggregate, Shares
representing at least 15% of the outstanding capital stock of the Company;
(b) one (1) individual designated or nominated by Intel, but only if
Intel, Intel Sub, and their respective affiliates own or hold, in the aggregate,
Shares representing at least 7.5%, but less than 15%, of the outstanding capital
stock of the Company; and
(c) four (4) individuals designated or nominated by Eagle River.
3. Removal of Board Members. Each Holder also agrees to vote all of such
Holder's Shares from time to time and at all times in whatever manner as shall
be necessary to ensure that (i) no director elected pursuant to Section 2 of
this Agreement may be removed from office other than for cause unless (A) such
removal is directed or approved by the affirmative vote of the Holder entitled
under Section 2 to designate that director or (B) the person(s) or entity(ies)
originally entitled to designate or nominate such director pursuant to Section 2
is no longer so entitled to designate or approve such director; and (ii) any
vacancies created by the resignation, removal, or death of a director elected
pursuant to Section 2 shall be filled pursuant to the provisions of Section 2.
4. Legend on Share Certificates. Each certificate representing any Shares
owned or held by a Holder shall be endorsed by the Company with a legend reading
substantially as follows:
"THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A VOTING AGREEMENT (A COPY
OF WHICH MAY BE OBTAINED UPON WRITTEN REQUEST FROM THE ISSUER), AND BY
ACCEPTING ANY INTEREST IN SUCH SHARES THE PERSON ACCEPTING SUCH
INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE
PROVISIONS OF SAID VOTING AGREEMENT, INCLUDING THE RESTRICTIONS ON
TRANSFER SET FORTH THEREIN."
2
5. Covenants of the Company.
(a) The Company agrees to use its best efforts to ensure that the
rights granted hereunder are effective and that the parties enjoy the benefits
thereof. Such actions include, without limitation, the use of the Company's best
efforts to cause the election and/or removal of the Class B Directors as
provided in Sections 2 and 3 above. The Company will not, by any voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
to be performed hereunder by the Company, but will at all times in good faith
assist in the carrying out of all of the provisions of this Agreement and in the
taking of all such actions as may be necessary or appropriate in order to
protect the rights of the parties hereunder against impairment.
(b) The Company agrees that it will not issue any shares of Class B
Common Stock or any securities convertible into or exchangeable for shares of
Class B Common Stock, or any securities that have or will have the right to vote
with the Class B Common Stock in the election of the Class B Directors, unless
the purchaser(s) of such shares or securities executes and delivers to the
Company, with a true and correct copy to be provided to Intel, an Adoption
Agreement, substantially in the form of Exhibit A attached hereto (the "ADOPTION
AGREEMENT"), prior to such issuance and sale in which each such purchaser agrees
to be bound as a Holder by, and comply with all of, the terms of this Agreement
that are applicable to a Holder.
6. No Liability for Election of Recommended Directors. No party to this
Agreement or any parent, subsidiary, affiliate, officer, director, stockholder,
partner, retired partner, member, retired member, stockholder, employee,
representative, or agent of any party, makes any representation or warranty as
to the fitness or competence of any director nominee hereunder to serve on the
Board by virtue of such party's execution of this Agreement or by the act of
such party in voting for such director nominee pursuant to this Agreement.
7. Manner of Voting. The voting of Shares pursuant to this Agreement may be
effected in person, by proxy, by written consent, or in any other manner
permitted by applicable law.
8. Grant of Proxy. Upon the failure of any Holder to vote its Shares in
accordance with the terms of this Agreement with respect to the election and
removal of individuals designated or nominated by Intel, such Holder hereby
grants to a stockholder designated by Intel a proxy coupled with an interest in
all of the Shares of such Holder. Upon the failure of any Holder to vote its
Shares in accordance with the terms of this Agreement with respect to the
election and removal of individuals designated or nominated by Eagle River, such
Holder hereby grants to a stockholder designated by Eagle River a proxy coupled
with an interest in all of the Shares of such Holder. Each proxy granted hereby
shall be irrevocable until this Section 8 is amended to remove such grant of
proxy in accordance with Section 15 hereof, to vote all such Shares in the
manner provided in Section 2 and 3 hereof.
3
9. Specific Enforcement. It is agreed and understood that any
non-compliance with the terms of this Agreement (or any threat thereof) by the
Company or any Holder would cause material irreparable damage to Intel and that
the remedy at law is and will be inadequate, and that, in addition to all other
remedies which it may have, Intel will be entitled to immediate specific
performance and injunctive or other equitable relief without the need to post a
bond or other security or prove actual damage. Further, the Company and each
Holder hereby waive any claim or defense that there is an adequate remedy at law
for such breach or threatened breach.
10. Execution by the Company. The Company, by its execution and delivery of
this Agreement, agrees that it will cause the certificates issued after the date
hereof evidencing the shares of Class B Common Stock to bear the legend required
by Section 4 herein, and it shall supply, free of charge, a copy of this
Agreement to any holder of a certificate evidencing shares of capital stock of
the Company upon written request from such holder to the Company, at its
principal office. The parties hereto hereby agree that the failure to cause the
certificates evidencing the Shares to bear the legend required by Section 4
herein and/or failure of the Company to supply, free of charge, a copy of this
Agreement as provided under this Section 10 shall not affect the validity or
enforcement of this Agreement.
11. Restrictions on Exercise of Drag Along Right Against Intel.
(a) Notwithstanding Section 6 of that certain Amended and Restated
Stockholders Agreement, dated as of March 16, 2004 (the "STOCKHOLDERS
AGREEMENT"), the Company and Eagle River each agrees and acknowledges that Intel
and Intel Sub shall have no obligation to take any action specified under
Section 6 of the Stockholders Agreement in connection with the exercise of the
Drag Along Right (as such term is defined in the Stockholders Agreement) or any
event giving rise to a Drag Along Right, unless each of the following conditions
is satisfied (each capitalized term in this Section 11(a) that is not otherwise
defined shall have the meaning ascribed to it set forth in the Stockholders
Agreement):
(i) The Selling McCaw Entity shall be required to commit to a
Transfer in a bona fide arm's-length transaction with a Person that is not an
Affiliate of the McCaw Entities.
(ii) The only representations, warranties or covenants that Intel
or Intel Sub shall be required to make in connection with a Transfer giving rise
to a Drag Along Right (such Transfer, a "COMPANY SALE") are representations and
warranties with respect to its own ownership of the Company's securities to be
sold by it and its ability to convey title thereto free and clear of liens,
encumbrances or adverse claims and reasonable covenants regarding
confidentiality, publicity, and similar matters.
(iii) The liability of Intel and Intel Sub with respect to any
representation and warranty or covenant made by the Company in connection with a
Company Sale shall be several and not joint with any other person, and any such
liability shall be limited to Intel's or Intel Sub's pro rata share of the
aggregate consideration payable to all
4
stockholders of the Company in the Company Sale, which may be held in escrow for
a period not to exceed 12 months from the closing date of the Company Sale.
(iv) Neither Intel nor Intel Sub shall be required to amend,
extend or terminate any contractual or other relationship with the Company, the
acquirer, or their respective affiliates.
(v) Neither Intel nor Intel Sub shall be required to agree to any
covenant not to compete or covenant not to solicit customers, employees, or
suppliers of any party to the Company Sale.
(b) Neither Intel nor Intel Sub will be bound by the Drag Along Right
following any assignment of the Drag Along Right (by operation of law or
otherwise) by Eagle River unless the person or entity to whom such right is
assigned shall have executed a written agreement, substantially in the form of
this Section 11 or pursuant to which such person becomes a party to this
Agreement, and agrees to be bound by all the provisions of this Section 11.
(c) Neither Intel nor Intel Sub will be bound by the Drag Along Right
if Eagle River takes or consents to any action that results in the ability of
any person or entity not an original party to this Agreement to exercise the
Drag Along Right against Intel or Intel Sub, unless such person or entity shall
have executed a written agreement, substantially in the form of this Agreement
or pursuant to which such person becomes a party to this Agreement, and agrees
to be bound by all the provisions of this Section 11.
12. Captions. The titles of the sections and subsections of this Agreement
are for convenience of reference only and are not to be considered in construing
or interpreting this Agreement.
13. Entire Agreement. This Agreement constitutes the entire understanding
and agreement between the parties with regard to the subjects hereof; provided,
however, that nothing in this Agreement shall be deemed to terminate or
supersede the provisions of any confidentiality and nondisclosure agreements
executed by the parties hereto prior to the date hereof, which agreements shall
continue in full force and effect until terminated in accordance with their
respective terms.
14. Notices. All notices, requests, waivers, and other communications made
pursuant to this Agreement shall be in writing and shall be conclusively deemed
to have been duly given (a) when hand delivered to a party; (b) when sent by
facsimile if sent during normal business hours of the recipient with
confirmation of sending to the fax number set forth below or, if sent after
normal business hours with confirmation of sending, then notice shall be deemed
to have been duly given on the next business day; (c) three (3) business days
after deposit in the U.S. mail with registered or certified mail return receipt
requested first class, postage prepaid, and addressed to a party as set forth
below; or (d) the next business day after deposit with a national overnight
delivery service, postage prepaid, and addressed to a party as set forth below
with next-business-day delivery guaranteed, provided that the sending
5
party receives a confirmation of delivery from the delivery service provider.
All notices, requests, waivers, and other communications shall be sent to the
receiving party at its address as set forth below, or to such address or
facsimile number as subsequently modified by written notice given in accordance
with this Section 14.
(i) if to the Company, at:
Clearwire Corporation
5808 Lake Washington Blvd. NE, Suite 300
Kirkland, WA 98033
Facsimile No: (425) 216-7900
Attn: Broady Hodder, General Counsel
With a copy to:
Davis Wright Tremaine, LLP
1501 Fourth Avenue
2600 Century Square
Seattle, WA 98121
Facsimile No: (206) 628-7699
Attn: Julie Weston, Esq.
(ii) if to Intel or Intel Sub:
Intel Pacific, Inc.
c/o Intel Corporation
2200 Mission College Blvd., RN6-46
Santa Clara, CA 95054-1549
Attn: Intel Capital Portfolio Manager
Fax Number: (408) 765-6038
With copies to: portfolio.manager@intel.com
(iii) if to Eagle River, at:
Eagle River Holdings, LLC
2300 Carillon Point
Kirkland, WA 98033
Fax Number: 425-828-8061
Each person making a communication hereunder by facsimile shall promptly confirm
by telephone to the person to whom such communication was addressed each
communication made by it by facsimile pursuant hereto, but the absence of such
confirmation shall not affect the validity of any such communication.
6
15. Amendments and Waivers. Any term of this Agreement may be amended,
terminated, or waived only with the written consent of the Company, Intel, and
Eagle River. Any amendment, termination, or waiver effected in accordance with
this Section 15 shall be binding upon each transferee of the Shares, each future
Holder of Shares, and the Company.
16. Delays or Omissions. No delay or omission to exercise any right, power,
or remedy accruing to the Company, Intel, and/or any Holder, upon any breach or
default under this Agreement shall impair any such right, power, or remedy of
the Company, Intel, and/or any Holder, nor shall it be construed to be a waiver
of any such breach or default, or an acquiescence therein, or of any similar
breach of default thereafter occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring. Any waiver, permit, consent, or approval of any kind or
character on the part of the Company, Intel, or a Holder of any breach of
default under this Agreement or any waiver on the part of the Company, Intel, or
a Holder of any provisions or conditions of this Agreement, must be in writing
and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement, or by law or otherwise
afforded to the Company, Intel, or a Holder shall be cumulative and not
alternative.
17. Stock Splits, Stock Dividends, etc. In the event of any issuance of
Shares hereafter to any Holder (including, without limitation, in connection
with any stock split, stock dividend, recapitalization, reorganization, or the
like), such Shares shall become subject to this Agreement and shall be endorsed
with the legend set forth in Section 4.
18. Severability. Should any provision of this Agreement be determined to
be illegal or unenforceable, such determination shall not affect the validity or
enforceability of any other provision of this Agreement.
19. Restrictions on Transferability; Binding Effect. This Agreement shall
be binding upon the Holders, their respective heirs, executors, representatives,
successors, transferees, and assigns and to such additional individuals or
entities that may become a Holder of the Shares. For any such transfer of shares
to be deemed effective, the transferee shall have executed and delivered to the
Company, with a true and correct copy to be provided to Intel and Eagle River,
an Adoption Agreement substantially in the form attached hereto as Exhibit A.
Upon the execution and delivery of an Adoption Agreement, such transferee shall
be deemed to be a Holder hereunder as if such transferee's signature appeared on
the signature pages hereto. By their execution of this Agreement or any Adoption
Agreement, each Holder hereunder appoints the Company as its attorney-in-fact
for the purpose of executing any Adoption Agreement which may be required to be
delivered hereunder.
20. Governing Law. This Agreement shall be governed by and construed in
accordance with the General Corporation Law of the State of Delaware as to
matters within the scope thereof, and as to all other matters shall be governed
by and construed in accordance with the internal laws of the State of Delaware,
without regard to principles of conflicts of laws.
7
21. Counterparts. This Agreement may be executed and delivered by facsimile
signature in any number of counterparts, each of which shall be an original, but
all of which together shall constitute one and the same instrument.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
8
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
CLEARWIRE CORPORATION
By: /s/ Benjamin G. Wolff
------------------------------------
Name: Benjamin G. Wolff
----------------------------------
Title: Co-President & Co-CEO
---------------------------------
INTEL PACIFIC, INC.
By: /s/ Arvind Sodhani
------------------------------------
Name: Arvind Sodhani
----------------------------------
Title: President
---------------------------------
INTEL CAPITAL CORPORATION
By: /s/ Arvind Sodhani
------------------------------------
Name: Arvind Sodhani
----------------------------------
Title: President
---------------------------------
EAGLE RIVER HOLDINGS, LLC
By: /s/ Benjamin G. Wolff
------------------------------------
Name: Benjamin G. Wolff
----------------------------------
Title: Co-President & Co-CEO
---------------------------------
[SIGNATURE PAGE TO CLEARWIRE VOTING AGREEMENT]
9
EXHIBIT A
ADOPTION AGREEMENT
This Adoption Agreement ("ADOPTION AGREEMENT") is executed by the
undersigned (the "TRANSFEREE") pursuant to the terms of that certain Voting
Agreement dated as of August 29, 2006 (the "AGREEMENT") by and among the
Company, Intel, Intel Sub, and Eagle River. Capitalized terms used but not
defined herein shall have the respective meanings ascribed to such terms in the
Agreement. By the execution of this Adoption Agreement, the Transferee agrees as
follows:
1. Acknowledgment. Transferee acknowledges that Transferee is acquiring
certain shares of the common stock of the Company (the "STOCK"), subject to the
terms and conditions of the Agreement.
2. Agreement. Transferee (i) agrees that the Stock acquired by Transferee
shall be deemed to be "Shares" under the Agreement, (ii) agrees to be bound as a
Holder by, and comply with all of, the terms of this Agreement that are
applicable to a Holder, and (ii) hereby adopts the Agreement with the same force
and effect as if Transferee were originally a party thereto.
3. Notice. Any notice required or permitted by the Agreement shall be given
to Transferee at the address listed beside Transferee's signature below.
EXECUTED AND DATED this ______ day of _____________.
TRANSFEREE:
By:
------------------------------------
Name and Title
-------------------------
Address:
-------------------------------
Fax:
-----------------------------------
Accepted and Agreed:
CLEARWIRE CORPORATION:
By:
---------------------------------
Title:
------------------------------
Exhibit 10.10
AGREEMENT
This Agreement (this "AGREEMENT") is entered into as of March 5, 2003, by and
among Nextel Communications, Inc., a Delaware corporation (the "COMPANY"),
Digital Radio, L.L.C., a Washington limited liability company ("INVESTOR") and
Craig O. McCaw ("INDIVIDUAL").
Unless the context otherwise requires, terms that are capitalized and not
otherwise defined in context have the meanings set forth in Article 5 of this
Agreement.
RECITALS
A. On April 4, 1995, the Company, Investor and Individual entered into the
Securities Purchase Agreement (as amended through the date hereof, the "SPA").
B. Pursuant to the SPA, on July 28,1995, Investor purchased, among other things,
shares of Class A Convertible Redeemable Preferred Stock of the Company ("CLASS
A PREFERRED STOCK") and shares of Class B Convertible Preferred Stock of the
Company ("CLASS B PREFERRED STOCK").
C. Prior to the Effective Date of this Agreement, as the holder of the Class A
Preferred Shares, Investor had elected three representatives to the Board of the
Company (the "INVESTOR DIRECTORS").
D. Also on April 4,1995, the Company and Eagle River, Inc., a Washington
corporation ("EAGLE RIVER") entered into a Management Support Agreement (the
"MANAGEMENT SUPPORT AGREEMENT") and an Incentive Option Agreement (the
"INCENTIVE OPTION").
E. The Company, Investor and Individual desire to terminate certain agreements
and modify their relationships as provided in this Agreement.
F. The Incentive Option is not being modified and, in accordance with its terms,
will remain exercisable until April 4, 2005.
AGREEMENT
1. TERMINATION OF AGREEMENTS
1.1 TERMINATION OF SPA. On the Effective Date, the SPA will terminate. From and
after the Effective Date, the SPA will be void and have no further force or
effect.
1.2 TERMINATION OF MANAGEMENT SUPPORT AGREEMENT. On the Effective Date and from
and after effective the Effective Date, the Company and Eagle River will
terminate the Management Support Agreement.
2. CONDITIONS TO EFFECTIVENESS
2.1 EFFECTIVE DATE. The Effective Date of this Agreement shall be the date when
all of the following actions have been taken (the "EFFECTIVE DATE"):
a. Investor shall have caused each of the Investor Directors to submit his
resignation as a director to the Company, which shall provide that such
resignations shall be effective upon acceptance by action of a majority of
the members of the Company's Board (excluding the Investor Directors).
b. The Operations Committee shall have acted by the vote of a majority of its
Members at a meeting duly called, convened and held, or by unanimous action
of the Operations Committee, to terminate the existence of the Operations
Committee, and such action shall have been approved and ratified by the
Company's Board.
c. Investor as the holder of the all the issued and outstanding shares of
Class A Preferred Stock shall have delivered written notice to the Company
that the holder elects to convert all the outstanding shares of Class A
Preferred Stock into shares of Class A Common Stock of the Company ("CLASS
A COMMON STOCK").
d. Investor as the holder of the issued and outstanding shares of Class B
Preferred Stock shall have surrendered certificates together with
instruments of transfer duly executed for all the outstanding Class B
Preferred Stock in exchange for 82 shares of Class A Common Stock.
2.2 POST-EFFECTIVE DATE COVENANT. The Company, Investor and Individual will each
use its or his respective best efforts to cause each of the actions contemplated
by this Section 2.2 to occur as promptly as practicable after the Effective
Date.
a. The Directors of the Company shall elect J. Timothy Bryan to serve the
remainder of the term for the vacancy created by his resignation until the
annual stockholders meeting of the Company in 2003.
b. Conditional upon receiving a Required Letter, the Directors of the Company
shall elect Individual to serve the remainder of the term for the vacancy
created by his resignation until the annual stockholders meeting of the
Company in 2004.
c. Conditional upon receiving a Required Letter, the Directors of the Company
shall elect Dennis M. Weibling to serve the remainder of the term for the
vacancy created by his resignation until the annual stockholders meeting of
the Company in 2005.
d. Contemporaneously with the actions contemplated in Section 2.2 a., b. and
c. the Directors of the Company shall approve and the Company shall execute
indemnification agreements with Individual and Messrs. Bryan and Weibling
granting to them the same indemnification granted to other non-management
directors of the Company.
3. SOLE WIRELESS PLAY
3.1 EXCLUSIVE WIRELESS PARTICIPATION. From and after the Effective Date, neither
Investor nor any Controlled Affiliate shall: (i)except as contemplated by
Section 3.2, directly or
-2-
indirectly acquire or seek to acquire any license granted by the FCC for two-way
terrestrial-based mobile wireless communications systems, (ii)except for an
investment constituting not more than 3% of the outstanding common stock of ATT
Corporation owned by Individual and for individual investments of not more than
$100,000, own any direct or indirect equity interest in a Person that engages or
proposes to engage in two-way terrestrial-based mobile wireless communications
systems in the region that includes any part of North America or South America,
(iii)serve as an officer, director, employee, manager or consultant of or to a
Person that engages or proposes to engage in two-way terrestrial-based mobile
wireless communications systems in the region that includes any part of North
America or South America unless in each such instance the opportunity to acquire
the FCC license, own the equity interest or serve in that capacity (each a
"WIRELESS OPPORTUNITY") was first offered to the Company pursuant to Section3.2.
Ownership by Investor or any Controlled Affiliate of securities of Western
Wireless, Inc. constituting less than three percent (3%) of its outstanding
capital stock and the purchase of additional securities therein for aggregate
consideration of not more than $1,000,000 in the aggregate shall not be a
violation of this Section3.1 or Section3.2. The terms of this Section3.1 shall
continue to apply to Investor and all Controlled Affiliates until February 13,
2004. As used in this Agreement, "MOBILE" systems include all vehicular and
other portable (hand held or otherwise) systems.
3.2 FIRST RIGHT TO WIRELESS OPPORTUNITY. If Investor or any of the other
Controlled Affiliates becomes aware of a Wireless Opportunity, that Person shall
give notice to the Company under Section6.2 of the Wireless Opportunity and, to
the extent known, of the circumstances surrounding the Wireless Opportunity. As
promptly as practicable following such notification, the President shall report
to the Board his recommendation concerning whether the Company should pursue the
Wireless Opportunity. Following the report of the President, not more than
30days after such notification, a majority of Disinterested Directors will elect
whether or not to pursue such Wireless Opportunity. If the Company elects not to
pursue such Wireless Opportunity, Investor, Individual and their respective
Affiliates shall be free to pursue that Wireless Opportunity for its, his or
their own account on terms no more favorable to the other party than those
offered to the Company. The Company, Investor and Individual shall use their
respective good faith best efforts to create and put in place appropriate
mechanisms to ensure reasonable and effective protection for confidential
information of Investor or Individual disclosed pursuant to this Section3.2.
3.3 CONFIDENTIAL INFORMATION AND ACTUAL OR POTENTIAL CONFLICTS. If Investor,
Individual or any of the other Controlled Affiliates pursued a "wireless
opportunity" under Section8.3(b) of the SPA or pursues a Wireless Opportunity
for its or their own account as permitted by Section3.2, the Company, Investor
and Individual shall use their respective good faith best efforts to create and
put in place appropriate mechanisms to ensure reasonable and effective
protection for confidential information of the Company and otherwise to minimize
the prospect of any apparent or actual conflict of interest between pursuit of
such Wireless Opportunity and the conduct of the Company's wireless
communications businesses. The obligations of Investor and Individual under the
preceding sentence shall continue for so long as it or he, or any of their
respective Affiliates, equity holders, officers, directors, managers, employees
or nominees are or is proposed to be a Director or an officer of the Company,
and shall be in addition to, and not a limitation on or in lieu of, any other
obligations imposed on such Persons or entities pursuant to applicable Law or
fiduciary obligations.
-3-
4. REPRESENTATIONS AND WARRANTIES
4.1 By COMPANY. The Company hereby represents and warrants to Investor and
Individual that:
a. The Company is a corporation duly organized, validly existing and in good
standing under the laws of the state of Delaware and has all requisite
corporate or other power and authority to carry on its business as now
conducted, and to enter into and to perform this agreement.
b. The Company has taken all necessary corporate action to authorize the
execution and delivery and, when the actions necessary to the Effective
Date have occurred, the performance of this Agreement. This Agreement has
been duly executed and delivered by the Company and constitutes a valid and
binding agreement of the Company enforceable against the Company in
accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
of general application which may affect the enforcement of creditors'
rights generally and by general equitable principles.
c. To the best of the Company's knowledge, it has complied with all of its
obligations and performed all of its duties under the SPA to and
including the Effective Date, and it is not aware of any existing breach by
Individual or Investor of their respective obligations or duties under the
SPA.
4.2 BY INVESTOR. Investor hereby represents and warrants to the Company that:
a. The Investor is a limited liability company duly organized, validly
existing and in good standing under the laws of the state of Washington
and has all requisite limited liability company or other power and
authority to carry on its business as now conducted, and to enter into and
to perform this agreement.
b. The Investor has taken all necessary action to authorize the execution and
delivery and the performance of this Agreement. This Agreement has been
duly executed and delivered by the Investor and constitutes a valid and
binding agreement of the Investor enforceable against the Investor in
accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
of general application which may affect the enforcement of creditors'
rights generally and by general equitable principles.
c. To the best of the Investor's knowledge, it has complied with all of its
obligations and performed all of its duties under the SPA to and
including the Effective Date, and it is not aware of any existing breach by
the Company of its obligations and duties under the SPA.
4.3 BY INDIVIDUAL. Individual represents and warrants to the Company that:
a. Individual is a resident of the State of Washington and is authorized to
execute, deliver and perform this Agreement without the need to obtain
the consent or
-4-
approval of any third party (other than any such consent or approval
already obtained). This Agreement has been duly executed and delivered by
Individual and constitutes a valid and binding agreement of Individual
enforceable against Individual in accordance with its terms, except as may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
and other similar laws of general application which may affect the
enforcement of creditors' rights generally and by general equitable
principles.
b. Individual Controls Eagle River and Eagle River has taken all necessary
corporate action to authorize the termination of the Management Support
Agreement.
c. To the best of the Individual's knowledge, he and his Controlled Affiliates
have complied with all of his and their respective obligations and
performed all of its duties under the SPA to and including the Effective
Date, and he is not aware of any existing breach by the Company of its
obligations and duties under the SPA.
5. DEFINITIONS
5.1 CERTAIN DEFINITIONS
"AFFILIATE" means, as to any Person, another Person that directly or indirectly
through one or more intermediaries, Controls, or is Controlled by, or is under
common Control with, such Person. For the purposes of this definition, "CONTROL"
when used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise; the terms "CONTROLLING" and "CONTROLLED" have meanings
correlative to the foregoing; provided, that the term "CONTROLLED AFFILIATE" as
used herein includes Individual and any Affiliate of Individual that is, at the
relevant time, Controlled by Individual; and further provided, that the Company
and Investor shall not be deemed to be direct or indirect Affiliates of each
other.
"BOARD" means the Board of the Company.
"DIRECTORS" means any and all of the duly elected members of the Board.
"DISINTERESTED DIRECTOR" means with respect to any contract or transaction
between the Company and any other Person that is the subject of any vote by the
Board, members of the Board who would not be a party to, or who would not have a
financial interest in, such contract or transaction (an "INTERESTED PARTY") and
are not at the time of such vote and are not expected to become following such
vote either Directors of the Company who are nominees of, or who are Affiliates
of, such an Interested Party or officers, directors, or employees of, and do not
have (and are not expected to receive) a financial interest in, such an
Interested Party. For purposes of this definition, no person would be deemed not
to be a Disinterested Director solely because such person is the beneficial
owner of any voting securities of the Company, but no Director that is an
Affiliate of Investor or of any of its Controlled Affiliates shall be a
Disinterested Director
-5-
for purposes of considering any Wireless Opportunity or any transaction with
Investor or any of its Affiliates.
"FCC" means the Federal Communications Commission.
"GOVERNMENTAL AUTHORITY" means any governmental or political subdivision or
department thereof, any governmental or regulatory body, commission, board,
bureau, agency or instrumentality, or any court or arbitrator or alternative
dispute resolution body, in each case whether domestic or foreign, federal,
state or local.
"LAW" means any domestic or foreign, federal, state or local law, statute,
ordinance, rule or regulation.
"PERSON" means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other, entity of whatever nature or a
group, including without limitation any pension, profit sharing or other benefit
plan or trust.
"REQUIRED LETTER" means an undated resignation letter from the individual
being elected which resignation can be accepted by the Board if the stockholders
of the Company do not ratify his election at the next annual meeting of the
Company's stockholders.
5.2 OTHER DEFINITIONAL PROVISIONS.
a. All terms defined in this Agreement have the defined meanings when used in
any certificate, report or other documents made or delivered pursuant
hereto or thereto, unless the context otherwise requires.
b. Terms defined in the singular have a comparable meaning when used in the
plural, and vice versa.
c. As used herein, the neuter gender also denotes the masculine and feminine,
and the masculine gender also denotes the neuter and feminine, where the
context so permits.
d. The words "INCLUDE," "INCLUDING" and "OR" mean without limitation by
reason of enumeration.
6. GENERAL
6.1 PUBLIC ANNOUNCEMENTS. Except as required by Law, the exercise of fiduciary
duty or the policies or rules of any stock exchange (or the NASDAQ-NMS) on which
the Company's securities are listed, the form and content of all press releases
or other public communications of any sort relating to the subject matter of
this Agreement, and the method of their release, or publication thereof by any
of the parties hereto or their respective Affiliates, shall be subject to the
prior approval of Investor and the Company, which approval shall not be
unreasonably withheld or delayed.
-6-
6.2 NOTICES. All notices, demands, requests, certificates or other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given when (i)hand delivered, (ii)sent by facsimile transmission
or by tested or otherwise authenticated telex or cable, (iii)one day after sent
by commercial courier guaranteeing next business day delivery or (iv)five days
after posting in the United States mail having been sent by registered or
certified mail return receipt requested, addressed as follows:
(i) if to Company:
Nextel Communications, Inc.
2001 Edmund Halley Drive
Reston, VA 20191
Attention: Timothy M. Donahue, President
Facsimile: (703)433-4352
with a copy to:
Nextel Communications, Inc.
2001 Edmund Halley Drive
Reston, VA 20191
Attention: Leonard J. Kennedy, General Counsel
Facsimile: (703)433-4846
(ii) if to Individual or Investor:
Digital Radio, L.L.C.
2320 Carillon Point
Kirkland, WA 94104-2675
Attention: Dennis Weibling
Facsimile: (206)828-8060
with a copy to:
Digital Radio, L.L.C.
2320 Carillon Point
Kirkland, WA 94104-2675
Attention: J. Timothy Bryan
Facsimile: (206)828-8060
Any communication delivered after business hours or on a Saturday, Sunday or
legal holiday at the place designated in such delivery shall be deemed for
purposes of computing any time period hereunder to have been delivered on the
next business day.
6.3 EXPENSES. Each party shall bear its own expenses, including the fees and
expenses of any attorneys, accountants, investment bankers, brokers, finders or
other intermediaries or other Persons engaged by Investor or the Company,
incurred in connection with this Agreement or the other agreements contemplated
hereby.
-7-
6.4 BENEFITS; ASSIGNMENT. The provisions of this Agreement shall be binding
upon, and inure to the benefit of, Investor and the Company and their respective
successors and permitted assigns. Nothing in this Agreement, express or implied,
is intended to confer upon any Person other than Investor and the Company and
their respective successors and permitted assigns any rights, remedies or
obligations under or by reason of this Agreement. None of the rights or
obligations of the Company hereunder may be assigned without the consent of
Investor. None of the rights of the Investor or Individual hereunder may be
assigned without the consent of the Company.
6.5 ENTIRE AGREEMENT; AMENDMENT AND WAIVER. This Agreement (which includes the
Exhibits and Annexes hereto) and the other documents to be executed pursuant to
Section 1.2 and the Required Letters to which either Investor or any of its
Controlled Affiliates or the Company is a party constitute the entire agreement
between Investor and its Controlled Affiliates, on the one hand, and the
Company, on the other hand, with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings, both written and
oral, between Investor and its Controlled Affiliates, on the one hand, and the
Company, on the other hand, with respect to the subject matter hereof and
thereof. This Agreement may not be amended, supplemented or otherwise modified
except by an instrument in writing signed by each of the parties hereto. No
waiver by either party hereto of any of the provisions hereof shall be effective
unless explicitly set forth in writing and executed by such party. Any waiver by
a party of a breach of this Agreement shall not operate or be construed as a
waiver of any subsequent breach.
6.6 HEADINGS. The headings in this Agreement are for convenience only and shall
not affect the construction hereof.
6.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT
TO ANY CONFLICTS OF LAW PRINCIPLES OF SUCH STATE.
6.8 REMEDIES.
a. Each of Investor and its Controlled Affiliates, on the one hand, and the
Company, on the other hand, acknowledges that the other party (or parties)
would not have an adequate remedy at Law for money damages in the event
that any of the covenants or agreements of such party in this Agreement was
not performed in accordance with its terms, and it is therefore agreed that
each of Investor and its Controlled Affiliates, on the one hand, and the
Company, on the other hand, in addition to and without limiting any other
remedy or right such party may have, shall have the right to an injunction
or other equitable relief in any court of competent jurisdiction, enjoining
any such breach and enforcing specifically the terms and provisions hereof,
and each of Investor and its Controlled Affiliates, on the one hand, and
the Company, on the other hand, hereby waive any and all defenses such
party may have on the ground of lack of jurisdiction or competence of the
court to grant such an injunction or other equitable relief.
-8-
b. All rights, powers and remedies provided under this Agreement or otherwise
available in respect hereof at Law or in equity shall be cumulative and not
alternative, and the exercise or beginning of the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any
other such right, power or remedy by such party.
6.9 SEVERABILITY. In the event that any provision of this Agreement is deemed
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
6.10 COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, and it shall not be necessary in
making proof of this Agreement to produce or account for more than one such
counterpart.
6.11 COMMUNICATIONS ACT. Nothing in this Agreement is intended or shall be
construed to diminish or affect the control of the Company or any of its
subsidiaries over any FCC licenses held by the Company or such subsidiary in any
manner prohibited by the Communications Act of 1934, as amended, or the rules
and regulations issued by the FCC.
6.12 FURTHER ASSURANCES. Each of Investor and Individual (and his Controlled
Affiliates, if appropriate) will cooperate with the Company in effecting the
amendment or termination of other documents (such as, without limitation, the
Company's Certificate of Incorporation and By-Laws) that may, in the Company's
reasonable judgment, be necessary or desirable to reflect, confirm or conform to
the matters and actions contemplated in this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
NEXTEL COMMUNICATIONS, INC
By: /s/ Leonard J. Kennedy
------------------------------------
Name: Leonard J. Kennedy
Title: Senior Vice President and
General Counsel
DIGITAL RADIO, L.L.C
By: /s/ Craig O. McCaw
------------------------------------
Name: Craig O. McCaw
Title: Chairman and Chief Executive
Officer
/s/ Craig O. McCaw
----------------------------------------
CRAIG O. MCCAW,
for his sole and separate estate
-9-
EXHIBIT 10.11
AMENDMENT
TO
MARCH AGREEMENT
BY AND AMONG
NEXTEL COMMUMCATIONS, INC.,
DIGITAL RADIO, L.L.C.,
AND CRAIG O. MCCAW
EFFECTIVE AS OF
OCTOBER 3, 2003
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
1. Wireless Opportunity; Corporate Opportunity .......................................................... 1
2. Company Right to Buy Excess MMDS ..................................................................... 2
3. Financing for Major Transactions ..................................................................... 2
4. Notice and Exercise Procedure for Company Right to Purchase .......................................... 3
4.1 Channel Listing and Update ....................................................................... 3
4.2 Related Assets ................................................................................... 5
4.3 Company Exercise of Right ........................................................................ 5
5. Company Swap Rights .................................................................................. 6
6. Company Right of First Refusal ....................................................................... 7
7. Closing Under Company Right to Buy and Swap Rights ................................................... 8
7.1 Closing Timing and Deliveries .................................................................... 8
7.2 Conditions to All Parties' Obligations ........................................................... 9
7.3 Conditions to Acquirer's Obligation to Close ..................................................... 10
7.4 Conditions to Transferor's Obligation to Close ................................................... 11
7.5 Representations and Warranties of Acquirer in Connection with a Closing .......................... 11
7.6 Representation and Warranties of Transferor in Connection with a Closing ......................... 12
7.7 Pre-Closing Deliveries; Post-Closing Adjustments; Subsequent Closings; Further Assurances ........ 16
7.8 Claims for Breach ................................................................................ 17
7.9 Taxes ............................................................................................ 17
8. Convenants ........................................................................................... 17
8.1 Covenants ........................................................................................ 17
9. Representations and Warranties ....................................................................... 19
9.1 By Investor ...................................................................................... 19
9.2 By Individual .................................................................................... 19
9.3 By the Company ................................................................................... 20
10. Definitional Provisions .............................................................................. 20
10.1 Definitions ..................................................................................... 20
10.2 Other Definitional Provisions .................................................................. 20
11. General .............................................................................................. 24
</TABLE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
<S> <C>
11.1 Arbitration .................................................................................... 24
11.2 Public Announcements ........................................................................... 25
11.3 Notices ........................................................................................ 25
11.4 Expenses ....................................................................................... 26
11.5 Benefits; Assignment ........................................................................... 26
11.6 Entire Agreement; Amendment and Waiver ......................................................... 26
11.7 Headings ....................................................................................... 26
11.8 Governing Law .................................................................................. 26
11.9 Severability ................................................................................... 26
11.10 Counterparts ................................................................................... 27
</TABLE>
-ii-
AMENDMENT
TO
MARCH AGREEMENT
This Amendment effective as of October 3, 2003 (this "AMENDMENT") to amend
the Agreement dated as of March 5, 2003 (the "MARCH AGREEMENT") by and among
Nextel Communications, Inc., a Delaware corporation (the "COMPANY"), Digital
Radio, L.L.C., a Washington limited liability company ("INVESTOR") and Craig O.
McCaw ("INDIVIDUAL").
RECITALS
A. Subject to the terms and conditions below, the parties have agreed to
resolve a dispute as to the applicability of the "Wireless Opportunity"
provisions of the March Agreement by expressly permitting Investor and
Controlled Affiliates to acquire owned and leased MMDS Spectrum without first
offering the opportunity to the Company.
B. In order to resolve the dispute between the parties, Investor,
Individual and their respective Controlled Affiliates have agreed to give the
Company the rights on the terms and subject to the conditions described herein
(1)until August 13, 2004 to acquire any channels of owned or leased MMDS
Spectrum in excess of 6 channels owned or leased in a BTA; (2) to swap certain
channels of owned or leased MMDS Spectrum; and (3) a right of first refusal on a
sale of owned or leased MMDS Spectrum to a third party.
C. Subject to and conditioned upon Investor and Individual entering into
this agreement, the Board of the Company has renounced any interest or
expectancy of the Company in excluding Investor and Individual from certain MMDS
Spectrum acquisitions more specifically identified below.
AGREEMENT
1. WIRELESS OPPORTUNITY; CORPORATE OPPORTUNITY.
(a) The parties agree that acquisition of MMDS Spectrum by Investor and
any Controlled Affiliate will not be subject to the provision of Section 3.1 or
3.2 of the March Agreement.
(b) Except as stated in Section 1(a), nothing in this Amendment modifies
or waives any provision of the March Agreement. Except as modified by Section 1
(a), the March Agreement remains in full force and effect.
(c) The Company, having been granted the rights set forth in this
Amendment with respect to MMDS Spectrum, waives and will make no claim that the
acquisition of MMDS Spectrum by Individual (or by entities under his control)
constitutes a usurpation of a corporate opportunity of the Company, if such
acquisition (i) was the subject of a notice to the Company under the March
Agreement (or its predecessor); (ii) was discussed prior to October 3, 2003, but
had not been the subject of a written offer; or (iii) occurs after October
3, 2003.
2. COMPANY RIGHT TO BUY EXCESS MMDS.
(a) The Company has the right to acquire under Section 4 from Investor and
from any Controlled Affiliate (each, a "COM ENTITY") any MMDS Spectrum in excess
of Six Retained Channels in any BTA that are owned by, leased to, or subject to
contract for purchase or lease by a COM Entity.
(b) "SIX RETAINED CHANNELS" means a total of six MMDS and/or ITFS channels
in any BTA that are owned, leased or subject to a contract for purchase or lease
by the COM Entities. The proportion of owned and leased channels in the Six
Retained Channels will be in the same proportion as the proportion of owned and
leased spectrum for the aggregate COM Entity MMDS Spectrum in such BTA Including
both (i) channels owned or leased or subject to a contract for purchase or lease
on August 14, 2004 that are to be included in the Channel Listing and Update,
and (ii) channels acquired pursuant to an Acquisition Agreement that was subject
to Section 3 (clauses (i) and (ii), the "COM ENTITY CHANNELS"). If the COM
Entities acquires six or more MMDS and/or ITFS channels pursuant to an
Acquisition Agreement and the Company does not exercise its rights under Section
3, then, at Investor's election, either (i) all channels so acquired will
constitute the Six Retained Channels for the applicable geographic area, and the
Company will be entitled to acquire all COM Entity Channels in that geographic
area that were not acquired under the Acquisition Agreement, or (ii) the Six
Retained Channels will be determined pursuant to this paragraph without regard
for whether they were acquired pursuant to an Acquisition Agreement, provided
that in such event, all channels in excess of the Six Retained Channels in each
applicable geographic market will be subject to the provisions of Section 4. If
there are not 6 channels available that are licensed to provide coverage to the
entire BTA, the six channel requirement will be met by permitting the COM
Entities to retain one or more sets of six channels with non-overlapping foot
prints that, within any set of retained channels, cover comparable geographic
areas in the BTA, or, if such channels do not provide the COM Entities with
coverage to all geographic areas in the BTA that were covered by the COM Entity
Channels on August 13, 2003, up to 6 channels that provide such coverage. If the
channels to be retained have overlapping footprints so that the COM Entities
have the use of more than six channels in any part of a BTA, the COM Entities
will as part of the Closing if the Company exercises its rights under Section 4
enter into agreements with a member of the Nextel Group to provide rights to the
Nextel Group member to use such channels so that the COM Entities do not have
the use of more than six channels in any part of the BTA. If the Investor and
the Company cannot agree on the terms for the Nextel Group's right to use such
channels, then, not sooner than 30 days after giving notice that it will
exercise that right if the parties do not agree, either party can initiate
arbitration under Section 11.1.
(c) The channels to be retained by the COM Entities will be mutually
agreed by Investor and the Company, with each party acting reasonably and in
good faith to determine the channels to be retained based on actual or
prospective requirements of the business of the COM Entities and the Nextel
Group. If the Investor and the Company cannot agree by August 20, 2004 on the
channels to be included in the Six Retained Channels, either party can initiate
arbitration under Section 11.1.
3. FINANCING FOR MAJOR TRANSACTIONS.
-2-
(a) If on or before August 13, 2004 Investor or a Controlled Affiliate has
entered into a binding commitment to acquire ownership or leasehold interests
in MMDS Spectrum with a third Person (an "ACQUISITION AGREEMENT") and the cash
consideration payable under the Acquisition Agreement for owned and/or leased
MMDS Spectrum that will be acquired is in excess of $100 million, Investor will
give notice to the Company (the "SECTION 3 NOTICE"), together with a copy of the
Acquisition Agreement (including all schedules and exhibits). The Company will
have 30 days after receiving the Section 3 Notice to elect whether to exercise
its right to acquire any MMDS Spectrum being acquired under the Acquisition
Agreement in excess of Six Retained Channels. If the Company does not elect to
exercise its right under this Section 3, and subject to the provisions of
Section 2(b), the provisions of Section 4 do not apply to the channels
identified in the applicable Section 3 Notice. For the avoidance of doubt,
Sections 5 and 6 will apply to the channels identified in the Section 3 Notice.
(b) If the Company timely elects to exercise its right:
(i) the Company will be required to pay on the later of (a) 60 days
after receiving the Section 3 Notice, or (b) the date when payment
is due under the Acquisition Agreement, the consideration payable
for the excess MMDS Spectrum the Company elects to acquire; and
(ii) the COM Entity will proceed as promptly as practicable to transfer
to the Company, on terms consistent with those set forth under
Section 7, the MMDS Spectrum in excess of Six Retained Channels that
the Company elects to acquire.
4. NOTICE AND EXERCISE PROCEDURE FOR COMPANY RIGHT TO PURCHASE.
4.1 CHANNEL LISTING AND UPDATE.
(a) On June 14, 2004, Investor will deliver to the Company a list (the
"CHANNEL LISTING") setting out:
(A) for each MMDS channel owned by a COM Entity, and for each MMDS
channel under contract to be acquired by a COM Entity,
(1) the FCC licensee for the channel,
(2) the name of the COM Entity with rights to the channel,
(3) the BTA, call sign, or other identifying information for
the channel,
(4) the consideration paid (or to be paid) to the seller to
acquire that channel (not including legal expenses,
closing costs, or other costs associated with the
acquisition),
(5) the Carrying Costs incurred for such channel from the
date of the purchase by the COM Entity through the most
recent practicable date,
-3-
(6) an Asset Listing for all Related Assets associated with
each channel, and
(7) the Deal Expenses for the acquisition of that channel
and any Related Assets.
(B) for each MMDS or ITFS channel leased to a COM Entity, and for
each MMDS or ITFS channel under contract to give a COM Entity
the right to use the channel
(1) the FCC licensee for the channel,
(2) the name of the COM Entity with rights to the channel,
(3) the BTA, call sign, or other identifying information for
the channel,
(4) the consideration paid (or to be paid) to the seller in
connection with the assumption of that channel (or, if
more than one channel was covered by the lease, a pro
rata part thereof) (not including legal expenses,
closing costs, or other costs associated with the
acquisition),
(5) a summary of payments due under the lease,
(6) the Carrying Costs for such channel from the date the
spectrum lease was assumed by the COM Entity through the
most recent practicable date,
(7) an Asset Listing for all Related Assets associated with
each channel, and
(8) the Deal Expenses for the acquisition of the channel and
any Related Assets.
(b) On July 13, 2004, Investor will deliver an update to the Channel
Listing containing any new or additional information that would be included in a
Channel Listing as of that date (the "UPDATE").
(c) With the Channel Listing and with the Update, Investor will deliver to
the Company a true and correct copy of each lease or other agreement giving a
COM Entity the right to use a channel identified on the Channel Listing or the
Update and any Related Assets. The Company will have a period of 60 days to
review the Channel Listing and 30 days to review the Update. During the period
of the Company's review, Investor will provide any additional information
reasonably requested by the Company to facilitate its review and understanding
of the information reflected on the Channel Listing or the Update (including, in
each case, the Asset Listing that is a part thereof), the terms of any channel
or spectrum lease acquisition by the COM Entity, and the Carrying Costs.
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(d) Investor's disclosure obligation under this Section 4.1 will be
limited to the extent required by the terms of any confidentiality agreement or
similar undertaking in a contract with a third Person. Investor will identify
the channels where disclosure is limited by this Section 4.2(d).
4.2 RELATED ASSETS.
(a) "RELATED ASSETS" means the tower sites and equipment used by a
Transferor in connection with any BTATC License or BTATC Spectrum Lease on or
about the date of the Closing and any tower sites or equipment owned or held by
a Transferor solely for use in connection with any BTATC License or BTATC
Spectrum Lease. Subject to obtaining Third Party Consents, a Transferor will
transfer or assign in connection with the transfer or assignment of a channel or
spectrum lease, any Related Assets used, owned or held solely and exclusively in
connection with the channel or spectrum lease being transferred or assigned. If
a BTATC Spectrum Lease cannot be transferred at an initial Closing, Related
Assets associated with the channels subject to that lease will not be
transferred and the Use and Access Agreement (as defined below) for those
Related Assets will not be entered into unless and until the BTATC Spectrum
Lease is assigned. As to all other Related Assets (which relate solely to that
lease and not to any other BTATC License or BTATC Spectrum Lease that is being
transferred), subject to obtaining Third Party Consents, the Transferor and
Acquiror will enter into an agreement in a form to be agreed by the parties on
arm's-length terms allowing the Acquiror the use of and access to the Other
Related Assets (a "USE AND ACCESS AGREEMENT"). If the Transferor and Acquiror
cannot agree on the terms of the Use and Access Agreement, then, not sooner than
30 days after giving notice that it will exercise that right if the parties do
not agree, either party can initiate arbitration under Section 11.1.
(b) "ASSET LISTING" means a schedule identifying the Related Assets
relevant to the BTATC License(s) or BTATC Spectrum Lease(s) for a particular
transaction Closing which sets forth: (i) identifying information for each
channel; (ii) the tower sites then used or held for use in connection, with that
channel; (iii) whether the site is used solely for that channel or held for use
solely for that channel or is also used with other channels; (iv) the equipment
then used or held for use in connection with that channel; (v) whether the
equipment is used solely for that channel or held for use solely for that
channel or is also used with retained channels (whether owned or leased).
4.3 COMPANY EXERCISE OF RIGHT.
(a) On August 13, 2004, or, if later, 60 days after delivery of the
Channel Listing or 30 days after delivery of the Update, the Company has the
right to give notice to Investor that the Company will acquire in any BTA any or
all channels in excess of Six Retained Channels covered by any license owned (or
under contract to be owned) by, or covered by any lease (or under any lease
under contract to be acquired by) to a COM Entity (the "CALL NOTICE"). The
Closing of the transaction will occur pursuant to Article 7.
(b) Subject to obtaining any Third Party Consents and to the Company's
right to exclude a BTATC License or BTATC Spectrum Lease and Related Assets as
contemplated by Section 7.3(a), the Call Notice irrevocably obligates (i) the
Company, or another member of the
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Nextel Group designated by the Company, to buy and the relevant COM Entity to
sell the owned channels identified in the Call Notice together with their
Related Assets for a purchase price equal to the consideration paid (or to be
paid) to the seller to acquire that channel, plus Deal Expenses, plus the
Carrying Costs for those channels for the period the channel was owned by the
COM Entity and (ii) the Company to assume and the relevant COM Entity to assign
in relevant part the leases for the leased channels identified in the Call
Notice together with, their Related Assets for a purchase price equal to the sum
of (w) any consideration paid (or to be paid) to the lessor or transferor to
acquire the lease; plus (x) the assumption of all future obligations under the
lease; plus (y) Deal Expenses; plus (z) the Carrying Costs for those channels
for the period the channel was leased to the COM Entity.
5. COMPANY SWAP RIGHTS.
(a) Subject to the conditions of Section 5.2(b), until October 3, 2006,
the Company has the right to exchange:
(1) any MMDS channel licensed to a member of the Nextel Group in a
BTA for an MMDS channel licensed to a COM Entity In that BTA;
(2) subject to obtaining any Third Party Consents, any MMDS
channel leased to a member of the Nextel Group in a BTA for an
MMDS channel leased to a COM Entity in that BTA;
(3) subject to obtaining any Third Party Consents, either:
(i) any MMDS channel owned by a Member of the Nextel Group
in a BTA for an MMDS channel leased to a COM Entity in
that BTA; or
(ii) any MMDS Channel leased to a Member of the Nextel Group
in that BTA under a Qualifying Lease of ran MMDS Channel
owned by a COM Entity;
(b) An exchange under this Section 5.2(a) is not permitted unless: (i) the
channel that the Company receives in the exchange can be "paired" with another
channel owned or leased to a member of the Nextel Group under the orders issued
by the FCC in the MMDS Band Plan Proceeding; and (ii) the channels in any set of
two to be exchanged have overlapping footprints covering comparable geographic
areas in the BTA.
(c) For each exchange the parties will jointly determine whether the value
being exchanged, including coverage and other terms of any license, spectrum
lease costs (taking into account the term of the lease and renewal rights as
well as payments due thereunder) are comparable or whether one of the parties is
losing value in the exchange. If a party is losing value, the parties will
negotiate in good faith a payment to compensate the party losing value which
payment will be due and payable at the closing of the exchange. If after 60
days, the parties cannot agree on whether compensation is payable or on the
amount of compensation to be paid, either party can submit the matter to
arbitration under Section 11.1.
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(d) Any exchange closing under this Section 5 will include Related Assets
for the channels being exchanged and will be pursuant to Article 7 with (i) a
designated Controlled Affiliate of the Company as Acquirer for the channel being
transferred by the COM Entity and as Transferor for the channel being
transferred by the member of the Nextel Group; and (ii) a COM Entity designated
by Investor as the Acquirer for the channel being transferred by the Company (or
its Affiliate) and as Transferor for the channel being transferred by the COM
Entity.
(e) Nextel will pay all reasonable costs associated with moving customers
of both parties off the channels exchanged pursuant to this Section 5 and onto
the other channel to the exchange.
(f) At Nextel's request Investor will prepare a Channel Listing (in
addition to the Channel Listing required under Section 4.1) to be delivered not
sooner than 90 days and not later than 120 days after delivery of the request. A
Channel Listing prepared pursuant to this Section 5(1) does not need to include
any information regarding Deal Expenses, except for Deal Expenses related to the
exchange, if any are then known.
6. COMPANY RIGHT OF FIRST REFUSAL.
(a) If, on or before October 3, 2006, any COM Entity receives from or
otherwise negotiates with a third Person all the material terms of an offer to
purchase any owned or leased MMDS Spectrum that (i) a COM Entity acquired or is
subject to a contract for purchase or lease with a COM Entity on or before
August 13, 2004, or (ii) that was received in exchange for MMDS Spectrum
described in clause (i), and if the COM Entity intends to pursue such sale, then
Investor will provide to the Company a notice (the "OFFER NOTICE") identifying
the purchaser, the MMDS Spectrum to be sold, the cash and any other
consideration price to be paid or received, and all the other material terms of
the proposed transaction ("OFFER TERMS"), and will deliver copies of all the
documents with the third Person or its Affiliates relating to the proposed sale.
If the Offer Terms include non-cash consideration, the Offer Notice will include
the COM Entity's valuation of the non-cash consideration. The Company may
request and the COM Entity will provide any information readily available to the
COM Entity regarding the value of non-cash consideration. If the Company
disagrees with the value assigned to the non-cash consideration, and if the
parties cannot agree on the value, either party can initiate arbitration under
Section 11.1.
(b) A transaction involving a swap or exchange of MMDS Spectrum that
includes some cash consideration is not subject to the provisions of this
Section 6 unless the amount of cash is more than half the value of the
transaction. A transaction is not subject to the provisions of this Section if
it involves the sale of a business that has launched commercial service and the
sale includes only that MMDS Spectrum then being used to provide commercial
service. The sale of a business that has launched commercial service is subject
to the provisions of this Section if it includes MMDS Spectrum that is not then
being used to provide commercial service, and the Offer Notice and Offer Terms
will describe the business as well as the MMDS Spectrum, and, if the Company
elects to purchase, it must purchase the MMDS Spectrum and the business that the
third Person offered to purchase.
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(c) The delivery of an Offer Notice is an irrevocable offer by the COM
Entity to transfer the MMDS Spectrum (and, if applicable, any business described
in the Offer Terms) that is subject to the Offer Notice to the Company (or any
controlled Affiliate, designated by the Company) for a cash purchase price equal
to the total value of the consideration described in the Offer Terms and on the
other terms set forth in the documents with the third Person that accompanied
the Offer Notice. The Company will have a 30 day period in which to accept such
offer as to all (but not less than all) of the MMDS Spectrum (and, if
applicable, any business described in the Offer Terms) covered by the Offer
Notice. Such acceptance will be irrevocable. If the Company exercises its right,
the closing of the transaction will occur as provided in the offer from the
third Person and, to the extent not defined by the Offer Terms, in accordance
with Sections 7.1 through 7.8. If the Offer Terms include the sale of a
business, the representations and warranties related to the business will be
those set forth in the Offer Terms, or, if there are none stated in the Offer
Terms, customary representations and warranties, as the parties may agree. If
the parties cannot agree, then, not sooner than 30 days after giving notice that
it will exercise that right if the parties do not agree, either party can
initiate arbitration under Section 11.1.
(d) If the Company rejects or fails to timely exercise its right to
purchase under Section 6.(a), the COM Entity will be entitled to consummate the
sale of all (but not less than all) of the owned or leased MMDS Spectrum (and,
if applicable, any related business) described in the Offer Notice to the third
Person identified in the Offer Terms at a price and other terms not less
favorable to the purchaser in any material respect than the Offer Terms. If a
closing to consummate a sale permitted by this Section 6 has not occurred within
one year of the Offer Notice, the sale may not be completed without repeating
the procedures of this Section 6.
(e) If a COM Entity did an exchange that included both MMDS Spectrum that
was acquired or to which rights were acquired by a COM Entity before August 13,
2004, and MMDS Spectrum acquired after that date, and if there is a subsequent
sale of fee MMDS Spectrum received in the exchange, then it will be presumed for
purposes of this Section 6 that the MMDS Spectrum being sold was, to the extent
of the value of the pre-August 13, 2004 spectrum, received in exchange for the
pre-August 14, 2004 MMDS Spectrum.
7. CLOSING UNDER COMPANY RIGHT TO BUY AND SWAP RIGHTS.
7.1 CLOSING TIMING AND DELIVERIES.
(a) The initial closing of the transfers and assignments contemplated by
Section 4 or Section 5 (each a "CLOSING") will each occur 14 days after the
conditions set forth in Section 7.2 through 7.4 have been first satisfied or
waived.
(A) Each Acquiror will deliver at the initial Closing:
(1) cash in an amount equal to the purchase price payable,
less the purchase price for assets or rights that cannot
transfer at that Closing because Third Party Consents
have not been obtained, plus any Carrying Costs payable;
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(2) an executed instrument of assignment and assumption in
the form agreed by the parties assuming Transferor's
obligations under any agreements relating to spectrum
leases or Related Assets to be transferred for which
Third Party Consents are not required or have been
obtained;
(3) evidence that any amendments, modifications or other
consideration due to third Persons as contemplated by
Section 8.1(d) have been made and/or delivered;
(4) executed Use and Access Agreements for any Related
Assets that are to be made available to the Acquiror as
set forth in Section 4.2(a).
(5) the officer's certificate described in Section 7.4(c).
(B) Each Transferor will deliver at the initial Closing:
(1) an executed instrument of assignment and assumption in
the form agreed by the parties transferring Transferor's
rights under any agreements relating to spectrum leases
or Related Assets to be transferred for which Third
Party Consents are not required or have been obtained;
(2) a bill of sale (or one or more real property deeds, if
there are Owned Towers to be transferred) for any
Related Assets that are to transfer for which any Third
Party Consents are not required or have been obtained;
(3) executed Use and Access Agreements for any Related
Assets that are to be made available to the Acquiror as
set forth in Section 4.2(a).
(4) the officer's certificate described in Section 7.3(c).
(b) If an initial Closing has occurred, but at the time of the initial
Closing there were Third Party Consents to obtain in order to transfer all the
assets and rights that are to be transferred under the Call Notice, then on the
180th day after the initial Closing, or on such other day as the parties may
agree, there will be a subsequent closing and the parties will make the
deliveries described in Section, 7.1(a) with respect to the additional assets
and other rights that can be transferred at the time of the subsequent Closing.
7.2 CONDITIONS TO ALL PARTIES' OBLIGATIONS. The obligations of each
Acquiror on the one hand and each Transferor on the other hand to effect a
Closing are subject to the satisfaction (or waiver by the Company and Investor)
at or prior to the Closing of each of the following conditions:
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(a) No temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction will be in effect or
pending which materially delays, restrains, enjoins, or seeks to prohibit the
Closing.
(b) Any waiting period under the HSR Act applicable to the transactions to
occur at the Closing will have expired or been earlier terminated.
(c) The transfer of any BTATC Licenses will have been authorized by a
Final Order.
(d) If the Closing is occurring under Section 5, any Third Party Consent
necessary to exchange either of the BTATC Spectrum Leases in any set to be
exchanged will have been obtained.
7.3. CONDITIONS TO ACQUIROR'S OBLIGATION TO CLOSE. The obligation of the
Acquiror to effect a Closing and to pay the consideration due at that Closing is
subject to the satisfaction (or waiver by Acquiror) at or prior to the Closing
of each of the following conditions:
(a) The representations and warranties of each Transferor set forth in
Section 7.6 will be true in all material respects as of the date of the Closing,
or,
(A) if any representation or warranty relating to a BTATC License
is not true in any material respect because of any action or
inaction by a COM Entity, or because of a discovery of facts
or circumstances not known by a COM Entity at the time it was
acquired, then (A) the parties have agreed to an adjustment of
the purchase price that takes into account the impairment and
the BTATC License and Related Assets will be transferred; or
(B) the Acquiror has elected not to purchase the affected
BTATC License and Related Assets and the purchase price has
been adjusted; and
(B) if any representation or warranty relating to a BTATC Spectrum
Lease is not true in any material respect because of any
action or inaction by a COM Entity, or because of a discovery
of facts or circumstances not known by a COM Entity at the
time it was acquired, then (A) the parties have agreed to an
adjustment of the purchase price that takes into account the
impairment and the BTATC Spectrum Lease and Related Assets
will be transferred; or (B) the Acquiror has elected not to
acquire the affected BTATC Spectrum Lease and Related Assets
and the purchase price has been adjusted;
(C) if any representation or warranty relating to a Related Asset
is not true in any material respect because of any action or
inaction by a COM Entity, or because of a discovery of facts
or circumstances not known by a COM Entity at the time it was
acquired, the parties have either agreed (A) to an appropriate
adjustment or arrangement, or (B) the Acquiror has elected not
to acquire that Related Asset;
(D) if any representation or warranty related to a BTATC License
or BTATC Spectrum Lease is untrue in any material respect, and
Section 7.3(a)(A)
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and (a)(B) do not apply, then the Acquiror is reasonably
satisfied with the disclosures and any other information
provided by a Transferor in connection with any information
provided in any disclosure schedule delivered by a Transferor
under Section 7.6; and
(E) if any representation or warranty related to a Related Asset
is untrue in any material respect and Section 7.3(a)(C) does
not apply, then either (A) the Acquiror has elected not to
acquire the Related Asset and the BTATC License or BTATC
Spectrum Lease to which it relates, and the purchase price has
been adjusted; or (B) the Acquiror will close over the
inaccuracy that was disclosed, and waive any claim for breach
associated with the inaccuracy that was disclosed.
(b) Each Transferor and its Affiliates will have performed and complied
with all covenants and obligations to effect the Closing required by this
Agreement to be complied with or performed prior to the Closing.
(c) Acquiror will have received a certificate, dated the date of the
Closing, signed by an officer of each Transferor stating that the conditions of
Section 7.3(a) and (b) have been satisfied.
7.4 CONDITIONS TO TRANSFEROR'S OBLIGATION TO CLOSE. The obligation of the
Transferor(s) to effect the Closing is subject to the satisfaction (or waiver by
an Transferor) at or prior to the Closing of each of the following conditions:
(a) The representations and warranties of Acquiror set forth in Section
7.5 will be true in all material respects as of the date of the Closing.
(b) Acquiror and its Affiliates will have performed and complied with all
covenants and obligations to effect the Closing required by this Agreement to be
complied with or performed prior to the Closing.
(c) Transferors will have received a certificate, dated the date of the
Closing, signed by an officer of the Acquiror stating that the conditions of
Section 7.4(a) and (b) have been satisfied.
7.5 REPRESENTATIONS AND WARRANTIES OF ACQUIROR IN CONNECTION WITH A
CLOSING. At each Closing, Acquiror will represent and warrant to Transferor that
on the day of the Closing:
(a) Acquiror is an entity duly organized, validly existing and in good
standing under the laws of the state under which it was created and has all
requisite entity power and authority to carry on its business as now conducted
and to enter into and perform the documents to be delivered at the Closing.
(b) Acquiror has taken all necessary action for it to authorize the
execution, delivery and performance of each document to be delivered by it at
the Closing. Each agreement to be delivered by Acquiror at the Closing has been
duly executed and delivered by Acquiror and is a
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valid and binding agreement of Acquiror enforceable against Acquiror in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar Laws of general
application which may affect the enforcement of creditor's rights generally and
by general equitable principles.
(c) Execution, delivery and performance of each document to be delivered
at the Closing and the consummation of the transactions to be effected at the
Closing will not result in any violation of, conflict with, constitute a default
(with or without notice or lapse of time) under, or give rise to a right of
termination, cancellation, acceleration of, or the imposition of any lien, claim
or encumbrance under, or require any consent under or require a payment by
Acquiror or any of its Affiliates to any other Person pursuant to (i) the
organizational documents of Acquiror, (ii) any note, bond, debt instrument,
mortgage, indenture or other agreement or instrument to which Acquiror or any of
its Affiliates is a party, or (iii) any Law or Order by which Acquiror or any
of its Affiliates is bound.
(d) Except for those that have been made or obtained, no consent,
approval, license, permit or authorization Of or registration, declaration or
filing with any Governmental Authority is required to be obtained or made by
Acquiror or any of its Affiliates in connection with the Closing or the
transactions to be effected thereby.
(e) Acquiror has no obligation to any agent, broker, or other Person for
any fee or commission in connection with the Closing or the transactions to be
effected thereby.
7.6 REPRESENTATIONS AND WARRANTIES OF TRANSFEROR IN CONNECTION WITH A
CLOSING. At each Closing, each Transferor will represent and warrant to Acquiror
that, except as set forth on the Closing Date Schedules, on the date of the
Closing:
(a) Transferor is an entity duly organized, validly existing and in good
standing under the laws of the state under which it was created and has all
requisite entity power and authority to carry on its business as now conducted
and to enter into and perform the documents to be delivered at the Closing.
(b) Transferor has taken all necessary action for it to authorize the
execution, delivery and performance of each document to be delivered by it at
the Closing. Each agreement to be delivered by Transferor at the Closing has
been duly executed and delivered by Transferor and is a valid and binding
agreement of Transferor enforceable against Transferor in accordance with its
terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws of general application which
may affect the enforcement of creditor's rights generally and by general
equitable principles.
(c) Execution, delivery and performance of each document to be delivered
at the Closing and the consummation of the transactions to be effected at the
Closing will not result in any violation of, conflict with, constitute a default
(with or without notice or lapse of time) under, or give rise to a right of
termination, cancellation, acceleration of, or the imposition of any lien, claim
or encumbrance under, or require any consent under or require a payment by
Transferor or any of its Affiliates to any other Person pursuant to (i) the
organizational documents of Transferor, (ii) any note, bond, debt instrument,
mortgage, indenture, BTATC
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spectrum Lease, agreement relating to a Related Asset or other agreement or
instrument to which Transferor or any of its Affiliates is a party, or (iii) any
Law or Order by which Transferor or any of its Affiliates is bound.
(d) Except for those that have been made or obtained, no consent,
approval, license, permit or authorizations of or registration, declaration or
filing with any Governmental Agency is required to be obtained or made by
Transferor or any of its Affiliates in connection with the Closing or other
transactions to effected thereby.
(e) Transferor has no obligation to any agent, broker, or other Person for
any fee or commission in connection with the Closing or the transactions to be
effected thereby.
(f) Transferor has good and valid title to all of the tangible personal
property to be transferred at Closing, free and clear of any liens, claims or
encumbrances, other than mechanics, carriers, repairman's or similar liens
arising in the ordinary course of business or liens for taxes not yet due and
payable.
(g) Except as set forth on Schedule A: (i) the grant, renewal or
assignment of the BTATC Licenses to the existing licensee thereof was approved
by the FCC by Final Order, and (ii) the BTATC Licenses are validly issued and in
full force and effect. Except as set forth on Schedule A, there is no Proceeding
pending before the FCC or, to the Knowledge of the Transferor, threatened,
which, if determined as requested by the moving party or as indicated in any
document initiating such Proceeding, could result in the revocation,
modification, restriction, cancellation, termination or non-renewal of any BTATC
License or other action which is adverse to the Transferor, or the imposition of
a monetary fine. Sellers have made on a timely basis all payments to the United
States Government for those of the BTATC Licenses that are BTA authorizations.
(h) Except as set forth on Schedule A and Schedule D, (i) the facilities
subject to a BTATC License for which a certification or notification of
completion of construction has been filed with the FCC ("CONSTRUCTED
FACILITIES") are operating and at all times since August 1, 2003 have been
operating in material compliance with the FCC authorization therefor, the
Communications Act, and (ii) the Transferor is not transmitting from or
otherwise operating any facility mat is not the subject of an FCC authorization.
Except as set forth on Schedule D: (i) none of the facilities subject to a BTATC
License (x) is authorized pursuant to an authorization which is subject to
challenge before the United States Court of Appeals, or (y) is subject to any
lease, sub-lease or any agreement to make it available to a third Person; (ii)
no BTATC License is subject to (x) a revocation proceeding or (y) a pending
request for waiver of Section 21.303 of the FCC Rules; and (iii) no Constructed
Facilities are operating pursuant to special temporary or developmental
authority.
(i) Since January 1, 2001, all Annual FCC Reports required to be filed by
Transferor with the FCC with respect to the BTATC Licenses have been timely
filed. Except as set forth on Schedule D, to the Knowledge of Transferor, all
Annual FCC Reports filed for calendar year 2002 or thereafter are complete and
accurate.
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(j) Transferor has delivered to Acquiror true and complete copies of the
FCC Licenses for each BTATC License, and all documents filed in any Proceeding
pending at the FCC relating to the BTATC Licenses.
(k) For each BTATC Spectrum Lease, Schedule E sets forth: (i) the name of
the third-party lessor; (ii) the name of the Transferor entity that is the
lessee; (iii) the FCC call sign or file number covering the BTATC Spectrum
Lease; (iv) the channels and BTA in which the BTATC Spectrum Lease is used or
useful; and (v) the expiration date of the BTATC Spectrum Lease.
(l) Except as set forth on Schedule F, each BTATC Spectrum Lease is valid,
binding and in full force and effect, meets all requirements of Law, and is
enforceable in accordance with its terms. Transferor is the lessee under each
BTATC Spectrum Lease (by entry into the BTATC Spectrum Lease, assignment of such
lease, transfer of rights or other means) and has the sole right to use the
spectrum under each BTATC Spectrum Lease. To the Knowledge of Transferors, other
than the terms of each BTATC Spectrum Lease and the FCC Rules limiting the
duration of such BTATC Spectrum Leases, there are no facts or circumstances that
might (whether with or without notice, lapse of time or the occurrence of any
other event) preclude the renewal or extension of such BTATC Spectrum Leases in
the ordinary course. Except as set forth on Schedule F: (i) neither Transferors
nor to the Knowledge of Transferors any other party to any of the BTATC Spectrum
Leases has (x) failed to comply or is in breach or default thereunder or (y)
claimed in any written statement that the counterparty has failed to comply or
is in breach or default thereunder, and (ii) the consummation of the Closing
will not cause any violation, breach or default of any BTATC Spectrum Lease or
require the consent of the lessor thereunder. Except as set forth on Schedule F,
no party to any BTATC Spectrum Lease has claimed, and to the Knowledge of
Transferors, no party has threatened, in any written statement to any Transferor
that such party has a right to terminate the BTATC Spectrum Lease prior to or at
the Closing or to seek damages against any Transferor for the violation, breach
or default by any Transferor of such BTATC Spectrum Lease.
(m) Except as set forth on Schedule G, to the Knowledge of Transferors:
(i) the grant, renewal or assignment of the FCC licenses subject to the BTATC
Spectrum Leases (the "LEASED FCC LICENSES") to the existing licensee thereof was
approved by the FCC by Final Order; (ii) the Leased FCC Licenses are validly
issued and in full force and effect; and (iii) there is no Proceeding pending
before the FCC or threatened, which, if determined as requested by the moving
party or as indicated in any document initiating such Proceeding, could result
in the revocation, modification, restriction, cancellation, termination or
non-renewal of the Leased FCC Licenses or other action which is adverse to the
licensee or any of Transferor.
(n) Schedule H sets forth a true and complete list of all agreements
regarding the BTATC Licenses between any Transferor and any other MMDS licensee,
applicant, lessor or operator with respect to (i) interference to or from
adjacent markets or spectrum within any market affecting a BTATC License, (ii)
the coordination of adjacent market or in-market spectrum use, or (iii) other
matters concerned with the operation of channels in adjacent markets or in the
same market or agreements for the partitioning of any BTA that is the subject of
a BTATC License that is a BTA authorization. Transferors have delivered to
Acquiror true complete copies of all such agreements.
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(o) Schedule I sets forth, to the Knowledge of Transferors, a true and
complete list of all agreements regarding Leased FCC Licenses between a
Transferor or the licensee of such license and any other MMDS, MDS or ITFS
licensee, applicant, lessor or operator with respect to (i) interference to or
from adjacent markets or spectrum within any Market affecting a Leased FCC
License, (ii) the coordination of adjacent market or in-market spectrum use, or
(iii) other matters concerned with the operation of channels in adjacent markets
or in the same market or agreements for the partitioning of any BTA that is the
subject of a Leased FCC License that is a BTA authorization. Transferors have
delivered to Acquiror true and complete copies of all such agreements.
(p) Each of the Channel Listing and the Update delivered under Section 4
was true, correct and complete when delivered, and any additional information
through the date of the Closing that would have been part of the Channel Listing
or the Update had it been delivered at the Closing has been provided to
Acquiror.
(q) The Asset Listing relating to the Closing was true, correct and
complete when delivered, and any additional information through the date of the
Closing that would have been part of the Asset Listing had it been delivered at
the Closing has been provided to Acquiror.
(r) Each transmission tower owned by Transferor included in the Related
Assets that is being transferred as contemplated by Section 7.10(a) ("OWNED
TOWER") is being conveyed to Acquiror free and clear of any encumbrance that
would interfere with the use of the tower as presently used by Transferor.
Transferor has delivered to Acquiror true, correct and complete copies of any
agreements with third Persons relating to an Owned Tower. Transferor has
delivered to Acquiror true, correct and complete copies of each agreement (the
"TOWER LEASES") giving Transferor a right to use a tower that is not an Owned
Tower that is identified on the Asset Listing. Each of the Tower Leases is
valid, binding and in full force and effect. Transferor has not and is not and,
to the knowledge of Transferor, no other party to a Tower Lease has failed to
comply with or is in breach or default thereunder, except for such
non-compliance, breach or default that could not reasonably be expected to have
a material adverse effect on Transferor's right to use the tower as presently
used. Each Owned Tower is obstruction-marked and lighted to the extent required
by, and in accordance with, the rules and the regulations of the Federal
Aviation Administration and the FCC.
(s) Transferor has all licenses, permits, certificates, approvals,
registrations and other authorizations required from any Governmental Agency in
connection with the ownership and operation of any business conducted using the
BTATC Licenses and BTATC Spectrum Leases as currently conducted by Transferor
(collectively, "PERMITS") Transferor is not in material violation of any
Permit. For the avoidance of doubt, Permit does not include any FCC License.
(t) Schedule J identifies each maintenance agreement or other contract
providing for the maintenance, repair, servicing or other services obtained from
or due to third Persons with respect to any Related Assets. Transferor has
delivered true, correct and complete copies of each such agreement to Acquiror.
To the knowledge of Transferor, there is no material default by any party under
an agreement identified on Schedule N.
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(u) Transferor's use or operation of the Related Assets to be transferred
at the Closing is in compliance with applicable Environmental Laws in all
material respects. There are no pending or, to the knowledge of Transferor,
threatened actions by or before any Governmental Authority alleging that the use
or operation of the Related Assets to be transferred at the Closing by
Transferor is not in compliance with applicable Environmental Laws. Transferor
holds and is in compliance in all material respects with all Permits required
under Environmental Laws for the operations of the Related Assets to be
transferred at the Closing.
(v) All physical assets identified on the Asset Listing that will be
transferred to Acquiror as contemplated by Section 7.10(a) are sold AS IS, WHERE
IS, AND WITH ALL FAULTS.
7.7 PRE-CLOSING DELIVERIES; POST-CLOSING ADJUSTMENTS; SUBSEQUENT CLOSINGS;
FURTHER ASSURANCES.
(a) Not more than 30 days and not less than 10 days before the scheduled
date of any Closing, each Transferor will deliver to each Acquiror the Schedules
described in Section 7.6 that would be delivered by Transferor if the Closing
were occurring on the date of delivery and indicating any facts or circumstances
that are expected to change prior to the Closing. Unless the Acquiror agrees
otherwise, the Schedules so delivered will be updated by Transferor not less
than 5 days before the Closing. The final schedules required by Section 7,6 will
be delivered at Closing (the "CLOSING DATE SCHEDULES").
(b) For the initial Closing (and any subsequent Closings), not more than
60 days after the Closing or any subsequent Closing, the Transferor will submit
an invoice showing in reasonable detail (i) the Carrying Costs incurred for each
channel transferred at that Closing during the period from the date of the
statement that was the basis for the Carrying Costs reimbursed at that Closing
through the date of the Closing, and (ii) for a Closing pursuant to Section 4,
Deal Related Expenses that were incurred in the period immediately preceding the
Closing. Not more than 30 days after receiving the invoice, the Acquiror will
pay the invoice. If there is a dispute whether the amounts on the invoice are
proper, the amount not in dispute will be paid and, not sooner than 30 days
after giving notice that it will exercise that right if the parties do not
agree, either party can initiate arbitration under Section 11.1.
(c) For a period of 180 days after the initial Closing, the parties will
continue to comply with Section 8.1 (b) and (d) to obtain any governmental
consent or approval or Third Party Consents that are required to accomplish any
transfer that could not occur at the initial Closing because such consents or
approvals had not yet been obtained. During this 180-day period, the parties
will cooperate, at the expense of the Acquiror, in any reasonable arrangement
designed to provide Acquiror with the benefit of any tangible asset or other
right for which the parties are seeking the necessary consent or approval to
make a transfer. After the 180-day period, at the request and expense of
Acquiror, the parties will cooperate in any reasonable arrangement designed to
provide the Acquiror with the benefit of any tangible asset or other right which
might have been transferred under this Amendment.
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(d) Acquiror on the one hand and each Transferor on the other hand will
execute and deliver any instruments and take any action as the other may
reasonably request in order to evidence or complete the transactions to be
effected at a Closing.
7.8 CLAIMS FOR BREACH.
(a) Any claim for breach of a representation or warranty must be made by
notice to the breaching party not more than 365 days after the Closing (or, with
respect to assets or other rights transferred at a subsequent Closing, 365 days
after the subsequent Closing) at which the breach occurred. Any claim must be in
writing, must identify in reasonable detail the breach claimed and, to the
extent known, the facts and circumstances giving rise to the claim. Investor and
any COM Entity that requires a license or other right to use spectrum or Related
Assets under this Agreement are jointly and severally liable for any claim made
by the Company for breach of a representation or warranty by Investor or any
other COM Entity. If a claim is made for breach of a representation or warranty,
then not sooner than 60 days after giving notice that it will exercise its right
to do so if the claim is not resolved, the party making the claim can initiate
arbitration under Section 11.1.
(b) NO PARTY TO THIS AGREEMENT IS ENTITLED TO SEEK OR RECOVER
CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES. CONSEQUENTIAL DAMAGES ARE, WITHOUT
LIMITATION, LOST PROFITS, LOST REVENUE, AND THE LIKE.
7.9 TAXES.
(a) All Transfer Taxes arising out of any transfer effected at any
Closing, under Article 7, and any Transfer Taxes required to effect any
recording or filing with respect thereto, will be paid by the Company. If an
exemption is potentially available, a COM Entity wall cooperate with any
reasonable request of the Company to obtain an appropriate resale exemption
certificate or other evidence to entitle the Company to claim the exemption.
(b) The Company will pay all gross receipts and income tax due on gain
recognized by Individual, Investor and any COM Entity on an exchange
accomplished under Section 5. If, in the three year period following the
exchange under Section 5, a COM Entity sells or exchanges the channels or other
assets or rights received in the exchange in a taxable transaction (as
determined under the Internal Revenue Code), then, not more than 10 days after
closing of the subsequent sale or exchange, the COM Entity will pay the Company
an amount equal to: (i) the tax paid under this Section 7.9(b) with respect to
the assets that were exchanged for the assets that were subsequently sold or
exchanged; plus (ii) interest on that amount from the date the Company paid the
tax to the date that the COM Entity reimburses the Company at a rate equal to
the Company's cost of funds on the date the Company paid the tax.
8. COVENANTS.
8.1 COVENANTS.
(a) Investor, Individual, or their Controlled Affiliates will disclose, to
the extent required, the terms of this Amendment in connection with any filings
related to the transfer to
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them of MMDS Spectrum. If any information about the Nextel Group is required in
connection with any such filing, the Company will cause required information to
be provided to Investor.
(b) From the date hereof to and including the last Closing to occur under
Section 7, the Company, Investor and Individual will (and will cause their
respective Affiliates, if appropriate, to) (i) cooperate with each other in the
preparation and filing of all forms, notifications, reports and information,
required or reasonably considered advisable by any of them pursuant to any Law
(including, without limitation, the Communications Act and the HSR Act); (ii)
use all commercially reasonable efforts to furnish or cause to be furnished, as
promptly as practicable; all information and documents requested under such
Laws; and (iii) use all commercially reasonable efforts to agree on a method to
overcome any objections by any Governmental Authority to any transaction
contemplated hereby.
(c) When negotiating leases for MMDS Spectrum or Related Assets,
Individual will cause COM Entities to use all commercially reasonable efforts,
and will use commercially reasonable efforts to cause any of their Affiliates
that are negotiating such leases, to have the right to assign such lease
pursuant to this Amendment without the need for any consent by the lessor or any
other third Person.
(d) From the date hereof to and including the last Closing to occur under
Section 7, Investor, the Company and Individual will (and will cause their
respective Affiliates, if appropriate, to) use commercially reasonable efforts
to obtain any Third Party Consents as promptly as practicable. If any third
Person proposes to condition its consent on any amendment or modification to any
agreement or other consideration, the proposed Transferor will promptly notify
the proposed Acquiror. The decision whether to make the amendment or
modification and/or to deliver any consideration will be made by the Acquiror
whose consent will not be unreasonably withheld or delayed.
(e) Individual will use his reasonable best efforts to cause Investor and
his and its Controlled Affiliates to comply with this Amendment.
(f) To the extent the Company assigns any of its rights under this
Amendment to an Affiliate, the Company will use its reasonable best efforts to
cause the Affiliate to comply with this Amendment.
(g) Investor and Individual will use their reasonable best efforts not to
become subject to, and not to permit any COM Entity to become subject to, any
confidentiality or nondisclosure obligations that would limit its ability to
make the disclosures required by this Amendment, and, if such obligations
nonetheless arise, each will use its reasonable best efforts to obtain a waiver
or consent that will permit it to make the disclosures required by this
Amendment.
(h) So long as Investor has any obligations under this Amendment,
Individual will retain control of Investor.
(i) In exercising its rights under Section 5 the Company will use its
reasonable best efforts to minimize and mitigate any damage to the existing or
planned business of a COM Entity. If, nonetheless, there is a material adverse
affect on such business, the Company will pay
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the affected COM Entity reasonable compensation in an amount agreed by the
parties. For purposes of this Section 8.1(i), "planned" business means that the
relevant COM Entity can show it would reasonably be expected to launch
commercial service in the 180-day period after the date the Company gives notice
it will exercise-swap rights under Section 5.
9. REPRESENTATIONS AND WARRANTIES.
9.1 BY INVESTOR. Investor hereby represents and warrants to the company
that:
(a) Investor is a limited liability company duly organized, validly
existing and in good standing under the laws of the state of Washington and has
all requisite limited liability company power and authority to carry on its
business as now conducted, and to enter into and to perform this agreement.
(b) Investor has taken all necessary action to authorize the execution,
delivery and performance of this Amendment. This Amendment has been duly
executed and delivered by Investor and is a valid and binding agreement of
Investor enforceable against Investor in accordance with its terms, except as
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
and other similar Laws of general application which may affect the enforcement
of creditors' rights generally and by general equitable principles.
(c) The execution, delivery, and performance of this Amendment and the
consummation of the transactions contemplated hereby will not result in any
violation of, conflict with, constitute a default (with or without notice or
lapse of time) under, or give rise to a right of termination, cancellation,
acceleration of, or the imposition of any lien, claim, or encumbrance under, or
require any consent under or require a payment by Investor to any other Person
pursuant to (i) the limited liability company agreement or other organizational
documents of Investor, (ii) any note, bond, debt instrument, mortgage, indenture
or other agreement or instrument to which any COM Entity is a party, or (iii)
any Law or Order by which any COM Entity is bound.
9.2 BY INDIVIDUAL. Individual represents and warrants to the Company that:
(a) He is a resident of the State of Washington and is authorized to
execute, deliver and perform this Amendment.
(b) He has duly executed and delivered this Amendment and it is a valid
and binding agreement of Individual enforceable against Individual in accordance
with its terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar Laws of general application which
may affect the enforcement of creditors' rights generally and by general
equitable principles.
(c) The execution, delivery, and performance of this Amendment and the
consummation of the transactions contemplated hereby will not result in any
violation of, conflict with, constitute a default (with or without notice or
lapse of time) under, or give rise to a right of termination, cancellation,
acceleration of, or the imposition of any lien, claim, or encumbrance under, or
require any consent under or require a payment by Individual to any other Person
pursuant to (i) any note, bond, debt instrument, mortgage, indenture or other
agreement or
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instrument to which Individual or any COM Entity is a party, or (ii) any Law or
Order by which Individual or any COM Entity is bound.
(d) Individual controls Investor.
9.3 BY THE COMPANY. The Company hereby represents and warrants to Investor
and Individual that:
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the state of Delaware and has all requisite
corporate power and authority to carry on its business as now conducted, and to
enter into and to perform this Agreement.
(b) The Company has taken all necessary corporate action to authorize the
execution, delivery and performance of this Amendment. This Amendment has been
duly executed and delivered by the Company and is a valid and binding agreement
of the Company enforceable against the Company in accordance with its terms,
except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other similar Laws of general application which may affect the
enforcement of creditors' rights generally and by general equitable principles.
(c) The execution, delivery, and performance of this Amendment and the
consummation of the transactions contemplated hereby will not result in any
violation of, conflict with, constitute a default (with or without notice or
lapse of time) under, or give rise to a right of termination, cancellation,
acceleration of, or the imposition of any lien, claim, or encumbrance under, or
require any consent under or require a payment by the Company to any other
Person pursuant to (i) the certificate of incorporation, by laws or other
organizational documents of the Company, (ii) any note, bond, debt instrument,
mortgage, indenture or other agreement or instrument to which any member of the
Nextel Group is a party, or (iii) any Law or Order by which any member of the
Nextel Group is bound.
10. DEFINITIONAL PROVISIONS.
10.1 DEFINITIONS.
"ACQUIROR" means, for any closing under Article 7, any Person that is
buying, exchanging, assuming or otherwise acquiring a license or spectrum lease
as a result of the transactions being consummated at that Closing, but only in
that capacity, and does not mean that Person in its capacity as a Transferor (if
applicable) at that Closing.
"ACQUISITION AGREEMENT" -- see Section 3.
"AFFILIATE" means, as to any Person, another Person that directly or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, such Person. For the purposes of this definition,
"CONTROL" when used with respect to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities,
by contract or otherwise; the terms "CONTROLLING" and "CONTROLLED" have meanings
correlative to
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the foregoing. The term "Controlled Affiliate" as used herein includes
Individual and any Affiliate of COM that is, at the relevant time, controlled
fay COM.
"AMENDMENT" - see Preamble.
"ANNUAL FCC REPORTS" means those reports, filings, notices and regulatory
fees required to be filed annually with the FCC by licensees, permittees,
conditional licensees and operators, including reports required by Sections
21.11(a), 21.911, 21.307(d) and 21.920 of Title 47 of the Code of Federal
Regulations, as such reports, filings, notices and regulatory fees may
be amended or supplemented from time to time.
"ARBITRATION RULES" -- see Section 11.1(a).
"ASSET LISTING" -- see Section 4.2(b).
"BTA" means Basic Trading Area.
"BTATC LICENSE" or "BTATC SPECTRUM LEASE" means, with respect to any
Closing to occur pursuant to this Agreement, an FCC license to be transferred at
that Closing or a spectrum lease that, if Third Party Consents are obtained, is
to be transferred at that Closing.
"CALL NOTICE" -- see section 4.3(a).
"CARRYING COSTS" for any channel means out of pocket costs incurred in the
ordinary course of business by the entity transferring the channel during the
period it owned or had the use of the channel, including, without limitation,
site installation expense, real or personal property taxes associated with site
leases and other Related Assets that are being transferred, lease payments for
channels under spectrum leases, lease payments under site leases, maintenance
and monitoring costs, site utility costs, but specifically excluding, salaries
and employee costs, any allocation of overhead, professional fees associated
with any acquisition, and expenses for equipment and software.
"CHANNEL LISTING" -- see Section 4.1(a).
"CLOSING" means the consummation of a transaction under Article 7 as
contemplated by this Agreement.
"CLOSING DATE SCHEDULES" -- see Section 7.7(a).
"COM ENTITY" -- see Section 2(a).
"COMMUNICATIONS ACT" means the communications Act of 1934, as amended and
the rules and regulations promulgated thereunder.
"CONSTRUCTED FACILITIES" -- see Section 7.6(h).
"DEAL EXPENSES" means, for any BTATC License, BTATC Spectrum Lease or
Related Assets the reasonable, out-of-pocket expenses paid by a COM Entity to
unaffiliated, third-party,
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independent legal counsel, brokers and other advisors in connection with (i)
acquiring such rights or assets that are being transferred under Sections 3 or
4; or (ii) in connection with effecting a transfer of the rights or assets to a
Nextel Group member under Sections 3,4, 5, or 6 this Amendment; but deal
expenses do not include the expenses incurred to obtain the Six Retained
Channels or any expenses related to any interpretation, disputes or arbitration
under this Amendment. Any allocation of deal expenses to the Six Retained
Channels will be agreed between the parties and, if they cannot agree, not
sooner than 30 days after giving notice that it will exercise that right if the
parties do not agree, either party can initiate arbitration under Section 11.1.
"ENVIRONMENTAL LAWS" means any law relating to the protection,
preservation or restoration of the environment (including air, water, vapor,
surface water, groundwater, drinking water supply, surface land, subsurface
land, plant and animal life or any other natural resource), or to human health
or safety as it relates to the environment, including any applicable provisions
of the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 9601 et seq., the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801 et seq., the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901 et seq., the Clean Water Act, 33 U.S.C. Section 1251 et
seq., the Clean Air Act, 33 U.S.C. Section 2601 et seq., the Toxic Substances
Control Act, 15 U.S.C. Section 2601 et seq., the Federal Insecticide, Fungicide,
and Rodenticide Act, 7 U.S.C. Section 136 et seq., and the Oil Pollution Act of
1990, 33 U.S.C. Section 2701 et seq., and the regulations promulgated pursuant
thereto, and all analogous state or local statutes.
"FCC" means the Federal Communications Commission.
"FINAL ORDER" means an action by the FCC (i) which action has not been
reversed, stayed, enjoined, set aside, annulled or suspended, (ii) in relation
to which no request for stay, motion or petition for reconsideration or
rehearing, application or request for review, or notice of appeal or other
administrative or judicial petition for review (collectively, an "Appeal") is
pending, and (iii) as to which the prescribed time for filing an Appeal, and for
the entry of orders staying, reconsidering, or reviewing on the FCC's or such
other regulatory authority's own motion has expired.
"GOVERNMENTAL AUTHORITY" means any governmental or political subdivision
or department thereof, any governmental or regulatory body, commission, board,
bureau, agency or instrumentality, or any court or arbitrator or alternative
dispute resolution body, in each case whether domestic or foreign, federal,
state or local.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended and the rules promulgated thereunder.
"ITFS" means Institutional Television Fixed Service, a class of microwave
frequencies licensed by the FCC pursuant to part 74 of Title 47 of the Code of
Federal Regulations, as amended and interpreted by the FCC.
"KNOWLEDGE OF ACQUIROR" means the actual knowledge, without any
independent investigation or inquiry, of the officers of the Acquiror.
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"KNOWLEDGE OF TRANSFERORS" means the actual knowledge, without any
independent investigation or inquiry, of the officers of the Transferors.
"LAW" means any domestic or foreign, federal, state or local law, statute,
ordinance, rule or regulation.
"LEASE PARTY" -- see Section 4.2(e).
"LEASED" means that a Person has been given the right to use a channel
licensed to another Person, and a "lease" means a channel lease or any other
agreement that entitles a Person to use a channel licensed to another Person.
"LEASED FCC LICENSES" -- see Section 7.6(m).
"MMDS" means Multichannel Multipoint Distribution Service, a domestic
transmission service licensed by the FCC pursuant to Part 21 of Title 47 of the
Code of Federal Regulations, as mended and interpreted by the FCC.
"MMDS SPECTRUM" means any license or lease for MMDS or ITFS channels.
"MARCH AGREEMENT" -- see Preamble.
"NEXTEL GROUP" means the Company and the entities controlled, directly or
indirectly, by the Company.
"OFFER NOTICE" -- see Section 6(a).
"OFFER TERMS" -- see Section 6(a).
"OWNED TOWERS" -- see Section 7.6(r).
"PERMITS" -- see Section 7.6(s).
"PERSON" means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other, entity of whatever nature or a
group, including without limitation any pension, profit sharing or other benefit
plan or trust.
"PROCEEDING" means any action, arbitration, audit, hearing, complaint,
inquiry, investigation, litigation, or suit (whether civil, criminal,
administrative, investigative, or informal) commenced, brought, conducted, or
heard by or before, or otherwise involving, any Governmental Authority or
arbitrator.
"RELATED ASSETS" -- see Section 4.2(a).
"SECTION 3 NOTICE" -- see Section 3.
"SIX RETAINED CHANNELS" -- see Section 2.1(b).
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"THIRD PARTY CONSENTS" -- means any consent or approval from a third
Person (other than a Governmental Authority) that is required under the terms of
a spectrum lease, site lease or other agreement that is contemplated to be
assigned under this Agreement.
"TOWER LEASES" -- see Section 7.6(r).
"TRANSFER TAX" means any Federal, state, county, local or other sales,
use, transfer, conveyance, documentary transfer, recording or other similar tax,
fee or charge imposed upon the sale, transfer, exchange, or assignment of
property or any interest therein or the recording thereof, and any penalty,
addition to, or interest with respect thereto (but excluding any taxes on gains
or income).
"TRANSFEROR" means, for any Closing under Article 7, any Person that is
selling, exchanging, assigning or otherwise transferring a license or lease as
a result of the transactions being consummated at that Closing, but only in that
capacity, and does not mean that Person in its capacity as an Acquiror (if
applicable) at that Closing.
"UPDATE" -- see Section 4.1(b).
"USE AND ACCESS AGREEMENT" -- see Section 4.2(a).
10.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement have the defined meanings when
used in any certificate, report or other documents made or delivered pursuant
hereto or thereto, unless the context otherwise requires.
(b) Terms defined in the singular have a comparable meaning when used in
the plural, and vice versa.
(c) As used herein, the neuter gender also denotes the masculine and
feminine, and the masculine gender also denotes the neuter and feminine, where
the context so permits.
(d) The words "include," "including" and "or" mean without limitation by
reason of enumeration.
11. GENERAL.
11.1 ARBITRATION.
(a) If a party or a COM Entity that is a Transferor or Acquirer, or a
member of the Nextel Group that is a Transferor or Acquiror desires to initiate
arbitration in connection with a dispute under this Amendment then it will
initiate binding arbitration proceedings for the matter to be resolved finally
by arbitration under the Center for Public Resources Non-Administered
Arbitration Rules ("Arbitration Rules"), which Rules are deemed to be
incorporated by reference into this Section 11.1.
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(b) The arbitrator will be chosen, and the proceedings conducted, in
general accordance with the Arbitration Rules; except that: (i) the parties to
the dispute will chose one arbitrator through a self-administered process of
striking names from a list of potential arbitrators and will not use the methods
provided for in the Arbitration Rules; (ii) the rules of evidence employed in
the federal courts at the time will apply; and (iii) discovery will be permitted
in accordance with the Federal Rules of Civil Procedure.
(c) The place of the arbitration will be Chicago, Illinois.
(d) If any provision of this Amendment provides that a Person can initiate
arbitration to resolve any matter in dispute, then no party, no COM Entity and
no member of the Nextel Group can initiate any legal proceeding relating to the
matter in dispute, but must proceed under this Section 11.1.
11.2. PUBLIC ANNOUNCEMENTS. Except as required by Law, the exercise of
fiduciary duty or the policies or rates of any stock exchange (or the Nasdaq
National Market) on which the Company's securities are listed, the form and
content of all press releases or other public communications of any sort
relating to the subject matter of this Amendment, and the method of their
release, or publication thereof by any of the parties hereto or their respective
Affiliates, shall be subject to the prior approval of Investor and the Company,
which approval shall not be unreasonably withheld or delayed.
11.3 NOTICES. All notices, demands, requests, certificates or other
communications under this Amendment shall be in writing and shall be deemed to
have been duly given when (i) hand delivered, (ii) sent by facsimile
transmission, (iii) one day after sent by commercial courier guaranteeing next
business day delivery or (iv) five days after posting in the United States mail
having been sent by registered or certified mail return receipt requested,
addressed as follows:
(i) if to the Company:
Nexiel Communications, Inc.
2001 Edmund Halley Drive
Reston, VA 20191
Attention: Marc Montagner
Facsimile: (703) 433-4306
with a copy to:
Nextel Communications, Inc.
2001 Edmund Halley Drive
Reston, VA 20191
Attention: Leonard J. Kennedy, General Counsel
Facsimile: (703) 433-4846
(ii) if to Investor or Individual:
Eagle River, Inc.
2300 Carillon Point
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Kirkland, WA 98033
Attention: Craig O. McCaw
Facsimile: (425) 828-8061
with a copy to:
Davis Wright Tremaine
1300 SW Fifth Avenue, Suite 2300
Portland, OR 97201-5682
Attention: Benjamin Wolff
Facsimile: (503) 778-5299
Any communication delivered after business hours or on a Saturday, Sunday or
legal holiday at the place designated in such delivery shall be deemed for
purposes of computing any time period hereunder to have been delivered on the
next business day.
11.4 EXPENSES. Each party shall bear its own expenses, including the fees
and expenses of any attorneys, accountants, investment bankers, brokers, finders
or other intermediaries or other Persons engaged by it, incurred in connection
with this Amendment, its interpretation and any disputes or arbitrations under
this Amendment.
11.5 BENEFITS; ASSIGNMENT. The provisions of this Amendment shall be
binding upon, and inure to the benefit of, the parties and their respective
successors and permitted assigns. Nothing in this Amendment, express or implied,
is intended to confer upon any Person other than the parties and their
respective successors and permitted assigns any rights, remedies or obligations
under or by reason of this Amendment. The Company may assign some or all of its
rights or obligations under this Amendment to any member of the Nextel Group.
Except as stated in the preceding sentence, no party to this Amendment may
assign its rights or obligations under this Amendment without the prior written
consent of the other parties.
11.6 ENTIRE AGREEMENT; AMENDMENT AND WAIVER. This Amendment is the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, both written and oral, with
respect to the subject matter hereof and thereof including, without limitation;
the term sheet between the Company and FLUX Holdings, LLC regarding, among
other things the WorldCom WBS Spectrum (as defined therein). This Amendment may
not be amended, supplemented or otherwise modified except by an instrument in
writing signed by each of the parties hereto. No waiver by either party hereto
of any of the provisions hereof shall be effective unless explicitly set forth
in writing and executed by such party. Any waiver by a party of a breach of this
Amendment shall not operate or be construed as a waiver of any subsequent
breach.
11.7 HEADINGS. The headings in this Amendment are for convenience only and
shall not affect the construction hereof.
11.8 GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE
-26-
COMMONWEALTH OF VIRGINIA WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAW
PRINCIPLES OF SUCH STATE.
11.9 SEVERABILITY. In the event that any provision of this Amendment is
deemed invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
11.10 COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Amendment to produce or account for more than
one such counterpart.
-27-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered to be effective as of the day and year first above
written.
NEXTEL COMMUNICATION, INC.
By: /s/ TIM DONOHUE
_________________________________
Name: TIM DONOHUE
_________________________________
Title: CEO
_________________________________
DIGITAL RADIO, L.L.C.
By: /s/ BRIAN MARCINEK
---------------------------------
Name: BRIAN MARCINEK
Title: VP Eagle River Investments LLC
Its Manager
/s/ CRAIG O. McCAW
-----------------------------------------
CRAIG O. McCAW, for his sole and separate
estate
-28-
EXHIBIT 10.12
FLUX U.S. CORPORATION
AGREEMENT AND UNDERTAKING
Agreement and Undertaking (the "Undertaking") is made as of this 13th day
of November, 2003, by Flux U.S. Corporation, a Delaware corporation (the
"Company"), in favor of Craig O. McCaw ("Individual").
RECITALS
A. Individual is a party to that certain Agreement dated as of March 5,
2003, as subsequently amended (the "March Agreement"), by and among Nextel
Communications, Inc., a Delaware corporation ("Nextel"), Digital Radio, L.L.C.,
a Washington limited liability company ("Investor"), and Individual, pursuant to
which any Controlled Affiliate (as defined in the March Agreement) of Individual
must offer certain rights to Nextel.
B. Upon consummation of the transactions contemplated in that certain
Subscription Agreement, of even date herewith, by and between the Company and
Flux Fixed Wireless, LLC, a Washington limited liability company ("FFW"), the
Company will become a Controlled Affiliate of Individual for the purposes of the
March Agreement.
C. As a condition to FFW entering into the Subscription Agreement, the
Company has agreed to enter into this Undertaking.
NOW, THEREFORE, in consideration of the FFW entering into and performing
its obligations under the Subscription Agreement, the Company hereby agrees and
undertakes as follows:
1. COMPLIANCE WITH MARCH AGREEMENT. The Company acknowledges and agrees
that it shall be subject to the terms and conditions of the March Agreement as a
Controlled Affiliate of Individual. Until this Undertaking is terminated in
accordance with Section 2 below, the Company shall take any and all actions
necessary to permit Individual to comply with the terms of the March Agreement,
including, without limitation, giving Nextel rights (a) until August 13, 2004 to
acquire any channels of owned or leased MMDS Spectrum (as defined in the March
Agreement) in excess of 6 channels owned or leased in a BTA (as defined in the
March Agreement); (2) to swap certain channels of owned or leased MMDS Spectrum;
and (3) a right of first refusal on a sale of owned or leased MMDS Spectrum to a
third party.
2. TERMINATION. This Undertaking shall terminate on the first to occur of
(i) the Company failing to qualify as a Controlled Affiliate under the terms of
the March Agreement or (ii) the termination of the March Agreement.
3. GOVERNING LAW. This Undertaking shall be enforced, governed and
construed in all respects in accordance with the laws of the State of
Washington. This Undertaking and the
1
rights, powers and duties set forth herein shall be binding upon the Company,
the Company's successors and assigns and shall inure to the benefit of the
Company, its successors and assigns.
IN WITNESS WHEREOF, the Company has executed this Undertaking, intending
to be bound hereby, as of the date first set forth above.
THE COMPANY:
FLUX U.S. CORPORATION
Signature: /s/ R. Gerard Salemme
____________________________
Name: R. Gerard Salemme
Title: Vice President
EXHIBIT 10.25
SUBSCRIPTION AGREEMENT
This Subscription Agreement (this "Agreement"), dated as of the 18th day of
August, 2006, by and between the undersigned subscriber ("Subscriber"), and
Clearwire Corporation, a Delaware corporation ("Clearwire" or the "Company"), is
being entered into in connection with the sale of shares of common stock by the
Company as described in that letter dated August 4, 2006 to Subscriber from the
Company (the "Offering"). The Company and Subscriber agree as follows:
1. SUBSCRIPTION FOR SHARES; ADJUSTMENT. Subscriber agrees to subscribe for,
and the Company agrees to sell and issue to Subscriber, the number of shares of
the Class A Common Stock, par value $.0001 per share, of Clearwire set forth
above Subscriber's signature to this Agreement (the "Purchased Shares"), on the
terms and conditions set forth in this Agreement.
Subscriber and the Company hereby agree that the Company shall have the
option to adjust the number of Purchased Shares to be sold to Subscriber based
on the total number of shares being sold in the Offering, but not below
Subscriber's pro-rata share of such shares being sold. The Company shall notify
Subscriber of the Subscriber's final share allocation in the Closing Notice (as
defined below). To the extent the number of Purchased Shares subscribed for by
Subscriber exceeds Subscriber's final share allocation set forth in the Closing
Notice, this Agreement shall automatically be amended to reduce the Purchased
Shares to the final share allocation. If Subscriber has elected to purchase
their full pro-rata share, then the number of Purchased Shares shall be
automatically adjusted to equal the final share allocation.
2. SUBSCRIPTION PRICE. The undersigned acknowledges and agrees that the
purchase price for the Purchased Shares shall be $6.00 per share (the "Purchase
Price").
3. PAYMENT OF PURCHASE PRICE. Subscriber agrees to pay the aggregate
Purchase Price for the Purchased Shares to Clearwire at the Closing. The
Purchase Price shall be paid in immediately available funds by wire transfer to
the Company in accordance with the wiring instructions provided by the Company
with the Closing Notice.
4. CLOSING DATE. Subject to the satisfaction or waiver of the conditions
set forth in Section 5 and Section 6 herein, the closing of Subscriber's
purchase of the Purchased Shares (the "Closing") shall take place remotely via
the exchange of documents and signatures after the last of the conditions set
forth in Section 5 and Section 6 herein shall have been satisfied or waived,
other than those conditions that by their nature are to be satisfied at the
Closing (but subject to the fulfillment or waiver of those conditions at the
Closing), at such time and place as the Company shall designate in a written
notice delivered to Subscriber by the Company at least two (2) business days
prior to the Closing (the "Closing Notice").
5. SUBSCRIBER CLOSING CONDITIONS. The obligation of Subscriber to purchase
the Purchased Shares at the Closing is subject to the fulfillment, to
Subscriber's satisfaction, of each of the following conditions:
(a) the Company shall have delivered to Subscriber a stock certificate
representing the Purchased Shares, free and clear of all liens, registered in
Subscriber's name;
(b) the Company shall have executed the joinder agreement, attached as
Exhibit A hereto (the "SA Joinder Agreement"), to that certain Amended and
Restated Stockholders Agreement, dated as of March 16, 2004, between Clearwire
and its stockholders (the "Stockholders Agreement");
(c) the Company shall have executed the joinder agreement, attached as
Exhibit B hereto (the "RRA Joinder Agreement") to that certain Registration
Rights Agreement between Clearwire and certain of its stockholders, dated March
16, 2004 (the "Registration Rights Agreement" and together with this Agreement,
the Stockholders Agreement, the SA Joinder Agreement, and the RRA Joinder
Agreement, the "Transaction Agreements");
(d) no litigation, arbitration, action, suit, proceeding, or
investigation (whether conducted by or before any judicial or regulatory body,
arbitrator, or other person) (collectively, "Litigation") questions the validity
of this Agreement or the other Transaction Agreements or the right of Clearwire
to enter into this Agreement or the other Transaction Agreements or to
consummate the transactions contemplated hereby or thereby; and
(e) as of the Closing, all authorizations, approvals or permits of, or
filings with any governmental authority, including but not limited to state
securities or "Blue Sky" offices and the Federal Communications Commission
("FCC"), that are required by law in connection with the lawful sale and
issuance of the Purchased Shares to be made prior to the closing shall have been
duly obtained by the Company, and shall be effective as of the Closing.
6. CLEARWIRE CLOSING CONDITIONS. The obligation of Clearwire to deliver the
Purchased Shares to Subscriber at the Closing, and the Subsequent Closing, if
any, is subject to the fulfillment, to the Company's satisfaction, of each of
the following conditions:
(a) Subscriber shall have delivered to Clearwire the Purchase Price in
accordance with Section 3 herein;
(b) Subscriber shall have delivered to Clearwire the Transaction
Agreements to which Subscriber is a party, each executed by Subscriber;
(c) the representations and warranties made by Subscriber in Section 7
of this Agreement shall be true and correct in all material respects at and as
of the Closing as if made at and as of such time (except that the accuracy of
representations and warranties that by their terms speak as of the date of this
Agreement or some other date shall be determined as of such date);
(d) no Litigation questions the validity of this Agreement or the
other Transaction Agreements or the right of Clearwire to enter into this
Agreement or the other Transaction Agreements or to consummate the transactions
contemplated hereby or thereby; and
(e) as of the Closing, all authorizations, approvals or permits of, or
filings with, any governmental authority, including but not limited to state
securities or "Blue Sky" offices or the FCC, that are required by law in
connection with the lawful sale and issuance of
2
the Purchased Shares to be made prior to the closing shall have been duly
obtained by the Company, and shall be effective as of the Closing.
7. REPRESENTATIONS AND WARRANTIES OF SUBSCRIBER. Subscriber represents and
warrants to the Company that the following statements are true and correct on
the date of this Agreement:
(a) Subscriber is an "accredited investor" as that term is defined in
Rule 501 of Regulation D promulgated under the Securities Act of 1933, as
amended (the "Securities Act").
(b) The Purchased Shares subscribed for (the "Securities") are being
acquired by Subscriber for investment purposes only, for Subscriber's own
account and not with the view to any resale or distribution thereof, and
Subscriber is not participating, directly or indirectly, in an underwriting of
such Securities, and will not take, or cause to be taken, any action that would
cause Subscriber to be deemed an "underwriter" of such Securities as defined in
Section 2(11) of the Securities Act.
(c) Subscriber acknowledges that Subscriber has been offered an
opportunity to ask questions of, and receive answers from, Clearwire concerning
the Company and Subscriber's proposed purchase of the Securities, and that, to
Subscriber's knowledge, the Company has fully complied with any request for such
information.
(d) Subscriber has been furnished Clearwire's Disclosure Memorandum,
dated ______________, 2006 (the "Disclosure Memorandum"), the exhibits thereto
and any other documents which may have been made available upon request
(collectively, the "Offering Documents"). Subscriber has carefully read the
Offering Documents and understands and has evaluated the risks of a purchase of
Securities, including the risks set forth in the Offering Documents under "Risk
Factors".
(e) Subscriber has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Securities, is able to bear such risks, and has obtained, in
Subscriber's judgment, sufficient information from the Company to evaluate the
merits and risks of an investment in the Securities. Subscriber has evaluated
the risks of investing in the Company and has determined that the Securities are
a suitable investment for Subscriber.
(f) Subscriber has full power and authority to enter into this
Agreement and to perform its obligations hereunder.
(g) To Subscriber's knowledge, neither the Company nor any person
acting on the Company's behalf has offered, offered to sell, offered for sale or
sold the Purchased Shares to Subscriber by means of any form of general
solicitation or general advertising.
(h) The execution, delivery and performance by Subscriber of this
Agreement and the other Transaction Agreements are within Subscriber's powers,
have been duly authorized, will not constitute or result in a breach or default
under or conflict with any law, judgment, order, ruling or regulation of any
court or other tribunal or of any governmental
3
commission or agency, or any agreement or other undertaking, to which Subscriber
is a party or by which Subscriber is bound, and will not violate any provisions
of the incorporation papers, bylaws, or stockholders agreement, as may be
applicable, of Subscriber. The signature of Subscriber on the Transaction
Agreements to which Subscriber is, or will be, at the time of execution, be,
genuine, and the Transaction Agreements to which Subscriber is, or will be a
party, will when executed by Subscriber, constitute legal, valid and binding
obligations of Subscriber, enforceable in accordance with their respective
terms.
(i) Subscriber is not relying on the Company with respect to tax and
other investment advice in connection with its decision to purchase the
Purchased Shares. Subscriber acknowledges that Subscriber has been advised by
the Company to consult with its tax or financial consultants prior to entering
into this Agreement.
(j) Subscriber acknowledges that the Company of offering Class B
Common Stock to certain new investors, but that such shares would, if purchased
by Subscriber, automatically convert to Class A Common Stock under the Company's
Restated Certificate of Incorporation, and waives any claim to receive Class B
Common Stock in this offering.
(k) Subscriber acknowledges the Company has negotiated definitive,
binding agreements for the sale of Company shares to certain new investors, and
that such sales may be consummated before its subscription is accepted, and
Subscriber hereby waives any claim that the offering of the Purchased Shares did
not comply as to form with the obligations of the Company under any agreement
granting preemptive rights to the Subscriber.
None of the representations and warranties contained in this Section
7, nor any other due diligence investigation conducted by Subscriber or on its
behalf shall in any way affect the right of Subscriber to rely fully on the
representations and warranties of the Company in this Agreement.
8. REPRESENTATIONS AND WARRANTIES OF CLEARWIRE. Clearwire represents and
warrants to Subscriber that, except as set forth on the Schedules attached to
this Agreement, each of which shall be deemed to be an exception to or exclusion
from only the particular representation and warranty against which it is listed
(unless it is readily apparent from a reading of the disclosure that such
disclosure is applicable to other representations and warranties), whether or
not the listed representation and warranty includes a reference to such
Schedule, and which exceptions (and all other disclosures) set forth in the
Schedules shall be deemed to be representations and warranties of Clearwire, the
following statements are true and correct on the date of this Agreement. Any
reference to the knowledge of any person shall mean the actual knowledge,
information and belief of such person after making reasonable inquiry of such
person's co-Chief Executive Officers, co-Presidents, Chief Operating Officer,
Chief Financial Officer. For each of these executives, reasonable inquiry shall
mean checking with their respective direct reports and other persons whom, by
the nature of the normal duties of their position, would reasonably be expected
to know. In addition, for purposes of these representations and warranties, the
term "the Company" shall include any entity in which Clearwire owns, directly or
indirectly, more than 50% of the outstanding equity interests and which has
assets of $10,000,000 or more, including, without limitation, the following:
Clearwire International LLC, Clearwire US, LLC, Fixed Wireless Holdings, LLC,
and Clearwire Spectrum
4
Holdings LLC (the "Subsidiaries"), but shall specifically exclude in all
instances NextNet Wireless, Inc. The term "Clearwire" shall mean Clearwire
Corporation (excluding its Subsidiaries).
(a) The execution, delivery and performance by Clearwire of this
Agreement, the other Transaction Agreements to which it is a party, are within
Clearwire's powers, have been duly authorized, will not, as applicable, give
rise to any right of termination, cancellation or acceleration, or require any
consent or approval under, or constitute or result in a breach or default of, or
conflict with any law, judgment, order, ruling or regulation of any court or
other tribunal or any governmental commission or agency, or any agreement or
other undertaking to which Clearwire is a party or by which Clearwire is bound,
will not violate or result in a breach of any provision of, constitute a default
under, accelerate or terminate any performance required by, or require a consent
or waiver under, any provisions of the Certificate of Incorporation, Bylaws, or
Stockholders Agreement of Clearwire, and will not result in the creation of any
lien, charge, claim or encumbrance on the Company's assets or property. The
signature of Clearwire on the Transaction Agreements is, or will, at the time of
execution be, genuine, and the Transaction Agreements constitute legal, valid
and binding obligations of Clearwire enforceable in accordance with their
respective terms. The Company is not in violation of any term of its (i)
Certificate of Incorporation or Bylaws or other organizational document or (ii)
of any law, statute, regulation, rule, ordinance, consent decree, settlement
agreement or governmental requirement, except, in the case of clause (ii), to
the extent that any such violation or non-compliance would not, individually or
in the aggregate, have a material adverse effect on Clearwire.
(b) The Company is duly incorporated or organized, as applicable, and
validly existing under the laws of the jurisdiction of its incorporation or
formation, as applicable, and is in good standing under such laws. The Company
is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a material adverse
effect on the Company. The Company has full power and authority:
(i) to own its properties and assets;
(ii) to carry on its business as presently conducted; and
(iii) to enter into the Transaction Agreements and to perform its
obligations thereunder, including the issuance, sale and
delivery of the Purchased Shares.
(c) Clearwire does not own or control, directly or indirectly, any
Subsidiaries other than those listed in Schedule 8(c) attached hereto, and the
shares of the capital stock or membership interests, as applicable, of the
Subsidiaries owned by Clearwire (which are reflected on Schedule 8(c)) are duly
authorized, validly issued, fully paid, and non-assessable, and free and clear
of all liens, charges, claims and encumbrances imposed by or through such
Subsidiaries, except as otherwise provided in Schedule 8(c). All of the
outstanding shares of the capital stock or membership interests, as applicable,
of the Subsidiaries, were offered, issued and sold in compliance in all material
respects with all applicable federal and state securities laws.
5
(d) The authorized capital stock of Clearwire and the shares of
capital stock of Clearwire issued and outstanding as of the date of this
Agreement are as set forth on Schedule 8(d) attached hereto. Upon the filing of
the Company's Third Amended and Restated Certificate of Incorporation, the form
of which is attached hereto as Exhibit C (the "Restated Charter"). The
authorized capital stock of Clearwire will be as set forth in the Restated
Charter. All of the outstanding shares of the capital stock of Clearwire are
duly authorized, validly issued, fully paid, and non-assessable, and free and
clear of all liens, charges, claims and encumbrances imposed by or through
Clearwire. The Purchased Shares, when issued, sold and delivered in accordance
with the terms and for the consideration set forth in this Agreement, will be
duly authorized, validly issued, fully paid, and non-assessable, and free and
clear of all liens, charges, claims and encumbrances imposed by or through
Clearwire. Additionally, the Purchased Shares are free of restrictions on
transfer other than restrictions on transfer under this Agreement and the other
Transaction Agreements and under applicable state and federal securities laws.
The outstanding securities of Clearwire are owned by the stockholders specified
in Schedule 8(d) attached hereto.
(e) Other than as disclosed in Schedule 8(e) attached hereto, the
Company does not have, is not bound by, and has no obligation to grant or enter
into, any outstanding subscriptions, options, warrants, rights (including
without limitation conversion or pre-emptive rights), calls, commitments, or
agreements of any character calling for it to issue, deliver, or sell, or cause
to be issued, delivered, or sold, any shares or any other equity securities or
equity securities convertible into, exchangeable for, or representing the right
to subscribe for, purchase, or otherwise acquire any shares or any other equity
securities in the capital of the Company. Other than as set forth in Schedule
8(e) attached hereto, the issuance and sale of the Purchased Shares will not
result in the issuance of any additional shares of capital stock of Clearwire or
the triggering of any other anti-dilution or similar rights contained in any
options, warrants, debentures or other securities agreements or commitments of
Clearwire. Other than the Stockholders Agreement and as disclosed in Schedule
8(e) attached hereto, the Company is not a party or subject to any agreement or
understanding, and, to the Company's knowledge, there is no agreement or
understanding between any persons and/or entities, which affects or relates to
the voting or giving of written consents with respect to any security or by a
director of the Company.
(f) Other than as disclosed in Schedule 8(f) attached hereto, the
Company:
(i) has no outstanding obligations, contractual or otherwise, to
repurchase, redeem, or otherwise acquire any shares or other
equity securities in the capital of the Company; and
(ii) is not a party to or bound by any agreement or instrument
under which any person has the right to require it to
effect, or to include any securities held by such person in,
any registration under any securities legislation or to
distribute any such securities to the public.
(g) All of the outstanding shares of capital stock of Clearwire were
offered, issued, and sold in compliance in all material respects with all
applicable federal and state
6
securities laws. Assuming the accuracy of the representations of Subscriber in
Section 7 herein, upon the closing of the transactions contemplated hereby, the
Purchased Shares will have been offered, issued and sold in compliance with all
applicable federal, state and provincial securities laws. Neither Clearwire nor
any person or entity acting on its behalf has taken or will take any action that
would subject the offering, sale or issuance of the Purchased Shares to the
registration requirements of the Securities Act.
(h) Except (i) as disclosed in Schedule 8(h) attached hereto, and (ii)
any filings required under the HSR Act, no consent, approval, authorization,
declaration, filing, or registration with any governmental authority, regulatory
authority or other party is required to be made or obtained by Clearwire in
connection with:
(i) the execution and delivery of any of the Transaction
Agreements; or
(ii) the performance by the Company of its obligations under the
Transaction Agreements.
(i) No Litigation is pending or, to the knowledge of the Company,
currently threatened or contemplated, against the Company that would, if
determined adversely, reasonably be expected to have a material adverse effect
on the business, condition, affairs, operations, properties, or assets of the
Company. The Company is not a party or subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality and no such order, writ, injunction, judgment or decree
questions the validity of this Agreement or the other Transaction Agreements or
the right of Clearwire to enter into this Agreement or the other Transaction
Agreements or to consummate the transactions contemplated hereby or thereby.
There is no action, suit, proceeding or investigation by the Company currently
pending or that the Company currently intends to initiate.
(j) The Company has delivered to Subscriber its audited financial
statements (balance sheet and income statement, statement of shareholders'
equity and statement of cash flows) as of December 31, 2003, December 31, 2004
and December 31, 2005 for the fiscal years then ended and unaudited financial
statements (balance sheet and income statement) as of March 31, 2006 for the
three months then ended (the "Financial Statements"). The Financial Statements
(i) are in accordance with the books and records of the Company (which are true
and complete in all material respects), and (ii) have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated, except that the unaudited Financial
Statements do not contain all footnotes and other disclosures required by
generally accepted accounting principles. The Financial Statements fairly
present in all material respects the financial condition and operating results
of the Company as of the dates, and for the periods, indicated therein, subject
to normal audit adjustments with respect to the March 31, 2006 Financial
Statements. Except as set forth in the Financial Statements or on Schedule 8(l),
the Company has no material liabilities, contingent or otherwise, other than (i)
liabilities incurred in the ordinary course of business subsequent to December
31, 2005, and (ii) obligations under contracts and commitments incurred in the
ordinary course of business and not required under generally accepted accounting
principles to be reflected in the Financial Statements, which, in
7
both cases, individually or in the aggregate, are not material to the financial
condition or operating results of the Company.
(k) To the knowledge of the Company, the Company has all franchises,
permits, licenses, and any similar authority necessary for the conduct of its
business as now being conducted by it, all of such franchises, permits, licenses
and any similar authority is valid and in full force and effect, and the Company
believes it can obtain, without undue burden or expense, any similar authority
for the conduct of its business as planned to be conducted. To the knowledge of
the Company, the Company is not in default in any respect under any of such
franchises, permits, licenses or other similar authority.
(l) Except as set forth on Schedule 8(l) attached hereto, since
December 31, 2005, there has not been:
(i) any material change in the assets, liabilities, financial
condition or operating results of the Company from that
reflected in the Financial Statements;
(ii) any material damage, destruction or loss, whether or not
covered by insurance;
(iii) any waiver, compromise or default by the Company of a
valuable right or of a material debt or obligation owed to
it;
(iv) any satisfaction or discharge of any lien, charge, claim or
encumbrance or payment of any obligation by the Company,
except in the ordinary course of business and that is not
material to the assets, properties, financial condition,
operating results or business of the Company;
(v) any transfer of or granting of any security interest in or
any exclusive license with respect to any material asset of
the Company; or
(vi) any material agreement or commitment by the Company to do
any of the things described in this Section 8(l).
(m) To the Company's knowledge, the Company is not in material
violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety, and no material expenditures are
or will be required in order to comply with any such existing statute, law or
regulation.
(n) Except as disclosed in Schedule 8(n) attached hereto and for
rights granted under the Registration Rights Agreement, the Company has not
granted or agreed to grant any registration rights, including without limitation
any piggyback or demand rights, to any person or entity.
8
(o) Except as set forth in Schedule 8(o) attached hereto, the Company
is not bound by or subject to (and none of its assets or properties is bound by
or subject to) any written or oral, express or implied, contract, commitment or
arrangement with any labor union, and no labor union has requested or, to the
Company's knowledge, has sought to represent any of the employees,
representatives or agents of the Company. There is no strike or other labor
dispute involving the Company pending, or to the Company's knowledge,
threatened, nor is the Company aware of any labor organization activity
involving its employees. To the Company's knowledge, the Company has complied in
all material respects with all applicable state and federal equal employment
opportunity and other laws related to employment.
9. Antidilution Rights.
(a) Grant of Antidilution Rights. Subject to Section 9(d), any time
after the date of this Agreement that the Company sells or issues or agrees to
sell or issue (or is deemed to do so under Section 9(e)) Dilutive Shares (as
defined below) to any Person for no consideration or consideration per share
that is less than the Trigger Price (as defined below) in effect immediately
prior to such issuance or sale (each, a "Dilutive Issuance"), the Company shall
concurrently issue to Subscriber for no consideration a number of shares of
Class A Common Stock ("Class A Shares") equal to (i) Subscriber's Adjusted
Shares (as defined below) less (ii) Subscriber's Original Shares (as defined
below) (the "Antidilution Shares"). No fractional Class A Shares shall be
issued pursuant to this Section 9(a). The number of Class A Shares issued shall
be rounded to the nearest integral number of whole Class A Shares. For the
purposes of this Section 9, whenever Dilutive Shares are issued for a
consideration other than cash, either in whole or in part, the fair market value
of the Dilutive Shares issued shall be as established by resolution of the
Company's Board of Directors.
(b) Definitions. For the purposes of this Section 9, for each Dilutive
Issuance, the following terms shall have the following meanings:
(i) "Adjusted Shares" means the number of Class A Shares equal
to the product of (x) Subscriber's Original Shares,
multiplied by (y) the quotient of (1) the Trigger Price in
effect immediately prior to a Dilutive Issuance, divided by
(2) the Trigger Price in effect immediately after such
Dilutive Issuance.
(ii) "Common Shares" means Class A Shares, shares of Class B
common stock or any other class of common stock of the
Company.
(iii) "Convertible Securities" means any evidences of
indebtedness, shares or other securities directly or
indirectly convertible into or exchangeable for Common
Shares, but excluding Options.
9
(iv) "Dilutive Shares" means Common Shares, Options and
Convertible Securities issued or deemed issued under Section
9(e) of this Agreement after the date of this Agreement
other than:
(1) Common Shares issued pursuant to Article IV, Section
2(d) of the Company's Certificate of Incorporation;
(2) (A) Common Shares outstanding on the date of this
Agreement, (B) Convertible Securities or Options
outstanding on the date of this Agreement (and the
Common Shares issued upon conversion, exchange or
exercise of such Convertible Securities or Options),
and (C) Common Shares (and/or Convertible Securities
and Options, and the Common Shares issuable upon
conversion, exchange or exercise of such Convertible
Securities or Options) issued pursuant to agreements in
effect or other commitments or offers outstanding on
the date of this Agreement that (1) relate to the
acquisition of spectrum rights or related assets by the
Company and/or affiliates of the Company, or (2) are
otherwise set forth in the Schedules attached to this
Agreement;
(3) Common Shares (and/or Convertible Securities and/or
Options, and the Common Shares issuable upon
conversion, exchange or exercise of such Convertible
Securities or Options) issued to employees,
consultants, directors, vendors, lessors or others with
whom the Company conducts business, provided that such
shares, options, warrants or other rights are issued
pursuant to a stock option plan or restricted stock
plan approved by the Company's Board of Directors and
solely for compensation purposes;
(4) Shares actually issued upon exercise of any currently
outstanding Options or conversion or exchange of any
currently existing Convertible Securities or Options or
Convertible Securities issued after the date of this
Agreement in accordance with this clause (iv); and/or
(5) Shares (and/or Convertible Securities and Options, and
the Shares issuable upon conversion, exchange or
exercise of such Convertible Securities or Options)
issued in connection with any stock split, stock
dividend, reverse stock split, recapitalization,
reorganization or other distribution of Shares (each, a
"Recapitalization Event") that does not affect the
relative economic interests or rights of holders of
Shares.
10
(v) "Options" means rights, options or warrants to subscribe
for, purchase or otherwise acquire directly or indirectly
Common Shares or Convertible Securities.
(vi) "Original Shares" means (x) with respect to the first
Dilutive Issuance, the total number of Class A Shares
acquired by Subscriber pursuant to this Agreement (as
adjusted for any Recapitalization Event) and (y) with
respect to each Dilutive Issuance thereafter, the total
number of Adjusted Shares immediately prior to such Dilutive
Issuance (as adjusted for any Recapitalization Event). For
the avoidance of doubt, any Shares acquired by Subscriber or
a Subscriber Affiliate from either the Company or any other
stockholder of Clearwire other than pursuant to this
Agreement shall in no event be included in the number of
Original Shares under this Section 9.
(vii) "Person" means any individual, corporation, partnership,
company, trust or other entity.
(viii) "Trigger Price" shall initially mean $6.00 per share (as
subsequently adjusted for any Recapitalization Event, the
"Original Issue Price"). In connection with each Dilutive
Issuance, the Trigger Price shall be adjusted downwards to
equal the lowest price per Dilutive Share paid for the
Dilutive Shares issued or sold in such Dilutive Issuance.
The Trigger Price shall also be proportionately adjusted
from time to time for any Recapitalization Event pursuant to
which securities of the Company are issued with respect to
the Original Shares and/or Adjusted Shares. Notwithstanding
the foregoing, in no event shall the Trigger Price be
adjusted downwards to an amount less than $5.00 per share
(as adjusted for any Recapitalization Event).
(c) Covenant Regarding Antidilution Shares. The Company hereby
represents, warrants and covenants that (i) as a condition precedent to the
issuance or sale of any Dilutive Shares in a Dilutive Issuance, the Company
shall have reserved at the time of such Dilutive Issuance out of its authorized
but unissued capital stock sufficient Class A Shares to enable the Company to
issue all of the applicable Antidilution Shares pursuant to this Section 9, and
(ii) all Antidilution Shares issued pursuant to this Section 9 shall, upon
issuance for no additional consideration, be duly authorized, validly issued,
fully paid and nonassessable.
(d) Termination of Antidilution Rights. The rights granted under this
Section 9 shall terminate immediately after the first to occur of the following:
(i) the date which is nine (9) months following the date of this Agreement or
(ii) the closing of the Company's initial public offering, defined as an
underwritten public offering of equity securities in which the Company raises an
aggregate of not less than US$400,000,000 in cash.
11
(e) Deemed Issuances of Shares. In the case of any issuance (whether
on or after the date of this Agreement) by the Company of any Convertible
Securities or Options, the following provisions shall apply for all purposes of
this Section 9:
(i) For any Convertible Securities issued (other than pursuant
to the exercise of Options) after the date of this
Agreement, the aggregate maximum number of Common Shares
deliverable upon conversion or exercise of or in exchange
for any such Convertible Securities shall be deemed to have
been issued at the time such Convertible Securities were
issued and for a consideration equal to the consideration,
if any, received by the Company upon the issuance of such
Convertible Securities plus the minimum additional
consideration, if any, to be paid under the terms of such
Convertible Security upon conversion, exercise or exchange
of such Convertible Securities into the Common Shares
covered thereby.
(ii) For any Options issued, the aggregate maximum number of
Shares deliverable upon exercise of the Options, or, in the
case of Options for Convertible Securities, the conversion,
exercise or exchange of such Convertible Securities, shall
be deemed to have been issued at the time such Options were
issued for a consideration equal to the consideration, if
any, received by the Company for such Options, plus the
minimum exercise price provided in such Options for the
Common Shares or Convertible Securities covered thereby,
and, in the case of Options for Convertible Securities, plus
the amount of additional consideration, if any, to be paid
upon the conversion, exercise or exchange of such
Convertible Securities.
10. RESTRICTED SECURITIES. Subscriber understands that the Securities have
not been, and will not be, registered under the Securities Act, by reason of a
specific exemption from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of the investment intent
and the accuracy of Subscriber's representations as expressed herein. Subscriber
understands that the Securities are "restricted securities" under the Securities
Act, inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such Securities may be resold without registration under the Securities Act,
only in certain limited circumstances and Subscriber agrees not to transfer the
Securities unless the transfer of the Securities is made: (i) pursuant to an
effective registration statement under the Securities Act; (ii) to the Company;
(iii) outside the United States in accordance with Rule 904 of Regulation S
under the Securities Act and in compliance with local laws; or (iv) within the
United States (A) in accordance with the exemption from registration under the
Securities Act provided by Rule 144 thereunder, if available, and in compliance
with any applicable state securities laws, and Subscriber shall be required to
furnish to the Company an opinion to such effect from counsel of recognized
standing reasonably satisfactory to the Company prior to such offer, sale or
transfer or (B) in a transaction that does not require registration under the
Securities Act or applicable state securities laws, and Subscriber shall be
required to furnish to the Company an opinion to such
12
effect from counsel of recognized standing reasonably satisfactory to the
Company prior to such offer, sale or transfer. Subscriber acknowledges that the
Company has no obligation to register or qualify the Securities for resale
except as set forth in the Registration Rights Agreement and that the Company is
required to refuse to register any transfer not made in accordance with the
provisions of this Section 10. Subscriber further acknowledges that if an
exemption from registration or qualification is available, it may be conditioned
on various requirements including, but not limited to, the time and manner of
sale, the holding period for the Securities, and on requirements relating to the
Company which are outside of Subscriber's control, and which the Company is
under no obligation and may not be able to satisfy. Subscriber also acknowledges
that the certificates representing the Securities shall bear the restrictive
legends required under applicable federal and state securities laws and the
Stockholders Agreement. The provisions of this Section 10 shall survive the
Closing.
11. STOCKHOLDERS AGREEMENT. Subscriber and Clearwire acknowledge and agree
that the Purchased Shares shall be subject to all of the terms of the
Transaction Agreements, including, among other provisions, the restrictions on
transfer and confidentiality obligations set forth therein. Subscriber further
agrees, at the Closing, to sign the SA Joinder Agreement and to become bound by
the terms and conditions of the Transaction Agreements.
12. REGISTRATION RIGHTS AGREEMENT. At the Closing, Subscriber shall become
a party to the Registration Rights Agreement, by executing and delivering the
RRA Joinder Agreement.
13. SURVIVAL OF WARRANTIES. Except as otherwise provided herein, the
representations and warranties of the Company and Subscriber contained in or
made pursuant to this Agreement shall survive the execution and delivery of this
Agreement and the Closing for a period of one (1) year following the Closing.
Notwithstanding the foregoing, nothing in this Section 13 shall be construed to
extend the representations, warranties and covenants contained herein beyond the
period set forth in the applicable statute of limitations.
14. INDEMNITY. Subscriber and Clearwire will indemnify and hold each other,
as well as their respective officers, directors, stockholders, agents, attorneys
and affiliates (the "Indemnified Parties") harmless from and against, and will
reimburse the Indemnified Parties for, any and all losses, damages, debts,
liabilities, obligations, judgments, orders, awards, writs, injunctions,
decrees, fines, penalties, taxes, costs or expenses (including but not limited
to any legal and accounting fees and expenses) ("Losses") arising out of or
based upon any false representation or warranty or breach or failure by
Subscriber or Clearwire, as the case may be, to comply with any covenant or
agreement made by Subscriber or Clearwire, as the case may be, in this
Agreement or in any other document furnished by Subscriber or Clearwire, as the
case may be, to the other in connection with this Agreement (other than the
other Transaction Agreements, which shall be subject to any indemnification or
other remedy provisions contained therein).
15. REVOCABILITY. Subscriber and Clearwire understand and agree that this
Agreement may be canceled, terminated, or revoked only by the mutual written
consent of Subscriber and Clearwire. Notwithstanding the foregoing, however,
this Agreement may be terminated by either Subscriber or Clearwire if the
Closing shall not have occurred on or before December 31, 2006, provided that
the failure to close on or before such date is not the fault of the terminating
party.
13
16. NOTICE. Any notices or other communications in connection herewith
shall be sufficiently given if sent by registered or certified mail, postage
prepaid, or by facsimile transmission, and:
(i) if to the Company, at
Clearwire Corporation
5808 Lake Washington Blvd. NE, Suite 300
Kirkland, WA 98033
Facsimile No: 425-216-7900
Attn: Broady Hodder, General Counsel
With a copy to:
Davis Wright Tremaine LLP
2600 Century Square
1501 Fourth Avenue
Seattle, WA 98121
Facsimile No: 206-628-7699
Attn: Julie A. Weston, Esq.
(ii) if to Subscriber, at the address listed on the signature
page hereto.
or at such other address as either Subscriber or the Company shall designate to
the other by notice in writing.
17. ASSIGNABILITY; SUCCESSORS AND ASSIGNS. Neither party may assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of the other party. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
18. AMENDMENTS AND WAIVERS. The Company may amend this Agreement with the
written consent of the holders of at least a majority of the aggregate number of
shares of Class A Common Stock issued and issuable in connection with this
Agreement and other subscription agreements of even date ("Offered Shares"). The
holders of at least a majority in aggregate principal amount of the Offered
Shares may waive compliance in a particular instance by the Company with any
provision of this Agreement. Any amendment or waiver of this Agreement made in
conformity with the provisions of this Section 19 shall be binding on all
holders of the Offered Shares.
19. ENTIRE AGREEMENT. This Agreement, the other Transaction Agreements and
the documents referred to herein and therein constitute the entire agreement
among the parties with respect to the subject matter hereof and thereof and no
party shall be liable or bound to any other party in any manner by any
warranties, representations, covenants or agreements except as specifically set
forth herein or therein.
14
20. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the state of Delaware and, to the extent it involves
any United States statute, in accordance with the laws of the United States.
21. FINDERS' FEES. Except as provided otherwise in Schedule 22 attached
hereto, each party represents that it neither is nor will be obligated for any
finders' fees or commissions in connection with this Agreement or the
transactions contemplated hereby. Subscriber agrees to indemnify and to hold
harmless the Company from any liability for any commission or compensation in
the nature of finders' fees (and the costs and expenses (including legal, travel
and out-of-pocket expenses) of defending against such liability or asserted
liability) for which Subscriber or any of its officers, directors, employees, or
representatives is responsible. The Company agrees to indemnify and hold
harmless Subscriber from any liability for any commission or compensation in the
nature of a finders' fee (and the costs and expenses (including legal, travel
and out-of-pocket expenses) of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
22. SEVERABILITY. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
23. FEES AND EXPENSES. Except as otherwise expressly provided for in this
Agreement, the Company, on the one hand, and Subscriber, on the other hand,
shall each pay all of its own expenses incurred in connection with the
transactions contemplated by this Agreement, including any and all legal,
accounting, investment banking and consulting fees and expenses incurred in
negotiating, executing and delivering this Agreement and the other agreements,
exhibits, schedules, documents and instruments contemplated by this Agreement.
24. CURRENCY. All dollar amounts referred to in this Agreement, including
the symbol "$", refer to lawful money of the United States of America.
25. COUNTERPARTS. This Agreement may be executed in two (2) or more
original or facsimile counterparts all of which together shall constitute one
and the same instrument.
26. DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement are
inserted for convenience of reference only and do not constitute a part of and
shall not be utilized in interpreting this Agreement.
27. DELAYS OR OMISSIONS. No failure to exercise or delay in the exercise of
any right, power or remedy accruing to Subscriber upon any breach or default of
the Company under this Agreement shall impair any such right, power or remedy of
Subscriber nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring.
[Remainder of this page is intentionally left blank.]
15
SUBSCRIBER SIGNATURE PAGE
The undersigned Subscriber hereby agrees to purchase the following number of
shares of Clearwire's Class A Common Stock, on the terms and conditions set
forth in the Agreement (check one):
[ ] Subscriber's full pro-rata share of the total Shares subscribed; or
[ ] exactly ___________ shares, but not more than the subscribed pro rata
share of the total Shares subscribed in the offering.
The undersigned Subscriber hereby represents and warrants that it is the
beneficial owner of ___________ Shares of Class A Common Stock and/or
___________ warrants exercisable for Class A Common Stock of the Company.
IN WITNESS WHEREOF, Subscriber has caused this Agreement to be duly executed as
of the date first written above.
SUBSCRIBER:
----------------------------------------
Print Name of Subscriber
By:
------------------------------------
Name:
----------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address:
-------------------------------
----------------------------------------
----------------------------------------
16
COMPANY SIGNATURE PAGE
IN WITNESS WHEREOF, Clearwire Corporation has caused this Agreement to be duly
executed as of the date first written above.
CLEARWIRE CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT A TO SUBSCRIPTION AGREEMENT
JOINDER TO STOCKHOLDERS AGREEMENT
(attached)
JOINDER IN STOCKHOLDERS AGREEMENT
This Joinder in Stockholders Agreement ("Joinder") is made and entered into
this ____ day of ________, 2006, by and between Clearwire Corporation, a
Delaware corporation (the "Company"), and the party whose signature appears
below (the "Joining Party").
RECITALS:
WHEREAS, the Joining Party has acquired or intends to acquire shares of capital
stock of the Company; and
WHEREAS, pursuant to Section 13.09 of that certain Amended and Restated
Stockholders Agreement, between the Company and its stockholders, dated as of
March 16, 2004 (the "Stockholders Agreement"), the Joining Party may become a
party to the Stockholders Agreement by execution of an instrument such as this
Joinder.
NOW, THEREFORE, the Joining Party agrees as follows:
1. JOINDER
By execution of this Joinder by the Joining Party and acceptance hereof by
the Company, the Joining Party is and agrees to become a party to, subject to
all the conditions, restrictions, obligations and duties of a Stockholder of
the Company under the Stockholders Agreement, including the restrictions on
transfer of the shares acquired from the Company and the requirement that the
Joining Party vote its shares in accordance with the terms thereof.
2. AGREEMENT TO BE BOUND BY AGREEMENT
This Joinder shall in all respects, including all matters of construction,
validity and performance, be governed by, and construed and enforced in
accordance with, the laws of the State of Delaware, without reference to any
rules governing conflicts of laws.
3. COUNTERPARTS
This Joinder may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one instrument.
COMPANY: JOINING PARTY:
By: By:
--------------------------------- ------------------------------------
Name: Name:
------------------------------- ----------------------------------
Title: Title:
------------------------------ ---------------------------------
Date: Date:
------------------------------- ----------------------------------
1
EXHIBIT B TO SUBSCRIPTION AGREEMENT
JOINDER TO REGISTRATION RIGHTS AGREEMENT
(attached)
JOINDER
In consideration of the permitted issuance, sale, pledge, or other transfer
to the undersigned of Registrable Securities in the Company, the undersigned
hereby consents and agrees to become a party to and be bound by the Registration
Rights Agreement dated as of the 16th day of March, 2004, as amended, receipt
of a copy of which is hereby acknowledged, as fully as if the undersigned were
one of its original parties, and all of the Registrable Securities owned by the
undersigned will be held in accordance with and restricted by the terms of such
Registration Rights Agreement.
Dated: _________________________
Name of Stockholder:
----------------------------------------
Sign Name:
----------------------------------------
Print Name:
----------------------------------------
Address:
----------------------------------------
----------------------------------------
----------------------------------------
SSN/EIN:
----------------------------------------
Approved by the Company:
COMPANY: CLEARWIRE CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
Dated:
---------------------------------
1
EXHIBIT C TO SUBSCRIPTION AGREEMENT
THIRD AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
(attached)
EXHIBIT 3.1
PAGE 1
Delaware
The First State
I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED
CERTIFICATE OF "CLEARWIRE CORPORATION", FILED IN THIS OFFICE ON THE
TWENTY-EIGHTH DAY OF AUGUST, A.D. 2006, AT 11:04 O'CLOCK A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
(SEAL) /s/ Harriet Smith Windsor
-----------------------------------------
Harriet Smith Windsor, Secretary of State
3720220 8100 AUTHENTICATION: 5002509
060798461 DATE: 08-28-06
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
DELIVERED 11:08 AM 08/28/2006
FILED 11:04 AM 08/28/206
SRV 060798461 - 3720220 FILE
THIRD AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CLEARWIRE CORPORATION
CLEARWIRE CORPORATION, a corporation organized and existing under the laws
of the State of Delaware (the "Corporation") hereby certifies that:
1. The name of the Corporation is Clearwire Corporation. The Corporation
was originally incorporated under the name Flux U.S. Corporation.
2. The date of filing of the Corporation's original Certificate of
Incorporation was October 27, 2003.
3. The Third Amended and Restated Certificate of Incorporation of the
Corporation as provided in Exhibit A hereto was duly adopted in accordance with
the provisions of Section 242 and Section 245 of the General Corporation Law of
the State of Delaware by the Board of Directors of the Corporation.
4. Pursuant to Section 245 of the Delaware General Corporation Law,
approval of the stockholders of the Corporation has been obtained.
5. The Third Amended and Restated Certificate of Incorporation so adopted
reads in full as set forth in Exhibit A attached hereto and is hereby
incorporated by reference.
IN WITNESS WHEREOF, the undersigned has signed this certificate this 28th
day of August, 2006, and hereby affirms and acknowledges under penalty of
perjury that the filing of this Third Amended and Restated Certificate of
Incorporation is the act and deed of Clearwire Corporation.
CLEARWIRE CORPORATION
By /s/ Benjamin G. Wolff
-------------------------------------
Name Benjamin G. Wolff
Title Co-President & Co-CEO
EXHIBIT A
THIRD AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CLEARWIRE CORPORATION
ARTICLE I
The name of the corporation is Clearwire Corporation (the "Corporation").
ARTICLE II
The address of the Corporation's registered office in the State of Delaware
is 2711 Centerville Road, Suite 400, City of Wilmington, County of New Castle.
The name of the Corporation's registered agent at such address is Corporation
Service Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of the
State of Delaware (the "DGCL").
ARTICLE IV
Section 1. Authorized Capital Stock. The total number of shares of capital
stock that the Corporation is authorized to issue is 805,000,000 shares,
initially consisting of 700,000,000 shares of Class A Common Stock, par value
$0.0001 per share (the "Class A Common Stock"). 100,000,000 shares of Class B
Common Stock, par value $0.0001 per share (the "Class B Common Stock") and
5,000,000 shares of Preferred Stock, par value $0.0001 per share (the "Preferred
Stock"). (In this Certificate of Incorporation, the term "Common Stock" means
the Class A Common Stock and Class B Common Stock collectively).
Section 2. Common Stock
(a) Equality of Rights Generally. Each share of Common Stock will,
except as otherwise provided in this Certificate of Incorporation, be identical
in all respects and will have equal rights, powers and privileges.
(b) Voting Rights. Holders of Class A Common Stock will be entitled to
one vote for each share of Class A Common Stock held of record on the applicable
record date, and holders of Class B Common Stock will be entitled to ten (10)
votes for each share of Class B Common Stock held of record on the applicable
record date, in each case, on each matter submitted to a vote of stockholders.
Holders of Class A Common Stock and Class B Common Stock will vote together as a
single class of Common Stock on each matter submitted to a vote of stockholders.
(c) Dividends.
(i) The holders of the Common Stock will be entitled to receive
dividends at such times and in such amounts as may be determined by the Board of
Directors of the Corporation (the "Board of Directors") and declared out of the
any funds lawfully available therefor. Dividends on Common Stock declared
payable from time to time by the Board of Directors, whether payable in cash,
property or shares of capital stock of the Corporation, will be paid equally, on
a per share basis, to holders of Common Stock.
(ii) In the case of any consolidation, merger, recapitalization,
reorganization or similar event: (i) the consideration payable in respect of
each share of Class A Common Stock will be the same and (ii) prior to the
conversion of all shares of Class B Common Stock into shares of Class A Common
Stock, the consideration payable in respect of each share of Class B Common
Stock will be the same as that payable in respect of each share of Class A
Common Stock. Notwithstanding the foregoing, if the consideration payable in
respect of shares of Class A Common Stock and Class B Common Stock consists of
securities, the securities issued to the holders of Class A Common Stock and
Class B Common Stock will be identical in all respects, except that the
conversion rights and disproportionate voting power of the Class B Common Stock
(i.e., the conversion of Class B Common Stock into Class A Common Stock and the
entitlement of each share of Class B Common Stock to ten (10) votes per share
versus one (1) vote per share with regard to a share of Class A Common Stock)
may be incorporated into the terms of the securities issued to the holders of
the Class B Common Stock.
(d) Conversion of Class B Common Stock.
(i) Right to Convert. At any time or from time to time each share
of Class B Common Stock will be convertible at the option of the holder thereof
into one fully paid and nonassessable share of Class A Common Stock ("Optional
Conversion Rights").
(ii) Automatic Conversion. Each share of Class B Common Stock
will automatically convert, without any action by the holder of such shares,
into one fully paid and nonassessable share of Class A Common Stock, upon the
earliest to occur of (A) the date on which the holder of such share of Class B
Common Stock, together with its Affiliates, has Beneficial Ownership of less
than 5% of the issued and outstanding shares of Class B Common Stock or (B) upon
any transfer by the holder of such share of Class B Common Stock other than a
Permitted Transfer, solely as to any shares of Class B Common Stock so
transferred.
(iii) Mechanics of Conversion. In the event of the conversion of
any Class B Common Stock pursuant to this Section 2(d) of Article TV, such
holder will surrender the certificate or certificates therefor, duly endorsed,
at the office of the Corporation or any transfer agent of such stock, and will
deliver together therewith written notice of the election or requirement to
convert the same and will state therein the name or names in which the
certificate or certificates for shares of Class A Common Stock are to be issued.
The Corporation will, as soon as practical thereafter, issue and deliver at such
office to such holder or the nominee or nominees of such holder, a certificate
or certificates for the number of shares of Class A Common Stock to which such
holder will be entitled. Such conversion will be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
shares to be converted and the Person or Persons entitled to receive the shares
of Class A Common
2
Stock issuable on the conversion will be treated for all purposes as the record
holder or holders of such shares of Class A Common Stock as of such date.
(iv) Reservation of Class A Common Stock Issuable upon
Conversion. The Corporation will at all times keep available out of its
authorized but unissued shares of Class A Common Stock, solely for the purposes
of effecting the conversion of the shares of Class B Common Stock, such number
of shares of Class A Common Stock as will be sufficient to effect the conversion
of all of the outstanding shares of Class B Common Stock; and if at any time the
number of authorized but unissued shares of Class A Common Stock will not be
sufficient to effect the conversion of all of the then outstanding shares of
Class B Common Stock, in addition to such other remedies as may be available to
the holders of such shares, the Corporation will take such corporate action as
may, in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Class A Common Stock to such number of shares as will be
sufficient for such purposes, including, without limitation, engaging in best
efforts to obtain the requisite stockholder approval of any necessary amendment
to this Certificate of Incorporation.
(v) No Impairment. The Corporation will not, (i) by amendment of
this Certificate of Incorporation or the Corporation's Bylaws, (ii) by adopting
any provision or entering into any agreement inconsistent therewith or (iii)
through any reorganization, recapitalization, transfer of assets, consolidation,
merger, dissolution, issuance of shares or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out all of the provisions of this
Section 2 of Article IV and in taking all of such action as may be necessary or
appropriate in order to protect the powers, preferences and rights, including
the voting rights and conversion rights of the holders of shares of Class B
Common Stock against impairment.
Section 3. Preferred Stock. The Preferred Stock may be issued in one or
more series as may be determined by the Board of Directors. The Board of
Directors is hereby authorized to issue the shares of Preferred Stock and to fix
from time to time before issuance the number of shares to be included in any
series and the designation, relative powers, preferences and rights and
qualifications, limitations or restrictions of all shares of such series. The
authority of the Board of Directors with respect to each series will include,
without limiting the generality or effect of the foregoing, the determination of
any or all of the following:
(a) the number of shares of any series and the designation to
distinguish the shares of such series from the shares of all other series;
(b) the voting powers, if any, and whether the voting powers are full
or limited in such series;
(c) the redemption provision, if any, applicable to the series,
including the redemption price or prices to be paid;
(d) whether dividends, if any, will be cumulative or noncumulative,
the dividend rate of the series and the dates and preferences of dividends on
such series;
3
(e) the rights of the series upon the voluntary or involuntary
dissolution of, or upon any distribution of the assets of, the Corporation;
(f) the provisions, if any, pursuant to which the shares of the series
are convertible into, or exchangeable for, shares of any other class or classes
or of any other series of the same or any other class or classes of stock, or
any other security, of the Corporation or any other corporation or other entity,
and the price or prices or the rate or rates of conversion or exchange
applicable thereto;
(g) the right, if any, to subscribe for or to purchase any securities
of the Corporation or any other corporation or other entity;
(h) the provisions, if any, of a sinking fund applicable to such
series; and
(i) any other relation, participation, option or other special powers,
preferences, rights, qualifications, limitations or restrictions thereof;
all as may be determined from time to time by the Board of Directors and stated
in the resolution or resolutions providing for the issuance of such Preferred
Stock.
Section 4. Stock Ownership and the Federal Communications Laws.
(a) Restrictions on Stock Ownership or Transfer. Notwithstanding any
other provision of this Certificate of Incorporation to the contrary, the
Corporation may restrict the ownership, or proposed ownership, of shares of
capital stock of the Corporation by any Person if such ownership or proposed
ownership (i) is or would reasonably be expected to be inconsistent with, or in
violation of, any provision of the Federal Communications Laws, (ii) limits or
impairs or would reasonably be expected to limit or impair any business
activities or proposed business activities of the Corporation under the Federal
Communications Laws or (iii) subjects or would reasonably be expected to subject
the Corporation to any regulation under the Federal Communications Laws to which
the Corporation would not be subject but for such ownership or proposed
ownership (clauses (i), (ii) and (iii) collectively, the "FCC Regulatory
Limitations").
(b) Beneficial Ownership Inquiry. The Corporation may by written
notice require a Person that is a holder of record of, or that the Corporation
knows to have, or has reasonable cause to believe has, Beneficial Ownership of
capital stock of the Corporation, to certify that, to the knowledge of such
Person:
(i) no capital stock as to which such Person has record ownership
or Beneficial Ownership is, directly or indirectly, Beneficially Owned by
Aliens; or
(ii) the number of shares of capital stock held of record or,
directly or indirectly, Beneficially Owned by such Person that are held of
record or Beneficially Owned by Persons that are Aliens are as set forth in such
certification.
With respect to any capital stock identified by such Person in
response to Section 4(b)(ii) above, the Corporation may require such Person to
provide such further information as the Corporation may reasonably require in
order to implement the provisions of Sections 4(c)
4
and 4(d) of this Article IV. For purposes of applying Sections 4(c) and 4(d) of
this Article IV with respect to any capital stock of the Corporation, if any
Person fails to provide the certification or other information to which the
Corporation is entitled pursuant to this Section 4(b) of Article IV, the
Corporation in its sole discretion may presume that the capital stock of the
Corporation in question is, or is not, directly or indirectly, Beneficially
Owned by Aliens.
(c) Denial of Rights, Refusal to Transfer. If (i) any Person from whom
information is requested pursuant to Section 4(b) of this Article IV should not
provide all the information requested by the Corporation, and (ii) the
Corporation reasonably concludes that a stockholder's ownership or proposed
ownership of, or that a stockholder's exercise of any rights of ownership with
respect to, shares of capital stock of the Corporation results or would
reasonably be expected to result in an FCC Regulatory Limitation or that the
capital stock of the Corporation in question is Beneficially Owned by Aliens,
then, in the case of either clause (i) or clause (ii), the Corporation may (A)
refuse to permit the transfer of shares of capital stock of the Corporation to
such proposed stockholder, (B) suspend those rights of stock ownership the
exercise of which causes or would reasonably be expected to cause such FCC
Regulatory Limitation, (C) redeem such shares of capital stock of the
Corporation held by such stockholder in accordance with the terms and conditions
set forth in Section 4(d) of this Article IV, and/or (D) exercise any and all
appropriate remedies, at law or in equity, in any court of competent
jurisdiction, against any such stockholder or proposed transferee, with a view
towards obtaining such information or preventing or curing any situation which
causes or could cause a FCC Regulatory Limitation. Any such refusal of transfer
or suspension of rights pursuant to clauses (A) and (B), respectively, of the
immediately preceding sentence will remain in effect until the requested
information has been received or the Corporation has determined that such
transfer, or the exercise of such rights, as the case may be, will not result in
a FCC Regulatory Limitation.
(d) Redemption of Shares Held by Aliens. Outstanding shares of capital
stock of the Corporation Beneficially Owned by Aliens may be redeemed by the
Corporation. The terms and conditions of such redemption will be as follows,
subject in any case to any other rights of a particular Alien or of the
Corporation pursuant to any contract or agreement between such Alien and the
Corporation:
(i) except as provided in Section 4(d)(vi) of this Article IV,
the redemption price of the shares to be redeemed pursuant to this Section 4(d)
of Article IV will be equal to the Market Price of such shares on the third
Business Day before the date notice of such redemption is given pursuant to
Section 4(d)(iv) of this Article IV, provided that except as provided in Section
4(d)(vi) of this Article IV, such redemption price as to any Alien who purchased
such shares of Common Stock within one year before the Redemption Date will not
(unless otherwise determined by the Board of Directors) exceed the purchase
price paid by such Alien for such shares;
(ii) the redemption price of such shares will be paid in cash,
Redemption Securities or any combination thereof;
(iii) if less than all of the shares, directly or indirectly,
Beneficially Owned by Aliens are to be redeemed, the shares to be redeemed will
be selected in such manner as will be determined in good faith by the Board of
Directors, which may include selection first
5
of the most recently purchased shares thereof, selection by lot or selection in
any other manner determined in good faith by the Board of Directors to be
equitable;
(iv) the Corporation will give notice of the Redemption Date at
least thirty (30) days before the Redemption Date to the record holders of the
shares selected to be redeemed (unless waived in writing by any such holder) by
delivering a written notice by first class mail, postage pre-paid, to the
holders of record of the shares selected to be redeemed, addressed to such
holders at their last address as shown upon the stock transfer books of the
Corporation (each such notice of redemption specifying the date fixed for
redemption, the redemption price, the place or places of payment and that
payment will be made upon presentation and surrender of the certificates
representing such shares); provided, that the Redemption Date may be the date on
which written notice is given to record holders if the cash or Redemption
Securities necessary to effect the redemption have been deposited in trust for
the benefit of such record holders and subject to immediate withdrawal by them
upon surrender of the stock certificates for their shares to be redeemed;
(v) on the Redemption Date, unless the Corporation shall have
defaulted in paying or setting aside for payment the cash or Redemption
Securities payable upon such redemption, any and all rights of Aliens in respect
of shares so redeemed (including without limitation any rights to vote or
participate in dividends) will cease and terminate, and from and after such
Redemption Date such Aliens will be entitled only to receive the cash or
Redemption Securities payable upon redemption of the shares to be redeemed; and
(vi) such other terms and conditions as the Board of Directors
shall determine to be equitable.
(e) Presumption of Notice. Any notice that is mailed as herein
provided will be conclusively presumed to have been duly given, whether or not
the holder of shares to be redeemed received such notice, and failure to give
such notice by mail, or any defect in such notice, to holders of shares
designated for redemption will not affect the validity of the proceedings for
the redemption of any other shares.
(f) Factual Determination. The Board of Directors will have the power
and duty to construe and apply the provisions of this Section 4 of Article IV
and, with respect to shares of capital stock, to make all determinations
necessary or desirable to implement such provisions, including, but not limited
to: (i) the number of shares of capital stock that are Beneficially Owned by any
Person; (ii) whether a Person is an Alien; (iii) the application of any other
definition of this Certificate of Incorporation to the given facts; and (iv) any
other matter relating to the applicability or effect of Section 4(d) of this
Article IV.
(g) Legends. The Corporation shall, to the extent required by law,
note on the certificates of its capital stock that the shares represented by
such certificates are subject to the restrictions set forth in this Section 4 of
Article IV.
ARTICLE V
The number of the directors of the Corporation will be fixed from time to
time in the manner described in the Bylaws of the Corporation. The manner of
election and removal of such
6
directors and the term such directors will hold office shall be designated in
the Bylaws of the Corporation. Each director will hold office until a successor
is duly elected and qualified or until his or her earlier death, resignation or
removal. Election of directors need not be by written ballot unless the Bylaws
of the Corporation shall so provide.
ARTICLE VI
To the fullest extent permitted by the DGCL or any other Applicable Law
currently or hereafter in effect, no director of the Corporation will be
personally liable to the Corporation or its stockholders for or with respect to
any acts or omissions in the performance of his or her duties as a director of
the Corporation. Any repeal or modification of this Article VI will not
adversely affect any right or protection of a director of the Corporation in
respect of any act or omission occurring in whole or in part prior to such
repeal or modification.
ARTICLE VII
Section 1. Right to Indemnification. Each individual who was or is a party
to or is threatened to be made a party to or is otherwise involved in, any
action, suit or proceeding, whether pending or threatened, whether civil,
criminal, administrative or investigative and whether brought by or in the right
of the Corporation or otherwise (a "Proceeding"), by reason of the fact that
such individual is or was a director or officer of the Corporation, or is or was
a director or officer of the Corporation and is or was serving at the request of
the Corporation as a director, officer, employee or agent or of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, (an "Indemnitee") will be indemnified and held harmless by the
Corporation to the fullest extent permitted by the DGCL, as the same exists or
may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than such law permitted the Corporation to provide prior
to such amendment) against all expenses, liability and loss (including, without
limitation, attorneys' fees and expenses, judgments, fines, excise taxes or
penalties pursuant to the Employee Retirement Income Security Act of 1974, as
amended, ("ERISA") and amounts paid in settlement) reasonably incurred or
suffered by such Indemnitee in connection therewith. The right to
indemnification will extend to the heirs, executors, administrators and estate
of any such director or officer. The right to indemnification provided in this
Article VII: (a) will not be exclusive of any other rights to which any
individual seeking indemnification may otherwise be entitled, including without
limitation, pursuant to any contract approved by a majority of the Board of
Directors (whether or not the directors approving such contract are or are to be
parties to such contract or similar contracts); and (b) will be applicable to
matters otherwise within its scope whether or not such matters arose or arise
before or after the adoption of this Article VII. Without limiting the
generality or the effect of the foregoing, the Corporation may adopt Bylaws, or
enter into one or more agreements with any individual, that provide for
indemnification greater or otherwise different than that provided in this
Article VII or the DGCL, and any such agreement approved by a majority of the
Board of Directors will be a valid and binding obligation of the Corporation
regardless of whether one or more members of the Board of Directors, or all
members of the Board of Directors, are parties thereto or to similar agreements.
Any amendment or repeal of, or adoption of any provision inconsistent with, this
Article VII will not adversely affect any right or protection existing
hereunder, or arising out of events occurring or circumstances existing, in
whole or in part, prior to such
7
amendment, repeal or adoption, and no such amendment, repeal or adoption will
affect the legality, validity or enforceability of any contract entered into or
right granted prior to the effective date of such amendment, repeal or adoption.
Section 2. Right to Advancement of Expenses. The right to indemnification
conferred in Section 1 of this Article VII will include the right to be paid by
the Corporation the expenses (including, without limitation, attorneys' fees and
expenses) reasonably incurred in defending any such Proceeding in advance of its
final disposition (an "Advancement of Expenses"); provided, however, that, if
the DGCL so requires, an Advancement of Expenses incurred by an Indemnitee in
his or her capacity as a director or officer (and not in any other capacity in
which service was or is rendered by such Indemnitee, including, without
limitation, service to an employee benefit plan) will be made only upon delivery
to the Corporation of an undertaking (an "Undertaking"), by or on behalf of such
Indemnitee, to repay all amounts so advanced if it will ultimately be determined
by final judicial decision from which there is no further right to appeal (a
"Final Adjudication") that such Indemnitee is not entitled to be indemnified for
such expenses under this Section 2 of Article VII or otherwise. The rights to
indemnification and to the Advancement of Expenses conferred in Sections 1 and 2
of this Article VII shall be contract rights and such rights will continue as to
an Indemnitee who has ceased to be a director or officer and will inure to the
benefit of the Indemnitee's heirs, executors, administrators and estate.
Section 3. Right of Indemnitee to Bring Suit. If a claim under Sections 1
and 2 of this Article VII is not paid in full by the Corporation within sixty
(60) calendar days after a written claim has been received by the Corporation,
except in the case of a claim for an Advancement of Expenses, in which case the
applicable period will be twenty (20) calendar days, the Indemnitee may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim. If successful in whole or in part in any such suit, or in a suit
brought by the Corporation to recover an Advancement of Expenses pursuant to the
terms of an Undertaking, the Indemnitee will be entitled to be paid also the
expense of prosecuting or defending such suit. In (a) any suit brought by the
Indemnitee to enforce a right to indemnification hereunder (but not in a suit
brought by the Indemnitee to enforce a right of an Advancement of Expenses) it
shall be a defense that, and (b) any suit brought by the Corporation it shall be
entitled to recover such expenses upon a Final Adjudication that, the Indemnitee
has not met any applicable standard for indemnification set forth in the DGCL.
Neither the failure of the Corporation (including the Board of Directors, legal
counsel or stockholders) to have made a determination prior to the commencement
of such suit that indemnification of the Indemnitee is proper in the
circumstances because the Indemnitee has met the applicable standard of conduct
set forth in the DGCL, nor an actual determination by the Corporation (including
the Board of Directors, legal counsel or stockholders) that the Indemnitee has
not met such applicable standard of conduct, will create a presumption that the
Indemnitee has not met the applicable standard of conduct or, in the case of
such suit brought by the Indemnitee to enforce a right to indemnification or to
an Advancement of Expenses hereunder, or brought by the Corporation to recover
an Advancement of Expenses pursuant to terms of an Undertaking, the burden of
proving that the Indemnitee is not entitled to be indemnified, or to such
Advancement of Expenses, under this Article VII or otherwise will be on the
Corporation.
8
Section 4. Non-Exclusivity of Rights. The rights to indemnification and to
the Advancement of Expenses conferred in this Article VII shall not be exclusive
of any other right which any individual may have or hereafter acquire under any
statute, this Certificate of Incorporation, the Bylaws of the Corporation, any
agreement, any vote of stockholders or directors, or otherwise.
Section 5. Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, manager, trustee, officer, employee
or agent of the Corporation or another corporation, partnership, joint venture,
trust or other enterprise against any expenses, liability or loss, whether or
not the Corporation would have the power to indemnify such individual against
such expense, liability or loss under the DGCL.
Section 6. Indemnification of Employees and Agents of the Corporation. The
Corporation may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification and to the Advancement of Expenses to
any employee or agent of the Corporation to the fullest extent of the provisions
of this Article VII with respect to the indemnification and Advancement of
Expenses of directors and officers of the Corporation.
Section 7. Service for Subsidiaries. Any Person serving as a director,
officer, employee or agent of another corporation, partnership, limited
liability company, joint venture or other enterprise, at least 50% of whose
equity interests are owned by the Corporation (a "subsidiary" for this Article
VII) will be conclusively presumed to be serving in such capacity at the request
of the Corporation.
Section 8. Reliance. Persons who after the date of the adoption of this
provision become or remain directors or officers of the Corporation or who,
while a director, officer or other employee of the Corporation, become or remain
a director, officer, employee or agent of a subsidiary, will be conclusively
presumed to have relied on the rights to indemnity, Advancement of Expenses and
other rights contained in this Article VII in entering into or continuing such
service. The rights to indemnification and to the Advancement of Expenses
conferred in this Article VII shall apply to claims made against an indemnitee
arising out of acts or omissions which occurred or occur both prior and
subsequent to the adoption hereof.
Section 9. Merger or Consolidation. For purposes of this Article VII,
references to the "Corporation" will include, in addition to the resulting
Corporation, any constituent Corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers and employees or agents, so that any Person who is or was a
director, officer, employee or agent of such constituent Corporation, or is or
was serving at the request of such constituent Corporation as a director,
officer, employee or agent of another Corporation, partnership, joint venture,
trust or other enterprise, will stand in the same position under this Article
VII with respect to the resulting or surviving Corporation as he or she would
have with respect to such constituent Corporation if its separate existence had
continued.
Section 10. Savings Clause. If this Article VII or any portion hereof will
be invalidated on any ground by any court of competent jurisdiction, then the
Corporation will nevertheless indemnify each Person entitled to indemnification
under Section 1 of this Article VII as to all expense, liability and loss
(including attorneys' fees and related disbursements,
9
judgments, fines, ERISA excise taxes and penalties, penalties and amounts paid
or to be paid in settlement) actually and reasonably incurred or suffered by
such Person and for which indemnification is available to such Person pursuant
to this Article VII to the fullest extent permitted by any applicable portion of
this Article VII that shall not have been invalidated and to the fullest extent
permitted by Applicable Law.
ARTICLE VIII
Section 1. Definitions. As used in this Certificate of Incorporation, the
term:
(a) "Affiliate" means a Person that directly, or indirectly through
one of more intermediaries, Controls, or is Controlled by, or is under common
Control with, another Person.
(b) "Alien" means "aliens," "their representatives," "a foreign
government or representatives thereof" or "any corporation organized under the
laws of a foreign country" as such terms are used in Section 310(b)(4) of the
Communications Act of 1934 (the "Communications Act").
(c) "Applicable Law" means all applicable provisions of (a)
constitutions, treaties, statutes, laws (including common law), rules,
regulations, ordinances or codes of any Governmental Authority and (b) orders,
decisions, injunctions, judgments, awards and decrees of any Governmental
Authority.
(d) "Associate" has the meaning ascribed to such term in Rule 12b-2
under the Exchange Act.
(e) "Beneficial Owner" (including, with its correlative meanings,
"Beneficially Own" and "Beneficial Ownership"), with respect to any securities,
means any Person which:
(i) has, or any of whose Affiliates or Associates has, directly
or indirectly, the right to acquire (whether such right is exercisable
immediately or only after the passage of time) such securities pursuant to any
agreement, arrangement or understanding (whether or not in writing), including,
without limitation, upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise;
(ii) has, or any of whose Affiliates or Associates has, directly
or indirectly, the right to vote or dispose of (whether such right is
exercisable immediately or only after the passage of time) or has "beneficial
ownership" of (as determined pursuant to Rule 13d-3 under the Exchange Act but
including all such securities which a Person has the right to acquire beneficial
ownership of whether or not such right is exercisable within the 60-day period
specified therein) such securities, including pursuant to any agreement,
arrangement or understanding (whether or not in writing);
(iii) has, or any of whose Affiliates or Associates has, any
agreement, arrangement or understanding (whether or not in writing) for the
purpose of acquiring, holding, voting or disposing of any securities which are
Beneficially Owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof); or.
10
(iv) holds a direct or indirect beneficial ownership interest in
the Person with record ownership or other beneficial ownership of capital stock
of the Corporation.
(f) "Business Day" means any day other than a day on which commercial
banks in The City of New York are required or authorized by law to be closed.
(g) "Control" means, with respect to a Person or Group, either of the
following:
(i) ownership by such Person or Group of Votes entitling it to
exercise in the aggregate more than 10% of the Voting Power of the entity in
question; or
(ii) possession by such Person or Group of the power, directly or
indirectly, (i) to elect a majority of the board of directors (or equivalent
governing body) of the entity in question, or (ii) to direct or cause the
direction of the management and policies of or with respect to the entity in
question, whether through ownership of securities, by contract or otherwise.
(h) "Disinterested Director Approval" means approval by an independent
committee of the Board comprised of Disinterested Directors.
(i) "Disinterested Directors" means, with respect to any matter to be
acted upon, each of the directors of the Corporation other than (i) for a
transaction between the Corporation and a director, the director who is party to
the transaction, (ii) for a transaction between the Corporation and any entity
other than a wholly-owned subsidiary of the Corporation, each director that is
an Interested Stockholder, or an employee or Affiliate of an Interested
Stockholder, of such entity, or (iii) for a transaction between the Corporation
and an Interested Stockholder of the Corporation, each director who is an
employee or Affiliate of such Interested Stockholder.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(k) "Federal Communications Laws" means any law of the United States
now or hereafter in effect (and any regulation thereunder, including, without
limitation, the Communications Act), and regulations thereunder, pertaining to
the ownership and/or operation or regulating the business activities of (x) any
television or radio station, daily newspaper, cable television system, Internet
service provider or other medium of mass communications or (y) any provider of
programming content to any such medium.
(l) "Governmental Authority" means any federation, nation, state,
sovereign or government, any federal, supranational, regional, state or local
political subdivision, any governmental or administrative body, instrumentality,
department or agency or any court, tribunal, administrative hearing body,
arbitration panel, commission or similar dispute resolving panel or body, and
any other entity exercising executive, legislative, judicial, regulatory or
administrative functions of a government.
(m) "Group" means any group within the meaning of Section 13(d)(3) of
the Exchange Act.
11
(n) "Holder" or "Holders" shall mean (a) Craig O. McCaw, (b) Eagle
River Holdings, LLC, (c) Intel Corporation, (d) all successors to a Holder by
way of merger, consolidation or sale of all or substantially all of such
Holder's assets and (d) all existing or future corporations, partnerships, joint
ventures, associations and other entities (each a "Subsidiary Entity") in which
such person or entity beneficially owns, directly or indirectly, fifty percent
(50%) or more of the outstanding voting stock, but excluding the Corporation or
any Subsidiary Entity in which the Corporation beneficially owns, directly or
indirectly, fifty percent (50%) or more of the outstanding voting stock.
(o) "Independent Director" means any member of the Board of Directors
who meets the director independence requirements of the rules and regulations of
The Nasdaq Stock Market, Inc. applicable to listed companies, as amended from
time to time, or if the principal United States listing or quotation of the
Common Stock is on another United States securities exchange or inter-dealer
quotation system of a registered national securities association, the director
independence requirements of the rules and regulations of that exchange or
association, as amended from time to time; provided, that if the Class A Common
Stock is not then traded on an exchange or association that maintains director
independence requirements, the Independent Directors will be the Arm's Length
Directors.
(p) "Interested Stockholder" means (i) with respect to any corporation
or other entity, any Person (other than the Corporation and any direct or
indirect wholly-owned subsidiary of the Corporation) that is the Owner of Stock
having (a) the right to vote more than 50% of the aggregate votes attributable
to the Voting Stock of such corporation or other entity or (b) 50% or more of
the economic interests of such corporation or other entity, and (ii) the
Affiliates of any Person determined to be an Interested Stockholder under clause
(i) of this Section 1(p).
(q) "Market Price" means as to any security, the average of the
closing prices of such security's sales on all domestic securities exchanges on
which such security may at the time be listed, or, if there have been no sales
on any such exchange on any day, the average of the highest bid and lowest asked
prices on all such exchanges at the end of such day, or, if on any day such
security is not so listed, the average of the representative bid and asked
prices quoted in the NASDAQ System as of 4:00 P.M., New York time, on such day,
or, if on any day such security is not quoted in the NASDAQ System, the average
of the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar successor organization, in each such case averaged
over a period of 21 days consisting of the day as of which "Market Price" is
being determined and the 20 consecutive business days prior to such day;
provided that if such security is listed on any domestic securities exchange the
term "business days" as used in this sentence means business days on which such
exchange is open for trading. If at any time such security is not listed on any
domestic securities exchange or quoted in the NASDAQ System or the domestic
over-the-counter market, the "Market Price" shall be the fair value thereof
determined in good faith by a majority of the Independent Directors.
(r) "Owner," including the terms "Own" and "Owned," when used with
respect to any Stock, means a Person that individually or with or through any of
its Affiliates:
(i) Beneficially Owns such Stock, directly or indirectly;
12
(ii) has (A) the right to acquire Beneficial Ownership of such
Stock (whether such right is exercisable immediately or only after the passage
of time) pursuant to any agreement, arrangement or understanding, or upon the
exercise of conversation rights, warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the Owner of Stock tendered pursuant
to a tender or exchange offer made by such Person or any of such Person's
Affiliates until such tendered Stock is accepted for purchase or exchange; or
(B) the right to vote such Stock pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be deemed the Owner of
any Stock because of such Person's right to vote such Stock if the agreement,
arrangement or understanding to vote such Stock arises solely from revocable
proxy or consent given in response to a proxy or consent solicitation made to
all holders of a class or series of such Stock; or
(iii) has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting (except voting pursuant to a revocable
proxy or consent or disposing of such Stock with any Person that Beneficially
Owns, or whose Affiliates Beneficially Own, directly or indirectly, such stock.
(s) "Permitted Transfer" by a holder of Class B Common Stock means any
transfer to:
(i) any Affiliate of the holder;
(ii) if the holder is a partnership or limited liability company,
any member or partner; or
(iii) if the holder is an individual, any transfer to any
immediate family member or any trust for the benefit of the individual or any
immediate family member.
(t) "Person" means an individual, a partnership, a limited liability
company, an association, a joint venture, a corporation, a trust, any entity
organized or existing under Applicable Law, an unincorporated organization or
any Governmental Authority.
(u) "Redemption Date" means the date fixed by the Board of Directors
for the redemption of any shares of capital stock of the Corporation pursuant to
Section 4(d) of Article IV.
(v) "Redemption Securities" means any debt or equity securities of the
Corporation, any of its Subsidiaries, or any combination thereof having such
terms and conditions as shall be approved by the Board of Directors and which,
together with any cash to be paid as part of the redemption price pursuant to
Section 4(d)(ii) of Article IV, in the opinion of an investment banking firm of
recognized national standing selected by the Board of Directors (which may be a
firm which provides other investment banking, brokerage or other services to the
Corporation), have a Market Price, at the time notice of redemption is given
pursuant to Section 4(d)(iv) of Article IV, at least equal to the redemption
price required to be paid by Section 4(d)(i) of Article IV.
(w) "Subsidiary" means, with respect to any Person (the "Parent"), any
other Person in which the Parent, one or more direct or indirect Subsidiaries of
the Parent, or the
13
Parent and one or more of its direct or indirect Subsidiaries (a) have the
ability, through ownership of securities individually or as a group, ordinarily,
in the absence of contingencies, to elect a majority of the directors (or
individuals performing similar functions) of such other Person, and (b) own more
than 50% of the equity interests.
(x) "Stock" means, with respect to any corporation, capital stock and,
with respect to any other entity, any equity interest.
(y) "Trading Day" means, with respect to any security, any day on
which the principal national securities exchange on which such security is
listed or admitted to trading or The Nasdaq Stock Market, Inc., if such security
is approved for quotation thereon, is open for the transaction of business
(unless such trading shall have been suspended for the entire day) or, if such
security is not listed or admitted to trading on any national securities
exchange or The Nasdaq Stock Market, Inc., any day other than a Saturday, Sunday
or a day on which banking institutions in the State of New York are authorized
or obligated by law or executive order to close.
(z) "Vote" means, with respect to any entity, the ability to cast a
vote at a stockholders', members' or comparable meeting of such entity with
respect to the election of directors, managers or other members of such entity's
governing body, or the ability to cast a general partnership or comparable vote.
(aa) "Voting Power" means, with respect to any entity as at any date,
the aggregate number of Votes outstanding as at such date in respect of such
entity.
(bb) "Voting Stock" means, with respect to any corporation, Stock of
any class or series entitled to vote generally in the election of directors and,
with respect to any entity that is not a corporation, any equity interest
entitled to vote generally in the election of the governing body of such entity,
including, without limitation, the Class A Common Stock and the Class B Common
Stock.
ARTICLE IX
The Board of Directors may make, amend and repeal the Bylaws of the
Corporation. Any Bylaw made by the Board of Directors under the powers conferred
hereby may be amended or repealed by the Board of Directors (except as specified
in any such Bylaw) or by the stockholders in the manner provided in the Bylaws
of the Corporation.
ARTICLE X
Section 1. Certain Acknowledgements. In anticipation that:
(a) each Holder will remain, for some period of time, a stockholder of
the Corporation;
(b) the Corporation and each Holder may engage in the same or similar
activities or lines of business and may have an interest in the same or similar
areas of corporate opportunities;
14
(c) there will or may be benefits to be derived by the Corporation
through its continued or potential contractual, corporate and business relations
with the Holders (including without limitation service of officers of the
Holders as directors of the Corporation); and
(d) there will be benefits in providing guidelines for directors and
officers of the Holders and of the Corporation with respect to the allocation of
corporate opportunities and other matters;
the provisions of this Article X are set forth to regulate, define and guide the
conduct of certain affairs of the Corporation as they may involve each Holder
and its partners, principals, directors, officers, members, managers and/or
employees, and the powers, rights, duties and liabilities of the Corporation and
its officers, directors, employees and stockholders in connection therewith.
Section 2. Competition and Corporate Opportunities. Except as each Holder
may otherwise agree in writing, each Holder shall have the right to, and shall
have no duty not to, (a) engage in the same or similar business activities or
lines of business as the Corporation, (b) compete against the Corporation, (c)
do business with any potential or actual competitor, customer or supplier of the
Corporation, and (d) employ or otherwise engage any officer or employee of the
Corporation. Neither a Holder nor any partners, principals, directors, officers,
members, managers and/or employees thereof (except as provided in Section 3 of
this Article X) shall be liable to the Corporation or its stockholders,
regardless of the impact any such activities may have on the Corporation, for
breach of any fiduciary duty by reason of any such activities of such Holder or
of the participation therein of such person and the Corporation shall have no
interest or expectancy that such Holder will not engage in any of the foregoing
activities, any such interest or expectancy being hereby renounced by the
Corporation. In the event that a Holder acquires knowledge of a potential
transaction or matter that may be a corporate opportunity or otherwise of
interest to such Holder and the Corporation, such Holder shall have no duty to
communicate or present such corporate opportunity to the Corporation, the
Corporation shall have no interest or expectancy in any such transaction or
matter, any such interest or expectancy being hereby renounced by the
Corporation, and, without limiting the generality of the foregoing, shall not be
liable to the Corporation or its stockholders for breach of any fiduciary duty
as a stockholder of the Corporation by reason of the fact that such Holder
pursues or acquires such corporate opportunity for itself, directs such
corporate opportunity to another person, or does not present such corporate
opportunity to the Corporation. Without limiting the generality of the
foregoing, a Holder shall have no such duty and shall not be so liable even if a
director or officer of the Corporation (including, without limitation, any such
director or officer who is also a partner, principal, director, officer, member,
manager and/or employee of such Holder) becomes aware of such transaction or
matter in his or her capacity as a director or officer of the Corporation, so
long as such Holder also learns, discovers, acquires or develops such
transaction or matters independently or otherwise in a manner that was not based
on such director's or officer's awareness of such transaction or matter. The
provisions of this Section 2 of Article X shall apply and not be affected by any
other provision of this Certificate of Incorporation including, without
limitation, Sections 3 or 4 of Article X.
Section 3. Allocation of Corporate Opportunities. In the event that a
director or officer of the Corporation who is also a director, officer or
employee of a Holder acquires knowledge of a potential transaction or matter
that may be a corporate opportunity or otherwise
15
of interest to the Corporation and such Holder, such director or officer of the
Corporation (a) shall have fully satisfied and fulfilled the fiduciary duties of
such director or officer to the Corporation and its stockholders with respect to
such corporate opportunity, (b) shall not be liable to the Corporation or its
stockholders for breach of any fiduciary duty with respect to such corporate
opportunity by reason of his or her not communicating information regarding such
corporate opportunity to the Corporation, and/or such Holder's pursuing or
acquiring such corporate opportunity for itself or directing such corporate
opportunity to another person, (c) shall be deemed to have acted in good faith
and in a manner such person reasonably believes to be in and not opposed to the
best interests of the Corporation, and (d) shall be deemed not to have breached
his or her duty of loyalty to the Corporation or its stockholders and not to
have derived an improper benefit therefrom, if such corporate opportunity
belongs to such Holder in accordance with the following policy:
(i) a corporate opportunity offered or disclosed to any person who is
a director but not an officer of the Corporation and who is also a partner,
principal, director, officer, member, manager and/or employee of a Holder shall
belong to such Holder, unless such opportunity is expressly offered to such
person primarily in his or her capacity as a director of the Corporation, in
which case such opportunity shall belong to the Corporation;
(ii) a corporate opportunity offered or disclosed to any person who is
an officer (whether or not a director) of the Corporation and who is also a
partner, principal, director or member, but not an officer or manager of a
Holder shall belong to the Corporation, unless such opportunity is expressly
offered to such person primarily in his or her capacity as a partner, principal,
director or member of such Holder, in which case such opportunity shall belong
to such Holder; and
(iii) a corporate opportunity offered or disclosed to any other person
who is an officer or manager of both the Corporation and a Holder, or a partner,
principal, director or member of both the Corporation and a Holder, shall belong
to such Holder or to the Corporation, as the case may be, if such opportunity is
expressly offered to such person primarily in his or her capacity as an partner,
principal, director, member, officer or manager of such Holder or of the
Corporation, respectively; otherwise, such opportunity shall belong to such
Holder.
Section 4. Certain Matters Deemed Not Corporate Opportunities. In addition
to and notwithstanding the foregoing provisions of this Article X, a corporate
opportunity will not be deemed to belong to the Corporation if it is a business
opportunity or matter (i) that the Corporation is not contractually permitted,
financially able or legally able to undertake, (ii) that is, from its nature,
not in the line of the Corporation's business or that is one in which the
Corporation has no interest as evidenced by a decision of a majority of the
Arm's Length Directors, or (iii) in which the Corporation or a Holder is
permitted to participate pursuant to any agreement between the Corporation and
such Holder that has been approved by a majority of the Arm's Length Directors,
it being acknowledged that the rights of the Corporation under any such
agreement shall be deemed to be contractual rights and shall not be corporate
opportunities of the Corporation for any purpose; provided, however, that no
presumption or implication as to corporate opportunities relating to any
transaction not explicitly covered by such an agreement shall arise from the
existence or absence of any such agreement.
16
Section 5. Agreements and Transactions with any Holder. If any contract
agreement, arrangement or transaction between the Corporation and a Holder
involves a corporate opportunity and is approved in accordance with the
procedures set forth in Article XI hereof, such Holder and its officers and
directors (including without limitation, any such person who is also a director
or officer of the Corporation) shall also, for the purposes of this Article X
and the other provisions of this Certificate of Incorporation, be deemed to have
fully satisfied and fulfilled any fiduciary duties they may have to the
Corporation and its stockholders. Any such contract, agreement, arrangement or
transaction involving a corporate opportunity not so approved shall not by
reason thereof result in any such breach of any fiduciary duty, but shall be
governed by the other provisions of Article X, this Certificate of
Incorporation, the bylaws, the Delaware General Corporation Law and other
Applicable Law.
Section 6. Amendment of this Article. Notwithstanding anything to the
contrary elsewhere contained in this Certificate of Incorporation, the
affirmative vote of the holders of at least 75% of the Voting Power of all
shares of Common Stock then outstanding, voting together as a single class,
shall be required to alter, amend or repeal, or to adopt any provision
inconsistent with, this Article X.
Section 7. Deemed Notice. Any person purchasing or otherwise acquiring any
interest in any shares of stock or other securities (including without
limitation stock options) of the Corporation shall be deemed to have notice of
and consented to the provisions of this Article X.
Section 8. No Expansion. Nothing in this Article X is intended to, and
shall not be construed to, expand any party's fiduciary duties under Applicable
Law.
Section 9. Chairman of the Board Not an Officer. For purposes of this
Article X, a director of the Corporation who is Chairman of the Board of
Directors of the Corporation shall not be deemed to be an officer of the
Corporation by reason of holding such position (regardless of whether such
position is deemed an office of the Corporation under the bylaws of the
Corporation), unless such person is a full-time employee of the Corporation.
ARTICLE XI
Section 1. Certain Acknowledgements. In anticipation that:
(a) each Holder will remain, for some period of time, a stockholder of
the Corporation and have continued contractual, corporate and business relations
with the Corporation;
(b) the Corporation and each Holder may enter into contracts or
otherwise transact business with each other and the Corporation may derive
benefits therefrom; and
(c) the Corporation may from time to time enter into contractual,
corporate or business relations with one or more of its directors, or one or
more corporations, partnerships, associations or other organizations in which
one or more of its directors have a financial interest (collectively, "Related
Entities");
17
the provisions of this Article XI are set forth to regulate and guide certain
contractual relations and other business relations of the Corporation as they
may involve each Holder, Related Entities and their respective officers and
directors, and the powers, rights, duties and liabilities of the Corporation and
its officers, directors and stockholders in connection therewith.
Section 2. No Limitation. The provisions of this Article XI are in addition
to, and not in limitation of, the provisions of the Delaware General Corporation
Law and the other provisions of this Certificate of Incorporation. Any contract
or business relation which does not comply with procedures set forth in this
Article XI shall not by reason thereof be deemed void or voidable or result in
any breach of any fiduciary duty to, or duty of loyalty to, or failure to act in
good faith or in the best interests of, the Corporation, or the derivation of
any improper personal benefit, but shall be governed by the remaining provisions
of this Certificate of Incorporation, the Bylaws, the Delaware General
Corporation Law and other Applicable Law.
Section 3. Related Party Transactions. No contract, agreement, arrangement
or transaction between the Corporation, on the one hand, and a Holder or a
Related Entity or one or more of the directors or officers of the Corporation,
on the other hand, or any amendment, modification or termination thereof, shall
be void or voidable solely for the reason that a Holder or Related Entity or any
one or more of the officers or directors of the Corporation are parties thereto,
or solely because any such directors or officers are present at or participate
in the meeting of the Board of Directors or committee thereof which authorizes
such contract, agreement, arrangement, transaction, amendment, modification or
termination (each, a "Transaction") or solely because his, her or their votes
are counted for such purpose, and a Holder, any Related Entity and such
directors and officers (a) shall have fully satisfied and fulfilled any
fiduciary duties they may have to the Corporation and its stockholders with
respect thereto, (b) shall not be liable to the Corporation or its stockholders
for any breach of any fiduciary duty they may have by reason of their approving
any such Transaction or the Corporation's entering into, performing or
consummating any such Transaction, (c) shall be deemed to have acted in good
faith and in a manner such persons reasonably believed to be in and not opposed
to the best interests of the Corporation, to the extent such standard is
applicable to such person's conduct, and (d) shall be deemed not to have
breached any duties of loyalty to the Corporation or its stockholders, whether
or not they have derived a personal benefit therefrom, if:
(i) the material facts as to the Transaction are disclosed or are
known to the Board of Directors or the committee thereof that authorizes the
Transaction and the Board of Directors or such committee in good faith
authorizes or approves the Transaction by the affirmative vote of a majority of
me directors on the Board of Directors who are disinterested with respect to the
Transaction ("Arm's Length Directors") or such committee (even though the Arm's
Length Directors are less than a quorum);
(ii) the material facts as to the Transaction are disclosed or are
known to the holders of the voting stock entitled to vote thereon, and the
Transaction is specifically approved in good faith by vote of the holders of a
majority of the then outstanding voting stock not owned by such Holder or such
Related Entity, voting together as a single class;
18
(iii) such Transaction is effected pursuant to, and consistent with,
terms and conditions specified in any arrangements, standards, protocols or
guidelines (collectively, the "Guidelines") which are in good faith authorized
or approved, after disclosure or knowledge of the material facts related
thereto, by the affirmative vote of a majority of the Arm's Length Directors on
the Board of Directors or the applicable committee thereof (even though the
Arm's Length Directors are less than a quorum) or by vote of the holders of a
majority of the then outstanding voting stock not owned by such Holder or such
Related Entity, voting together as a single class (such authorization or
approval of such Guidelines constituting or being deemed to constitute
authorization or approval of such Transaction); or
(iv) such Transaction is fair as to the Corporation as of the time it
is authorized, approved or ratified by the Board of Directors, a committee
thereof or the stockholders of the Corporation.
In addition, each Transaction authorized, approved or effected, and such
Guidelines so authorized or approved, as described in (i), (ii), or (iii) above,
shall be deemed to be entirely fair to the Corporation and its stockholders;
provided, however, that if such authorization or approval is not obtained, or
such Transaction is not so effected, no presumption shall arise that such
Transaction or such Guidelines are not fair to the Corporation and its
stockholders.
Section 4. Certain Interested Party Transactions. Except as expressly
permitted under Section 3 of that certain Amended and Restated Stockholders
Agreement, dated as of March 16, 2004, as amended from time to time, between the
Corporation and certain of its stockholders, any transaction between the
Corporation and (i) one or more of the Corporation's directors or officers or
any entity (other than a wholly-owned subsidiary of the Corporation) in which
any of the Corporation's directors or officers is an employee or Affiliate of an
Interested Stockholder of such entity, (ii) an Interested Stockholder, or (iii)
any other transaction otherwise provided for in the Corporation's bylaws, shall
be (x) fair to the Corporation and (y) subject to Disinterested Director
Approval or approval by the disinterested stockholders.
Section 5. Quorum. Directors of the Corporation who are also directors,
officers or employees of a Holder or any Related Entity may be counted in
determining the presence of a quorum at a meeting of the Board of Directors or
of a committee that authorizes or approves any such Transaction or any such
Guidelines. Voting stock owned by a Holder and any Related Entities may be
counted in determining the presence of a quorum at a meeting of stockholders
that authorizes or approves any such Transaction or any such Guidelines.
Section 6. No Breach. A Holder shall not be liable to the Corporation or
its stockholders for breach of any fiduciary duty it may have by reason of the
fact that such Holder takes any action or exercises any rights or gives or
withholds any consent in connection with any Transaction between such Holder and
the Corporation. No vote cast or other action taken by any person who is an
officer, director or other representative of a Holder, which vote is cast or
action is taken by such person in his capacity as a director of the Corporation,
shall constitute an action of, or the exercise of a right by, or a consent of,
such Holder for the purpose of any such Transaction.
19
Section 7. Deemed Notice. Any person purchasing or otherwise acquiring any
interest in any shares of stock or other securities (including without
limitation stock options) of the Corporation shall be deemed to have notice of
and to have consented to the provisions of this Article XI.
Section 8. No Expansion. Nothing in this Article XI is intended to, nor
shall anything in this Article XI be construed to, expand any party's fiduciary
duties under Applicable Law.
ARTICLE XII
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation in the manner now or
hereinafter prescribed by statutes, and all rights conferred upon the
stockholders therein are granted subject to this reservation. The number of
authorized shares of any class of capital stock of the Corporation may be
increased or decreased (but not below the number of shares thereof then
outstanding) only by the affirmative vote of the holders of a majority of the
capital stock of the Corporation entitled to vote, voting together as a single
class. As permitted under Section 242(b)(2) of the DGCL, no class of capital
stock of the Company will be entitled to vote as a separate class upon a
proposed amendment to increase or decrease the authorized number of shares of
such class.
ARTICLE XIII
Notwithstanding any other provisions of this Certificate of Incorporation
or any provision of law which might otherwise permit a lesser vote or no vote,
but in addition to any affirmative vote of the holders of the capital stock
required by law or this Certificate of Incorporation, the affirmative vote of
the holders of at least two-thirds of the combined Voting Power of all of the
then outstanding shares of the Corporation eligible to be cast in the election
of directors will be required to amend, alter, change or repeal Articles VI,
VII, X, XII or XIV hereof, or this Article XIII, or any provision thereof or
hereof.
ARTICLE XIV
The Corporation expressly elects to be governed by Section 203 of the DGCL.
Notwithstanding the terms of Section 203 of the DGCL, no Holders or their
respective Affiliates will be deemed at any time and without regard to the
percentage of voting stock of the Corporation owned by the Holders or their
respective Affiliates, as applicable, to be an "interested stockholder" as such
term is defined in Section 203(c)(5) of the DGCL.
20
EXHIBIT 10.26
MARKET OPERATION, SPECTRUM LEASE AND SUBLICENSE AGREEMENT
dated
October 22, 2004
by and among
the Sprint Subsidiaries listed on the Schedule R-1 hereto
("Sprint")
and
Fixed Wireless Holdings, LLC
("Operator")
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Article I DEFINITIONS ................................................................... 2
Article II ROLLING CLOSING AND CLOSING CONDITIONS ....................................... 9
2.1 Term ........................................................................ 9
2.2 Rolling Closings ............................................................ 9
2.3 Initial Closing ............................................................. 9
2.4 Deliveries on Initial Closing Date .......................................... 11
2.5 Market Closings ............................................................. 12
2.6 Deliveries on the Rolling Market Closing Date ............................... 13
2.7 Termination Date ............................................................ 13
2.8 Tower Lease Consents ........................................................ 14
2.9 Covenants Pending Closing ................................................... 14
Article III LEASE OF SPRINT SPECTRUM; USE OF THIRD PARTY SPECTRUM ....................... 15
3.1 Lease of Sprint Spectrum .................................................... 15
3.2 Use of Leased Spectrum ...................................................... 19
Article IV PRIMARY LEASE MANAGEMENT ..................................................... 22
4.1 Primary Lease Performance ................................................... 22
4.2 Primary Lease Defaults By Third Party Licensees ............................. 23
4.3 Primary Lease Management .................................................... 24
Article V SPECTRUM MANAGEMENT ........................................................... 25
5.1 Sprint Authorization Modifications and Coordination Documents ............... 25
5.2 Leased Authorization Modifications and Coordination Documents ............... 26
5.3 Limitations ................................................................. 27
5.4 Third Party Licensee Programming Obligations ................................ 28
</TABLE>
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
i
<TABLE>
<S> <C>
5.5 Additional Spectrum Rights .................................................. 29
5.6 Band Plan ................................................................... 31
5.7 FCC Transitions ............................................................. 31
Article VI FEES AND EXPENSES ............................................................ 33
6.1 Primary Lease Fees and Expenses ............................................. 33
6.2 Regulatory Fees and Expenses ................................................ 33
6.3 Initial Fee ................................................................. 33
6.4 Monthly Fee ................................................................. 33
6.5 Payments .................................................................... 33
6.6 Taxes ....................................................................... 34
6.7 Reimbursement and Other Expenses ............................................ 34
6.8 Security .................................................................... 34
6.9 Spectrum Opportunities ...................................................... 35
Article VII EQUIPMENT AND OPERATION OF SPECTRUM ......................................... 35
7.1 Transmission Equipment ...................................................... 35
7.2 Option to Purchase or Continue to Use Transmission Equipment ................ 36
7.3 Site Availability ........................................................... 36
7.4 Use of Transmission Facilities Following Term of Primary Lease .............. 37
7.5 Construction ................................................................ 37
7.6 Insurance ................................................................... 37
7.7 Obligation to Operate ....................................................... 38
7.8 Inspection Rights ........................................................... 38
Article VIII INFORMATION AND REPORTING .................................................. 38
8.1 Financial Statements ........................................................ 38
8.2 Spectrum and Operator Controlled Spectrum ................................... 39
</TABLE>
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
ii
<TABLE>
<S> <C>
Article IX REPRESENTATIONS AND WARRANTIES ............................................... 39
9.1 By Operator ................................................................. 39
9.2 By Sprint ................................................................... 40
9.3 Survival of Representations and Warranties .................................. 43
Article X DEFAULTS; TERMINATION ......................................................... 43
10.1 Termination for Loss of Authorizations or Primary Leases ................... 43
10.2 Termination by Agreement or for Default .................................... 43
10.3 Partial Termination for Default ............................................ 45
10.4 Breach of Representations and Warranties ................................... 45
10.5 Other Remedies ............................................................. 45
10.6 Expenses ................................................................... 45
Article XI INDEMNIFICATION .............................................................. 45
11.1 Indemnification by Sprint .................................................. 45
11.2 Indemnification by Operator ................................................ 46
11.3 Claims for Indemnification ................................................. 46
Article XII ASSIGNMENT .................................................................. 47
Article XIII CONFIDENTIALITY [***] ..................................................... 48
13.1 Confidentiality ............................................................ 48
13.2 No Publicity Without Consent ............................................... 49
13.3 [***] ...................................................................... 49
Article XIV DISPUTES 50
14.1 Dispute Resolution Through Arbitration 50
14.2 Specific Performance 51
14.3 Jurisdiction and Venue 51
</TABLE>
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
iii
<TABLE>
<S> <C>
Article XV COVENANTS .................................................................... 51
15.1 Compliance with Law ........................................................ 51
15.2 Wholesale Pricing .......................................................... 51
15.3 Other Relationships ........................................................ 52
Article XVI SPRINT'S TOWER FACILITIES ................................................... 52
Article XVII SPRINT'S RIGHT TO RECAPTURE MARKET ......................................... 53
17.1 Recapture Right ............................................................ 53
17.2 Put Option ................................................................. 63
17.3 Purchase Option ............................................................ 68
17.4 Fair Market Value Determination ............................................ 72
Article XVIII INTERPRETATION AND CONTRACT ADMINISTRATION ................................ 73
18.1 Notices .................................................................... 73
18.2 Interpretation and Construction ............................................ 74
18.3 Amendment and Waiver ....................................................... 75
18.4 Third Parties .............................................................. 75
18.5 Entire Understanding ....................................................... 75
18.6 Severability ............................................................... 75
18.7 Further Assistance ......................................................... 75
18.8 Force Majeure .............................................................. 76
18.9 Counterparts ............................................................... 76
18.10 Word Meanings ............................................................. 76
18.11 Reliance .................................................................. 76
18.12 Survival of Obligations ................................................... 76
18.13 Relationship of the Parties ............................................... 77
18.14 Governing Law ............................................................. 77
</TABLE>
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
iv
<TABLE>
<S> <C>
18.15 Limitation of Liability ................................................... 77
</TABLE>
<TABLE>
<S> <C>
Schedule R-1 Sprint Subsidiaries
Schedule R-2 Primary Leases, Third Party Licensees and Leased Authorizations
Schedule R-3 Sprint Authorizations
Schedule R-4 Markets
Schedule 3.2 Consents
Schedule 3.2(b) Disputed Primary Leases
Schedule 4.1 Sprint Primary Lease Duties
Schedule 4.3(b) Non-Flex Use Primary Leases
Schedule 5.1(b) Spectrum Management Fees
Schedule 5.2(b) Sprint Management Fees for Leased Spectrum
Schedule 5.5 Existing Operator Controlled Spectrum
Schedule 6.3 Market Closing Payments
Schedule 6.4 Monthly Fees
Schedule 6.9 Spectrum Opportunities
Schedule 7.1(a) Sprint Transmission Equipment
Schedule 7.1(b) Equipment Service Level Requirements
Schedule 7.5 Construction Obligations
Schedule 9.1(f) Financing Commitments
Schedule 9.2(c) No Violation
Schedule 9.2(d) Litigation
Schedule 9.2(e) (iii) Pending Applications
Schedule 9.2(e) (iv) Valid Authorizations
Schedule 9.2(e) (v) Primary Lease Defaults
Schedule 9.2(e) (vi) Tower Lease Defaults
Schedule 9.2(e) (vii) Sprint Interference Consents
Schedule 9.2(e) (viii) Licensee Interference Consents
Schedule 16 Tower Leases
Schedule 17.1(h) Example of Computation of Paid In Fees
Schedule 17.2(a) Example of Computation of Put Price
Exhibit A Form of Consent
Exhibit B MHz Household Computation
Exhibit C Transmission Facilities Operation and Maintenance Agreement
Exhibit D Form of Licensee Notice
Exhibit E Transition Services Agreement
Exhibit F Parent Guaranty
Exhibit G Put/Call Term Sheet
</TABLE>
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
v
MARKET OPERATION, SPECTRUM LEASE AND SUBLICENSE AGREEMENT
THIS MARKET OPERATION, SPECTRUM LEASE AND SUBLICENSE AGREEMENT
("Agreement") is entered into as of October 22, 2004 (the "Effective Date"), by
and among each of the wholly owned subsidiaries of Sprint Corporation identified
in Schedule R-1 attached hereto (each, a "Sprint Subsidiary" and collectively,
the "Sprint Subsidiaries" or "Sprint"), and Fixed Wireless Holdings, LLC
("Operator"). Sprint and Operator are also referred to in this Agreement as a
"Party" and collectively as the "Parties".
PRELIMINARY STATEMENTS
Certain Sprint Subsidiaries are parties to the channel lease
agreements identified in Schedule R-2 attached hereto, pursuant to which the
respective subsidiaries lease certain Multichannel Multipoint Distribution
Service, Multipoint Distribution Service or Instructional Television Fixed
Service spectrum rights from the respective licensees which are parties to such
channel leases.
Pursuant to each of the authorizations identified in Schedule R-3
attached hereto, certain Sprint Subsidiaries are authorized by the FCC to
construct and operate facilities utilizing the frequencies assigned to certain
FCC authorizations within the geographic areas designated therein and, in the
case of the Basic Trading Area authorizations, hold the right to utilize
additional frequencies in additional areas under certain conditions.
Operator is in the business of acquiring, constructing and operating
an advanced high speed wireless data system and may, in the future, provide
voice, video, data or other communications services via microwave transmissions.
Operator desires to use (a) certain transmission capacity of the spectrum
licensed to certain Sprint Subsidiaries pursuant to the terms hereof and (b)
certain transmission capacity of the channels leased to Sprint by third party
licensees, pursuant to the terms hereof and the terms and conditions set forth
in the underlying channel leases.
The Parties are entering into this Agreement with the intent that
Operator will construct and commence operation of an advanced high speed
wireless data system using such spectrum and that Operator may use such spectrum
for any other purposes now or hereafter allowed by the FCC's rules and policies.
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
1
AGREEMENT
In consideration of the premises and the mutual covenants,
agreements, undertakings, representations and warranties set forth in this
Agreement, and subject to the terms and conditions contained in this Agreement,
the Parties agree as follows:
Article I
DEFINITIONS
For purposes of this Agreement, the following terms have the
meanings specified or referred to in this Article I:
"AAA" has the meaning set forth in Section 14.1.
"Acquisition Costs" has the meaning set forth in Section 17.1(h).
"Agreement" means this Market Operation, Spectrum Lease and
Sublicense Agreement.
"Applicable Percentage" has the meaning set forth in Section
17.1(h)
"Authorization" means either a Sprint Authorization or Leased
Authorization and "Authorizations" means collectively the Sprint Authorizations
and Leased Authorizations.
"Band Plan" has the meaning set forth in Section 5.6.
"BRS" means Broadband Radio Service, as that term is defined in the
New FCC Order.
"BTA" means Basic Trading Area, as that term is defined in the FCC
Rules.
"Call Assignment Application" has the meaning set forth in Section
17.3(d)(i)
"Call Closing" has the meaning set forth in Section 17.3(e).
"Call Leased Spectrum Assignment Application" has the meaning set
forth in Section 17.3(d)(ii).
"Call Leased Spectrum Assignment Notification" has the meaning set
forth in Section 17.3(d)(iii).
"Call Notice" has the meaning set forth in Section 17.3(a).
"Call Option" has the meaning set forth in Section 17.3(a).
"Call Price" has the meaning set forth in Section 17.3(a).
"Call Waiting Period" has the meaning set forth in Section 17.3(b)
"Claiming Party" has the meaning set forth in Section 11.3.
"Closed Market" has the meaning set forth in Section 2.2.
"Closing" has the meaning set forth in Section 2.2.
"Confidential Information" has the meaning set forth in Section
13.1.
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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"Co-Proponent" means any Sprint Subsidiary or the Operator which is
then jointly serving as a Proponent to effectuate the transition of adjacent
markets pursuant to the FCC Market Transition Rules.
"Consent" has the meaning set forth in Section 3.2(b).
"Consent Date" has the meaning set forth in Section 3.2(b).
"Construction Default" has the meaning set forth in Section 10.2.
"Coordination Document" means any market coordination agreement,
interference consent or similar document consenting to facilities of another
licensee which would not otherwise be permitted under the FCC Rules.
"Costs" means all costs and expenses of every kind that a Party pays
to any unrelated third-party arising out of the performance and administration
of this Agreement, including legal fees, engineering fees, consulting fees, and
all expenses incurred in providing such services, regulatory fees and all taxes
other than income taxes and payroll taxes.
"Current FCC Rules" means the Title 47 U.S. Code of Federal
Regulations and the policies of the FCC as in effect as of the Effective Date.
"EBS" means Educational Broadband Service, as that term is defined
in the New FCC Order.
"Effective Date" means the date first written above.
"Efforts" means the efforts that a reasonably prudent person or
entity desirous of achieving a result would use in similar circumstances to
ensure that such result is achieved; provided, however, that an obligation to
use Efforts under this Agreement does not require the Party subject to that
obligation to take actions or incur costs that would result in a materially
adverse change in the benefits such Party expects to realize from this
Agreement.
"Eligible Spectrum" has the meaning set forth in Section 17.1(a).
"Engineering Arbitrator" has the meaning set forth in Section 14.1.
"FCC" means the Federal Communications Commission.
"FCC Lease Applications" has the meaning set forth in Section
3.1(c).
"FCC Market Transition Rules" has the meaning set forth in Section
5.7.
"FCC Rules" means Title 47 U.S. Code of Federal Regulations and the
policies of the FCC, as each may be amended from time to time.
"Final Order" means an order of the FCC which is effective, which is
not subject to any petition for reconsideration, petition to deny or informal
objection, application for review, notice of appeal, petition for writ of
certiorari or request for stay and the time for any Party to seek such relief or
for the FCC to grant such relief sua sponte has expired.
"Financial Statements' has the meaning set forth in Section 9.1(e).
"GSA" means Geographic Service Area as that term is defined in the
New FCC Order.
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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"Guarantor" means Clearwire Corporation, a Delaware corporation, and
its successors and assigns.
"Indemnifying Party" has the meaning set forth in Section 11.3.
"Initial Closing Date" means the date upon which the first Closing
occurs with respect to any of the Markets.
"Initial Fee" has the meaning set forth in Section 6.3.
"Initial Term" has the meaning set forth in Section 2.1.
"Investment Costs" has the meaning set forth in Section 17.1(h).
"ITFS" means Instructional Television Fixed Service, as such term is
defined in the Current FCC Rules. Pursuant to the New FCC Order, the FCC has
changed the name of ITFS to EBS and therefore following the date on which the
rules promulgated pursuant to the New FCC Order become effective, the term
"ITFS" as used herein will be deemed to mean "EBS".
"Leased Authorization" means, subject to adjustment as provided in
this Agreement, (a) each authorization listed in Schedule R-2 which is
attributable to a Closed Market, and (b) any FCC authorization for ITFS or MDS
spectrum which is now or hereafter considered Leased Spectrum. Upon any Market
becoming a Closed Market, any authorization listed in Schedule R-2 attributable
to such newly Closed Market will automatically be considered as a Leased
Authorization for purposes of this Agreement. Each and every Leased
Authorization is collectively referred to herein as the "Leased Authorizations".
"Leased Spectrum" means the spectrum which is leased by a Sprint
Subsidiary from a third party and which Operator is entitled to use pursuant to
the terms of this Agreement, including, (a) subject to the terms of Section
3.2(b), all spectrum listed in Schedule R-2 which is attributable to a Closed
Market and (b) any ITFS or MDS spectrum which is hereafter leased to a Sprint
Subsidiary, or which a Sprint Subsidiary is otherwise entitled to use in the
Markets, pursuant to any contractual arrangement, and which is leased to
Operator pursuant to the terms of Section 5.5 of this Agreement. Upon any Market
becoming a Closed Market, subject to Section 3.2(b), any spectrum listed in
Schedule R-2 attributable to such newly Closed Market will automatically be
considered as Leased Spectrum for purposes of this Agreement.
"Licensees" means collectively the Third Party Licensees and the
Sprint Licensees.
"Long Term De Facto Lease Transfer Effective Date" has the meaning
set forth in Section 3.1(d).
"Market" means any BTA listed on Schedule R-4 attached hereto or the
[***] Geographic Service Area (as such term is defined in the New FCC Order),
and "Markets" means all BTAs listed on Schedule R-4 and the [***] Geographic
Service Area.
"Market Closing" has the meaning set forth in Section 2.5.
"Market Closing Date" has the meaning set forth in Section 2.5.
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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"Market Closing Payments" means those payments identified and
allocated by Market in Schedule 6.3 and which are due and payable to Sprint on
the Initial Closing Date and each subsequent Market Closing Date.
"MDS" means collectively Multichannel Multipoint Distribution
Service and Multipoint Distribution Service, as such terms are defined in the
Current FCC Rules. Pursuant to the New FCC Order, the FCC has changed the name
of MDS to BRS and therefore following the date on which the rules promulgated
pursuant to the New FCC Order become effective, the term "MDS" as used herein
will be deemed to mean "BRS."
"MHz Households" means the MHz per household in any given Market as
determined in accordance with the methodology set forth in Exhibit B.
"Minimum Number of Markets" has the meaning set forth in Section
2.3(b).
"Monthly Fee" has the meaning set forth in Section 6.4.
"Monthly Gross Revenues" has the meaning set forth in Section 6.8.
"New FCC Order" means that certain Report and Order and Further
Notice of Proposed Rulemaking dated June 10, 2004 in WT Docket No. 03-66 and
several related dockets, and which was released by the FCC on My 29, 2004.
"Operator" means Fixed Wireless Holdings, LLC, a Delaware limited
liability company, and its permitted successors and assigns.
"Operator Acquisition Expenses" has the meaning set forth in Section
17.1(h).
"Operator Affiliate" means (a) Guarantor, for so long as it controls
Operator, (b) any entity other than Guarantor which directly has the power to
vote by ownership, proxy, contract or otherwise, securities constituting 50% or
more of the voting securities of Operator or direct the appointment of 50% or
more of the membership of the board or similar governing body of Operator, (c)
any entity or person which is owned or controlled by Operator and (d) any entity
which Guarantor controls, for so long as Guarantor controls Operator. For the
purpose of this definition, an entity or person will be deemed to "control"
another entity if (and only for so long as) such entity has the right to
directly or indirectly (a) vote by ownership, proxy, contract or otherwise,
securities constituting 50% or more of the voting securities of an entity, or
(b) appoint 50% or more of the membership on the board or similar governing body
of an entity.
"Operator Contributed Proportion" has the meaning set forth in
Section 17.1(h).
"Operator Controlled Spectrum" means collectively the Operator
Leased Spectrum and Operator Owned Spectrum.
"Operator Indemnitee(s)" has the meaning set forth in Section 11.1.
"Operator Leased Spectrum" means any MDS or ITFS spectrum rights
held or hereafter acquired by Operator or any Operator Affiliate in any Closed
Market pursuant to a contractual agreement with a party which is not a Sprint
Subsidiary where the Operator or Operator Affiliate is not, or does not become,
the licensee of said spectrum. For avoidance of doubt, as of the Effective Date
the spectrum rights listed on Schedule 5.5 which Operator or any Operator
Affiliate is, or will be, entitled to use pursuant to a contractual agreement,
is Operator Leased Spectrum for purposes of this Agreement (as of the effective
date of such contractual
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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agreement); provided that the Markets to which such spectrum is attributable are
Closed Markets.
"Operator Owned Spectrum" means any MDS or ITFS spectrum rights held
or hereafter acquired by Operator or any Operator Affiliate in any Closed
Market, where Operator or such Operator Affiliate is or becomes the licensee for
said spectrum. For avoidance of doubt, as of the Effective Date the spectrum
rights listed on Schedule 5.5 which is, or will be, licensed to Operator or any
Operate Affiliate is Operator Owned Spectrum for the purpose of this Agreement
(as of such time as such spectrum right is assigned to or acquired by Operator
or an Operator Affiliate); provided that the Markets to which such spectrum is
attributable are Closed Markets.
"Operator Transmission Equipment" has the meaning set forth in
Section 7.1.
"Owned Spectrum Assignment Application" has the meaning set forth in
Section 17.1(e)(i).
"Paid In Fees" has the meaning set forth in Section 17.1(h).
"Parent Guaranty" has the meaning set forth in Section 6.8.
"Party" means either Sprint or Operator and "Parties" means both
Sprint and Operator.
"Potential Spectrum" has the meaning set forth in Section 6.9.
"Primary Lease" means each channel lease agreement identified in
Schedule R-2 which is attributable to a Closed Market and any new channel lease
agreement pursuant to which any Sprint Subsidiary becomes entitled to use any
ITFS or MDS channels for commercial purposes in Region 1 and which are subleased
to Operator pursuant to Section 5.5 of this Agreement, as each may be amended or
extended as contemplated herein. Upon any Market becoming a Closed Market, any
channel lease agreement listed in Schedule R-2 attributable to such newly Closed
Market and any new channel lease agreement which channels are applicable to a
Closed Market and which are subleased to Operator pursuant to Section 5.5 will
automatically be considered as a Primary Lease for purposes of this Agreement.
Each and every Primary Lease from time to time in effect are herein collectively
referred to as the "Primary Leases".
"Primary Lease Costs" has the meaning set forth in Section 6.1.
"Primary Lease Fees" has the meaning set forth in Section 6.1.
"Primary Lease Reimbursements" has the meaning set forth in Section
6.1.
"Prohibited Entity" has the meaning set forth in Article XII.
"Proponent" has the meaning set forth in the FCC Market Transition
Rules.
"Proposed Leased Authorizations" means all of the authorizations
listed in Schedule R-2 or any FCC authorizations covering any Proposed Leased
Spectrum.
"Proposed Primary Leases" means all of the third party lease
agreements with Sprint set forth in Schedule R-2.
"Proposed Leased Spectrum" means the spectrum which is leased by a
Sprint Subsidiary from a third party and which is listed in Schedule R-2.
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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"Proposed Spectrum" means the Proposed Sprint Spectrum and the
Proposed Leased Spectrum.
"Proposed Sprint Spectrum" means all of the spectrum which is listed
in Schedule R-3.
"Put Assignment Application" has the meaning set forth in Section
17.2(d)(i).
"Put/Call Term Sheet" has the meaning set forth in Section 17.2(d).
"Put Closing" has the meaning set forth in Section 17.2(e).
"Put Leased Spectrum Assignment Application" has the meaning set
forth in Section 17.2(d)(ii).
"Put Leased Spectrum Assignment Notification" has the meaning set
forth in Section 17.2(d)(iii).
"Put Notice" has the meaning set forth in Section 17.2(a).
"Put Price" has the meaning set forth in Section 17.2(a).
"Recapture Closing" has the meaning set forth in Section 17.1(f).
"Recapture Notice" has the meaning set forth in Section 17.1(a).
"Recaptured Lease Assignment Application" has the meaning set forth
in Section 17.1(e)(ii).
"Recaptured Lease Assignment Notification" has the meaning set forth
in Section 17.1(e)(iii).
"Recapture Price" has the meaning set forth in Section 17.1(h)
"Recaptured Spectrum" has the meaning set forth in Section 17.1(a).
"Region 1" means collectively all Markets.
"Rejected Lease Credit" has the meaning set forth in Section 3.2(b).
"Rejected Lease Fee" has the meaning set forth in Section 3.2(b).
"Rejected Lease Initial Fee" has the meaning set forth in Section
3.2(b).
"Rejected Primary Lease" has the meaning set forth in Section
3.2(b).
"Renewal Term" has the meaning set forth in Section 2.1.
"Revenue Threshold" has the meaning set forth in Section 6.8.
"Rules" has the meaning set forth in Section 14.1.
"Security" has the meaning set forth in Section 6.8.
"Spectrum" means collectively, the Leased Spectrum and Sprint
Spectrum.
"Spectrum Development Cap" has the meaning set forth in Section
4.3(b).
"Spectrum Grouping" has the meaning set forth in Section 17.1(c)(i).
"Spectrum Grouping Criteria" has the meaning set forth in Section
17.1(d).
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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"Sprint" means collectively all Sprint Subsidiaries.
"Sprint Authorization" means (a) any FCC authorization identified in
Schedule R-3 attributable to a Closed Market, and (b) any FCC authorization
hereafter issued by the FCC to, or acquired by, any Sprint Subsidiary to
construct and operate MDS or ITFS facilities assigned to such authorization
within a Closed Market and which is leased to Operator as contemplated pursuant
to this Agreement. Each and every Sprint Authorization from time to time in
effect are herein collectively referred to as the "Sprint Authorizations" Sprint
Authorizations do not include any FCC authorizations acquired by any Sprint
Subsidiary pursuant to Section 17.1.
"Sprint Contributed Proportion" has the meaning set forth in Section
17.1(h).
"Sprint Entity" means Sprint Corporation and any subsidiary of
Sprint Corporation.
"Sprint Indemnitee(s)" has the meaning set forth in Section 11.2.
"Sprint Licensee" means any Sprint Subsidiary which holds a Sprint
Authorization which is then subject to the terms of this Agreement. Each and
every Sprint Licensee is collectively referred to herein as the "Sprint
Licensees".
"Sprint Renewal Application" has the meaning set forth in Section
3.1(g).
"Sprint Spectrum" means the frequencies that the Sprint Licensees
are authorized at any given time to utilize pursuant to the Sprint
Authorizations within the geographic areas designated therein, provided that
such Sprint Authorizations are attributable to a Closed Market. Upon any Market
becoming a Closed Market, any spectrum listed in Schedule R-3 attributable to
such newly Closed Market will automatically be considered as Sprint Spectrum for
purposes of this Agreement, provided that the corresponding Sprint Authorization
is in full force and effect.
"Sprint Subsidiary" means of any of the wholly owned subsidiaries of
Sprint Corporation which are identified on Schedule R-1 attached hereto, and
each of their respective successors and assigns.
"Sprint Subsidiaries" means collectively, each and every Sprint
Subsidiary.
"Sprint Transmission Equipment" has the meaning set forth in Section
7.1.
"Sprint's Pro Rata Share" has the meaning set forth in Section 17.1
(k).
"Substitute Tower Lease" has the meaning set forth in Section 2.8.
"Term" has the meaning set forth in Section 2.1.
"Third Party Licensee" means any person or entity, other than a
Sprint Entity, which may be from time to time a party to a Primary Lease. Each
and every Third Party Licensee is collectively referred to herein as "Third
Party Licensees".
"Towers" has the meaning set forth in Article XVI.
"Tower Leases" has the meaning set forth in Article XVI.
"Tower Sublease Consent" has the meaning set forth in Article XVI.
"Tower Subleases" has the meaning set forth in Article XVI.
"Transition Costs" has the meaning set forth in Section 17.1(h).
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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"Transition Plan" has the meaning set forth in the FCC Market
Transition Rules.
"Transition Services Agreement' has the meaning set forth in Section
5.4.
"Transmission Equipment" has the meaning set forth in Section 7.1.
"Transmission Facilities Operation and Maintenance Agreement" has
the meaning set forth in Section 3.2(d).
"Unilateral Action" has the meaning set forth in Section 5.1(a).
"Unincorporated Spectrum" has the meaning set forth in Section 17.1
(a).
Article II
ROLLING CLOSING AND CLOSING CONDITIONS
2.1 Term. Subject to the provisions for earlier termination
contained in Article X and Section 18.6, this Agreement will extend for: (a) an
initial term of [***] from the Initial Closing Date (the "Initial Term") and (b)
one additional term of [***] (the "Renewal Term") unless Operator notifies
Sprint at least [***] before the end of the Initial Term that Operator elects
not to extend this Agreement for the Renewal Term. The Initial Term and Renewal
Term, if it becomes effective, are herein referred to collectively as the
"Term".
2.2 Rolling Closings. The Parties acknowledge that it is in their
respective best interests for the sublease of the spectrum set forth in Schedule
R-2 and the lease of the spectrum set forth in Schedule R-3 contemplated
pursuant to this Agreement be consummated as soon as reasonably practical.
Furthermore, the Parties acknowledge that it may not be practical to consummate
the lease and sublease contemplated pursuant to this Agreement with respect to
all Markets at the same time. Therefore, the various leases, sublease and
licenses contemplated pursuant to this Agreement may take effect (each a
"Closing") as to each Market at different times in the manner described in this
Article II. Upon a Closing having occurred with respect to any Market, such
Market will be a "Closed Market" for purposes of this Agreement.
2.3 Initial Closing.
(a) Upon the Initial Closing Date, Operator will have all the
rights granted herein with respect to Spectrum and Sprint Transmission
Equipment in each Market that is the subject of such Closing.
(b) Following the date on which Sprint and Operator have obtained
Tower Lease Consents to enter into Tower Subleases or have procured
Substitute Tower Leases, or combination thereof, for at least five
Markets, which Markets, along with those Markets identified in the last
two sentences of this Section 3.2(b), will include without limitation at
least four of the top ten Markets as determined by the number of
households in each Market ("Minimum Number of Markets"), Sprint will
proceed with the initial Closing by providing Operator with notice of
Sprint's selection of a date which is no sooner than 10 days following
such notice and no later than 180 days following the Effective Date and
such date will be the Initial Closing Date. If Sprint and Operator have
obtained Tower Lease Consents to enter into Tower Subleases or
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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have procured Substitute Tower Leases for the Minimum Number of Markets
and Sprint fails to provide such notice, then the Initial Closing Date
will occur on the earlier of the 30th day following the date that Sprint
and Operator have obtained the Tower Sublease Consents or Substitute Tower
Leases for the Minimum Number of Markets or the 180th day following the
Effective Date. The Parties acknowledge that Sprint does not have any
tower facilities in the following Markets and that such Markets will
become Closed Markets on the Initial Closing Date without any condition of
a Tower Sublease Consent or Substitute Tower Lease: [***] The Parties
acknowledge that a Sprint Subsidiary owns the tower facilities in the
[***] Market and that such Market will become a Closed Market on the
Initial Closing Date, subject to such Sprint Subsidiary and Operator
entering into a lease agreement as mutually agreed upon for such tower
facilities.
(c) Following the selection or determination of the Initial
Closing Date, the Parties will proceed with Closing with respect to all
applicable Markets, provided that:
(i) The following conditions to Operator's obligation to
proceed with Initial Closing Date are satisfied or waived by
Operator:
(A) Sprint will have delivered to Operator Tower
Subleases (with any required Tower Sublease Consents) and
Substitute Tower Leases for at least the Minimum Number of
Markets.
(B) Sprint will have delivered to Operator all documents
referenced in Section 2.4(a) hereof.
(C) As of the Initial Closing Date there will exist no
valid order, statute, rule, regulation, executive order, stay,
decree, judgment or injunction which prohibits or prevents the
consummation of the transactions contemplated by this
Agreement.
(D) All representations and warranties made by Sprint in
or pursuant to this Agreement will be true and correct in all
material respects, except for those representations and
warranties that are qualified as to materiality which will be
true and correct in all respects, on and as of the Initial
Closing Date with the same effect as if such representations
and warranties had been made on and as of the Initial Closing
Date, except to the extent that any such representation or
warranty by its terms relates to an earlier date, and except
to the extent that any change is expressly permitted by the
terms of this Agreement or expressly consented to in writing
by Operator.
(E) Sprint will have performed or complied in all
material respects with all covenants, agreements and
conditions contained in this
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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Agreement required to be performed or complied with at or
prior to the Initial Closing Date.
(ii) The following conditions to Sprint's obligation to
proceed with Initial Closing Date are satisfied or waived by Sprint:
(A) Operator will have delivered to Sprint all items
referenced in Section 2.4(b) hereof.
(B) As of the Initial Closing Date there will exist no
valid order, statute, rule, regulation, executive order, stay,
decree, judgment or injunction which prohibits or prevents the
consummation of the transactions contemplated by this
Agreement.
(C) All representations and warranties made by Operator
in or pursuant to this Agreement will be true and correct in
all material respects, except for those representations and
warranties that are qualified as to materiality which will be
true and correct in all respects, on and as of the Initial
Closing Date with the same effect as if such representations
and warranties had been made on and as of the Initial Closing
Date, except to the extent that any such representation or
warranty by its terms relates to an earlier date, and except
to the extent that any change that is expressly permitted by
the terms of this Agreement or expressly consented to in
writing by Operator.
(D) Operator will have performed or complied in all
material respects with all covenants, agreements and
conditions contained in this Agreement required to be
performed or complied with at or prior to the Initial Closing
Date.
(E) Operator will have paid Sprint all Market Closing
Payments for each Market Closing on the Initial Closing Date.
2.4 Deliveries on Initial Closing Date.
(a) On the Initial Closing Date, Sprint will deliver to Operator:
(i) Each Tower Sublease (with any required Tower
Sublease Consent) or, as applicable, Substitute Tower Lease for the
Markets then Closing, duly executed by the appropriate Sprint
Subsidiary;
(ii) A cross receipt executed by an officer of Sprint
identifying each of the Markets subject to such Closing and
acknowledging that each such Market is a Closed Market for purposes
of this Agreement;
(iii) Each Consent attributable to the Market then
Closing which Sprint has obtained;
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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(iv) The Spectrum Operation Agreement duly executed by
Sprint;
(v) The tower lease for the [***] Market duly executed
by the appropriate Sprint Subsidiary;
(vi) The Transition Services Agreement duly executed by
Sprint; and
(vii) A certificate duly executed by Sprint that all of
the conditions set forth in Section 2.3(c)(i) have been satisfied.
(b) On the Initial Closing Date, Operator will deliver to Sprint:
(i) Each Tower Sublease (along with any required Tower
Sublease Consent) for the Markets then Closing, duly executed by
Operator;
(ii) The Parent Guaranty, duly executed by Guarantor;
(iii) A cross receipt executed by an officer of Operator
identifying each of the Markets subject to such Closing, and
acknowledging that each such Market is a Closed Market for purposes
of this Agreement;
(iv) The Spectrum Operation Agreement duly executed by
Operator;
(v) The Transition Services Agreement duly executed by
Operator;
(vi) The tower lease for the [***] Market duly executed
by the appropriate Sprint Subsidiary;
(vii) Operator will have paid to Sprint the Market
Closing Payments for all of the Markets which are closing on the
Initial Closing Date; and
(viii) A certificate duly executed by Operator that all
of the conditions set forth in Section 2.3(c)(ii) have been
satisfied.
2.5 Market Closings. Following the Initial Closing Date, from time
to time or all at once, at such time as Sprint or Operator obtains a Tower
Sublease Consent for an applicable Tower Sublease or a Substitute Tower Lease
for a Market which is not a Closed Market, the Parties will proceed to Closing
pursuant to the terms set forth in this Section 2.5 with respect to each such
Market (each a "Market Closing"). Each Market Closing will occur on a date (a
"Market Closing Date") mutually agreed upon by the Parties, provided however,
that as long as there exists no valid order, statute, rule, regulation,
executive order, stay, decree, judgment or injunction which prohibits or
prevents such Market Closing, such Market Closing will not occur later than 15
days following the date on which Sprint receives the Tower Sublease Consent for
an applicable Tower Sublease for such Market or Sprint provides a Substitute
Tower
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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Lease for such Market. Upon each Market Closing, Operator will have all the
rights granted herein with respect to the Spectrum and Sprint Transmission
Equipment in each such Closed Market.
2.6 Deliveries on the Rolling Market Closing Date.
(a) On each Market Closing Date, Sprint will deliver to Operator:
(i) the Tower Sublease for such Market, along with any required Tower
Sublease Consent, or the Substitute Tower Lease for each such Market, (ii)
a certificate executed by an officer of Sprint identifying each of the
Markets subject to such Closing, and acknowledging that each such Market
is a Closed Market for purposes of this Agreement, and (iii) each Consent
attributable to the Markets then Closing which Sprint has obtained.
(b) On each Market Closing Date, and with respect to each Market
then Closing, Operator will: (i) pay Sprint all Market Closing Payments
for the Markets then Closing, and (ii) deliver a certificate executed by
an officer of Operator identifying each of the Markets subject to such
Closing, and acknowledging that each such Market is a Closed Market for
purposes of this Agreement.
(c) Commencing with each Market Closing Date, the Monthly Fee
otherwise payable pursuant to Section 6.4 will be increased by an amount
equal to the amount corresponding to such Closed Market on Schedule 6.4
attached hereto.
2.7 Termination Date.
(a) At the election of either Party, this Agreement will terminate
on the 10th day following the notice of such electing Party's intent to
terminate this Agreement if the Initial Closing Date has not occurred on
or before the 180th day following the Effective Date, provided, however
that a Party may not terminate this Agreement if the Initial Closing Date
has not occurred as a result of that Party's failure to comply with its
obligations under this Agreement.
(b) Each Party's right of termination under this Section 2.7 is in
addition to any other rights it may have under this Agreement or
otherwise, and the exercise of a right of termination will not be an
election of remedies. If this Agreement is terminated pursuant to this
Section 2.7, all further obligations of the Parties under this Agreement
will terminate, except the obligations in Article XIII will survive.
(c) Except as otherwise specifically provided in this Agreement,
if this Agreement terminates for any reason other than (i) the Tower
Sublease Consents or Substitute Tower Leases for the Minimum Number of
Markets as contemplated pursuant to Section 2.3(b) having not been
obtained, (ii) the existence of any valid order, statute, rule,
regulation, executive order, stay, decree, judgment, or injunction which
prohibited or prevented any such Market Closings or (iii) Sprint's failure
to comply with its obligations under this Agreement, then Sprint will
retain the Initial Fee. Otherwise the Initial Fee will be refunded within
5 business days of any such termination.
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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2.8 Tower Lease Consents. For a period of 180 days following the
Effective Date, Sprint will use Efforts to obtain the Tower Sublease Consents
for all Tower Subleases for the Tower Leases identified in Schedule 16 and which
are denoted therein as requiring the landlord's consent. At any time during the
18 months following the Initial Closing Date, Sprint may deliver a Tower
Sublease Consent for any Tower which is located in a Market which is not a
Closed Market or a lease for other suitable replacement tower facilities
("Substitute Tower Lease") on financial terms and conditions at least as
favorable to Operator as the relevant Tower Lease being replaced and such
Substitute Tower Lease will automatically take the place of such Tower Lease for
purposes of this Agreement. Upon delivery of such Tower Sublease Consent or
Substitute Tower Lease, the Parties will proceed to Closing with respect to such
Market as contemplated pursuant to Section 2.6. In addition, if at any time
during such eighteen (18) month period, Operator elects, by written notice to
Sprint, to lease or sublease the spectrum in a Market which is not a Closed
Market even though the Tower Sublease Consent or a Substitute Tower Sublease has
not been procured for such Market, then the Parties will proceed to Closing with
respect to such Market pursuant to Section 2.6. In such case, Sprint will have
no liability whatsoever for the failure to obtain a Tower Sublease Consent or a
Substitute Tower Lease for such Market. To the extent that any Tower Sublease or
Substitute Tower Lease is not obtained within a reasonable period of time, the
obligations of Operator set forth in Section 7.7 will be adjusted appropriately.
If a Tower Sublease Consent or a Substitute Tower Lease with respect to any
Market is not obtained within 18 months following the Initial Closing Date then,
provided that Sprint provides Operator with notice of its intent to lease or
otherwise transfer spectrum in Markets which are not Closed Markets and Operator
does not elect to proceed to Closing without a Tower Sublease Consent or
Substitute Tower Lease within 30 days of such notice, Sprint's obligations set
forth in Section 2.9 will terminate with respect to such Market in which case
Sprint may then enter into any transaction with respect to the spectrum in any
such Markets with any other party and Sections 5.5 and 13.3 will thereafter no
longer be applicable to any such Markets.
2.9 Covenants Pending Closing.
(a) Except as otherwise specified herein, from and after the
Effective Date, each Party will use its Efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable and consistent with applicable law to perform its
obligations under this Agreement to facilitate the Closing of the Markets
and to satisfy its respective conditions to Closing.
(b) From and after the Effective Date, but subject to the terms of
Section 2.8, Sprint will not enter into any agreement, arrangement or
understanding to, or otherwise offer or commit to sell, transfer, assign,
lease or dispose of any of the spectrum identified on Schedule R-2 and
Schedule R-3. Notwithstanding the preceding sentence, this Section 2.9(b)
will not apply to (i) any spectrum in a Closed Market which becomes
Recaptured Spectrum or which is no longer leased or subleased, as
applicable, by Operator pursuant to this Agreement, (ii) any sale, lease,
transfer, assignment, or other disposition which takes effect after the
Term, and (iii) any sale, lease, transfer, assignment, or other
disposition of any spectrum rights provided that such spectrum rights
remain subject to the terms of this Agreement.
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
14
(c) From and after the Effective Date through the Initial Closing
Date and/or Market Closing Date, as applicable, but subject to the
provisions of Section 2.8 and Section 3.2(b), Sprint will make all
required payments and perform all material obligations then required under
each channel lease agreement identified in Schedule R-2 which is
attributable to any Market which is not a Closed Market. From and after
the Effective Date through the applicable Initial Closing Date or Market
Closing Date, Sprint will, consistent with its past business practices and
procedures, maintain all necessary qualifications to hold and obtain
renewal in the ordinary course all authorizations identified in Schedule
R-3 which are attributable to any Market which is not a Closed Market.
Article III
LEASE OF SPRINT SPECTRUM; USE OF THIRD PARTY SPECTRUM
3.1 Lease of Sprint Spectrum.
(a) Operator's right to use any Proposed Sprint Spectrum in any
given Market is subject to the Initial Closing Date or a Market Closing
Date having occurred for such Market. Commencing with the Initial Closing
Date, and subject to the terms and conditions of this Agreement, each
Sprint Licensee will lease its respective Sprint Spectrum to Operator for
the duration of the Term. Subject to the terms of this Agreement, the
Sprint Authorizations, the FCC Rules, the Initial Closing Date and the
applicable Market Closing Date having occurred, Operator may use all of
the currently and potentially available capacity on the Sprint Spectrum
during the Term for any purpose now or hereafter allowed by FCC Rules.
(b) The parties acknowledge that on July 29, 2004 the FCC released
the New FCC Order in which the FCC substantially modified the FCC Rules
applicable to MDS and ITFS, but that the new FCC Rules have not yet become
effective. It is the intent of the Parties that this Agreement be
interpreted in a manner consistent with the Current FCC Rules until such
modified FCC Rules become effective and that thereafter this Agreement be
interpreted in a manner consistent with the modified FCC Rules.
Specifically, Operator and the Sprint Licensees acknowledge that in the
New FCC Order, the FCC has adopted rules permitting long term de facto
transfer leasing by MDS licensees, but that such rules have not become
effective as of the Effective Date. Until the Long Term De Facto Transfer
Lease Effective Date (as defined herein) with respect to any given Sprint
Spectrum, the lease of such Sprint Spectrum pursuant to this Agreement
will be deemed to be, and will be interpreted as, a lease of all of the
currently and potentially available capacity on the Sprint Spectrum
pursuant to the Current FCC Rules which govern the leasing of MDS
capacity. Notwithstanding any provision herein to the contrary, until the
Long Term De Facto Transfer Lease Effective Date, each Sprint Licensee
will exercise such de jure and de facto control over the construction and
operations of all facilities authorized pursuant to its respective Sprint
Authorizations as is required by the Current FCC Rules, and each Third
Party Licensee will exercise such de jure and de facto control over the
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
15
construction and operations of all facilities authorized pursuant to their
respective Leased Authorizations as is required by the Current FCC Rules.
(c) The Sprint Licensees and Operator will use Efforts to prepare
all application forms and related exhibits, certifications and other
documents necessary to secure the FCC's consent to the long term de facto
transfer leasing of all of the Proposed Sprint Spectrum ("FCC Lease
Applications") and to file the FCC Lease Applications within 5 business
days following the later of (i) the date the FCC Rules permitting MDS
licensees to engage in long term de facto transfer leasing become
effective and (ii) the Effective Date. Subsequently, the Sprint Licensees
and Operator each will promptly and diligently prepare, file and prosecute
all necessary amendments, briefs, pleadings, petitions for
reconsideration, applications for review, waiver requests, documents and
supporting data, and take all such actions and give all such notices as
may be required or requested by the FCC or as may be appropriate to
expedite the grant of each FCC Lease Application without conditions
materially adverse to the respective Sprint Licensee or Operator. If any
person or entity petitions the FCC to deny one or more of the FCC Lease
Applications, or if the FCC grants such applications and any person or
entity petitions for reconsideration or review of such grant before the
FCC or appeals or applies for review in any judicial proceeding, then the
respective Sprint Licensee and Operator will use their Efforts to oppose
such petition before the FCC or defend such grant by the FCC. If the FCC
denies one or more of the FCC Lease Applications or grants one or more of
such applications with conditions materially adverse to Operator or the
relevant Sprint Licensee, then if requested to do so by such adversely
affected Party, such Party and the other relevant Party will use their
Efforts to secure reconsideration or review of such action. Operator will
be responsible for the payment of all Costs that the Sprint Licensees
incur in connection with their performance under this Section 3.1 (c),
including all application fees imposed by the FCC on the filing of the FCC
Lease Applications and all legal fees incurred in the preparation and
prosecution of the FCC Lease Applications.
(d) With respect to any given Sprint Spectrum, the "Long Term De
Facto Transfer Lease Effective Date" will be the later of (i) the date on
which the FCC's grant of the respective FCC Lease Application becomes a
Final Order, or (ii) the applicable Market Closing Date or Initial Closing
Date. This Agreement will be deemed to be, and will be interpreted as, a
long term de facto transfer lease with respect to such Sprint Spectrum
immediately upon the Long Term De Facto Transfer Lease Effective Date with
respect to such Sprint Spectrum, without further action by the Sprint
Licensee or Operator. Upon the Long Term De Facto Transfer Lease Effective
Date with respect to any given Sprint Spectrum and subject to the terms
set forth herein, including those set forth in Article V hereof, the
maximum control over and responsibility for the construction and operation
of facilities utilizing such Sprint Spectrum and compliance with the FCC
Rules will automatically be transferred to Operator and the relevant
Sprint Licensee will be relieved of such responsibility to the maximum
extent permitted by the FCC Rules. Notwithstanding the foregoing, during
the Term each Sprint Licensee will remain in de jure control of its Sprint
Authorizations and will remain in de facto control over any Sprint
Spectrum for which the Long Term De Facto Transfer Lease Effective Date
has not occurred. During the Term, Operator will not hold itself
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
16
out to the public as the de jure licensee of any of the Sprint
Authorizations or take any action inconsistent with or contrary to the
relevant Sprint Licensee's de jure control over its Sprint Authorizations.
(e) Notwithstanding anything contained herein to the contrary: (i)
Operator will comply at all times with the FCC Rules and all other
applicable laws; (ii) this Agreement may be revoked, cancelled, or
terminated by Sprint pursuant to Section 10.2 or by the FCC if Operator
fails to comply with the FCC Rules and other applicable laws related
hereto; (iii) if any Sprint Authorization is revoked, cancelled,
terminated, or otherwise ceases to be in effect, Operator will have no
continuing authority or right to use the Sprint Spectrum authorized
pursuant to that Sprint Authorization, unless otherwise authorized by the
FCC, nor will it have any continuing obligations with respect thereto;
(iv) this Agreement is not an assignment, sale, or other type of
irrevocable transfer of the Sprint Authorizations; (v) this Agreement will
not be assigned to any entity that is ineligible or unqualified to enter
into a spectrum leasing arrangement under the FCC Rules; and (vi) Sprint
will not consent to an assignment of this Agreement unless such assignment
complies with applicable FCC Rules.
(f) Notwithstanding anything to the contrary contained herein, the
lease for the Sprint Spectrum authorized pursuant to a given Sprint
Authorization will not extend beyond: (i) the date such Sprint
Authorization expires by its terms; provided, however that if a
timely-filed application for renewal is submitted, the lease for the
Sprint Spectrum authorized pursuant to such Sprint Authorization will not
cease unless and until such application for renewal is dismissed or denied
with prejudice by the FCC by Final Order; (ii) the date such Sprint
Authorization is terminated, forfeited or cancelled by the FCC; or (iii)
the expiration of the Term or the termination of this Agreement pursuant
to Article X. Upon the expiration or termination of the lease for any
given Sprint Spectrum pursuant to this Section 3.1 (f), such spectrum will
no longer be considered Sprint Spectrum for purposes of this Agreement and
the Sprint Authorization for such spectrum will no longer be considered a
Sprint Authorization for purposes of this Agreement. If the FCC terminates
or does not renew any Sprint Authorization and provides Sprint with any
other spectrum in consideration for such termination or non-renewal, then
such new spectrum will be Sprint Spectrum for purposes of this Agreement.
If the FCC terminates or does not renew any Sprint Authorization and the
FCC provides monetary compensation to Sprint in return, such compensation
will be credited against the Monthly Fees to the extent it does not exceed
the net present value (using a discount rate of [***] of the Monthly Fees
allocable to the Sprint Spectrum subject to such termination or
non-renewal (determined by multiplying the Monthly Fees otherwise payable
to Operator by a fraction, the numerator of which is the MHz Households
for such Sprint Spectrum subject to the termination or non-renewal, and
the denominator of which is the MHz Households for all Proposed Spectrum
as of the Effective Date), minus any other compensation paid by the FCC to
Operator in consideration of the termination or non-renewal of such Sprint
Authorizations. Except as set forth in the immediately preceding sentence
and in Section 10.3, in no event will Monthly Fees be reduced as a result
of the loss of any Sprint Authorization. If the FCC terminates or does not
renew any Sprint Authorization and provides Sprint compensation in the
form of bidding credits to Sprint
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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in return, to the extent permitted by the FCC, and subject to the terms
and conditions set forth in this Section. Sprint will make such bidding
credits available to Operator for the purpose of acquiring spectrum within
Region 1. Operator will provide Sprint with at least 60 days advance
notice of its intent to participate in any FCC auction in which Operator
intends to use such bidding credits. Sprint and Operator will take such
actions as are necessary and proper to transfer such bidding credits to
Operator prior to the date on which Operator is required to pay for any
spectrum it acquires in Region 1 pursuant to an FCC auction, provided,
however that the face value of such bidding credits will not exceed the
lesser of : (i) the total bidding credits received by Sprint which are
allocable to the termination or non-renewal of any Sprint Authorizations
within Region 1, or (ii) the value on a per MHz/pop basis for the bidding
credits received by Sprint which are allocable to the termination or
non-renewal of any Sprint Authorizations within Region 1, multiplied by
the MHz/pop for all spectrum acquired by Operator at such auction for
Region 1. As a condition of the transfer of the bidding credits, Operator
will execute and deliver an agreement, in form and substance reasonably
satisfactory to Sprint, to assign the spectrum acquired in Region 1 to a
Sprint Subsidiary. Upon the consummation of such assignment and such
spectrum becoming authorized by the FCC, it will be deemed Sprint Spectrum
for purposes of this Agreement. Operator's rights to use any such bidding
credits as set forth herein will only apply to the next FCC auction which
follows the termination or non-renewal of any Sprint Authorization for
which such bidding credits were awarded. Thereafter, Operator will have no
claim whatsoever to such bidding credits. If Operator is entitled to the
bidding credits as set forth in this Section 3.1 (f) and Sprint is unable
to transfer the bidding credits to Operator or Operator is unable to use
or receive the benefit of the bidding credits as set forth in this Section
3.1 (f), then upon written notice to Sprint, the Monthly Fees for the
affected Market will be reduced by a percentage determined by dividing (A)
the number of MHz Households for the Spectrum subject to such termination,
by (B) the number of MHz Households for all Potential Spectrum for such
Market as of the Effective Date. The reduction in Monthly Fees
contemplated pursuant to the preceding sentence will take effect on the
first day of the next calendar month following delivery of such notice. In
no event will Operator have any claim to bidding credits arising from the
termination of any Sprint Authorization resulting from a breach of
Operator's obligations under this Agreement.
(g) If any Sprint Authorization expires during the Term, the
relevant Sprint Licensee will use its Efforts to prepare and timely file
such application for renewal as is required by the FCC Rules ("Sprint
Renewal Application"). Operator will provide Sprint with such information
as Sprint reasonably requests to assist in the preparation of any Sprint
Renewal Application. Any such Sprint Renewal Application will include an
affirmative statement of the Sprint Licensee that it intends, subject to
the approval of the FCC, to extend the lease of such Spectrum pursuant to
the terms of this Agreement. If any Sprint Authorization subject to long
term de facto transfer leasing expires during the Term, Operator and the
relevant Sprint Licensee will timely seek any required approval from the
FCC for continued long term de facto transfer leasing pursuant to the
terms of this Agreement in the Sprint Renewal Application for the
underlying Sprint Authorization. If any person petitions the FCC to deny
one or more of the Sprint Renewal Applications, or if the FCC grants a
Sprint Renewal Application and any
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
18
person petitions for reconsideration or review of such grant before the
FCC, or appeals or applies for review in any judicial proceeding, then the
respective Sprint Subsidiary and Operator will use their Efforts to oppose
such petition before the FCC or defend such grant by the FCC. If the FCC
denies one or more of the Sprint Renewal Applications or grants one or
more of such applications with conditions materially adverse to any Party,
then if requested to do so by such adversely affected Party, such Party
and the other relevant Party will use their Efforts to secure
reconsideration or review of such action. Operator will be responsible for
the payment of all Costs that the Sprint Licensees incur in connection
with their performance under this Section 3.1 (g), including all
application fees imposed by the FCC on the filing of the Sprint Renewal
Applications and all legal fees incurred in the preparation and
prosecution of the Sprint Renewal Applications.
3.2 Use of Leased Spectrum.
(a) Operator's right to use any Proposed Leased Spectrum
contemplated pursuant to this Section in any given Market is subject to
the Market Closing Date, or Initial Closing Date, as applicable, having
occurred for such Market. Each Sprint Subsidiary which is a party to a
Proposed Primary Lease will grant to Operator, for the duration of the
Term, a license to use, subject to the terms of this Agreement, all of the
currently and potentially available capacity on the Leased Spectrum which
the respective Sprint Subsidiaries are entitled to use pursuant to the
Primary Leases. Subject to the terms of this Agreement, Operator may use
the Leased Spectrum for any purpose now or hereafter allowed by the FCC
Rules, provided, however, that Operator's use of the Leased Spectrum will
at all times be subject to the terms of the Primary Lease governing such
Leased Spectrum. Notwithstanding any provision hereof, during the Term
each Third Party Licensee will remain in de jure and de facto control over
its Leased Spectrum and Operator will not hold itself out to the public as
the de jure or de facto licensee of any of the Leased Authorizations or
take any action inconsistent with or contrary to the relevant Third Party
Licensee's de jure or de facto control over its Leased Authorizations
unless the FCC has authorized Operator to exercise long term de facto
transfer leasing control over such Leased Authorization pursuant to
Section 5.5.
(b) Notwithstanding anything to the contrary contained herein, but
subject to Section 3.2(e), the spectrum encumbered by those certain
Proposed Primary Leases identified in Schedule 3.2 will not be considered
Leased Spectrum until and unless the Parties obtain the consent of the
Third Party Licensee of such spectrum as contemplated pursuant to this
Section 3.2(b). From and after the Initial Closing Date through the 180th
day thereafter (the "Consent Date") the relevant Sprint Subsidiary and
Operator will each use their Efforts to obtain each consent identified in
Schedule 3.2 to the transfer of such Sprint Subsidiary's rights and
obligations under the corresponding Primary Leases in accordance with the
terms of this Agreement (each a "Consent" and collectively, the
"Consents"). Sprint will use its Efforts to obtain each Consent in
substantially the form attached as Exhibit A but any documentation
executed by an applicable Third Party Licensee which reasonably permits
the license of any such Leased Spectrum as contemplated herein will be
effective as a Consent. Each Proposed
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
19
Primary Lease listed on Schedule 3.2 for which a Consent is not obtained
as of the Consent Date will be deemed a "Rejected Primary Lease".
Following the Consent Date, but subject to such Sprint Subsidiary's
obtaining such Consent at a later date as set forth in Section 3.2(c) (i)
any Rejected Primary Lease will no longer be deemed a Primary Lease for
purposes of this Agreement, (ii) the Leased Authorization which is the
subject of any Rejected Primary Lease will no longer be deemed a Leased
Authorization for purposes of this Agreement, and (iii) all of Sprint's
obligations pursuant to Section 2.9 with respect to such Rejected Primary
Lease will terminate with respect to the Proposed Leased Spectrum governed
by such Rejected Primary. Following the Consent Date, Sprint will provide
Operator with a credit against the Monthly Fees in the amount equal to the
sum of (w) all Primary Lease Costs (as defined in Section 6.1) paid by
Operator through the Consent Date pursuant to each Rejected Primary Lease
attributable to a Closed Market, (x) the aggregate of all Monthly Fees
paid to Sprint through The Consent Date with respect to the applicable
Closed Market as set forth in Section 6.4 multiplied by a fraction, the
numerator of which is the MHz Households for the Leased Spectrum subject
to each Rejected Primary Lease and the denominator of which is the MHz
Households for all Spectrum for such Closed Market as of the Effective
Date, (y) a portion of the Initial Fee paid pursuant to Section 6.3
determined by multiplying the Initial Fee by a fraction the numerator of
which is the MHz Households for the Leased Spectrum subject to a Rejected
Primary Lease and the denominator is the MHz Households for all Proposed
Spectrum as of the Effective Date, and (z) the Market Closing Payment for
such Closed Market multiplied by a fraction the numerator of which is the
MHz Households for the Leased Spectrum subject to a Rejected Primary Lease
and the denominator is the MHz Households for all Proposed Spectrum as of
the Effective Date in such Closed Market (the "Rejected Lease Credit"). As
used herein, the amount determined pursuant to clauses (y) and (z) of the
immediately preceding sentence is known as the "Rejected Lease Initial
Fee." The Rejected Lease Credit will be applied against the next
installment(s) of Monthly Fees until the balance of Rejected Lease Credit
is $0. Within 30 days following the Consent Date, Sprint will provide
Operator with the computation of the Rejected Lease Credit which
computation will be conclusive on the Parties unless Operator provides
written notice of its disagreement to such Rejected Lease Credit within 30
days thereafter, in which case the matter will be submitted to the dispute
resolution procedures set forth in Article XIV of this Agreement. From and
after the Consent Date, the Market Closing Payment for each Market which
contains a Rejected Primary Lease will be reduced by an amount equal to
the Market Closing Payment for such Market as set forth in Schedule 6.3
multiplied by a fraction the numerator of which is the MHz Households for
the spectrum subject to the Rejected Primary Lease(s) and the denominator
is the MHz Households for all Proposed Spectrum as of the Effective Date
in such Market then Closing (the "Rejected Lease Fee"). For avoidance of
doubt, Exhibit B sets forth the MHz Households for all Proposed Spectrum
as of the Effective Date as well as the methodology to be employed in
determining MHz Households for any Spectrum pursuant to this Agreement.
Following the Consent Date: (I) Operator will no longer be responsible for
the Primary Lease Costs arising under any Rejected Primary Lease, and (II)
the Monthly Fee otherwise payable to Sprint will be reduced by a
percentage determined by dividing (A)
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
20
the number of MHz Households for the Leased Spectrum subject to the
Rejected Primary Leases by (B) the number of MHz Households for all
Proposed Spectrum as of the Effective Date. Notwithstanding anything to
the contrary contained herein, the Parties acknowledge that the Third
Party Licensees listed on Schedule 3.2(b) have asserted that their
respective Primary Leases are no longer in effect. If Sprint fails to
obtain a Consent for any such Primary Lease by the Consent Date, the
Rejected Lease Credit with respect to any such Primary Lease listed on
Schedule 3.2(b) will include the Primary Lease Fees paid by Operator with
respect to such Primary Lease.
(c) If following the Consent Date a Sprint Subsidiary obtains a
Consent with respect to any Rejected Primary Lease attributable to a
Closed Market and provides Operator with written notice thereof, then
commencing with the first full calendar month following the date such
Consent is obtained (i) Operator will be responsible for the payment of
all Primary Lease Costs allocable to such Rejected Primary Lease, (ii) the
Monthly Fee will be increased by an amount equal to the Monthly Fee for
such Market as set forth on Schedule 6.4, multiplied by a fraction, the
numerator of which is the number of MHz Households for the Leased Spectrum
subject to such Rejected Primary Leases, and the denominator of which is
the number of MHz Households for all Proposed Spectrum as of the Effective
Date, (iii) such Rejected Primary Lease will thereafter be deemed a
Primary Lease for purposes of this Agreement, the spectrum which is the
subject of any Rejected Primary Lease will be deemed Leased Spectrum for
purposes of this Agreement and the FCC authorization which is the subject
of any Rejected Primary Lease will be deemed a Leased Authorization for
purposes of this Agreement, and (iv) and no later than 30 days following
the date such Consent is obtained, Operator will pay to Sprint an amount
equal to (A), if such Rejected Primary Lease was attributable to a Closed
Market as of the Consent Date, the Rejected Lease Initial Fee for such
Rejected Primary Lease, or (B) if such Rejected Primary Lease was not
attributable to a Closed Market as of the Consent Date, but such Market
becomes a Closed Market prior to delivery of the applicable Consent, the
Rejected Lease Initial Fee and an amount equal to the Rejected Lease Fee
for such Rejected Primary Lease. If following the Consent Date a Sprint
Subsidiary obtains a Consent with respect to any Rejected Primary Lease
attributable to a Market which is not a Closed Market, then upon such
Market becoming a Closed Market, such Rejected Primary Lease will become a
Primary Lease and such spectrum will become Leased Spectrum and Operator
will pay Sprint the Rejected Initial Lease Fee for such Rejected Primary
Lease and the Market Closing Payment with respect to such Market without
giving effect to the Rejected Lease Fee for such Rejected Primary Lease.
(d) On the Initial Closing Date, Operator and each relevant Sprint
Subsidiary will enter into the services agreement in substantially the
form attached hereto as Exhibit C pursuant to which, to the extent
permitted under any applicable Rejected Primary Lease, Operator will
perform such Sprint Subsidiary's obligations to provide programming and
operation of the Third Party Licensees' spectrum pursuant to each Rejected
Primary Lease (the "Transmission Facilities Operation and Maintenance
Agreement"). To the extent any Rejected Primary Lease prohibits such
Sprint Subsidiary from delegating or subcontracting its obligations under
any Rejected Primary Lease as contemplated pursuant to the Transmission
Facilities Operation and
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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Maintenance Agreement or Sprint elects to perform the obligations under
such Rejected Primary Lease, Operator will grant such Sprint Subsidiary
limited access to facilities and shared equipment as necessary to enable
such Sprint Subsidiary to perform its obligations under any such Rejected
Primary Lease.
(e) Notwithstanding anything to the contrary contained herein, in
lieu of obtaining a Consent for any Proposed Primary Lease, Sprint may
acquire the underlying Proposed Leased Authorization. If Sprint acquires a
Proposed Leased Authorization as contemplated pursuant to this Section
3.2(e), such Proposed Leased Spectrum will thereafter be considered
Proposed Sprint Spectrum (and Sprint Spectrum upon the applicable Market
becoming a Closed Market) and such Proposed Leased Authorization will be
considered a Proposed Sprint Authorization (and a Sprint Authorization
upon the applicable Market becoming a Closed Market) for purposes of this
Agreement. If Sprint acquires a Proposed Leased Authorization prior to the
Consent Date, the Primary Lease governing the use of such Proposed Leased
Authorization will not be deemed a Rejected Primary Lease and the
adjustments to the applicable Monthly Fees, Initial Fee and Market Closing
Payments set forth in Section 3.2(b) will not apply with respect to such
Primary Lease. If Sprint acquires a Proposed Leased Authorization which is
the subject of a Rejected Primary Lease (e.g., after the Consent Date),
then it will be deemed as if Sprint obtained a Consent for such Rejected
Primary Lease for the purpose of computing the Rejected Initial Lease Fee
and the Rejected Lease Fee as set forth in Section 3.2(c). Sprint will be
solely responsible for all Costs, including the purchase price thereof, it
incurs in connection with the acquisition of any Proposed Leased
Authorization as contemplated pursuant to this Section 3.2(e).
Article IV
PRIMARY LEASE MANAGEMENT
4.1 Primary Lease Performance. Except as set forth herein,
from and after the Initial Closing Date Operator will perform all obligations of
each Sprint Subsidiary under the Primary Leases, including providing all
insurance required under the Primary Leases. Notwithstanding the preceding
sentence, Sprint will perform the obligations set forth on Schedule 4.1 with
respect to the Primary Leases. Not later than 30 days following the Initial
Closing Date, Operator will provide Sprint with a certificate of insurance
evidencing the coverages required pursuant to the Primary Leases for each Closed
Market. Not later than 30 days following each successive Market Closing Date,
Operator will provide Sprint with a certificate of insurance evidencing the
coverages required pursuant to the Primary Leases attributable for each such new
Closed Market. Such certificate will name the relevant Sprint Subsidiary, and
the respective Third Party Licensees as additional insureds or additional loss
payees, as appropriate, and will provide that such insurance may not be
cancelled except upon 60 days written notice from insurer to the relevant Sprint
Subsidiary. On the Initial Closing Date and each Market Closing Date, the
relevant Sprint Subsidiary and Operator will transmit to each Third Party
Licensee which is a party to any Primary Lease attributable to each Closed
Market a notice substantially in the form attached as Exhibit D. To the extent
any request for Consent with respect to any Primary Lease listed on Schedule 3.2
has not been obtained or a request for
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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Consent has not been previously requested in writing, on the Initial Closing
Date and each Market Closing Date, the relevant Sprint Subsidiary will transmit
a request for Consent to each Third Party Licensee which is a party to any such
Primary Lease in the Market(s) which are the subject of the Closing. No later
than 3 business days after it becomes aware of any breach or receives any notice
of any breach or alleged breach under any Primary Lease, Operator will provide
Sprint with written notice of such breach or alleged breach. For purposes of the
immediately preceding sentence, Operator will be deemed to be aware of any
breach if any person charged with the administration of the Primary Leases has
knowledge of any circumstances which would cause a reasonable person to conclude
that a breach has occurred. Such notice will set forth in detail the allegations
of any Third Party Licensee with respect to such breach and will set forth in
detail Operator's explanation or plan to cure or otherwise address such breach,
including a timeline for taking any action to cure such breach until such breach
is resolved. Operator will provide Sprint with follow-up notices no less than
every two weeks which set forth the current status of Operator's efforts to
address or cure any material breach. Operator will diligently pursue and take
all such actions necessary to cure any and all breaches of any Primary Lease in
accordance with the default provisions under the Primary Leases.
4.2 Primary Lease Defaults By Third Party Licensees. Subject
to the terms contained in this Section 4.2, Sprint hereby assigns to and grants
to Operator all rights and powers during the Term to enforce all obligations of
each Third Party Licensee under the Primary Leases attributable to each Closed
Market. If any Third Party Licensee fails to perform any obligation under any
Primary Lease, Operator will provide Sprint with prompt written notice of such
failure. Operator will enforce and require strict performance of all material
terms of each Primary Lease; provided, however, that upon the direction of the
relevant Sprint Subsidiary, Operator will waive performance obligations on the
part of Licensee to the extent such waiver does not materially and adversely
affect Operator's ability to use any Leased Spectrum. Notwithstanding the
preceding sentence, to the extent that it does not impair the continuing
enforceability of a Primary Lease, Operator may elect not to enforce specific
terms of a Primary Lease provided, that: (i) Operator reasonably determines that
doing so is in its best business interests, (ii) that Operator and Third Party
Licensee are parties to the other leasing arrangements for spectrum rights, have
common board members or common ownership, or are otherwise parties to a
strategic business agreement and (iii) Operator provides Sprint notice of such
decision within 3 business days following such default. in such event, the
relevant Sprint Subsidiary may, at its sole discretion, elect to directly
enforce the terms of said Primary Lease and Operator will be responsible for all
Costs such Sprint Subsidiary incurs in such enforcement. Operator may not pursue
the termination of any Primary Lease by reason of a default or otherwise without
the relevant Sprint Subsidiary's prior written consent. Operator will provide
the relevant Sprint Subsidiary with timely notice of the resolution or planned
resolution of any defaults occurring under any Primary Lease. Operator will be
responsible for all Costs it and Sprint incur in connection with its enforcement
of the terms and conditions of any Primary Lease; provided, however, that if the
applicable Primary Lease permits the recovery of any Costs from the Third Party
Licensee, Operator will be entitled to recover such Costs from the applicable
Third Party Licensee to the extent Operator incurs such Costs. Notwithstanding
anything to the contrary contained in this Section 4.2, if any Third Party
Licensee fails to perform any obligation under any Primary Lease, which could
result in the loss or revocation of any Authorization or any material rights
under any Authorization, the relevant Sprint Subsidiary,
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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upon notice to Operator, may elect to enforce the terms of the Primary Lease
directly against such Third Party Licensee in lieu of Operator enforcing such
terms. In such event, Operator will be responsible for all Costs such Sprint
Subsidiary incurs in connection therewith, and will be entitled to reimbursement
thereof as provided or allowed in the Primary Lease. Notwithstanding anything to
the contrary contained in this Agreement, no Sprint Subsidiary will have any
liability to Operator or otherwise for any damages which are directly or
indirectly caused by a breach of a Primary Lease by a Third Party Licensee.
4.3 Primary Lease Management
* * *
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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* * *
Article V
SPECTRUM MANAGEMENT
5.1 Sprint Authorization Modifications and Coordination
Documents.
(a) Following the Long Term De Facto Transfer Lease Effective Date
with respect to any given Sprint Spectrum and to the extent permitted by
the FCC Rules, Operator may (i) submit to the FCC and prosecute any
applications for modifications to facilities utilizing Sprint Spectrum
licensed to the relevant Sprint Licensee, (ii) withdraw any application
submitted pursuant to the immediately preceding clause, (iii) submit to
the FCC any and all required notices for any new or modified facilities
which utilize the Sprint Spectrum, (iv) submit to the FCC and prosecute
any applications for new or modified facilities utilizing Sprint Spectrum
to be licensed to Operator, (v) submit to the FCC and prosecute any
applications or take such other action as may be necessary for the
issuance of additional spectrum under the BTA authorizations in any Closed
Market, which upon such grant by the FCC becoming a Final Order, such
spectrum will be Sprint Spectrum for purposes of this Agreement, and (vi)
except as set forth in Section 5.3 or Section 5.7, enter into any
Coordination Document with respect to such Sprint Spectrum. Any such
action taken by Operator pursuant to the previous sentence is herein
referred to as a "Unilateral Action". Operator will provide Sprint with at
least 15 business days advance written notice prior to taking any
Unilateral Action. Such notice will set forth with particularity the
proposed Unilateral Action. Operator will not take any Unilateral Action
which (i) would impair the ability of Sprint or Operator to perform any
obligation under any Primary Lease, or (ii) is not principally related to
improving the ability of Operator to use such Sprint Spectrum to provide
the services contemplated under this Agreement If Operator undertakes any
Unilateral Action, it will do so in strict compliance with all laws,
rules, policies, and regulations then in effect and will refrain from
taking any action which could
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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reasonably be expected to result in the imposition of any penalty or
sanction by the FCC or other governmental entity upon any Sprint
Subsidiary or Operator.
(b) To the extent Operator is not permitted by law to exercise the
rights conferred in Section 5.1 (a), upon Operator's request, the relevant
Sprint Licensee will (i) complete and submit to the FCC within 30 days and
thereafter prosecute such applications for any modification to facilities
utilizing any Sprint Spectrum, (ii) execute and, within 30 days, return
any Coordination Document, (iii) withdraw within 30 days any application
submitted to the FCC by any Sprint Licensee, (iv) submit to the FCC within
30 days any notices for new or modified facilities for any Sprint
Spectrum, and (v) take all reasonable action necessary under the FCC Rules
to make any additional spectrum which is available in any Closed Market
and which Sprint may obtain from time to time as the BTA holder, which
upon such grant becoming a Final Order, such spectrum will be Sprint
Spectrum for purposes of this Agreement. Notwithstanding anything to the
contrary contained herein, no Sprint Licensee will be obligated to execute
any Coordination Document or file or implement a modification to any
facilities used in connection with the Sprint Spectrum if (x) such
requested action would impair the ability of Sprint or Operator to perform
any obligations under any Primary Lease, (y) such action is not
principally related to improving the ability of Operator to use such
Sprint Spectrum to provide the services contemplated under this Agreement,
or (z) such action violates the FCC Rules, other applicable laws, or the
terms of any Sprint Authorization or License. Furthermore, in no event
will any Sprint Licensee be required to execute a Coordination Document
which will, in Sprint's reasonable judgment, impair any then existing or
planned operation of ITFS or MDS spectrum by any Sprint Entity in any
markets which are adjacent to Region 1; provided, however, Sprint will
consider in good faith any Coordination Document which is otherwise
requested by Operator. Operator will promptly pay all Costs incurred by
Sprint in connection with this Section 5.1(b) and will pay to Sprint
management fees according to Schedule 5.l(b).
5.2 Leased Authorization Modifications and Coordination
Documents.
(a) Each Sprint Subsidiary hereby assigns to, and grants to
Operator for the duration of the Term all rights and powers to exercise
the right to request and require the Third Party Licensees: (i) to
complete, submit to the FCC and prosecute such applications for any
modification to facilities utilizing such Third Party Licensee's Leased
Spectrum which are permitted by law and the Primary Lease governing the
use of such Leased Spectrum, (ii) to submit to the FCC and prosecute such
applications to effectuate an exchange of one or more of such Leased
Spectrum for the same amount of ITFS or MDS spectrum, provided that such
exchange is permitted by law and the Primary Lease governing the use of
such Leased Spectrum, (iii) to execute and promptly return any
Coordination Document, provided such Coordination Document is permitted by
law and the Primary Lease governing the use of such Leased Spectrum, (iv)
to withdraw any application submitted to the FCC by a Third Party
Licensee, provided that such instruction is permitted by law and the
Primary Lease governing the use of such Leased Spectrum, and (v) to submit
to the FCC any notices for new facilities permitted under the Primary
Lease governing use of such Leased Spectrum.
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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Operator will provide the relevant Sprint Subsidiary with simultaneous
written notice of any request for a modification made under this Section
5.2(a). Notwithstanding anything to the contrary contained herein,
Operator will not request or require any Third Party Licensee to execute
any Coordination Document or file or implement a modification to any
facilities used in connection with any Leased Spectrum if (i) such action
would impair the ability of Sprint or Operator to perform any obligations
under any Primary Lease or (ii) such action is not principally related to
improving the ability of Operator to use such Leased Spectrum to provide
the services contemplated under this Agreement. Operator will promptly pay
all Costs incurred by Sprint in connection with this Section 5.2(a)
including any and all costs or expenses to be borne by any Sprint
Subsidiary under any Primary Lease.
(b) To the extent Operator is not able to exercise the rights
conferred in Section 5.2(a), at the written request of Operator, the
relevant Sprint Subsidiary will provide written notice instructing any
Third Party Licensee: (i) to complete, submit to the FCC and prosecute
such applications for any modification to facilities utilizing such Third
Party Licensee's Leased Spectrum which are permitted by law and the
Primary Lease governing the use of such Leased Spectrum, (ii) to submit to
the FCC and prosecute such applications to effectuate an exchange of one
or more of such Leased Spectrum for the amount of ITFS or MDS spectrum,
provided that such exchange is permitted by law and the Primary Lease
governing the use of such Leased Spectrum, (iii) to execute and promptly
return any Coordination Document, provided such Coordination Document is
permitted by law and the Primary Lease governing the use of such Leased
Spectrum, (iv) to withdraw any application submitted to the FCC by Third
Party Licensee, provided that such instruction is permitted by law and the
Primary Lease governing the use of such Leased Spectrum, and (v) to submit
to the FCC any notices for new facilities permitted under the Primary
Lease governing use of such Leased Spectrum. Notwithstanding anything to
the contrary contained herein, Sprint will not be obligated to require or
request that any Third Party Licensee file or implement a modification to
any facilities used in connection with the Leased Spectrum if (x) such
action would impair the ability of Sprint or Operator to perform any
obligations under any Primary Lease or (y) such action is not principally
related to improving the ability of Operator to use such Leased Spectrum
to provide the services contemplated under this Agreement. Each Sprint
Subsidiary will use commercially reasonable efforts to cause each Third
Party Licensee to comply with its obligations pursuant to the Primary
Lease governing the use of such Leased Spectrum. Operator will promptly
pay all Costs incurred by Sprint in connection with this Section 5.2(b)
and will pay to Sprint management fees according to Schedule 5.2(b).
5.3 Limitations. Notwithstanding anything to the contrary
contained in this Agreement:
(a) Operator will not construct or operate any new or modified
facility utilizing any Spectrum that would violate the FCC Rules or other
applicable law, violate the terms of any Primary Lease, violate the terms
of any Authorization, or impair the ability of Operator to satisfy any
obligations under any Primary Lease or impair the ability of Sprint to
satisfy any obligation under any Rejected Primary Lease.
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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(b) In no event will any Sprint Licensee be required to file or
prosecute any application for or notification with regard to any
facilities or usage of Spectrum which would violate the FCC Rules or other
applicable law, violate the terms of any Primary Lease, violate the terms
of any Authorization, or impair the ability of Sprint to satisfy any
obligation under any Rejected Primary Lease. Furthermore, in no event will
any Sprint Subsidiary be required to file or prosecute any application for
any facilities which violate the terms of any Primary Lease, Sprint
Authorization, Leased Authorization or Rejected Primary Lease.
(c) Unless otherwise consented to in advance by Sprint in writing,
which consent will not be unreasonably denied, withheld or delayed,
Operator will not enter into any Coordination Document, and will use its
Efforts to prevent any Third Party Licensee from entering into any
Coordination Document, that directly or indirectly waives interference
protection to any Spectrum or consents to accept interference to any
Spectrum unless such Coordination Documents provides for the beneficiary
of such waiver or consent to reciprocally waive interference protection or
consent to accept interference from use of the Spectrum.
(d) Operator will not attempt, and will use its Efforts to prevent
any Third Party Licensee from attempting, pursuant to Section 27.53(1)(2)
of the FCC Rules as adopted in the New FCC Order, to force an adjacent
channel licensee to comply with the more restrictive spectral mask
specified in that Section of the FCC Rules unless Operator will have
first: (i) reasonably determined that such election is commercially
reasonable, spectrally efficient and consistent with sound engineering
practice, giving full consideration to the concomitant FCC requirement
that the licensee making such an election comply with the same more
restrictive spectral mask and the possible spectral inefficiencies, costs
and other burdens associated with such compliance; and (ii) provided
Sprint at least 20 business days advance notification prior to such
election, along with an explanation of Operator's rationale for
determining that such election is commercially reasonable, spectrally
efficient and consistent with sound engineering practice.
(e) Operator agrees that: (i) it will not waive, and will use its
Efforts to prevent any Third Party Licensee from waiving, its right to
interference protection from facilities near any Market that exceed the
maximum "height benchmarking" set forth in Section 27.1221 of the FCC
Rules as adopted in the New FCC Order; and (ii) it will not agree, and
will prevent any Third Party Licensee from agreeing, to provide
interference protection to such facilities, unless Operator will have
first: (i) reasonably determined that such action is commercially
reasonable, spectrally efficient and consistent with sound engineering
practice; and (ii) provided Sprint at least 20 business days advance
notification, along with an explanation of Operator's rationale for
determining that such election is commercially reasonable, spectrally
efficient and consistent with sound engineering practice.
5.4 Third Party Licensee Programming Obligations. Commencing
no later than 180 days following the Initial Closing Date, Operator will support
and diligently perform all obligations under the Primary Leases and otherwise
with respect to each Third Party
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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Licensee's retained capacity, including: (a) providing and delivering
programming content as required under the Primary Leases, (b) remedying any
adverse impact upon the Third Party Licensee's programming as required under the
Primary Leases; (c) providing transport or transport facilities (such as studio
to transmitter links) as required under the Primary Leases; (d) the
installation, maintenance and repair of any receive site or other equipment as
required under the Primary Leases; and (e) providing data services and receive
sites as required under the Primary Leases. To the extent that point-to-point
microwave facilities licensed by the FCC to any Sprint Subsidiary are used by
any Sprint Subsidiary in a Closed Market as of the Initial Closing Date or
Market Closing Date (as applicable) to satisfy any obligation identified in (c)
above and to the extent permitted by the FCC Rules, Sprint shall make such
facilities available for the continued satisfaction of the applicable Primary
Lease obligation, provided that: (w) Operator will maintain, repair and replace
as needed, at its sole cost and expense, all such facilities in good working
order, reasonable wear and tear excepted, in compliance with the FCC Rules, in
accordance with the terms and conditions of the applicable Primary Lease, and
consistent with sound engineering practices as further detailed in the Equipment
Service Level Requirements set forth in Schedule 7.1(b) as if such facilities
were Transmission Equipment; (x) notwithstanding the foregoing, the applicable
Sprint Subsidiary will exercise such control over the facilities and their
operation and maintenance as is required by the FCC Rules; (y) the applicable
Sprint Subsidiary will have no liability to Operator in the event the FCC
authorization for any such facility is cancelled, forfeited, or not renewed
unless such is the result of gross negligence or willful misconduct on the part
of any Sprint Subsidiary and will have no obligation to seek renewal of any FCC
authorization for such facilities unless requested to do so by Operator in
writing no less than sixty (60) days for any application for renewal is to be
filed pursuant to the FCC Rules; and (z) Operator will be responsible for the
payment of all Costs that any Sprint Subsidiary incurs in connection with its
performance under this Section 5.4. Notwithstanding the foregoing obligations,
Sprint and Operator will enter into a Transition Services Agreement in the form
attached hereto as Exhibit E pursuant to which Sprint will perform such
obligations upon the terms and conditions set forth therein (the "Transition
Services Agreement").
5.5 Additional Spectrum Rights.
* * *
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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* * *
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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* * *
(c) Operator will use its Efforts to require that each agreement
pursuant to which Operator is entitled to use any Operator Leased Spectrum
will include (i) the customary terms and conditions which Operator
generally employs in its spectrum leasing agreements, and (ii) will permit
Operator the unrestricted right to assign such agreement to Sprint
Operator will provide Sprint with a true and correct copy of any such
agreements and any and all amendments or other modifications thereto no
later than 30 days following the date on which such document is executed,
or if such agreement is being assigned to Operator by a third party, the
date of such assignment.
5.6 Band Plan. To enable Sprint to support Operator's planned
use of the Spectrum, at least 30 days prior to undertaking any efforts to use
any Spectrum in any Market, Operator will provide Sprint with a detailed
description of Operator's planned use for the Spectrum in such Market (each a
"Band Plan"). The Band Plan will include a description of the type of duplexing
Operator plans to use, the modulation method and a designation of upstream,
downstream and guard band spectrum (as applicable). From time to time during the
Term, Operator will provide Sprint with at least 30 days advance notice of any
proposed changes to any Band Plan. Sprint may make reasonable recommendations to
any initial Band Plan or any proposed revisions thereto; provided, however, that
Operator will not be obligated to accept such recommendations if Operator, in
its reasonable discretion, determines that adopting such recommendations would
not be the most effective and efficient manner to utilize the Spectrum or if
such recommendations would result in substantial additional Costs or obligations
of Operator.
5.7 FCC Transitions.
(a) The Parties acknowledge that Operator may be required to
transition certain Spectrum pursuant to certain provisions of the New FCC Order
(such provisions the "FCC Market Transition Rules") prior to utilizing such
Spectrum hereunder. In serving as a "Proponent" pursuant to the FCC Market
Transition Rules, Operator will not take any action that (i) would impair the
ability of Sprint or Operator to perform any obligation under any Primary Lease
or Rejected Primary Lease, or (ii) is not principally related to improving the
ability of Operator to use such Spectrum to provide the services contemplated
under this Agreement.
(b) If a third party (including a Third Party Licensee) serves as
a Proponent in connection with any Spectrum, Operator will take such steps as
are reasonably necessary to assure that the transition is accomplished in a
manner that (i) would not impair the ability of Sprint or Operator to perform
any obligation under any Primary Lease or Rejected Primary Lease, or (ii) is
principally related to improving the ability of Operator to use such Spectrum to
provide the services contemplated under this Agreement.
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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(c) Notwithstanding the provisions of Section 5.7(a), if in
transitioning any Spectrum, Operator is required by the FCC Market Transition
Rules to transition any spectrum licensed to or leased by any Sprint Subsidiary
or any affiliate of a Sprint Subsidiary in any market adjacent to any Closed
Market, Operator will provide Sprint with at least 30 days advance notice before
circulating a Transition Plan pursuant to the FCC Market Transition Rules and
will afford the applicable Sprint Subsidiary or its affiliate the opportunity to
serve as a Co-Proponent and to jointly develop a Transition Plan in conjunction
with Operator. Sprint will notify Operator within 15 business days of receipt of
such notice whether any Sprint Subsidiary or an affiliate of any Sprint
Subsidiary elects to serve as a Co-Proponent and jointly develop a Transition
Plan. In the development of any joint Transition Plan under this Section 5.7(c),
the Co-Proponents will utilize their Efforts to assure that the transition (i)
would not impair the ability of Operator or any Sprint Subsidiary or any Sprint
Entity to perform under any spectrum lease in any Closed Market or any market
adjacent to any Closed Market, including any Primary Lease or Rejected Primary
Lease, and (ii) is principally related to improving the ability of each to use
the spectrum in their respective markets in a manner that is spectrally
efficient and cost efficient, giving due weight to the views of Sprint with
respect to the transition within its markets and to the views of Operator with
respect to the transition within the Closed Markets and any other adjacent
markets operated by Operator.
(d) If in transitioning any spectrum, any Sprint Subsidiary is
required by the FCC Market Transition Rules to transition any spectrum licensed
to or leased by Operator in any market adjacent to any Market, Sprint will
provide Operator with at least 30 days advance notice before circulating a
Transition Plan pursuant to the FCC Market Transition Rules and will afford
Operator the opportunity to serve as a Co-Proponent and to jointly develop a
Transition Plan in conjunction with Sprint Operator will notify Sprint within 15
business days of receipt of such notice whether it elects to serve as a
Co-Proponent and jointly develop a Transition Plan. In the development of any
joint Transition Plan under this Section 5.7(d), the Co-Proponents will utilize
their Efforts to assure that the transition (i) would not impair the ability of
Operator or any Sprint Subsidiary, or any affiliate of any Sprint Subsidiary to
perform under any spectrum lease in any Market or any market adjacent to any
Market, including any Primary Lease or Rejected Primary Lease, and (ii) is
principally related to improving the ability of each to use the spectrum in
their respective markets in a manner that is spectrally efficient and cost
efficient, giving due weight to the views of Sprint with respect to the
transition within its markets and to the views of Operator with respect to the
transition within the Markets and any other adjacent markets operated by
Operator.
(e) Operator will transition each of the Closed Markets pursuant to
the FCC Market Transition Rules no later than the latest date permitted under
the FCC Market Transition Rules without placing any Sprint Authorization or
Leased Authorization at risk of termination, non-renewal or reallocation.
(f) All Costs incurred by any Sprint Subsidiary or an affiliate of
any Sprint Subsidiary in connection with the development of transition plans and
the implementation of transitions under this Section 5.7 will be allocated in
accordance with the FCC Rules then in effect without regard to any Sprint
Subsidiary or an affiliate of any Sprint Subsidiary serving as a Co-Proponent.
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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Article VI
FEES AND EXPENSES
6.1 Primary Lease Fees and Expenses. Commencing with the
Initial Closing Date and each applicable Market Closing Date, Operator will pay
all monthly fees (monthly minimum payments, revenue sharing and per subscriber
fees), periodic incentive payments and other compensation owed to the Third
Party Licensees under the Primary Leases (the "Primary Lease Fees") attributable
to each Closed Market. Operator's obligation to pay the Primary Lease Costs
prior to the Consent Date is independent of and irrespective of, the granting of
any Consent identified on Schedule 3.2 hereof. Commencing with the Initial
Closing Date and each applicable Market Closing Date, Operator will be
responsible for the payment of all reimbursements and other amounts owed to the
Third Party Licensees under the Primary Leases attributable to each Closed
Market, including any reimbursable regulatory fees incurred by a Third Party
Licensee (the "Primary Lease Reimbursements"). The Primary Lease Fees and
Primary Lease Reimbursements are herein referred to as the "Primary Lease
Costs". Operator will promptly pay the Primary Lease Costs when due and payable
and in accordance with the terms of the respective Primary Leases.
6.2 Regulatory Fees and Expenses. Operator will be responsible
for, and will reimburse Sprint no later than 30 days from the receipt of an
invoice from Sprint for such amounts, all Costs in connection with the Sprint
Licensees' maintenance of the Sprint Spectrum during the Term; provided,
however, any Costs which exceed [***] in any calendar month will be approved by
Operator prior to the time such expense is incurred, which consent will not be
unreasonably withheld, conditioned, or delayed. Operator will be responsible
for, and will pay when due, any and all Costs in connection with its transition
of the Spectrum pursuant to Section 5.7 (including the costs of transitioning
spectrum outside of the Closed Markets when such transition is required by the
FCC Market Transition Rules as a condition to the transition of any Spectrum).
6.3 Initial Fee. Operator has paid Sprint the amount of [***]
(the "Initial Fee"). Subject to Section 2.7(c), the Initial Fee is
non-refundable. On the Initial Closing Date and each subsequent Market Closing
Date, Operator will pay Sprint an amount equal to the sum of all Market Closing
Payments identified in Schedule 6.3 for each Market which becomes a Closed
Market on the Initial Closing Date, or such Market Closing Date, as applicable.
6.4 Monthly Fee. Commencing with the Initial Closing Date and
each Market Closing Date and continuing throughout the Term, Operator will pay
Sprint a monthly spectrum access and aggregation fee (the "Monthly Fee") equal
to the amount set forth in Schedule 6.4 for each Market which becomes a Closed
Market on the Initial Closing Date, or applicable Market Closing Date.
6.5 Payments. The Market Closing Payments will be paid on the
Initial Closing Date and upon the subsequent Market Closing Dates (as
applicable) in the manner directed by Sprint. The Monthly Fee for a given month
will be sent to Sprint at such address as Sprint designates from time to time by
first-class, United States Postal Service mail or, at Sprint's option, by
electronic funds transfer to such account as Sprint designates, no later than 30
days after the last day of the month in question. Except as specified in Section
6.7. all other
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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amounts due hereunder from Operator to Sprint will be sent to for delivery to
Sprint on or before when due at such address as Sprint designates from time to
time by first-class, United States Postal Service mail or, at Sprint's option,
by electronic funds transfer to such account as Sprint designates.
6.6 Taxes. Operator will pay all duties, levies, including
regulatory fees and assessments, spectrum usage fees, and taxes, including but
not limited to, sales, property, ad valorem and use taxes, or any tax or fee in
lieu thereof, imposed by any local, state or federal government or governmental
agency during the Term with respect to the Spectrum and Transmission Equipment
(as defined in Section 7.1), and with respect to Operator's use and operation of
such Spectrum and Transmission Equipment, to the extent such amounts relate to
periods included in the Term of this Agreement, excepting only any taxes on or
measured by the income of the Sprint Subsidiaries. Any such items that become
due during the calendar year in which the Term ends will be prorated between the
applicable Sprint Subsidiary and Operator based upon the number of days during
such year that this Agreement is in effect; provided however, that any such
items that are calculated based on the number of subscribers or customers will
be allocated between Sprint and Operator based on their respective number of
subscribers or customers and any such items that are more appropriately based on
the respective activities and operations of Sprint and Operator will be prorated
using a fair and equitable allocation method that considers, among other things,
the basis upon which such amount was assessed. Operator shall pay the cost of
any documentary, stamp, sales, excise, transfer or other similar taxes payable
in respect of its acquisition of any leasehold interests pursuant to this
Agreement and pursuant to Operator's acquisition of any assets pursuant to
Article XVII, except to the extent Article XVII otherwise specifically allocates
such expenses between the Parties.
6.7 Reimbursement and Other Expenses. Where one Party is
required to reimburse the other Party for Costs, such payment will be sent to
such other Party at such address as such other Party designates from time to
time by first-class, United States Postal Service mail, or at the election of
the receiving Party, by electronic funds transfer to such account as such Party
designates, no later than 30 days following receipt of an invoice and such
supporting documentation as the Party paying the reimbursement reasonably
requests.
6.8 Security. Upon the Effective Date, Operator will either
provide to Sprint a letter of credit or establish an escrow account in an amount
equal to [***] to secure Operator's obligations under this Agreement (the
"Security"). Upon each anniversary of the Effective Date, the Security will be
increased or decreased in such amount as to reflect the aggregate Monthly Fees
and Primary Lease Costs payable during the next 12 months; provided, however,
that at any time during the Term, Sprint may, in its reasonable discretion,
require additional Security if any new Primary Lease, amendment to a Primary
Lease, or multiple number of either entered into in a given 12 month period,
results in a total increase in Primary Lease obligations in excess of [***]
Furthermore, Operator will provide Sprint with such documentation as Sprint may
reasonably request evidencing compliance with the Security requirements set
forth in this Agreement The Security will remain in place at least throughout
the first 5 years of the Initial Term. Thereafter, the Security will remain in
place until such date on which Operator has generated Monthly Gross Revenues (as
defined below) in excess of the Revenue Threshold for at least 3 consecutive
months, at which time such Deposit will be released to the extent no claims are
then pending against such amounts. The "Revenue
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Threshold" means an amount equal to (a) [***] years of the Term, (b) [***]
years of the Term, and (c) [***] years of the Term. "Monthly Gross Revenues"
means the gross revenue collected by Operator for any communications services
provided over facilities that (a) utilize the Spectrum or are collocated,
integrated or used in conjunction with any such facilities and (b) utilize MDS
or ITFS channels other than the Spectrum; provided that such gross revenues will
not include (x) equipment, installation and maintenance charges, including
charges for the installation or activation of new equipment or services (to the
extent that such installation or activation charges do not include a
communications service component), charges for equipment sold, recurring lease
fees for rented or leased equipment, and charges for the maintenance or repair
of equipment; or (y) third party pass-through charges (including governmental
taxes, fees or charges), surcharges, universal service fund contributions, and
charges billed on a purely "pass through" basis by Operator to its subscribers
for communications services (such as charges for collect calls or long distance
telephone services) rendered by other entities. On the Initial Closing Date,
Clearwire Corporation ("Guarantor") will execute and deliver a guaranty in the
form attached hereto as Exhibit F (the "Parent Guaranty") which will remain in
place throughout the Term.
6.9 Spectrum Opportunities. Schedule 6.9 attached hereto lists
certain ITFS and MDS spectrum (the "Potential Spectrum") in which Sprint
currently holds certain rights which may permit Sprint to sublease such channels
to Operator pursuant to this Agreement. If Sprint obtains an ITFS or MDS
capacity lease agreement which permits Sprint to sublease any Potential Spectrum
to Operator, such lease agreement will be considered as a Primary Lease for
purposes of this Agreement, such Potential Spectrum will be considered as Leased
Spectrum for purposes of this Agreement and any underlying FCC authorization
will be considered as a Leased Authorization for purposes of this Agreement.
Furthermore, no later than 15 days following the date on which any such new
Primary Lease is fully executed, Operator will pay Sprint an amount equal to the
corresponding value for such Potential Spectrum as indicated on Schedule 6.9.
Furthermore, commencing with the first full calendar month following the date on
which such new Primary Lease is executed and continuing through the Term, the
Monthly Fee set forth in Section 6.4 will be increased by an amount equal to the
corresponding amount for such Potential Spectrum as indicated on Schedule 6.9.
Article VII
EQUIPMENT AND OPERATION OF SPECTRUM
7.1 Transmission Equipment. During the Term, each Sprint
Subsidiary will grant to Operator the right to (a) use all equipment owned by
such Sprint Subsidiary and being used as of the Initial Closing Date and each
applicable Market Closing Date for the operation of the Spectrum, and (b) use
all equipment which such Sprint Subsidiary does not own but is otherwise
permitted to use for the operation of the Spectrum pursuant to any Primary Lease
(collectively, the "Sprint Transmission Equipment"). Schedule 7.1(a) sets forth
a list of the equipment used in connection with the operation of the Proposed
Spectrum as of the Effective Date. Operator will provide, construct and install
all equipment which it desires for the operation of its business or which is
required to comply with the requirements of the Authorizations, as they may be
modified from time to time, to comply with the FCC Rules, or
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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that is otherwise required pursuant to the terms of the Primary Leases (the
"Operator Transmission Equipment"). Operator will keep complete records
identifying the Operator Transmission Equipment and Sprint Transmission
Equipment then being used for the Spectrum. Upon the request of Sprint, Operator
will provide Sprint with such records from time to time during the Term. The
Sprint Transmission Equipment and the Operator Transmission Equipment are
sometimes collectively referred to herein as the "Transmission Equipment".
Operator will maintain, repair and replace as needed, at its sole cost and
expense, all Transmission Equipment in good working order, reasonable wear and
tear excepted, in compliance with the FCC Rules and sound engineering practices
as further detailed in the Equipment Service Level Requirements set forth in
Schedule 7.1(b) and, in the case of Transmission Equipment used in connection
with any Leased Spectrum, in accordance with the terms and conditions of the
Primary Lease governing the use of such Leased Spectrum. If Operator elects to
replace or cease using any Sprint Transmission Equipment, Operator will provide
Sprint with reasonable advance notice of such removal and will dispose of such
equipment, at Operator's sole cost and expense, as Sprint reasonably requests.
Any equipment used to replace Sprint Transmission Equipment will be considered
Operator Transmission Equipment. Upon expiration of the Term, Operator will
surrender all then existing Sprint Transmission Equipment to Sprint in the same
condition as it was received from Sprint, reasonable wear and tear excepted.
Operator will bear the risk of any casualty, damage, or theft to the
Transmission Equipment Operator will assure that all use of the Spectrum during
the Term is in compliance, in all material respects, with all applicable laws,
including the FCC Rules. The appropriate Sprint Licensee will exercise such
supervision and control as is required by the FCC Rules over Operator's
activities under this Section 7.1 with respect to its Sprint Spectrum prior to
the Long Term De Facto Lease Effective Date applicable to such Sprint Spectrum.
Notwithstanding anything to the contrary contained herein, should Operator's
rights to use any Transmission Equipment terminate and Sprint obtains possession
or control of any such Transmission Equipment, such equipment will no longer be
considered Transmission Equipment for purposes of this Agreement, provided,
however, that this sentence will not be construed as a waiver of Sprint's rights
with respect to any obligations of Operator with respect to such equipment
accruing prior to the date on which Operator's rights to use such equipment
terminate and Sprint takes possession or control of such equipment.
7.2 Option to Purchase or Continue to Use Transmission
Equipment. All Transmission Equipment used in connection with any Leased
Spectrum will be subject to any and all purchase options or other rights to use
such Transmission Equipment set forth in the Primary Lease governing the use of
the Leased Spectrum for which such equipment is used, including any option for
the Third Party Licensee to purchase certain equipment used in connection with
the transmission of its video programming for $1.00. Furthermore, to the extent
any Transmission Equipment is used solely in connection with the performance of
any Rejected Primary Lease pursuant to the Spectrum Operation Agreement, such
Transmission Equipment will be subject to any applicable purchase option set
forth in such Rejected Primary Lease. No later than 10 business days after
delivery of a written request by Sprint, Operator will provide Sprint with such
documentation as Sprint reasonably requests to evidence Operator's compliance
with the obligations set forth in this Section 7.2.
7.3 Site Availability. Subject to Article XVI, Operator will
be responsible, at its sole cost and expense, for securing the rooftop,
transmission tower, and
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
36
equipment room space necessary for the installation of the transmission
facilities that operate on or in connection with any Spectrum. Operator will
ensure that any lease or contractual agreement for rooftop, transmission tower,
or equipment room space for use in connection with the Spectrum will be freely
assignable by Operator to Sprint. Prior to entering into an agreement for the
use of such facilities and space, Operator will consult with Sprint regarding
the availability of facilities owned or leased by a Sprint Entity. In the
development of the advanced high speed wireless data system in Region 1,
Operator will procure tower space, backhaul and other network elements and
services for use in such system from a Sprint Entity when commercially and
competitively reasonable provided that any such Sprint Entity responds to any
such inquiry by Operator in a timely manner.
7.4 Use of Transmission Facilities Following Term of Primary
Lease. Any lease or contractual agreement for rooftop, transmission tower, or
equipment room space for use in connection with the Leased Spectrum will contain
a clause permitting the applicable Third Party Licensee to use such space
following expiration of the Primary Lease if, pursuant to the Primary Lease, the
relevant Sprint Subsidiary would be obligated to include or use efforts to
obtain such a clause if such Sprint Subsidiary were entering into such an
agreement.
7.5 Construction. Operator will, within the time periods
required pursuant to the FCC Rules, Leased Authorizations and Primary Leases,
construct and place into operation all facilities specified under the Primary
Leases and Leased Authorizations, as the same may be amended or modified from
time to time. Operator will timely construct and place into operation all
facilities which are not presently constructed but are required under the
Primary Leases for the relaying of the underlying Third Party Licensee's
programming to its transmission facility and for the transmission of that
programming. Operator will, within the time periods required pursuant to the
Sprint Authorizations and the FCC Rules, construct and place into operation all
facilities required under the Sprint Authorizations and FCC Rules. Operator will
comply in all respects with any "substantial service" or other performance
requirements imposed by the FCC or the FCC Rules with respect to each Sprint
Authorization and Leased Authorization. Schedule 7.5 sets forth a list of all
receive site obligations pursuant to the Primary Leases and Operator agrees to
construct such receive sites in accordance with the terms of the applicable
Primary Leases.
7.6 Insurance. Operator will, at its own cost and expense,
maintain with sound and financially reputable insurers, (a) General Commercial
Liability Insurance covering liability resulting from Operator's operation of
the Transmission Equipment with limits of not less than [***] combined single
limit per occurrence for bodily injury and property damage liability and [***]
aggregate limit, (b) "All Risk" property insurance covering the Transmission
Equipment for its full replacement value, and (c) Worker's
Compensation/Employers' Liability, Business Auto liability and other insurance
required by law. Each Sprint Subsidiary will be named as an additional
insured/loss payee under such insurance policies. No later than 30 days after
the Initial Closing Date, Operator will provide Sprint with a certificate of
insurance of the coverages required to be maintained pursuant to this Section
7.6. Such certificate will name each Sprint Subsidiary as an additional insured
or as an additional loss payee, as appropriate, and will provide that such
insurance may not be cancelled except upon 60 days written notice from the
insurer to Sprint.
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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7.7 Obligation to Operate. [***]. Any launch of such a system
and Operator's obligations pursuant to this Section 7.7, but not Operator's
obligations under Section 7.5 hereof, is subject to the availability to Operator
of at least [***]. Operator will be solely responsible for the operation,
marketing and customer service support for its business operations. Operator
will, to the extent required under any Primary Lease, provide any Third Party
Licensee with access to such services as are offered over the Spectrum by
Operator. Nothing contained herein will be construed to restrict Operator to
using the Spectrum for other purposes besides an advanced high speed data system
provided that Operator has complied with the provisions of this Section 7.7.
7.8 Inspection Rights. Sprint will have the right, upon
reasonable advance notice (which may be given telephonically or otherwise), to
inspect any facilities used in connection with the operation of the Spectrum,
including all tower facilities identified in Schedule 16 for the sole purpose of
determining compliance with this Agreement. Notwithstanding anything to the
contrary contained herein, Sprint's right to access and inspect the facilities
hereunder will at a minimum be in accordance with the FCC Rules applicable to a
licensee's access to facilities used in connection with such licensee's FCC
authorizations.
Article VIII
INFORMATION AND REPORTING
8.1 Financial Statements. No later than 45 days following the
end of each calendar quarter during the Term, Operator will deliver to Sprint a
report detailing all Primary Lease Fees, Primary Lease Reimbursements and all
amounts paid under the Tower Subleases and Substitute Tower Leases during such
calendar quarter. No later than April 1 of each year during the Term, Operator
will deliver to Sprint an unaudited balance sheet as of the end of the previous
fiscal year of Guarantor, on a consolidated basis. Within 30 days following
receipt of its audited financial statements Operator will deliver to Sprint an
audited balance sheet of Guarantor on a consolidated basis as of the end of the
most recent year. To the extent there is a material change in the financial
condition of the Guarantor or Operator as reflected in such balance sheet which
reasonably calls into question Operator's ability, or indicates that Operator
may not be able, to fulfill its obligations under this Agreement, Operator will
provide Sprint with such other financial statements and information as
reasonably requested by Sprint to demonstrate the ability of Operator and
Guarantor to satisfy their obligations under this Agreement. No later than
January 31 of each year, Operator will deliver to Sprint a report certifying
that, except as set forth therein, Operator is in compliance with this Agreement
and all Primary Leases, including all construction obligations. Any financial
statements, certificates or other information provided
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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38
to Sprint pursuant to this Section 8.1 will be Confidential Information of
Operator. Each report required pursuant to this Section 8.1 will be certified by
an officer of Operator as true and correct.
8.2 Spectrum and Operator Controlled Spectrum. During the Term,
Operator will, no later than 30 days following written notice from Sprint,
provide Sprint with access to such records and information concerning the
Spectrum and Operator Controlled Spectrum as are reasonably needed to determine
compliance with the terms of this Agreement or to evaluate whether Sprint should
elect to exercise any of its rights under Sections 17.1 or 17.2. Sprint may
access such records during business hours at Operator's offices or at such other
place, or in such other manner, as mutually agreed upon by the Parties.
Notwithstanding anything to the contrary contained herein, unless Operator is
then in breach of this Agreement, Sprint will not be entitled to review
information with respect to any given Closed Market more than twice during any
calendar year.
Article IX
REPRESENTATIONS AND WARRANTIES
9.1 By Operator. Operator represents and warrants to Sprint
that:
(a) Organization. Operator is duly organized, validly existing and
in good standing under the laws of the state or commonwealth of its
formation, and has full power and authority to carry out all of the
transactions contemplated by this Agreement.
(b) Authorization; Valid and Binding Agreement. Operator has taken
all action necessary to authorize the execution and delivery of this
Agreement. Upon execution and delivery, this Agreement will constitute a
valid and binding agreement of Operator, enforceable in accordance with
its terms. The person signing this Agreement on behalf of Operator is duly
authorized to execute and deliver this Agreement and to legally bind
Operator to all of the terms, covenants and conditions contained in this
Agreement.
(c) No Violation. Except as disclosed in this Agreement, as of the
Effective Date, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated by this Agreement, will
constitute a violation of, be in conflict with, or constitute a default
under, any term or provision of any agreement governing Operator's
formation or other governing instruments, or any agreement or commitment
to which Operator is bound, or any judgment, decree, order, regulation or
rule of any court or governmental authority, or any statute or law. Except
for any consent or approval of any governmental entity which may be
required with respect to Operator's use of the Towers contemplated
pursuant to this Agreement, and except for FCC approval of the long term
de facto transfer leasing of Sprint Spectrum, no consent of any federal,
state or local authority is required, or if required has failed to be
obtained, in connection with the execution and delivery of this Agreement
by Operator or with the performance of the transactions contemplated by
this Agreement by
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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Operator. Operator is eligible to serve as a long term de facto transfer lessee
pursuant to the FCC Rules.
(d) Litigation. Except as specifically disclosed herein, as of the
Effective Date there is no action, suit, proceeding or investigation
pending or, to the actual knowledge of Operator, threatened against
Operator before any court, administrative agency or other governmental
body relating in any way to the transactions contemplated by this
Agreement. Except as specifically disclosed herein, as of the Effective
Date no unsatisfied judgment, order, writ, injunction, decree or
assessment of any court or of any federal, state, local or other
governmental department, commission, board, bureau, agency or
instrumentality relating in any way to this Agreement or any other
agreements, certificates or instruments to be executed and delivered
herewith has been entered against and served upon Operator. Except as
specifically disclosed herein, as of the Effective Date, there is no
action, proceeding or investigation pending or, to the best knowledge of
Operator, threatened against Operator which questions or challenges the
validity of or otherwise seeks to prevent the consummation or performance
of this Agreement.
(e) Financial Statements. Operator has delivered to Sprint the
consolidated unaudited balance sheet of Guarantor for the period ending
June 30, 2004 (the "Financial Statements"). The Financial Statements are
the Confidential Information of Operator. The Financial Statements are not
prepared in accordance with GAAP, but are consistent with the books and
records of Guarantor and fairly present the financial condition, assets
and liabilities, and the results of operations of Guarantor and Operator
at the respective dates of, and for the periods referred to in, such
Financial Statements and reflect any adjustments made to the Financial
Statements. The Financial Statements reflect the consistent application of
accounting principles throughout the periods involved.
(f) Financing Commitment. Schedule 9.1(f) sets forth a complete
and accurate summary of the financing commitments Guarantor and Operator
have obtained to enable Operator to perform its obligations under this
Agreement. Attached as Exhibits to Schedule 9.1(f) is a letter from
Clearwire Corporation certifying that Schedule 9.1(f) is true and correct.
9.2 By Sprint. Each Sprint Subsidiary represents and warrants
to Operator that:
(a) Organization. Such Sprint Subsidiary is duly organized,
validly existing and in good standing as a corporation under the laws of
the state or commonwealth of its formation, and has full power and
authority to carry out all of the transactions contemplated by this
Agreement.
(b) Authorization; Valid and Binding Agreement. Such Sprint
Subsidiary has taken all action necessary to authorize the execution and
delivery of this Agreement. Upon execution and delivery, this Agreement
will constitute a valid and binding agreement of such Sprint Subsidiary,
enforceable in accordance with its terms.
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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The person signing this Agreement on behalf of such Sprint Subsidiary is
duly authorized to execute and deliver this Agreement and to legally bind
such Sprint Subsidiary to all of the terms, covenants and conditions
contained in this Agreement.
(c) No Violation. Except as disclosed on Schedule 9.2(c), as of the
Effective Date: (i) neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated by this Agreement
will constitute a violation of, be in conflict with, or constitute a
default under, any term or provision of any agreement governing such
Sprint Subsidiary's formation or other governing instruments, or any
agreement or commitment to which such Sprint Subsidiary is bound, or any
judgment, decree, order, regulation or rule of any court or governmental
authority, or any statute or law; and (ii) except for any consent or
approval of any governmental entity which may be required with respect to
Operator's use of the Towers contemplated pursuant to this Agreement, and
except for FCC approval of the long term de facto transfer leasing of
Sprint Spectrum, no consent of any federal, state or local authority is
required, or if required has failed to be obtained, in connection with the
execution and delivery of this Agreement by such Sprint Subsidiary or with
the performance of the transactions contemplated by this Agreement by such
Sprint Subsidiary.
(d) Litigation. Except as disclosed on Schedule 9.2(d), as of the
Effective Date, there is no action, suit, proceeding or investigation
pending or, to the actual knowledge of Sprint, threatened against such
Sprint Subsidiary before any court, administrative agency or other
governmental body relating in any way to the transactions contemplated by
this Agreement. Except as disclosed on Schedule 9.2(d), as of the
Effective Date, no unsatisfied judgment, order, writ, injunction, decree
or assessment of any court or of any federal, state, local or other
governmental department, commission, board, bureau, agency or
instrumentality relating in any way to this Agreement or any other
agreements, certificates or instruments to be executed and delivered
herewith has been entered against and served upon such Sprint Subsidiary.
Except as disclosed on Schedule 9.2(d), as of the Effective Date, there is
no action, proceeding or investigation pending or, to the best knowledge
of such Sprint Subsidiary, threatened against such Sprint Subsidiary which
questions or challenges the validity of, or which otherwise seeks to
prevent the consummation or performance of this Agreement.
(e) FCC Licenses. Solely for the purposes of this Section 9.2(e),
the term "Sprint Authorizations" will mean solely those authorizations set
forth in Schedule R-3, the term "Primary Leases" will mean solely those
channel leases set forth in Schedule R-2, the term "Leased Authorizations"
will mean solely those authorizations set forth on Schedule R-2, the term
"Sprint Spectrum" means solely the spectrum authorized pursuant to the
Sprint Authorizations, and the term "Leased Spectrum" means solely the
spectrum authorized pursuant to the Leased Authorizations, irrespective of
the Initial Closing Date or any Market Closing Date.
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
41
(i) As of the Effective Date, each Sprint Licensee holds
and is fully qualified and authorized in all respects to hold, the
Sprint Authorizations which have been granted to it by the FCC.
(ii) As of the Effective Date, there is no condition
imposed by the FCC as part of the Sprint Authorizations, or to the
knowledge of such Sprint Subsidiary, as a part of the Leased
Authorizations, that is neither set forth on the face thereof as
issued by the FCC nor contained in the FCC Rules applicable
generally to stations of that type, nature, class or location;
except for actions or proceedings affecting ITFS or MDS facilities
generally, no application, action or proceeding is pending or
threatened (nor is there any basis for) that is reasonably likely to
result in the denial of an application for renewal, the revocation,
modification, non-renewal or suspension of the Sprint
Authorizations, or the issuance of a cease-and-desist order,
forfeitures or other administrative or judicial sanctions relating
to the operation of the Sprint Spectrum. Such Sprint Subsidiary's
operations and activities are now being conducted and, since January
1, 2000 have been conducted in compliance, in all material respects,
with the Communications Act of 1934, as amended, and the FCC Rules.
(iii) Except as disclosed on Schedule 9.2(e)(iii), as of
the Effective Date no application is presently pending before the
FCC proposing any modification to or extension or renewal of any
Sprint Authorization or any Leased Authorization.
(iv) Except as disclosed on Schedule 9.2(e)(iv), each
Sprint Authorization was validly issued in accordance with
procedures that comply with the FCC Rules and other applicable laws,
is issued pursuant to a Final Order and is in full force and effect
as of the Effective Date. To the best knowledge of Sprint, except as
disclosed on Schedule 9.2(e)(iv), each Leased Authorization was
validly issued in accordance with procedures that comply with the
FCC Rules and other applicable laws, is issued pursuant to a Final
Order and is in full force and effect as of the Effective Date. As
used in the immediately preceding sentence, Sprint will only be
deemed to have knowledge of a matter if the event forming the basis
of the inaccuracy or omission in the representation and warranty
herein provided occurred on or after January 1, 2000 and Sprint had
actual knowledge of such event.
(v) Except as set forth on Schedule 9.2(e)(v), as of the
Effective Date, Sprint has not received notice from any Third Party
Licensee of any material breach or default by a Sprint Subsidiary
under any Primary Lease which has not been cured and Sprint does not
know of any matters which exist or are imminent which would
constitute a default by any Sprint Subsidiary under any Primary
Lease.
(vi) Except as set forth on Schedule 9.2(e)(vi), within
the 24 months preceding the Effective Date, Sprint has not received
notice of any material breach or default (including any non-payment)
by a Sprint Subsidiary
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
42
under any Tower Lease which has not been cured and Sprint does not
know of any matters which exist or are imminent which would
constitute a default by any Sprint Subsidiary under any Tower Lease.
(vii) Other than the interference consents set forth on
Schedule 9.2(e)(vii), no Sprint Subsidiary has agreed to accept
electromagnetic interference to the operation of any Sprint Spectrum
within a 35-mile radius of its licensed transmission point from the
operation of other ITFS or MDS stations which are licensed to
transmit from a point which is outside of such 35-mile radius.
(viii) Other than the interference consents set forth on
Schedule 9.2(e)(viii), to the best knowledge of Sprint, no Licensee
has agreed to accept electromagnetic interference to the operation
of any Leased Spectrum within a 35-mile radius of its licensed
transmission point from the operation of other ITFS or MDS stations
which are licensed to transmit from a point which is outside of such
35-mile radius. As used in the immediately preceding sentence,
Sprint will only be deemed to have knowledge of a matter if the
event forming the basis of the inaccuracy or omission in the
representation and warranty herein provided occurred on or after
January 1, 2000 and Sprint had actual knowledge of such event.
9.3 Survival of Representations and Warranties. The
representations and warranties contained in this Agreement (and all annexes
attached hereto) will survive until the [***] of the Initial Closing Date.
Article X
DEFAULTS; TERMINATION
10.1 Termination for Loss of Authorizations or Primary
Leases. Without further liability to either Sprint or Operator (unless the
termination of this Agreement with respect to any Spectrum is due to a breach by
either Party of its obligations under this Agreement or the Primary Lease for
such Spectrum or due to the negligence or willful misconduct of either Party),
this Agreement will terminate with respect to particular Spectrum if: (a) the
Authorization for such Spectrum is terminated, cancelled or a timely-filed
application for renewal of such authorization is dismissed or denied with
prejudice by the FCC; (b) such Spectrum is Sprint Spectrum and Sprint's
authority to lease such Sprint Spectrum to Operator in accordance with the terms
of this Agreement is terminated by the FCC; or (c) such Spectrum is Leased
Spectrum and either (i) the Third Party Licensee's authority to lease such
Leased Spectrum to the respective Sprint Subsidiary in accordance with the
relevant Primary Lease is terminated by the FCC; (ii) Sprint's authority to
permit Operator's use of such Leased Spectrum in accordance with the terms
hereof is terminated by the FCC; or (iii) the Primary Lease regarding such
Leased Spectrum expires by its terms or is terminated.
10.2 Termination by Agreement or for Default. This Agreement
may be terminated without liability to the terminating Party: (a) at any time by
mutual agreement of the Parties; (b) immediately by the terminating Party upon a
material breach by the other Party,
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
43
including the failure to pay the Monthly Fee or any reimbursements due
hereunder, if such material breach is not cured within 30 days (15 business days
if breach is non-payment) after receipt of written notice from the terminating
Party; provided, however, if any breach not involving the payment of money is of
a nature such that it is not capable of being cured within such 30 day period,
this Agreement may not be terminated if the breaching Party commences action to
cure such breach during such 30 day period and thereafter proceeds with due
diligence to fully cure such breach; or (c) immediately by a Party upon
institution of proceedings under the present or future United States Bankruptcy
Code with respect to the other Party, or if a receiver or trustee is appointed
for or ordered to take possession of and/or to dispose of the other Party's
business or property, or if the other Party makes any assignment or conveyance
for the benefit of its creditors (provided that the other Party will have a
period of 60 days to obtain a dismissal of any involuntary proceedings or
procedures brought against it before this Agreement may be terminated as a
result thereof). Termination will be effective upon the later of written notice
of such termination by the terminating Party to the other Party or the
expiration of any available cure period or other time period, as applicable;
provided, however, that neither termination nor expiration of this Agreement
will relieve either Party of liabilities previously accrued hereunder.
Notwithstanding anything to the contrary contained herein, a material breach of
this Agreement will include (a) if the Parent Guaranty or any portion thereof is
or becomes invalid, void, voidable or otherwise unenforceable for any reason
whatsoever, including the insolvency or dissolution of the Guarantor, or (b) the
occurrence of a second or subsequent Construction Default. A "Construction
Default" means (a) the failure to timely construct any facilities required to be
constructed pursuant to any Primary Lease, Leased Authorization or Sprint
Authorization within the applicable time periods specified therein or applied
thereto under the FCC Rules which failure is the basis for the termination
(whether or not such termination actually occurs) of any Primary Lease, Leased
Authorization or Sprint Authorization by Final Order, but taking into effect any
Final Order which extends such time period and which is effective prior to the
expiration of the previously specified time period, or with respect to
contractual obligations pursuant to a Primary Lease to construct, any amendment
to the applicable Primary Lease, or written waiver of the terms of the
applicable Primary Lease, which extends such time period and which is effective
prior to the expiration of the previously specified time period in the Primary
Lease; or (b) the failure to provide "substantial service" or other performance
requirements imposed by the FCC or FCC Rules with respect to each Sprint
Authorization or Leased Authorization, but taking into effect any Final Order
which extends such applicable time period and which is effective prior to the
expiration of any applicable previously specified time period, which failure is
the basis for the FCC to terminate, cancel or forfeit the Sprint Authorization
or Leased Authorization or to take action to: (i) reduce the GSA for any Leased
Authorization or Sprint Authorization (other than a BTA authorization) resulting
in a reduction in excess of ten percent (10%) of the MHz Households authorized
to be serviced by such Sprint Authorization or Leased Authorization, or (ii) in
the case of any BTA authorization that is a Leased Authorization or Sprint
Authorization, reduce the GSA for such Leased Authorization or Sprint
Authorization resulting in a reduction in excess of twenty percent (20%) of the
MHz Households authorized to be serviced pursuant to such BTA authorization,.
The first Construction Default, if any, will be a material breach of this
Agreement for all purposes other than Sprint's ability to terminate this
Agreement and Sprint may exercise any other remedy available pursuant to this
Agreement, at law or in equity, irrespective of any cure periods otherwise set
forth in this Section 10.2.
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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10.3 Partial Termination for Default. Upon the election of
Operator, this Agreement will terminate with respect to a particular portion of
the Spectrum if as a direct result of Sprint's breach of its obligations
hereunder: (a) Sprint's authority to operate such Sprint Spectrum is terminated
by the FCC; (b) Sprint's authority to lease, or Licensee's authority to operate
such Spectrum in accordance with the terms of the Primary Lease governing the
use of such Spectrum or this Agreement is terminated by the FCC; or (c) the FCC
terminates Licensee's authority or Sprint's authority to lease such Spectrum in
accordance with the terms and conditions of this Agreement. Upon the termination
of this Agreement with respect to any Spectrum pursuant to the immediately
preceding sentence, (i) Sprint will refund a portion of the Initial Fee and
Market Closing Payments equal to (A) the sum of the Initial Fee and Market
Closing Payments which have been paid, multiplied by (B) a fraction the
numerator of which is the number of MHz Households for the Spectrum subject to
the termination and the denominator of which is the total number of MHz
Households for all Proposed Spectrum as of the Effective Date and (ii) the
Monthly Fees will be reduced by a percentage determined by dividing (A) the
number of MHz Households for the Spectrum subject to the termination, by (B) the
number of MHz Households for all Proposed Spectrum as of the Effective Date.
10.4 Breach of Representations and Warranties. Notwithstanding
anything to the contrary contained herein, with respect to a breach of the
representations and warranties set forth in Section 9.2 herein by Sprint,
Operator's sole remedy will be pursuant to the indemnification provisions set
forth in Section 11.1 below.
10.5 Other Remedies, in the event of a material breach by a
Party under this Agreement, the other Party, in addition to having the right to
terminate this Agreement without liability, may pursue such other remedies as
may be available to it at law or in equity. Furthermore, Sprint may, at its sole
election, cure any breach by Operator under this Agreement (including any breach
under any Primary Lease) and Operator will pay Sprint any Costs which Sprint
incurs in curing such breach. Notwithstanding the preceding sentence, any
election by Sprint to cure a breach by Operator will not operate as a cure on
behalf of Operator and Sprint will retain all of its rights with respect to such
breach, including terminating this Agreement. Each Party has an affirmative duty
to mitigate its damages under this Agreement.
10.6 Expenses. Subject to the Party's arbitration obligations
set forth in Article XIV, if suit is brought because of the breach of any term
or provision contained in this Agreement on the part of Sprint or Operator which
such Party is obligated to keep or perform, the prevailing Party may recover all
expenses incurred therefor, including reasonable attorneys' fees.
Article XI
INDEMNIFICATION
11.1 Indemnification by Sprint. To the extent permitted by
law, each Sprint Subsidiary covenants and agrees to, and will, indemnify, defend
and hold harmless Operator, its members, directors, officers, employees,
affiliates and agents (the "Operator Indemnitee(s)") from and against, and will
reimburse any Operator Indemnitee on demand for, all liabilities, direct losses
or damages (including the loss of use of any Spectrum and any portion of the
Initial Fee and/or Monthly Fee fairly allocable to such Spectrum), claims,
demands,
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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actions, reasonable costs and expenses (including, without limitation,
reasonable court costs and attorneys' fees) which any of the Operator
Indemnitees may suffer, sustain, incur, pay or expend by virtue or as a result
of (a) any material breach or default by such Sprint Subsidiary of any of its
covenants, agreements, duties or obligations under this Agreement; (b) any
material breach or default of, or inaccuracy or omission in, any representation
or warranty of such Sprint Subsidiary contained in this Agreement; (c) any acts,
omissions, negligence or willful misconduct of such Sprint Subsidiary, its
owners, members, directors, officers, employees, affiliates and agents in
connection with the performance of this Agreement; or (d) the operation
construction, maintenance or use of the Spectrum prior to the Effective Date,
including but not limited to claims for infringement of patents arising from
such use of the Spectrum and any claims arising from facts and circumstances
occurring prior to an applicable Closing.
11.2 Indemnification by Operator. To the extent permitted by
law, Operator covenants and agrees to, and will, indemnify, defend and hold
harmless Sprint Subsidiaries, their members, directors, officers, employees,
affiliates and agents (the "Sprint Indemnitee(s)") from and against, and will
reimburse any Sprint Indemnitee on demand for, all liabilities, direct losses or
damages, claims, demands, actions, reasonable costs and expenses (including
without limitation, reasonable court costs and attorneys' fees) which any of the
Sprint Indemnitees may suffer, sustain, incur, pay or expend by virtue or as a
result of (a) any material breach or default by Operator of any of its
covenants, agreements, duties or obligations under this Agreement, including
failure to perform any obligation under any Primary Lease; (b) any material
breach or default of, or inaccuracy or omission in, any representation or
warranty of Operator contained in this Agreement; (c) any acts, omissions,
negligence or willful misconduct of Operator, its owners, members, directors,
officers, employees, affiliates and agents in connection with the performance of
this Agreement; (d) claims by customers of Operator or by subscribers to
Operator's services; (e) actions by the FCC or other federal, state or local
governmental authorities regarding the Transmission Equipment, towers and other
facilities or the use of the Spectrum; (f) Operator's construction, operation,
maintenance and repair of the Transmission Equipment, towers and other
facilities; (g) claims of libel, slander or the infringement of copyright or the
unauthorized use of any trademark, trade name or service mark or claims that the
content of any material transmitted over the Spectrum violates any pornography,
obscenity laws, or infringes privacy rights or any other claimed harm or
unlawfulness arising from any transmission; and (h) claims for infringement of
patents arising from Operator's use of the Spectrum.
11.3 Claims for Indemnification. Where indemnification under
this Article XI is sought by a Party (the "Claiming Party"): (a) it will notify
in writing the other Party (the "Indemnifying Party") promptly of any claim or
litigation or threatened claim to which the Indemnification relates; (b) upon
the Indemnifying Party's written acknowledgment of its obligation to indemnify
in such instance, in form and substance satisfactory to the Claiming Party, the
Claiming Party will afford the Indemnifying Party an opportunity to participate
in and, at the option of the Indemnifying Party, control, compromise, settle,
defend or otherwise resolve the claim or litigation (and the Claiming Party will
not effect any such compromise or settlement without the prior written consent
of the Indemnifying Party); and (c) the Claiming Party will cooperate with the
Indemnifying Party in its above-described participation in any compromise,
settlement, defense or resolution of such claim or litigation. If the
Indemnifying Party does not
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so acknowledge its indemnification responsibility, the Claiming Party may
proceed directly to enforce its indemnification rights.
Article XII
ASSIGNMENT
Each Sprint Subsidiary has the absolute right to assign any of its
rights and obligations under this Agreement provided that such Sprint Subsidiary
also assigns its rights and obligations to the Primary Leases and the Sprint
Authorizations to the same party or an affiliate of such party. Except as
expressly set forth in this Article XII, Operator may not assign, pledge,
hypothecate, sublease, or transfer in any manner whatsoever, any of its rights
and/or obligations under this Agreement, other than to an Operator Affiliate,
without Sprint's prior written consent, which will not be unreasonably withheld,
conditioned or delayed. Furthermore, Operator will not, through merger, sale or
any other transaction, change its ownership structure in any manner so that any
person(s) or entity(ies) which do not currently own at least 49% of the voting
securities of the Operator, have the right to vote more man 49% of Operator
equity units or elect more than 49% of the members of Operator's or Guarantor's
board of directors or similar governing body after such transaction (a "Change
in Control"), unless Operator has obtained Sprint's prior written consent which
will not be unreasonably withheld, conditioned or delayed; provided, however,
that Sprint's consent will not be required in any such transaction where either
(a) Operator provides at least 30 days prior written notice of the transaction
and the surviving or acquiring entity (or Guarantor in the event of a
restructuring event as described above) has sufficient resources to perform its
obligations under this Agreement, as determined in Sprint's reasonable
discretion, or (b) if such transaction occurs after substantially all of the
Markets are built and Operator is providing services in such Markets.
Notwithstanding anything to the contrary contained herein, Operator will not
assign, pledge, hypothecate, sublease or transfer in any manner whatsoever, its
rights and/or obligations under this Agreement to any Prohibited Entity (as
defined below) without Sprint's prior written consent, which may be withheld in
Sprint's sole discretion. As used herein, a "Prohibited Entity" means any entity
which, and any now hereafter subsidiary or affiliate of such entity (or
successor entity) operates under the name [***] Any assignment, pledge,
hypothecation, sublease or transfer in any manner whatsoever which violates this
Article XII will be null and void. Any Change in Control in violation of this
Article XII will be a material breach of this Agreement. Provided that Operator
provides Sprint with 15 days advance written notice thereof, Operator may pledge
its rights under this Agreement and its rights to the Transmission Equipment for
any financing it may incur in connection with the development of Region 1,
provided, however, that any such financing and/or pledge will be subject to the
rights of Sprint hereunder and the Licensees under the Primary Leases,
including, but not limited to, such Licensee's rights to purchase any
Transmission Equipment as set forth in the Primary Leases. If either Party
completes an assignment pursuant to this Article XII, the Party making or
completing any such assignment will, give written notice to the other Party of
the name and address of any such assignee within 30 days following the
completion of such assignment. Following the 5th anniversary of the Effective
Date, Operator may permit a third party to have exclusive use of up to 48 MHz of
the Spectrum in each Market without obtaining Sprint's prior consent, provided
that: (a) Operator provides Sprint with at least 30 days advance written notice
of the specific terms and conditions
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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of such sublease, (b) the person or entity using such Spectrum agrees in writing
to be bound to all of the restrictions and obligations contained herein with
respect to such Spectrum, (c) Operator remains primarily liable for the complete
performance of the terms of this Agreement with respect to such Spectrum, (d)
the person or entity using such Spectrum agrees in writing to provide periodic
certifications, as Sprint reasonably requests, evidencing its compliance with
build out and construction obligations with respect to such Spectrum, and (e)
Sprint may, in its reasonable discretion, require additional Security for
performance of the obligations with respect to such Spectrum. Notwithstanding
anything to the contrary contained herein, if there occurs a Change in Control
which results in any Prohibited Entity having the right to vote more than 49% of
Guarantor's or Operator's equity units or elect more than 49% of the members of
Guarantor's or Operator's board of directors, or similar governing body, the
Monthly Fee otherwise payable pursuant to Section 6.4 will, on a going forward
basis, be increased by [***] of such amount otherwise payable. Notwithstanding
anything to the contrary contained in this Article XII, Operator's rights under
this Article XII are subject to Operator obtaining any necessary consent of any
Third Party Licensee to the extent required under any Primary Lease.
Article XIII
CONFIDENTIALITY; [***]
13.1 Confidentiality. The Parties acknowledge that
Confidential Information (as such term is defined below) may be made available
to them pursuant to this Agreement, and that such Confidential Information has
been and will be developed by the other Party at considerable effort and expense
and represents special, unique and valuable proprietary assets of such Party
that is not ordinarily disclosed to the public, the value of which may be
destroyed by unauthorized dissemination. Each Party acknowledges and agrees that
it will become privy to Confidential Information of the other Party which could
be used in a manner harmful to the Party owning such Confidential Information.
Therefore, each Party agrees it will not use any Confidential Information of the
other Party in the development, operations, planning, marketing, or distributing
of any products or services which compete with those offered by the other Party.
Furthermore, except as may be required for the performance of this Agreement, or
compliance with any applicable law, during the Term and for a [***] neither
Party nor any of its employees, representatives, agents or affiliates will make
use of, disseminate, or in any way disclose any Confidential Information to any
third person, firm, corporation or other entity for any reason whatsoever, said
undertaking to be enforceable by injunctive or other equitable relief to prevent
any violation or threatened violation thereof. Each Party will exercise
reasonable care to protect the Confidential Information and will disclose
Confidential Information only to those of its employees, representatives, agents
or affiliates who need to know such information in connection with performance
of this Agreement. Either Party may disclose Confidential Information if
required by any judicial or governmental request, requirement or order, provided
that such Party will take reasonable steps to give the other Party sufficient
prior notice in order to contest such request, requirement or order by notifying
the other Party of such request. As used herein, the term "Confidential
Information" means all technical, business, financial and other confidential or
proprietary information of a Party, any information or material that has been
created, discovered, developed or otherwise become known to a Party (including,
without limitation, information created, discovered, developed or made known to
such Party by third parties) which has commercial value in the
telecommunications
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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business and which is designated in writing by the other Party as confidential.
Notwithstanding the lack of any designation by either Party of any information
as confidential, any engineering design, manufacturing processes or source code,
non-public financial information regarding such Party, information relating to
research and development, new product pricing and marketing plans of such Party,
and non-public information relating to such Party's operations, revenues, trade
secrets or management practices will be Confidential Information. "Confidential
Information" will not include information of a Party which: (a) has been or
becomes published or is now or is in the future in the public domain through no
action of the Party receiving such information pursuant to this Agreement; (b)
prior to disclosure hereunder, is within the legitimate possession of a Party as
evidenced by competent written proof of such legitimate possession; (c)
subsequent to disclosure hereunder, is lawfully received from a third party
having rights therein without restriction of the third party's rights to
disseminate the information and without notice of any restriction against its
further disclosure; or (d) is independently developed or acquired by a Party
through persons who have not had, either directly or indirectly, access to or
knowledge of such Confidential Information.
13.2 No Publicity Without Consent. Except as may be required
by applicable law, neither Party will disclose any of the terms and conditions
set forth herein to any non-affiliated party, without prior coordination with
and advance written approval by the other Party, which may be granted or
withheld at the other Party's sole discretion. Notwithstanding the foregoing,
either Party may disclose the terms and conditions of this Agreement to its
legal and financial advisors, investors and/or lenders, provided, however that
any person receiving such information will agree to be subject to the terms of
Section 13.1. Unless otherwise agreed to by Sprint, Operator may not use
Sprint's name or logo or any other trade name or logo which is owned or
controlled by any Sprint Entity. Unless otherwise agreed to by Operator, no
Sprint Subsidiary may use Operator's name or logo or any other trade name or
logo which is owned or controlled by Operator or its affiliates. Either Party
may disclose the existence of this Agreement provided that such disclosing Party
gives the other Party advance written notice of its intent to make such
disclosure.
[***]
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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Article XIV
DISPUTES
14.1 Dispute Resolution Through Arbitration. Unless otherwise
specifically provided for herein, the Parties will utilize good faith efforts to
resolve any disputes arising out of or relating to the negotiation, execution,
interpretation, performance or nonperformance of this Agreement through amicable
settlement discussions to be commenced by the giving of a written notice of
dispute by the Party claiming to be aggrieved. The notice of dispute will state
with specificity the matters in dispute, the position of the Party giving the
notice of dispute and the rationale for that position. If the Parties fail to
resolve the dispute by amicable settlement within 15 business days from the date
the notice of dispute is given, then either Party may then request the final
settlement of such dispute through arbitration in Kansas City, Missouri, under
the Commercial Arbitration Rules (the "Rules") of the American Arbitration
Association (the "AAA") by notifying the other Party and the AAA in accordance
with the Rules. The arbitration will be conducted by three (3) arbitrators
appointed in accordance with the Rules and will be conducted pursuant to
expedited and accelerated procedures. The arbitrators will decide the issues
submitted to them in accordance with the provisions and commercial purposes of
this Agreement. The Parties agree that the award of the arbitrators will be
final and waive any right to trial by jury or to challenge the arbitrators'
award. However, any Party aggrieved by a default by the other may seek immediate
injunctive relief before any court of competent jurisdiction and agree that such
relief will not be sought to avoid or stay the arbitration. Judgment on the
award of the arbitrators may be entered in any court having jurisdiction over
the Party against whom enforcement of the award is being sought, and the Parties
hereby irrevocably consent to the jurisdiction of any such court for the purpose
of enforcing any such award. In their final award, the arbitrators will require
that the losing Party to the arbitration pay all reasonable costs (including
without limitation reasonable fees of counsel) incurred in conducting the
arbitration. The Parties will facilitate the arbitration by (a) making available
to one another and to the arbitrators for examination, inspection and
extraction, all documents, books, records and personnel under their control if
determined by the arbitrators to be relevant to the dispute and not otherwise
privileged from disclosure, subject to written agreement by the arbitrators to
hold all Confidential Information so disclosed in confidence, and (b) observing
strictly the time periods established by the rules or by the arbitrators for
submission of evidence or briefs. The Parties acknowledge and agree that time is
of the essence in resolving any dispute submitted to arbitration.
Notwithstanding anything in this Section 14.1 to the contrary, with respect to
any dispute regarding Sprint's obligations pursuant to Section 17.1(d), (a
"Spectrum Grouping Dispute"), the parties will submit the dispute to a mutually
agreeable independent qualified industry engineering consultant (an "Engineering
Arbitrator") who will serve as the arbitrator for such dispute in the manner set
forth in this Section 14.1. If the parties are unable to agree to a single
Engineering Arbitrator, each Party will select one independent qualified
engineering consultant who will serve as an Engineering Arbitrator; and each
Party will submit the names of no more than three additional independent
qualified industry engineering consultants to the two Engineering Arbitrators
selected by Sprint and Operator who will then select a third Engineering
Arbitrator from the combined lists submitted by Sprint and Operator. In such
event, the three Engineering Arbitrators so selected will serve as a panel of
arbitrators to decide the dispute pursuant to the terms set forth in this
Section 14.1.
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14.2 Specific Performance. Each of the Parties acknowledges
and agrees that the rights reserved to the other are of a special, unique,
unusual and extraordinary character, which gives them peculiar value, the loss
of which cannot be reasonably or adequately compensated for in damages in an
action at law and the breach by either Party of any of the provisions hereof
(other than provisions calling for the payment of money) will cause the other
irreparable damage and injury. In such event, the non-defaulting Party will be
entitled, as a matter of right, without further notice, to require of the other
Party specific performance of all of the acts, services and undertakings
required under this Agreement, including the obtaining of all requisite
authorizations to execute or perform this Agreement, and to obtain injunctive
and other equitable relief in any court of competent jurisdiction to prevent the
violation or threatened violation of any of the provisions of this Agreement.
Neither this provision nor any exercise by any Party of rights to equitable
relief or to specific performance herein granted will constitute a waiver of any
other rights which the non defaulting Party may have to damages or otherwise.
14.3 Jurisdiction and Venue. Subject to the provisions of
Section 14.1, any suit brought with respect to this Agreement will be brought in
the state or federal district court located in Kansas City, Missouri. For any
and all such purposes, the Parties hereby irrevocably submit to the jurisdiction
of such courts, waive all objections thereto (on the grounds of improper venue,
forum non conveniens or otherwise), and agree that service of process upon each
as provided in Section 14.1 will be effective to establish personal jurisdiction
over it in such courts.
Article XV
COVENANTS
15.1 Compliance with Law. Each of the Parties will comply with
the Communication Act of 1934, as amended, and the FCC Rules, will timely file
all reports, schedules and/or forms required by the FCC to be filed by it, and
will timely pay all fees required by the FCC to be paid by it, excepting only
the obligation of Sprint to pay certain fees which is otherwise assigned to
Operator herein.
15.2 [***] Pricing. Any Sprint Entity will have the right to
purchase, [***], products and services offered by Operator, or any Operator
Affiliate, within [***]. These products and services may include roaming
services for customers of any Sprint Entity. Operator will offer and provide any
such products and services to any Sprint Entity [***] on commercially reasonable
terms (including pricing) and if applicable, those terms that are generally made
available to Operator's other [***] customers purchasing comparable services
within [***]. Notwithstanding anything to the contrary contained herein, each
Sprint Entity will receive pricing for any products and services offered by
Operator or Operator Affiliate equal to the lesser of the following: [***]
Furthermore, Operator will negotiate in good faith to execute a roaming services
agreement with any Sprint Entity containing commercially reasonable roaming
rates, feature functionality and other terms necessary to
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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provide the broadband wireless services which are available from time to time
on Operator's network in Region 1 to the customers of any Sprint Entity.
15.3 Other Relationships. It is recognized that from time to
time the Parties may have other opportunities with respect to excess spectrum
capacity on MDS and ITFS frequencies in areas outside of Region 1 and that the
Parties may be interested in pursuing an ability to lease such excess spectrum
capacity or to exchange certain spectrum assets. If a Party desires such a
relationship, the other Party will make available representatives for a
reasonable time via telephone or in person to discuss such possible
relationship. Furthermore, it is recognized that Sprint may desire to implement
an affiliate type relationship with Operator within Region 1 and that Operator
may be interested in pursuing such relationship. If Sprint desires such a
relationship, Operator will make available for a reasonable time representatives
via telephone or in person to discuss such possible relationship.
Notwithstanding anything to the contrary contained herein, this Section 15.3
will not be construed as placing an obligation for a Party to actually negotiate
or otherwise consider in good faith any offers or proposals made by the other
Party, it being agreed that the intent of this Section 15.3 is to provide the
Parties with a means by which to facilitate communications with each other with
respect to business opportunities and for no other purpose. In no event will
either Party be obligated to perform under this Section 15.3 if it reasonably
believes that receipt of any information from the other Party may have an
adverse impact upon its ability to pursue any business interest or opportunity
or that receipt of such information could create any liability to any third
party. Nothing contained in this Section 15.3 will be construed as a material
obligation of either Party.
Article XVI
SPRINT'S TOWER FACILITIES
Attached hereto as Schedule 16 is a list of tower locations
("Towers") in Region 1 and Sprint's contractual agreements to use space on the
Towers ("Tower Leases"). On the Initial Closing Date and each Market Closing
Date, Operator will enter into a Tower Sublease Agreement with the applicable
Sprint Subsidiary, in a form mutually agreed upon by the Parties, for each Tower
Lease (each a "Tower Sublease" and collectively the "Tower Subleases") for each
Market then Closing. To the extent landlord's consent is required to enter into
any Tower Sublease ("Tower Sublease Consent"), Sprint will use Efforts to obtain
such consent as specified in Section 2.8. From and after the Effective Date,
Operator will timely pay all Costs under each Tower Lease. Any material breach
or default by Operator under any Tower Sublease which results in the termination
of such Tower Sublease will be a material default under this Agreement,
provided, however that Sprint will not terminate this Agreement as a result of
such default if (a) Operator has obtained other tower space for the operation of
the Spectrum in the Market applicable to the defaulted Tower Sublease, which is
freely assignable to Sprint, (b) no other Tower Sublease has been terminated as
a result of a breach of a Tower Lease by Operator, and (c) such termination of
the Tower Sublease does not result in the termination of any Primary Lease,
Rejected Primary Lease, Leased Authorization or Sprint Authorization. To the
extent permitted under the Tower Leases and as may be required under any
Rejected Primary Lease, Operator will permit the underlying channel lessor of
such Rejected Primary Lease continuing access to such facilities.
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Article XVII
SPRINT'S RIGHT TO RECAPTURE MARKET
17.1 Recapture Right.
(a) Pursuant to the terms of this Section 17.1, during the [***] Sprint
may elect to terminate a portion of this Agreement as it relates to certain
Spectrum and, subject to the receipt of any required consents or other
contractual obligations of Operator with respect to any Operator Controlled
Spectrum, to acquire certain Operator Controlled Spectrum in Closed Markets. As
used herein, the term "recapture" refers to Sprint's right to terminate this
Agreement as to such Spectrum and, subject to the receipt of any required
consents or other contractual obligations of Operator with respect to any
Operator Controlled Spectrum to acquire such Operator Controlled Spectrum. At
any time during the [***] Sprint may from time to time, by providing written
notice of Sprint's intent to exercise its recapture rights with respect to a
closed Market (a "Recapture Notice"), elect to recapture up to approximately
[***] of the total Spectrum and Operator Controlled Spectrum, excluding any
Operator Controlled Spectrum that Sprint has elected to exclude pursuant to
Section 17.l(h)(iv), in each Closed Market as of the Closing of such Closed
Market plus any additional Spectrum or Operator Controlled Spectrum in such
Closed Market which after such Closing became subject to this Agreement, less
any Spectrum or Operator Controlled Spectrum which is no longer subject to this
Agreement pursuant to the terms of this Agreement (other than any Spectrum or
Operator Controlled Spectrum which has been the subject to the exercise of the
recapture rights, Put Option or Call Option prior to any such election by
Sprint). As used herein, "Eligible Spectrum" means, subject to Section
17.1(h)(iv) and obtaining the necessary consents to transfer any Operator
Controlled Spectrum, all Spectrum and Operator Controlled Spectrum in a given
Closed Market then subject to the terms of this Agreement. Following the [***]
of the Initial Closing Date, Sprint may only recapture Unincorporated Spectrum.
"Unincorporated Spectrum" means any Spectrum or Operator Controlled Spectrum in
a Closed Market which (i) is not then being used by Operator, (ii) has not been
sublet by Operator to an unaffiliated third party as permitted pursuant to
Article XII, (iii) is not part of Operator's then current plan for deployment of
additional spectrum or services within the Term, or (iv) is capable of being
exchanged for other Spectrum or Operator Controlled Spectrum without material
interference to Operator's existing commercial operations. Each Recapture Notice
will identify the amount of Eligible Spectrum or Unincorporated Spectrum that
Sprint intends to recapture for such Closed Market. The amount of Eligible
Spectrum or Unincorporated Spectrum will be determined as of the date of such
Recapture Notice and on a MHz Household basis in accordance with the methodology
set forth on Exhibit B. The Eligible Spectrum or Unincorporated Spectrum, as
applicable, for a given Closed Market which Sprint will recapture pursuant to
this Section 17.1 is herein referred to as "Recaptured Spectrum". If Operator
assigns, pledges, hypothecates, subleases or transfers in any manner whatsoever,
any of its rights and/or obligations under this Agreement or should a Change in
Control occur after the Initial Term has expired, Sprint may exercise its rights
with respect to any Unincorporated Spectrum (not to exceed an amount which is
approximately [***] of all Eligible Spectrum in such Closed Market less any
amount
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
53
of Eligible Spectrum in such Closed Market for which recapture rights, Put
Option and/or Call Option have been previously exercised in any Closed Market)
under this Section 17.1 in the same manner in which Sprint is permitted to
exercise such rights after the [***] of the Initial Closing Date.
(b) For a period not to exceed 30 days following the Recapture Notice, the
Parties will negotiate in good faith to determine the identity of the Eligible
Spectrum or Unincorporated Spectrum which will be Recaptured Spectrum.
(c) If the Parties do not reach agreement as to the identity of the
Recaptured Spectrum pursuant to Section 17.1(b), then:
* * *
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(d) In creating the Spectrum Groupings as set forth in Section 17.1(c),
Sprint will:
(i) Configure the Spectrum Groupings so that Operator may select a
Spectrum Grouping which enables it to continue its operations.
(ii) Use good faith efforts to create Spectrum Groupings which are
conducive to the continued operation of Spectrum and Operator Controlled
Spectrum.
(iii) Use reasonable efforts to configure the Spectrum Groupings in
a manner so as to minimize disruption of Operator's commercial operations.
(iv) Configure the Spectrum Groupings in a manner which gives the
Operator the opportunity to select a Spectrum Grouping, or Spectrum
Groupings, containing at least [***] of contiguous spectrum.
If Operator disagrees that Sprint has created the Spectrum Groupings in
accordance with the requirements set forth in this Section 17.1(d) ("Spectrum
Groupings Criteria"), then such matter will be a Spectrum Grouping Dispute and
will be submitted to dispute resolution pursuant to Section 14.1.
(e) No later than 30 days following the later of (A) the date on which the
identity of the Recaptured Spectrum is determined pursuant to Section 17.1(a),
(b) and (c) or (B) the Spectrum Grouping Dispute is resolved pursuant to Section
14.1:
(i) Sprint and Operator will prepare all application forms and
related exhibits, certifications and other documents necessary to secure
the FCC's consent to an assignment of the authorizations to Sprint for any
Recaptured Spectrum which is Operator Owned Spectrum (each, an "Owned
Spectrum Assignment Application"). Subsequently, Sprint and Operator each
will promptly and diligently prepare, file and prosecute all necessary
amendments, briefs, pleadings, petitions for reconsideration, applications
for review, waiver requests, documents and supporting data, and take all
such actions and give all such notices as may be required or requested by
the FCC or as may be appropriate to expedite the grant of any Owned
Spectrum Assignment Application without conditions materially adverse to
Sprint or Operator. If any person petitions the FCC to deny any Owned
Spectrum Assignment Application, or if the FCC grants any Owned Spectrum
Assignment Application and any person petitions for reconsideration or
review of such grant before the FCC or appeals or applies for review in
any judicial proceeding, then Sprint and Operator will use their Efforts
to oppose such
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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petition before the FCC or defend such grant by the FCC. If the FCC denies
any Owned Spectrum Assignment Application or grants any Owned Spectrum
Assignment Application with conditions materially adverse to Operator or
Sprint, then if requested to do so by such adversely affected Party, such
Party and the other relevant Party will use their Efforts to secure
reconsideration or review of such action. Sprint will be responsible for
the payment of all Costs that the Parties incur in connection with their
performance under this Section 17.1(e)(i), including all application fees
imposed by the FCC on the filing of any Owned Spectrum Assignment
Application and all legal fees incurred in the preparation and prosecution
of any Owned Spectrum Assignment Application.
(ii) To the extent that FCC consent is required for the assignment
of any leases of any Recaptured Spectrum which is Operator Leased
Spectrum, Sprint and Operator will prepare all application forms and
related exhibits, certifications and other documents necessary to secure
the FCC's consent to an assignment of the leases of any Recaptured
Spectrum which is Operator Leased Spectrum (a "Recaptured Lease Assignment
Application"). Subsequently, Sprint and Operator each will promptly and
diligently prepare, file and prosecute all necessary amendments, briefs,
pleadings, petitions for reconsideration, applications for review, waiver
requests, documents and supporting data, and take all such actions and
give all such notices as may be required or requested by the FCC or as may
be appropriate to expedite the grant of any Recaptured Lease Assignment
Application without conditions materially adverse to Sprint or Operator.
If any person petitions the FCC to deny any Recaptured Lease Assignment
Application, or if the FCC grants any Recaptured Lease Assignment
Application and any person petitions for reconsideration or review of such
grant before the FCC or appeals or applies for review in any judicial
proceeding, then Sprint and Operator will use their Efforts to oppose such
petition before the FCC or defend such grant by the FCC. If the FCC denies
any Recaptured Lease Assignment Application or grants any Recaptured Lease
Assignment Application with conditions materially adverse to Operator or
Sprint, then if requested to do so by such adversely affected Party, such
Party and the other relevant Party will use their Efforts to secure
reconsideration or review of such action. Sprint will be responsible for
the payment of all Costs that the Parties incur in connection with their
performance under this Section 17.1(e)(ii), including all application fees
imposed by the FCC on the filing of any Recaptured Lease Assignment
Application and all legal fees incurred in the preparation and prosecution
of the applications.
(iii) To the extent that notice to the FCC is required prior to the
assignment of any lease of any Recaptured Spectrum which is Operator
Leased Spectrum, Sprint and Operator will prepare and timely file all
notification forms and related exhibits, certifications and other
documents necessary to notify the FCC in advance of the assignment of the
lease of Recaptured Spectrum which is Operator Leased Spectrum (a
"Recaptured Lease Assignment Notification"). Subsequently, Sprint and
Operator each will promptly and diligently prepare, file and prosecute all
necessary amendments, briefs, pleadings, petitions for
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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reconsideration, applications for review, waiver requests, documents and
supporting data, and take all such actions and give all such notices as
may be required or requested by the FCC or as may be appropriate to
respond to any FCC inquiry or any third party petition or complaint
regarding the assignment of the lease of such Operator Leased Spectrum in
support of such assignment without conditions materially adverse to Sprint
or Operator. If any person petitions for reconsideration or review of an
FCC decision affirming such assignment before the FCC or appeals or
applies for review in any judicial proceeding, then Sprint and Operator
will use their Efforts to oppose such petition before the FCC or defend
such grant by the FCC. If the FCC rejects any assignment of the lease of
Operator Leased Spectrum that is the subject of a Recaptured Lease
Assignment Notification or imposes conditions materially adverse to
Operator or Sprint, then if requested to do so by such adversely affected
Party, such Party and the other relevant Party will use their Efforts to
secure reconsideration or review of such action. Sprint will be
responsible for the payment of all Costs that the Parties incur in
connection with their performance under this Section 17.1(e), including
all application fees imposed by the FCC on the filing of any Recaptured
Lease Assignment Notification and all legal fees incurred in the
preparation and prosecution of the notification.
(f) From and after the Recapture Notice through the date on which the
Parties determine the identity of the Recaptured Spectrum as set forth above,
Operator will not, without Sprint's prior consent, which will not be
unreasonably withheld, conditioned or delayed, make any material modifications
or changes in the operation of the Eligible Spectrum or enter into, or permit
any Third Party Licensee to enter into, any Coordination Documents with respect
to the Eligible Spectrum unless such modifications are required by contractual
or regulatory deadlines. From and after the Recapture Notice until the date on
which the Parties consummate the recapture transaction for a given Closed Market
(the "Recapture Closing"), Operator will not, without Sprint's prior consent,
not to be unreasonably withheld, conditioned or delayed, make any material
modifications or changes in the operation of the Recaptured Spectrum or enter
into, or permit any Third Party Licensee to enter into, any Coordination
Documents with respect to the Recaptured Spectrum.
(g) Each Recapture Closing for any Recaptured Spectrum which does not
require the FCC's consent for the transfer contemplated pursuant to the
recapture set forth herein will take place on the date which is 30 days
following the date that the identity of such Recaptured Spectrum is determined
pursuant to Sections 17.1(a), (b), and (c); provided, however, that to the
extent prior notification to the FCC is required before the assignment of a
lease for Operator Leased Spectrum to Sprint, the Recapture Closing will not
occur until the prior notification period established by the FCC Rules will have
run and, at Sprint's sole option, if the FCC initiates an inquiry or any person
submits a complaint or petition challenging the lease assignment, the FCC will
have affirmed the lease assignment by Final Order. The Recapture Closing for any
given Closed Market with respect to any Operator Controlled Spectrum which is
the subject of an Owned Spectrum Assignment Application or a De Facto Lease
Assignment
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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Application, will take place not later than 30 days following the FCC's grant of
such application and such grant becoming a Final Order.
(h)
* * *
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* * *
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* * *
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* * *
(ii) At the Recapture Closing (A) Operator will assign, and cause
any applicable Operator Affiliate to assign, all right, title and interest
in the Recaptured Spectrum that is Operator Controlled Spectrum to Sprint,
(B) this Agreement will terminate with respect to any Recaptured Spectrum,
and (C) Sprint will pay Operator the Recapture Price for each Closed
Market which is subject to the Recapture Closing.
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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(iii) No later than 15 days following the determination of the
identity of the Recaptured Spectrum, Operator will provide Sprint with a
written estimate of the Transition Costs. Prior to incurring any expense
in transitioning its use of the Recaptured Spectrum which in the aggregate
exceeds Operator's written estimate, Operator will provide Sprint with
written notice of such expenses and will, at Sprint's request, meet in
person or telephonically to discuss the possibility of reducing such
expenses. At Sprint's request, Operator will provide Sprint with access to
detailed records that support Operator's calculation of the Acquisition
Costs, Investment Costs or Transition Costs. If Sprint objects to
Operator's calculation of the Acquisition Costs, Investment Costs or
Transition Costs and the Parties are unable to resolve the dispute, Sprint
may submit the matter to arbitration pursuant to Section 14.1.
(iv) Notwithstanding anything to the contrary contained herein,
Sprint may elect to exclude all Operator Controlled Spectrum in a
particular Closed Market from the recapture right set forth herein by
stating so in the Recapture Notice. In such event, the Operator Controlled
Spectrum in such Closed Market will not be considered as Eligible Spectrum
for purposes of this Agreement.
(i) Effective as of the Recapture Closing with respect to any Recaptured
Spectrum, (i) Operator will cease use of all such Recaptured Spectrum and such
Recaptured Spectrum will thereafter no longer be considered Spectrum or Operator
Controlled Spectrum (as applicable) for purposes of this Agreement, and (ii) any
Primary Lease which governs the use of any such Recaptured Spectrum will no
longer be a Primary Lease for purposes of this Agreement. Effective as of the
Recapture Closing with respect to any Recaptured Spectrum, on a going forward
basis the Monthly Fee will be reduced by an amount equal to the then current
Monthly Fee multiplied by a fraction, the numerator of which is the MHz
Households for the Recaptured Spectrum (but excluding Operator Controlled
Spectrum) subject to the Recapture Closing, and the denominator of which is the
MHz Households for all Proposed Spectrum as of the date of the Effective Date.
(j) Following the Recapture Closing with respect to any Recaptured
Spectrum, Operator and Sprint will provide the FCC with such notification forms
and related exhibits, certifications and other documents as are required by the
FCC Rules within the time period afforded by the FCC Rules. Subsequently, Sprint
and Operator each will promptly and diligently prepare, file and prosecute all
necessary amendments, briefs, pleadings, petitions for reconsideration,
applications for review, waiver requests, documents and supporting data, and
take all such actions and give all such additional notices as may be required or
requested by the FCC or as may be appropriate to respond to any post-Recapture
Closing FCC inquiry or any third party petition or complaint regarding the
transfer of such Recaptured Spectrum in support of such transfer without
conditions materially adverse to Sprint or Operator. If any person petitions for
reconsideration or review of an FCC decision affirming such transfer before the
FCC or appeals or applies for review in any judicial proceeding, then Sprint and
Operator will use their Efforts to oppose such petition before the FCC or defend
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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such grant by the FCC. If the FCC rejects any transfer of Recaptured Spectrum or
imposes conditions materially adverse to Operator or Sprint, then if requested
to do so by such adversely affected Party, such Party and the other relevant
Party will use their Efforts to secure reconsideration or review of such action.
Sprint will be responsible for the payment all of the Costs that the Parties
incur in connection with their performance under this Section 17.1(j), including
all fees imposed by the FCC on the filing of any notification and all legal fees
incurred in the preparation and prosecution of the notification.
(k) Until the Recapture Closing with respect to any Recaptured Spectrum,
Operator will, as required by contractual or regulatory obligations continue to
operate all facilities being used in connection with the operation of such
Recaptured Spectrum and will continue to perform all obligations under all
Primary Leases and any leases with respect to any Operator Leased Spectrum which
govern the use of the Recaptured Spectrum. Upon the Recapture Closing with
respect to any Recaptured Spectrum (i) Operator will immediately cease use of
all Sprint Transmission Equipment which is used solely in the operation of such
Recaptured Spectrum and such equipment will thereafter no longer be Transmission
Equipment for purposes of this Agreement, (ii) for a period not to exceed 6
months, Sprint will have the right to use any other equipment, including any
shared equipment, used in connection with such Recaptured Spectrum to the extent
reasonably necessary to satisfy its obligations under any Primary Lease,
Rejected Primary Lease or to comply with any Sprint Authorization, at a lease
cost of the fair market rental value of such equipment, (iii) Sprint will have
an option to buy, at greater of the fair market value or Operator's depreciated
costs, as determined pursuant to Section 17.4, any equipment owned by Operator
and used solely in the operation of such Recaptured Spectrum, that is not or
could not be redeployed by Operator in the operation of other spectrum, (iv)
Sprint will have access to all tower and other facilities used in connection
with the operation of the Recaptured Spectrum as of the date of the Recapture
Notice, and (v) Sprint will pay Operator on a monthly basis Sprint's Pro Rata
Share (as defined below) attributable to Sprint's use of any such tower and
other facilities. "Sprint's Pro Rata Share" means the sum of the tower and
facility lease fees paid by Operator to an unaffiliated third party for any
facilities which Sprint elects to utilize pursuant to the previous sentence and
the recurring utility charges and maintenance costs actually paid by Operator
with respect to any facilities which Sprint utilizes for the operation of any
Recaptured Spectrum, multiplied by a fraction, the numerator of which is the
amount of Recaptured Spectrum (in MHz) operating from such facilities and the
denominator of which is the total ITFS and MDS spectrum (in MHz) operated by
Operator from such facility.
17.2 Put Option.
(a) At any time prior to the [***] of the Initial Closing Date, Sprint may
from time to time elect to put any or all of the Spectrum to Operator by
providing notice (a "Put Notice") to Operator informing Operator of Sprint's
intent to exercise its put rights and identifying the amount of Spectrum to be
transferred. The price paid by Operator to Sprint upon the closing of such put
option (the "Put Price") will be (i) if the Put Notice is sent prior to the
[***] of the Initial Closing
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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Date, [***] multiplied by the number of MHz Households covered by the Put
Spectrum, or (ii) if the Put Notice is after the [***] of the Initial Closing
Date an amount equal to (A) [***] multiplied by the number of MHz Households
covered by the Put Spectrum, less (B) the sum, after taking into effect any
credits which Operation has received with respect to such Put Spectrum, of the
Monthly Fees attributable to such Put Spectrum, the Primary Lease Fees
attributable to such Put Spectrum, that proportion of the Initial Fee
attributable to such Put Spectrum, and Market Closing Payments paid with respect
to the Put Spectrum. An example of the computation of the Put Price after the
[***] of the Initial Closing Date is set forth as Schedule 17.2(a). Each Put
Notice will identify the amount of Spectrum that Sprint intends to put for such
Closed Market. The amount of Spectrum which Sprint will put pursuant to this
Section 17.2 will be determined as of the date of such Put Notice and on a MHz
Household basis in accordance with the methodology set forth on Exhibit B. The
Spectrum for a given market which Sprint will put to Operator pursuant to this
Section 17.2 is herein referred to as "Put Spectrum". If the Put Notice occurs
after the [***] of the Initial Closing Date, Sprint may not put any Spectrum to
Operator that is subject to a Primary Lease unless at least one year is
remaining of the last term (including any renewals) of the Primary Lease.
(b) If Sprint elects to put less than all of the Spectrum in a given
Closed Market, for a period not to exceed 30 days following the Put Notice, the
Parties will negotiate in good faith to determine the identity of the Spectrum
which will be Put Spectrum.
(c) If the Parties do not reach agreement as to the identity of the Put
Spectrum pursuant to Section 17.2(b), then (i) Sprint will divide the Spectrum
for such Closed Market into no more than [***] with each containing
approximately (within plus or minus 2% of an equal amount) an equal amount of
Spectrum (on a MHz Household basis) and will send Operator notice of the
Spectrum Groupings, and (ii) no later than 30 days after receipt of such notice,
representatives of Operator and Sprint will meet at a mutually agreed upon
location or telephonically and the parties will alternately select (with
Operator selecting first) Spectrum Groupings until Sprint has selected the
amount of Spectrum identified in the Put Notice, and such Spectrum selected by
Sprint will constitute the Put Spectrum. The Parties acknowledge the difficulty
in dividing the Spectrum in any given Closed Market in a manner that creates
equal Spectrum Groupings and recognize that it is likely Spectrum Groupings will
not be exactly equal in terms of MHz Households.
(d) Following the Put Notice, Sprint and Operator will negotiate in good
faith to reach agreement as to the transaction documents based substantially
upon the terms and conditions specified in the term sheet (the "Put/Call Term
Sheet") attached as Exhibit G. No later than 10 days following the date on which
the identity of the Put Spectrum is determined pursuant to Section 17.2 (a), (b)
and (c):
(i) Sprint and Operator will prepare all application forms and
related exhibits, certifications and other documents necessary to secure
the FCC's
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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consent to an assignment of the Sprint Authorizations to Operator for any
Put Spectrum (each, a "Put Assignment Application"). Subsequently, Sprint
and Operator each will promptly and diligently prepare, file and prosecute
all necessary amendments, briefs, pleadings, petitions for
reconsideration, applications for review, waiver requests, documents and
supporting data, and take all such actions and give all such notices as
may be required or requested by the FCC or as may be appropriate to
expedite the grant of any Put Assignment Application without conditions
materially adverse to Sprint or Operator. If any person petitions the FCC
to deny any Put Assignment Application, or if the FCC grants any Put
Assignment Application and any person petitions for reconsideration or
review of such grant before the FCC or appeals or applies for review in
any judicial proceeding, then Sprint and Operator will use their Efforts
to oppose such petition before the FCC or defend such grant by the FCC. If
the FCC denies any Put Assignment Application or grants any Put Assignment
Application with conditions materially adverse to Operator or Sprint, then
if requested to do so by such adversely affected Party, such Party and the
other relevant Party will use their Efforts to secure reconsideration or
review of such action. Each Party will be responsible for the payment of
one-half of all Costs that the Parties incur in connection with their
performance under this Section 17.2(d)(i), including all application fees
imposed by the FCC on the filing of any Put Assignment Application and all
legal fees incurred in the preparation and prosecution of any Put
Assignment Application.
(ii) To the extent that FCC consent is required for the assignment
of any leases of any Put Spectrum which is Leased Spectrum, Sprint and
Operator will prepare all application forms and related exhibits,
certifications and other documents necessary to secure the FCC's consent
to an assignment of the Primary Leases of any Put Spectrum which is Leased
Spectrum (a "Put Leased Spectrum Assignment Application"). Subsequently,
Sprint and Operator each will promptly and diligently prepare, file and
prosecute all necessary amendments, briefs, pleadings, petitions for
reconsideration, applications for review, waiver requests, documents and
supporting data, and take all such actions and give all such notices as
may be required or requested by the FCC or as may be appropriate to
expedite the grant of any Put Leased Spectrum Assignment Application
without conditions materially adverse to Sprint or Operator, If any person
petitions the FCC to deny any Put Leased Spectrum Assignment Application,
or if the FCC grants any Put Leased Spectrum Assignment Application and
any person petitions for reconsideration or review of such grant before
the FCC or appeals or applies for review in any judicial proceeding, then
Sprint and Operator will use their Efforts to oppose such petition before
the FCC or defend such grant by the FCC. If the FCC denies any Put Leased
Spectrum Assignment Application or grants any Put Leased Spectrum
Assignment Application with conditions materially adverse to Operator or
Sprint, then if requested to do so by such adversely affected Party, such
Party and the other relevant Party will use their Efforts to secure
reconsideration or review of such action. Each Party will be responsible
for the payment of one-half of all Costs that the Parties incur in
connection with their performance under this Section
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
65
17.2(d)(ii), including all application fees imposed by the FCC on the
filing of any Put Leased Spectrum Assignment Application and all legal
fees incurred in the preparation and prosecution of the applications.
(iii) To the extent that notice to the FCC is required prior to the
assignment of any Primary Lease for any Put Spectrum which is Leased
Spectrum, Sprint and Operator will prepare and timely file all
notification forms and related exhibits, certifications and other
documents necessary to notify the FCC in advance of the assignment of the
Primary Lease for Put Spectrum (a "Put Leased Spectrum Assignment
Notification"). Subsequently, Sprint and Operator each will promptly and
diligently prepare, file and prosecute all necessary amendments, briefs,
pleadings, petitions for reconsideration, applications for review, waiver
requests, documents and supporting data, and take all such actions and
give all such notices as may be required or requested by the FCC or as may
be appropriate to respond to any FCC inquiry or any third party petition
or complaint regarding the assignment of the lease of such Leased Spectrum
in support of such assignment without conditions materially adverse to
Sprint or Operator. If any person petitions for reconsideration or review
of an FCC decision affirming such assignment before the FCC or appeals or
applies for review in any judicial proceeding, then Sprint and Operator
will use their Efforts to oppose such petition before the FCC or defend
such grant by the FCC. If the FCC rejects any assignment of the Primary
Lease for any Leased Spectrum that is the subject of a Put Leased Spectrum
Assignment Notification or imposes conditions materially adverse to
Operator or Sprint, then if requested to do so by such adversely affected
Party, such Party and the other relevant Party will use their Efforts to
secure reconsideration or review of such action. Each Party will be
responsible for the payment of one-half of all Costs that the Parties
incur in connection with their performance under this Section 17.2(d),
including all application fees imposed by the FCC on the filing of any Put
Leased Spectrum Assignment Notification and all legal fees incurred in the
preparation and prosecution of the notification.
(e) If Sprint elects to put less than all of the Spectrum in a given
Closed Market, from and after the Put Notice through the date on which the
Parties determine the identity of the Put Spectrum as set forth above, Operator
will not, without Sprint's prior consent, make any material modifications or
changes in the operation of the Spectrum in a Closed Market which is the subject
of a Put Notice or enter into, or permit any Third Party Licensee to enter into,
any Coordination Documents with respect to such Spectrum unless such
modifications are required by contractual or regulatory deadlines. If Sprint
elects to put less than all of the Spectrum in a given Closed Market, from and
after the Put Notice until the date on which the Parties close the put (the "Put
Closing"), Operator will not, without Sprint's prior consent, not to be
unreasonably withheld, conditioned or delayed, make any material modifications
or changes in the operation of the Put Spectrum or enter into, or permit any
Third Party Licensee to enter into, any Coordination Documents with respect to
the Put Spectrum.
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(f) The Put Closing for any given Closed Market with respect to any Put
Spectrum which does not require the FCC's consent for the transfer contemplated
herein will take place on the date which is 30 days following the date on which
the identity of the Put Spectrum is determined pursuant to Sections 17.2(a),
(b), and (c); provided, however, that to the extent prior notification to the
FCC is required before the assignment of a Primary Lease, the Put Closing will
not occur until the prior notification period established by the FCC Rules will
have run and, at Sprint's sole option, if the FCC initiates an inquiry or any
person submits a complaint or petition challenging the lease assignment, the FCC
will have affirmed the lease assignment by Final Order. The Put Closing for any
given Closed Market with respect to any Put Spectrum which is the subject of a
Put Assignment Application or a Put Lease Assignment Application, will take
place not later than 30 days following the FCC's grant of such application and
such grant becoming a Final Order.
(g) At the Put Closing, Sprint will assign all of its right, title and
interest in the Sprint Authorizations and Primary Leases (as applicable) for the
Put Spectrum to Operator and Operator will pay Sprint the Put Price in
immediately available funds. Operator will have the option to buy any Sprint
Transmission Equipment which is owned by Sprint and is used solely in connection
with the Put Spectrum for its fair market value as determined pursuant to
Section 17.4. Operator may exercise such option by providing written notice of
its intent to do so no later than 20 days following the Put Notice. If Operator
elects to exercise such option, at the Put Closing, Operator will pay Sprint the
fair market value of such Sprint Transmission Equipment and Sprint will deliver
to Operator a bill of sale, without warranty, delivering title to such Sprint
Transmission Equipment to Operator. Notwithstanding anything to the contrary
contained herein, to the extent that any Put Closing applies to all Spectrum in
a given Closed Market, the applicable Tower Sublease for such Closed Market will
remain in effect notwithstanding any provision set forth therein stating that
such Tower Sublease will terminate upon termination of this Agreement.
(h) Effective as of the Put Closing with respect to any Put Spectrum, (i)
such Put Spectrum will no longer be considered Spectrum for purposes of this
Agreement, and (ii) any Primary Lease which governs the use of any such Put
Spectrum will no longer be a Primary Lease for purposes of this Agreement.
Effective as of the Put Closing with respect to any Put Spectrum, on a going
forward basis the Monthly Fee will be reduced by an amount equal to the then
current Monthly Fee multiplied by a fraction, the numerator of which is the MHz
Households for the Put Spectrum as of the date of the Put Closing, and the
denominator of which is the MHz Households for all Proposed Spectrum as of the
Effective Date.
(i) Following the Put Closing with respect to any Put Spectrum, Operator
and Sprint will provide the FCC with such notification forms and related
exhibits, certifications and other documents as are required by the FCC Rules
within the time period afforded by the FCC Rules. Subsequently, Sprint and
Operator each will promptly and diligently prepare, file and prosecute all
necessary amendments, briefs, pleadings, petitions for reconsideration,
applications for review, waiver requests, documents and supporting data, and
take all such actions and give all such additional
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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notices as may be required or requested by the FCC or as may be appropriate to
respond to any post-Put Closing FCC inquiry or any third party petition or
complaint regarding the transfer of such Put Spectrum in support of such
transfer without conditions materially adverse to Sprint or Operator. If any
person petitions for reconsideration or review of an FCC decision affirming such
transfer before the FCC or appeals or applies for review in any judicial
proceeding, then Sprint and Operator will use their Efforts to oppose such
petition before the FCC or defend such grant by the FCC. If the FCC rejects any
transfer of Put Spectrum or imposes conditions materially adverse to Operator or
Sprint, then if requested to do so by such adversely affected Party, such Party
and the other relevant Party will use their Efforts to secure reconsideration or
review of such action. Each Party will be responsible for the payment of
one-half of all Costs that the Parties incur in connection with their
performance under this Section 17.2(i), including all fees imposed by the FCC on
the filing of any notification and all legal fees incurred in the preparation
and prosecution of the notification.
17.3 Purchase Option.
(a) For a period of [***] of the Initial Closing Date, Operator will have
the option (the "Call Option") to acquire up to [***] of the Spectrum in each
Closed Market as of the Closing of such Market plus any additional Spectrum in
such Closed Market which after such Closing became subject to this Agreement
less any Spectrum which is no longer subject to this Agreement pursuant to the
terms of this Agreement (other than any Spectrum which has been the subject to
the exercise of the recapture rights, Put Option or Call Option prior to the
exercise of the Call Option by Operator) by providing notice (a "Call Notice")
to Sprint informing Sprint of Operator's intent to exercise the Call Option and
identifying the amount of Spectrum to be transferred. The price paid by Operator
to Sprint upon the closing of such Call Option (the "Call Price") will be [***]
multiplied by the number of MHz Households covered by such Spectrum. The Call
Notice will identify the amount of Spectrum that Operator intends to acquire.
The amount of Spectrum which Operator may acquire pursuant to this Section 17.3
will be determined as of the date of such Call Notice and on a MHz Household
basis in accordance with the methodology set forth on Exhibit B. The Spectrum
for a given Closed Market which Operator will acquire pursuant to this Section
17.3 is herein referred to as "Call Spectrum".
(b) For a period not to exceed 60 days following the Call Notice ("Call
Waiting Period"), the parties will negotiate in good faith to determine the
identity of the Spectrum which will be the Call Spectrum. Such determination
should be made without regard to whether Sprint intends to exercise its
recapture rights following the Call Waiting Period. If Sprint intends to
exercise its Put Option with regard to the remaining Spectrum (after giving
effect to the Call Option exercise) in any such Closed Market for which Operator
has exercised its Call Option, then Sprint will provide its Put Notice during
the Call Waiting Period. Sprint may not exercise its recapture rights set forth
in Section 17.1 during the 180 day period during which the Call Option may be
exercised; provided that with respect to a Closed Market in which Operator has
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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provided its Call Notice, Sprint may provide a Recapture Notice with regard to
the Operator Controlled Spectrum and any Spectrum other than the Call Spectrum
during the 15 day period following the later of (a) determination of the Call
Spectrum or (b) the expiration of the Call Waiting Period. If Sprint provides a
Put Notice with respect to any Closed Market which is subject to a Call Notice
prior to the expiration of the Call Waiting Period, to the extent such Put
Notice does not put the remainder of the Spectrum in any such Closed Market
(taking into account the amount of Spectrum which is the subject of the Call
Notice), then the Parties will, for a period not to exceed 30 days, negotiate in
good faith to determine the identity of the Put Spectrum and Call Spectrum. If
the Parties are unable to determine the identity of the Put Spectrum and Call
Spectrum, the Parties will follow the procedures set forth in Section 17.3(c)
until Operator has selected the amount of Spectrum identified in the Call Notice
and Put Notice for such Closed Market.
(c) If the Parties do not reach agreement as to the identity of the Call
Spectrum pursuant to Section 17.3(b), then (i) Sprint will divide the Spectrum
in each Closed Market into no more than [***] with each containing approximately
(within plus or minus [***] of an equal amount) an equal amount of Spectrum (on
a MHz Household basis) and will send Operator notice of the Spectrum Groupings,
and (ii) no later than 30 days after receipt of such notice, representatives of
Operator and Sprint will meet at a mutually agreed upon location or
telephonically and the parties will alternately select (with Operator selecting
first) Spectrum Groupings until Operator has selected the amount of Spectrum
identified in the Call Notice, and such Spectrum selected by Operator will
constitute the Call Spectrum. The Parties acknowledge the difficulty in dividing
the Spectrum in any given Closed Market in a manner that creates equal Spectrum
Groupings for such Closed Market and recognize that it is likely Spectrum
Groupings will not be exactly equal in terms MHz Households.
(d) Following the Call Notice, Sprint and Operator will negotiate in good
faith to reach agreement as to the transaction documents based substantially
upon the terms and conditions specified the Put/Call Term Sheet. No later than
10 days following the date on which the identity of the Call Spectrum is
determined pursuant to Section 17.3 (a), (b) and (c):
(i) Sprint and Operator will prepare all application forms and
related exhibits, certifications and other documents necessary to secure
the FCC's consent to an assignment of the Sprint Authorizations to
Operator for any Call Spectrum (each, an "Call Assignment Application").
Subsequently, Sprint and Operator each will promptly and diligently
prepare, file and prosecute all necessary amendments, briefs, pleadings,
petitions for reconsideration, applications for review, waiver requests,
documents and supporting data, and take all such actions and give all such
notices as may be required or requested by the FCC or as may be
appropriate to expedite the grant of any Call Assignment Application
without conditions materially adverse to Sprint or Operator. If any person
petitions the FCC to deny any Call Assignment Application, or if the FCC
grants any Call Assignment Application and any person petitions for
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
69
reconsideration or review of such grant before the FCC or appeals or
applies for review in any judicial proceeding, then Sprint and Operator
will use their Efforts to oppose such petition before the FCC or defend
such grant by the FCC. If the FCC denies any Call Assignment Application
or grants any Call Assignment Application with conditions materially
adverse to Operator or Sprint, then if requested to do so by such
adversely affected Party, such Party and the other relevant Party will use
their Efforts to secure reconsideration or review of such action. Each
Party will be responsible for the payment of one-half of all Costs that
the Parties incur in connection with their performance under this Section
17.3(d)(i), including all application fees imposed by the FCC on the
filing of any Call Assignment Application and all legal fees incurred in
the preparation and prosecution of any Call Assignment Application.
(ii) To the extent that FCC consent is required for the assignment
of any leases of any Call Spectrum which is Leased Spectrum, Sprint and
Operator will prepare all application forms and related exhibits,
certifications and other documents necessary to secure the FCC's consent
to an assignment of the Primary Leases of any Call Spectrum which is
Leased Spectrum (a "Call Leased Spectrum Assignment Application").
Subsequently, Sprint and Operator each will promptly and diligently
prepare, file and prosecute all necessary amendments, briefs, pleadings,
petitions for reconsideration, applications for review, waiver requests,
documents and supporting data, and take all such actions and give all such
notices as may be required or requested by the FCC or as may be
appropriate to expedite the grant of any Call Leased Spectrum Assignment
Application without conditions materially adverse to Sprint or Operator.
If any person petitions the FCC to deny any Call Leased Spectrum
Assignment Application, or if the FCC grants any Call Leased Spectrum
Assignment Application and any person petitions for reconsideration or
review of such grant before the FCC or appeals or applies for review in
any judicial proceeding, then Sprint and Operator will use then Efforts to
oppose such petition before the FCC or defend such grant by the FCC. If
the FCC denies any Call Leased Spectrum Assignment Application or grants
any Call Leased Spectrum Assignment Application with conditions materially
adverse to Operator or Sprint, then if requested to do so by such
adversely affected Party, such Party and the other relevant Party will use
then Efforts to secure reconsideration or review of such action. Each
Party will be responsible for the payment of one-half of all Costs that
the Parties incur in connection with their performance under this Section
17.2(d)(ii), including all application fees imposed by the FCC on the
filing of any Call Leased Spectrum Assignment Application and all legal
fees incurred in the preparation and prosecution of the applications.
(iii) To the extent that notice to the FCC is required prior to the
assignment of any Primary Lease for any Call Spectrum which is Leased
Spectrum, Sprint and Operator will prepare and timely file all
notification forms and related exhibits, certifications and other
documents necessary to notify the FCC in advance of the assignment of the
Primary Lease for Call Spectrum (a "Call Leased Spectrum Assignment
Notification"). Subsequently, Sprint and
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
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Operator each will promptly and diligently prepare, file and prosecute all
necessary amendments, briefs, pleadings, petitions for reconsideration,
applications for review, waiver requests, documents and supporting data,
and take all such actions and give all such notices as may be required or
requested by the FCC or as may be appropriate to respond to any FCC
inquiry or any third party petition or complaint regarding the assignment
of the lease of such Leased Spectrum in support of such assignment without
conditions materially adverse to Sprint or Operator. If any person
petitions for reconsideration or review of an FCC decision affirming such
assignment before the FCC or appeals or applies for review in any judicial
proceeding, then Sprint and Operator will use their Efforts to oppose such
petition before the FCC or defend such grant by the FCC. If the FCC
rejects any assignment of the Primary Lease for any Leased Spectrum that
is the subject of a Call Leased Spectrum Assignment Notification or
imposes conditions materially adverse to Operator or Sprint, then if
requested to do so by such adversely affected Party, such Party and the
other relevant Party will use their Efforts to secure reconsideration or
review of such action. Each Party will be responsible for the payment of
one-half of all Costs that the Parties incur in connection with their
performance under this Section 17.3(d), including all application fees
imposed by the FCC on the filing of any Call Leased Spectrum Assignment
Notification and all legal fees incurred in the preparation and
prosecution of the notification.
(e) The closing for any Call Spectrum the ("Call Closing") which does not
require the FCC's consent for the transfer contemplated pursuant to the
recapture set forth herein will take place on the date which is 30 days
following the date on which the identity of the Call Spectrum is determined
pursuant to Sections 17.3(a), (b), and (c); provided, however, that to the
extent prior notification to the FCC is required before the assignment of a
Primary Lease, the Call Closing will not occur until the prior notification
period established by the FCC Rules will have run and, at Operator's sole
option, if the FCC initiates an inquiry or any person submits a complaint or
petition challenging the lease assignment, the FCC will have affirmed the lease
assignment by Final Order. The Call Closing with respect to any Call Spectrum
which is the subject of a Call Assignment Application or a Call Lease Assignment
Application, will take place not later than 30 days following the FCC's grant of
such application and such grant becoming a Final Order.
(f) At the Call Closing, Sprint will assign all of its right, title and
interest in the Sprint Authorizations and Primary Leases (as applicable) for the
Call Spectrum to Operator and Operator will pay Sprint the Call Price.
(g) Effective as of the Call Closing with respect to any Call Spectrum,
(i) such Call Spectrum will no longer be considered Spectrum for purposes of
this Agreement, and (ii) any Primary Lease which governs the use of any such
Call Spectrum will no longer be a Primary Lease for purposes of this Agreement.
Effective as of the Call Closing with respect to any Call Spectrum, on a going
forward basis the Monthly Fee will be reduced by an amount equal to the then
current Monthly Fee multiplied by a fraction, the numerator of which is the MHz
Households for the Call
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
71
Spectrum as of the date of the Call Closing, and the denominator of which
is the MHz Households for all Proposed Spectrum as of the Effective Date.
(h) Following the Call Closing with respect to any Call Spectrum,
Operator and Sprint will provide the FCC with such notification forms and
related exhibits, certifications and other documents as are required by
the FCC Rules within the time period afforded by the FCC Rules.
Subsequently, Sprint and Operator each will promptly and diligently
prepare, file and prosecute all necessary amendments, briefs, pleadings,
petitions for reconsideration, applications for review, waiver requests,
documents and supporting data, and take all such actions and give all such
additional notices as may be required or requested by the FCC or as may be
appropriate to respond to any post-Call Closing FCC inquiry or any third
party petition or complaint regarding the transfer of such Call Spectrum
in support of such transfer without conditions materially adverse to
Sprint or Operator. If any person petitions for reconsideration or review
of an FCC decision affirming such transfer before the FCC or appeals or
applies for review in any judicial proceeding, then Sprint and Operator
will use their Efforts to oppose such petition before the FCC or defend
such grant by the FCC. If the FCC rejects any transfer of Call Spectrum or
imposes conditions materially adverse to Operator or Sprint, then if
requested to do so by such adversely affected Party, such Party and the
other relevant Party will use their Efforts to secure reconsideration or
review of such action. Each Party will be responsible for the payment of
one-half of all Costs that the Parties incur in connection with their
performance under this Section 17.3(h), including all fees imposed by the
FCC on the filing of any notification and all legal fees incurred in the
preparation and prosecution of the notification.
17.4 Fair Market Value Determination. Where this Agreement specifies
that a Party will have the option to purchase any Transmission Equipment for its
fair market value, this Section 17.4 will govern such determination. The Party
selling such Transmission Equipment will provide the other Party with notice of
its determination of fair market value of the equipment to be purchased pursuant
to the relevant Section of this Agreement. The Parties will negotiate in good
faith for a period of 10 days following such notice of the determination of fair
market value of such equipment. If the Parties are unable to reach agreement as
to fair market value of such within such 10 day period, then the fair market
value will be conclusively determined by two qualified independent appraisers
with experience and expertise in valuation of assets such as the equipment in
question, one retained and paid by each of the Parties. The Parties will
promptly notify each other of their respective selections; provided, however, if
either Party fails to deliver notice to the other of its selection of an
appraiser within 15 business days after notice by the other Party that it has
selected an appraiser (which notice will identify such appraiser), the
determination will be rendered by the single appraiser so selected (whose fees,
in such case, will be borne equally by the Parties). The appraisers selected in
accordance with the foregoing procedure will each determine the fair market
value of the equipment (each of which value will be an amount that, on the basis
of market and other conditions prevailing at such time could reasonably be
expected to be paid for such equipment by a third party in an arm's length
transaction, assuming that the buyer and seller are under no compulsion to buy
or sell) and submit their determinations of such value to the Parties within 15
business days of their selection. The fair market value will be the amount equal
to the sum of such fair market values
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
72
for the equipment determined by each appraiser divided by two, except that if
there is more than a [***] difference between such values and the higher of such
two values exceeds the sum of [***] a third independent appraiser with
recognized experience and expertise in valuation of assets such as the
equipment, selected by the first two appraisers within 10 business days of such
appraiser's determination of fair market value (and, if the first two appraisers
are unable to select the third within such time frame, then the parties will,
within 5 business days of such inability, request the ranking executive officer
of the American Arbitration Association's Regional Office in Kansas City,
Missouri, or his or her designee to select the third appraiser and the parties
will direct that such selection be made within 15 business days of such
request), and such third appraiser will determine such fair market value (which
in no event will be outside the range created by the values determined by the
first two appraisers). The cost of such third appraiser will be borne one-half
by each Party.
Article XVIII
INTERPRETATION AND CONTRACT ADMINISTRATION
18.1 Notices. All notices and other communications given or made
pursuant to this Agreement will be in writing and will be deemed received as of
the first weekday (excluding Federal holidays) after being sent for next-day
delivery by United States Postal Service Express Mail, return receipt requested,
or by Federal Express, signature required, to the other person at the following
address:
If to Operator:
Fixed Wireless Holdings, LLC
10210 NE Points Road, Suite 210
Kirkland, WA 98033
Attention: Benjamin G. Wolff
Facsimile: (425) 828-8061
With a copy to:
Davis Wright Tremaine LLP
2600 Century Square
1501 Fourth Avenue
Seattle, Washington 98101-1688
Attention: Julie Weston, Esq.
Facsimile: (206) 628-7699
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
[*** Confidential Treatment Requested]
73
If to Sprint, or any Sprint Subsidiary:
Sprint Spectrum Management
[***]
With copy to:
[***]
Sprint Spectrum Management
A Party may change the address at which notices are to be given to it by giving
notice of such change to the other Party in the manner hereinabove provided for
the giving of notices. Notwithstanding anything to the contrary contained
herein, in the case of any notice given pursuant to Article XI or in any manner
alleging or pertaining to a breach of an obligation on the part of a Party
hereto, the notice will not be effective unless such notice is also sent via
facsimile to the other Party and to the copy addressees at the facsimile numbers
provided hereinabove. Furthermore, in the case of any notice contemplated by the
preceding sentence given by Operator, a copy of such notice will be sent
contemporaneously with the notice to the addressees listed hereinabove, and in
the manner provided hereinabove, to:
[***]
18.2 Interpretation and Construction. The headings and captions of
this Agreement are inserted for convenience and identification only and are in
no way intended to define, limit or expand the scope and intent of this
Agreement or any provision of this Agreement. Where the context so requires, the
singular will include the plural. The references contained in this Agreement to
"Sections" and "Articles" are to sections and articles of this Agreement unless
the context clearly requires otherwise. As used herein, the term "Agreement"
means this Agreement and all annexes, schedules and exhibits attached hereto. If
this Agreement requires interpretation or construction, this Agreement will not
be interpreted or construed more strictly against any one Party by reason of any
rule of interpretation or construction under which a document is to be construed
more strictly against the drafting party.
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
74
18.3 Amendment and Waiver. Unless otherwise provided herein, this
Agreement may be amended or terminated only by an instrument in writing duly
executed by the Parties. Any waiver by any Party of any breach of or failure to
comply with any provision of this Agreement by the other Party will not be
construed as or constitute a continuing waiver of such provision, or a waiver of
any other provision hereof.
18.4 Third Parties. This Agreement will be binding upon and inure to
the benefit of the Parties hereto and their respective successors and assigns
(as permitted hereunder). It is not the intent of the Parties that there be any
third party beneficiaries of this Agreement, and this Agreement is exclusively
for the benefit of the Parties hereto and their respective successors and
assigns (as permitted hereunder).
18.5 Entire Understanding. THIS AGREEMENT SETS FORTH THE ENTIRE
UNDERSTANDING OF THE PARTIES WITH RESPECT TO THE SUBJECT MATTER CONTAINED IN
THIS AGREEMENT AND SUPERSEDES ALL PRIOR AGREEMENTS AND COLLATERAL COVENANTS,
ARRANGEMENTS, COMMUNICATIONS, REPRESENTATIONS AND WARRANTIES, WHETHER ORAL OR
WRITTEN, BY EITHER PARTY (OR ANY OWNER, MEMBER, OFFICER, DIRECTOR, PARTNER
EMPLOYEE OR REPRESENTATIVE OF EITHER PARTY) WITH RESPECT TO THE SUBJECT MATTER
OF THIS AGREEMENT.
18.6 Severability. If any provision or provisions of this Agreement
are determined to be invalid or contrary to any existing or future law, statute
or ordinance of any jurisdiction or any order, rule or regulation of a court or
regulatory or other governmental authority of competent jurisdiction, such
invalidity will not impair the operation of or affect those provisions in any
other jurisdiction or any other provisions of this Agreement which are valid,
and the invalid provisions will be construed in such manner that they will be as
similar in terms to such invalid provisions as may be possible, consistent with
applicable law; provided, however, that if a provision cannot be severed without
substantially diminishing the economic value of this Agreement to a Party, that
Party, notwithstanding anything to the contrary herein, may terminate this
Agreement on 90 days' written notice to the other Party.
18.7 Further Assistance. From time to time after the date of
execution, the Parties will utilize Efforts to take such further action and
execute such further documents, assurances and certificates as either Party may
reasonably request of the other in order to effectuate the purpose of this
Agreement. Notwithstanding the foregoing, and for the avoidance of doubt, the
Parties acknowledge that the FCC Rules governing the Spectrum and the leasing
thereof may be modified during the Term. If any such modification occurs which
results in any material provision of this Agreement being invalid, illegal,
incapable of being enforced, or incapable of being performed without a
materially adverse effect upon the Party responsible for such performance, the
Parties will negotiate in good faith to modify this Agreement to both comply
with the modified FCC Rules and to effect the original intentions of the Parties
as closely as possible in an acceptable manner to the end that the relationships
among the Parties with respect to the Spectrum contemplated hereby are fulfilled
to the maximum extent possible. In addition, each Party agrees that it will not
take any action that would adversely affect the rights granted by it to the
other Party hereunder.
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
75
18.8 Force Majeure. Notwithstanding anything contained in this
Agreement to the contrary, neither Party will be liable to the other for failure
to perform any obligation under this Agreement other than for the payment of
money if prevented from doing so by reason of fires, strikes, labor unrest,
embargoes, civil commotion, rationing or other orders or requirements, acts of
civil or military authorities, acts of God or other contingencies beyond the
reasonable control of the Party responsible for such performance, and all
requirements as to notice and other performance required under this Agreement
within a specified period will be automatically extended to accommodate the
duration of any such contingency which interferes with such performance. This
Section 18.8 will not apply to excuse Operator from any Construction Default.
18.9 Counterparts. This Agreement may be signed in any number
of counterparts, each of which will be an original for all purposes, but all of
which together constitute one agreement.
18.10 Word Meanings. As used in this Agreement, the term
"including" is deemed to mean "including, without limiting the generality of the
foregoing." All pronouns and any variations therefor are deemed to refer to the
masculine, feminine, neuter, singular or plural as the context may require. All
references to "herein" means a reference to this Agreement. Unless another time
requirement is specifically provided, any consent of either Party or response to
a requested consent, as required hereunder will be given within 45 days from the
date of any such request, provided, however, that if Operator's launch of
commercial operations in a Closed Market is dependent upon obtaining Sprint's
consent sooner than 45 days, Operator's request for such consent will so state
and Sprint will either provide its consent or a response within 30 days of any
such request.
18.11 Reliance. It is understood that Operator's ability to
comply with certain obligations under this Agreement is subject to the
availability of accurate information from various sources, including Sprint,
Third Party Licensees and the FCC data base. Provided that Operator does not
have actual knowledge of any information which conflicts with information from
another source (regardless of whether provided by Sprint, a Third Party Licensee
or the FCC), Operator will be entitled to rely on information that is: (a)
provided by Sprint in that certain CD ROM previously delivered to Operator which
contains substantially all of the copies of the Sprint Authorizations, Primary
Leases and Leased Authorizations, as the same may be supplemented from time to
time, (b) provided by a Third Party Licensee in writing or other documented
format, or (c) contained in the FCC data base as long as such information is
confirmed as accurate by referencing information provided by Sprint. Subject to
the terms of this Section 18.11, Operator's obligations with respect to
maintenance of the Spectrum and construction of facilities under this Agreement
will be subject to such reasonable reliance by Operator. Upon the request of
Operator, Sprint will provide Operator with copies of any interference consents
identified in Schedule 9.2(e)(vii) or Schedule 9.2(e)(viii).
18.12 Survival of Obligations. All obligations of Operator or
Sprint which by their nature involve performance, in any particular, after the
end of the Term or after the end of Operator's right to use any given Spectrum,
or which cannot be ascertained to have been fully performed until after the end
of the Term or after the end of Operator's right to use
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
76
any given Spectrum, will survive the expiration or sooner termination of the
Term or Operator's right to use that given Spectrum.
18.13 Relationship of the Parties. This Agreement does not
constitute either Party as a joint venturer, partner or employee of the other
Party or an agent or representative of the other Party. Neither Party has the
right, power or authority, nor will it hold itself out as having the right,
power or authority, to create any contract or obligation, express or implied,
binding the other Party. The Parties agree that any and all contracts entered
into between Operator and its customers or any other entity will be for the sole
benefit of the parties thereto and will not be interpreted or construed in any
manner as obligating Sprint to perform for the benefit of such customers. Sprint
will not be liable to Operator's customers by virtue of leasing the Spectrum
capacity under this Agreement. Except as otherwise expressly stated herein, each
Party hereto is responsible for its own expenses incurred in connection with the
negotiation and performance of this Agreement.
18.14 Governing Law. This Agreement is governed by and is to
be construed and enforced in accordance with the Communications Act of 1934, as
amended, the FCC Rules, the laws of the State of Kansas and, with respect to
arbitration, the Federal Arbitration Act.
18.15 Limitation of Liability. NOTWITHSTANDING ANYTHING TO THE
CONTRARY CONTAINED HEREIN, NO PARTY WILL BE LIABLE TO THE OTHER PARTY FOR
SPECIAL, INDIRECT, INCIDENTAL, EXEMPLARY, CONSEQUENTIAL OR PUNITIVE DAMAGES, OR
LOSS OF PROFITS, ARISING FROM THE RELATIONSHIP OF THE PARTIES OR THE CONDUCT OF
BUSINESS UNDER, OR BREACH OF, THIS AGREEMENT, EXCEPT WHEN SUCH DAMAGES OR LOSS
OF PROFITS ARE CLAIMED BY OR AWARDED TO A THIRD PARTY (WHICH FOR PURPOSES OF
THIS SECTION 18.15 EXCLUDES ANY SPRINT INDEMNITEE OR OPERATOR INDEMNITEE) IN A
CLAIM OR ACTION AGAINST SUCH THIRD PARTY FOR WHICH A PARTY TO THIS AGREEMENT HAS
A SPECIFIC OBLIGATION TO INDEMNIFY ANOTHER PARTY TO THIS AGREEMENT.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
77
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed as of the day and year first above written.
OPERATOR:
FIXED WIRELESS HOLDINGS, LLC
By: /s/ Benjamin G. Wolff
---------------------------------
Benjamin G. Wolff
Executive Vice President
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
78
SPRINT:
* * *
By: /s/ Todd A. Rowley
---------------------------------
Todd A. Rowley
Vice President
* * *
By: /s/ Todd A. Rowley
---------------------------------
Todd A. Rowley
Vice President
* * *
By: /s/ Todd A. Rowley
---------------------------------
Todd A. Rowley
Vice President
* * *
By: /s/ Todd A. Rowley
---------------------------------
Todd A. Rowley
Vice President
* * *
By: /s/ Todd A. Rowley
---------------------------------
Todd A. Rowley
Vice President
* * *
By: /s/ Todd A. Rowley
---------------------------------
Todd A. Rowley
President
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
79
* * *
By: /s/ Todd A. Rowley
---------------------------------
Todd A. Rowley
Vice President
* * *
By: /s/ Todd A. Rowley
---------------------------------
Todd A. Rowley
Vice President
* * *
By: /s/ Todd A. Rowley
---------------------------------
Todd A. Rowley
Vice President
* * *
By: /s/ Todd A. Rowley
---------------------------------
Todd A. Rowley
Vice President
* * *
By: /s/ Todd A. Rowley
---------------------------------
Todd A. Rowley
Vice President
* * *
By: /s/ Todd A. Rowley
---------------------------------
Todd A. Rowley
Vice President
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
80
* * *
By: /s/ Todd A. Rowley
---------------------------------
Todd A. Rowley
Vice President
* * *
By: /s/ Todd A. Rowley
---------------------------------
Todd A. Rowley
President
* * *
By: /s/ Todd A. Rowley
---------------------------------
Todd A. Rowley
Vice President
* * *
By: /s/ Todd A. Rowley
---------------------------------
Todd A. Rowley
Vice President
* * *
By: /s/ Todd A. Rowley
---------------------------------
Todd A. Rowley
Vice President
* * *
By: /s/ Todd A. Rowley
---------------------------------
Todd A. Rowley
Vice President
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
81
* * *
By: /s/ Todd A. Rowley
---------------------------------
Todd A. Rowley
Vice President
* * *
By: /s/ Todd A. Rowley
---------------------------------
Todd A. Rowley
Vice President
* * *
By: /s/ Todd A. Rowley
---------------------------------
Todd A. Rowley
Vice President
* * *
By: /s/ Todd A. Rowley
---------------------------------
Todd A. Rowley
Vice President
* * *
By: /s/ Todd A. Rowley
---------------------------------
Todd A. Rowley
President
* * *
By: /s/ Todd A. Rowley
---------------------------------
Todd A. Rowley
Vice President
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
82
* * *
By: /s/ Todd A. Rowley
---------------------------------
Todd A. Rowley
President
* * *
By: /s/ Todd A. Rowley
---------------------------------
Todd A. Rowley
Vice President
SPRINT PROPRIETARY INFORMATION EXECUTION VERSION
83
EXHIBIT A
CONSENT AND AGREEMENT
This Consent and Agreement ("Consent") is entered into effective ________,
2004 by and among ___________________ ("Licensee"), ___________________
("[Sprint Subsidiary]"), and Fixed Wireless Holdings, LLC ("Operator").
PRELIMINARY STATEMENTS
Licensee and [Sprint Subsidiary] are parties to that certain [IDENTIFY
ITFS/MDS LEASE] dated as of _________ ______, _____ (the "Lease") pursuant to
which [Sprint Subsidiary] leases from Licensee certain excess capacity spectrum
rights on the ____ channels in the ________, _______ market, call sign
_______________(the "Leased Spectrum").
Licensee understands that [Sprint Subsidiary] intends to grant Operator
rights to utilize the Leased Spectrum to construct and commence operation of a
wireless telecommunications system.
AGREEMENT
1. Licensee hereby consents to Sprint's grant of its rights to use the Leased
Spectrum to Operator and any affiliates of Operator, and further agrees
that, until notified otherwise by [Sprint Subsidiary], Operator will have
all of the rights and benefits of [Sprint Subsidiary] under the Lease.
Licensee agrees to accept performance of [Sprint Subsidiary]'s obligations
under the Lease directly from Operator. Licensee furthermore consents to
any future assignment of Sprint's rights under the Lease to Operator.
Sprint will remain liable as a surety for performance of the Lease.
2. Operator's use of the Leased Spectrum will at all times be subject to the
terms and conditions of the Lease, as the same may be amended from time to
time.
3. The notice provisions set forth in the Lease are hereby deleted in the
entirety and replaced with the provisions set forth on Exhibit A attached
hereto.
4. Except as otherwise set forth herein, all of the terms and conditions of
the Lease will remain in full force and effect.
5. Licensee certifies that, except as set forth on Exhibit B, (a) the Lease
is in full force and effect on the date hereof and that [Sprint
Subsidiary] and Licensee are in compliance with all material terms and
conditions thereof, without any default on the part of [Sprint Subsidiary]
or Licensee, (b) to the best of its knowledge, no breaches or defaults
exist under the Lease on the part of [Sprint Subsidiary] which have not
been fully cured within the time frames set forth in the Lease, (c) to the
best of its knowledge, there are no events or circumstances that, but for
the passage of time or giving of notice, would be a default under the
Lease, (d) no amounts are past due from [Sprint Subsidiary] under the
Lease, (e) the Lease constitutes the entire agreement between the Licensee
and [Sprint Subsidiary], and (f) the license granted by the FCC for the
Leased Spectrum was validly issued in accordance with procedures that
comply with the rules and regulations of the
SPRINT PROPRIETARY INFORMATION
EXHIBIT A - Consent and Agreement
A-1
FCC and other applicable laws, is issued pursuant to a final
non-appealable order and is in full force and effect as of the date of
this Consent.
6. The provisions of this Consent are irrevocable and will remain in full
force and effect until termination of the Lease as provided by its terms.
7. This Consent may be executed in any number of counterparts, each of which
will be deemed an original, but which together will constitute a single
instrument.
[remainder of page intentionally left blank]
SPRINT PROPRIETARY INFORMATION
EXHIBIT A - Consent and Agreement
A-2
IN WITNESS WHEREOF, the undersigned have executed this Consent effective
as of the dated first written above.
LICENSEE:
________________________________________
By:_____________________________________
Name:___________________________________
Title:__________________________________
[SPRINT SUBSIDIARY]:
________________________________________
By:_____________________________________
Name:___________________________________
Title:__________________________________
[OPERATOR]:
________________________________________
By:_____________________________________
Name:___________________________________
Title:__________________________________
SPRINT PROPRIETARY INFORMATION
EXHIBIT A - Consent and Agreement
A-3
EXHIBIT A
Notices
All notices and other communications given or made pursuant to the Lease will be
in writing and will be deemed received as of the first weekday (excluding
Federal holidays) after being sent for next-day delivery by United States Postal
Service Express Mail, return receipt requested, or by Federal Express, signature
required, to the other person at the following address:
If to Operator:
Fixed Wireless Holdings, LLC
Attn: Benjamin G. Wolff
10210 NE Points Road, Suite 210
Kirkland, WA 98033
Facsimile No. 425.828.8061
With a copy to:
Davis Wright Tremaine LLP
Attn: Julie Weston, Esq.
1501 Fourth Avenue
Seattle, WA 98101-1688
Facsimile No. 206.628.7698
If to Licensee:
__________________
__________________
__________________
With a copy to:
__________________
__________________
__________________
If to Sprint:
Sprint
[***]
SPRINT PROPRIETARY INFORMATION
EXHIBIT A - Consent and Agreement
A-4
With copy to:
Sprint
[***]
A party may change the address at which notices are to be given to it by
giving notice of such change to the other party in the manner hereinabove
provided for the giving of notices. Notwithstanding anything to the contrary
contained herein, in the case of any notice given which alleges or pertains to a
breach of an obligation on the part of a party hereto, the notice will not be
effective unless such notice is also sent via facsimile to the other party and
to the copy addressees at the facsimile numbers provided hereinabove.
Furthermore, in the case of any notice contemplated by the preceding sentence
given by Operator or Licensee to Sprint, a copy of such notice will be sent
contemporaneously with the notice to the addressees listed hereinabove, and in
the manner provided hereinabove, to:
[***]
SPRINT PROPRIETARY INFORMATION
EXHIBIT A - Consent and Agreement
A-5
EXHIBIT B
Estoppel Matters
List any matters which are responsive to Section 5:
SPRINT PROPRIETARY INFORMATION
EXHIBIT A - Consent and Agreement
A-6
EXHIBIT B
COMPUTATION OF MHZ HOUSEHOLDS
The table below represents, by Market, the cumulative MHz Households for all
Proposed Spectrum as of the Effective Date and includes the MHz Households for
all incumbent GSAs for such Proposed Spectrum with a centroid located in a
Market. The MHz Household count provided below also includes the MHz Households
for all channels licensed to the BTA authorization in the Markets where Sprint
is the holder of the BTA authorization. For any individual GSA for spectrum
(whether or not Proposed Spectrum), the number of MHz Households will be
determined in accordance with the terms set forth in this Exhibit B and will
equal the MHz for the applicable spectrum multiplied by the Households for the
applicable spectrum; provided, however that for the purposes of this Agreement
the MHz Households for any Spectrum included as Proposed Spectrum (as of the
Effective Date) will equal the MHz Households for such GSA as of the Effective
Date.
The MHz for the applicable spectrum means the total amount of spectrum, measured
in megahertz, which is authorized by the FCC from time to time pursuant to the
licenses for such spectrum.
The number of Households for any GSA which is not included in the computation of
the MHz Households set forth in the table below, will be determined using the
CelSpectrum application. If the CelSpectrum application is no longer available,
the determination of MHz Households will be determined using the methods and
procedures employed by the CelSpectrum application, or if not available, the
most similar application available.
The CelSpectrum application stores the FCC ULS database information to determine
the GSA license center. Changes to the database from the previous month are
determined and applied to the GSA drawing repository also contained on the
server housing the CelSpectrum application at CelPlan Technologies in Reston,
VA. The application looks at the PSA centroid coordinates and draws the 35mi PSA
boundary and then intersects that with all other PSAs of the same channel to
form GSAs (Geographical Service Areas). These GSAs are specified as the midline
intersection of the overlapping area between two PSAs. When multiple PSAs
overlap the same area the area is divided between the GSAs by extending the
midlines to ensure no gaps or overlaps in the territory that could be claimed by
any party. The algorithms used to draw these lines incorporate the Great Earth
Curvature as the line if actually drawn straight would allow gaps and overlaps.
This procedure allows for the fact that the shortest distance between two points
at the edges of the intersection is a slight curve. The GSAs are drawn on a per
channel basis. Monthly the entire nation's GSAs are pre-computed and stored for
quick reference and map retrieval.
The CelSpectrum application also contains two household database numbers. One
internally to CelPlan based on Census data and one embedded that is supplied as
an update from data supplied by SRC. This database is updated yearly with a
projection of the actual household count based on research conducted by SRC and
loaded into very small bins that the application uses the
SPRINT PROPRIETARY INFORMATION
EXHIBIT B - Computation of MHz Households
B-1
resulting GSAs to overlay against. The SRC database is the corporate standard
demographic analysis tool used by many top companies.
As of the Effective Date, the MHz Households for the following GSAs are as
follows:
* * *
SPRINT PROPRIETARY INFORMATION
EXHIBIT B - Computation of MHz Households
B-2
EXHIBIT C
TRANSMISSION FACILITIES OPERATION AND MAINTENANCE AGREEMENT
This Transmission Facilities Operation and Management Agreement (the
"AGREEMENT") is made effective as of October___, 2004 (the "EFFECTIVE DATE"),
and is executed by and between the undersigned wholly owned subsidiaries of
Sprint Corporation (each, a "SPRINT SUBSIDIARY" and collectively "SPRINT"), and
FIXED WIRELESS HOLDINGS, LLC, a Delaware limited liability company ("OPERATOR").
PRELIMINARY STATEMENTS
Each Sprint Subsidiary is a party to one or more spectrum lease agreements
(each, a "PRIMARY LEASE") with various third parties (each, a "THIRD PARTY
LICENSEE") pursuant to which such Sprint Subsidiary agreed, among other things,
to operate the Third Party Licensee's channels.
During the term of this Agreement, Sprint desires for Operator to operate
certain of the channels which are subject to the Primary Leases as requested in
writing from time to time by Sprint.
Sprint and Operator desire to enter into this Agreement to memorialize
their agreement with respect to Operator's operation of the certain channels
subject to the Primary Leases on behalf of Sprint using the Transmission
Equipment (as defined below).
AGREEMENT
In consideration of the foregoing and of the mutual promises and covenants
herein contained, Sprint and Operator hereby agree as follows:
1. Term. The term of this Agreement will commence on the Effective Date and
extend through the earlier of (i) the termination of the Market Operation,
Spectrum Lease and Sublicense Agreement dated October ____, 2004 by and
between Operator and certain wholly owned subsidiaries of Sprint
Corporation ("Region 1 Agreement") or (ii) 10th anniversary thereof. A
party may terminate this Agreement upon 30 days written notice to the
other party if the other party is in default and fails within such 30 day
period to cure such default. A party will be deemed to be in default under
this Agreement if it fails to comply with any material obligation, term or
covenant under this Agreement. Termination of this Agreement will not
affect or diminish the rights or claims or remedies available to the
non-defaulting party arising by reason of any default.
2. Channels. This Agreement will apply to the operation of those certain
channels subject to a Primary Lease which Sprint may from time to time
identify to Operator in a written notice (each, an "OPERATION NOTICE").
Each Operation Notice will include a statement that the services to be
provided by Operator are permitted under the Primary Lease, and that
Sprint has secured all rights of access and permissions needed by Operator
to perform its obligations hereunder. Effective no later than thirty (30)
days following delivery of an Operation Notice (each, an "OPERATION
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COMMENCEMENT DATE"), any channels designated therein will be considered as
"Channels" for purposes of this Agreement. From tune to time during the
term of this Agreement, Sprint may elect to terminate this Agreement with
respect to specific Channels by providing written notice (each, a
"TERMINATION NOTICE") identifying such Channels. Effective as of the tenth
(10th) day following the Termination Notice (the "OPERATION TERMINATION
DATE"), such Channels will no longer be considered Channels for purposes
of this Agreement.
3. Fees. No later than the 10th day of each calendar month during the term,
Sprint will pay Operator an "Operation and Maintenance Fee" pursuant to
the terms set forth on Schedule 3. For any partial calendar month during
the term of this Agreement, Sprint will pay Operator a pro-rata share of
the amount stated above. Such pro-rata fee will be due and payable within
10 days of the expiration of such partial calendar month. Except as set
forth in the Region 1 Agreement dated as of the date hereof between Sprint
and Operator, Sprint will be responsible for the payment of all fees,
royalties, expenses and other costs arising under the Primary Leases and
shall indemnify and hold Operator harmless from the payment of any such
amounts. In addition, Sprint will reimburse Operator for any out-of-pocket
costs or expenses incurred by Operator in the performance of the services
as set forth under this Agreement, provided, that to the extent any such
costs and expenses exceed [***] for any calendar month, Sprint has
approved such costs and expenses. Notwithstanding anything to the contrary
set forth herein, Operator will not be obligated to perform any services
hereunder if Sprint has not agreed to reimburse Operator for the costs and
expenses related to such services which are otherwise reimbursable
pursuant to this Agreement; provided that Sprint has not suggested or
provided a lower cost alternative for the provision of such services. Any
amount not paid hereunder when due will bear interest at the rate of [***]
per annum from the date due until such amount, along with all accrued
interest thereon, is paid in full.
4. Utilities. During the term of this Agreement, Operator will provide the
utilities necessary for the transmission over the Channels as required
pursuant to the terms of this Agreement.
5. Equipment. Each Operation Notice will include a detailed description of
all equipment which is then currently used in connection with the
transmission of the Channels identified in such Operation Notice, and
following the Operation Commencement Date such equipment will be
considered as "Transmission Equipment" for purposes of this Agreement.
From and after the Operation Termination Date for any Channels, the
Transmission Equipment being used in connection with such Channels will no
longer be considered Transmission Equipment for purposes of this
Agreement.
6. Operation of the Channel(s). During the term of this Agreement and subject
to the terms set forth herein, Operator will operate the Channels on
behalf of the applicable Sprint Subsidiary, using the Transmission
Equipment and, to the extent necessary and proper, other equipment owned
by Operator and others, in accordance with Sprint's instructions to
satisfy the terms of the Primary Lease governing such Channels and in
accordance with any other written instructions of Sprint. Sprint will
provide operational instructions to Operator with respect to the
operations of the channels and
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compliance with the Primary Lease. Subject to reimbursement by Sprint of
Operator's costs in connection with such access rights, the applicable
Third Party Licensee and Sprint will have access to the transmission
facilities used in the transmission of any applicable Third Party
Licensee's Channels no later than the earlier of (a) any time period for
such access as specified in such applicable Primary Lease, (b) any time
period required under the FCC Rules or by the FCC, or (c) 72 hours
following written notice to Operator. Notwithstanding anything to the
contrary contained herein, Sprint may, in its sole discretion, elect to
perform any obligations under any Primary Lease, including without
limitation, any construction obligations thereunder, without reduction of
the fees payable to Operator in accordance with this Agreement.
7. Programming and Delivery of Content. Throughout the term of this
Agreement, Operator will, pursuant to Sprint's instructions, provide the
minimum amount of programming for transmission using the Channels as
required under each applicable Primary Lease; provided, however that the
content of such programming shall be provided by Sprint or by the Third
Party Licensee to Operator in a timely manner. To the extent any equipment
and facilities utilized as of the Effective Date to deliver content for
transmission over any Third Party Licensee's Channels is controlled by
Operator pursuant to the terms of the Region 1 Agreement, Operator will
provide Sprint and any Third Party Licensee access to such equipment and
facilities as necessary to satisfy their respective obligations to provide
programming content as set forth in this Section 7.
8. Maintenance. Operator will provide routine maintenance as needed, and
pursuant to any written instructions from Sprint, to the Transmission
Equipment. Should any of the Transmission Equipment require repair other
than routine maintenance or replacement, as determined in Operator's
reasonable discretion or pursuant to written instructions from Sprint,
Sprint will reimburse Operator for the cost of such repairs, replacement,
and any parts, equipment and expenses incurred by Operator with regard to
such repair or replacement. Upon installation, any replacement equipment
will become Transmission Equipment. Upon payment to Operator, any such
replacement equipment will become the property of Sprint. Furthermore,
Sprint will reimburse Operator for such expenses incurred by Operator in
making any upgrades, modifications, or improvements in connection with the
operation of the Channels as agreed to by the parties. Sprint will
reimburse Operator for any such costs and expenses no later than 30 days
following Operator's delivery of an invoice for such expenses.
9. Regulatory Compliance. Each of the parties hereto will take all reasonable
steps to comply with the Communications Act of 1934, as amended, and the
rules and regulations of the FCC. Notwithstanding anything to the contrary
contained herein, the Third Party Licensee will at all times retain such
responsibility for the operation and control of the facilities licensed to
it as is required by the FCC's rules and policies.
10. Insurance. At its expense, Operator will secure and maintain with
financially reputable insurers "All Risk" property insurance covering the
Transmission Equipment for its replacement value. A certificate of
insurance will be delivered to
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Sprint within 30 days of the Effective Date evidencing that the above
coverage is in effect and will not be canceled or materially altered
without first giving Sprint 30 days' prior written notice. Renewal
certificates will be delivered prior to the expiration of the term
thereof. Sprint will be named as an additional insured on the above
referenced policy of insurance.
11. Indemnification. Sprint will indemnify, defend (with legal counsel
reasonably acceptable to Operator) and hold Operator and its respective
affiliates, managers, officers, directors, employees, agents, attorneys,
representatives, successors and assigns (the "Operator Indemnitees")
harmless from and against any and all liabilities, claims, judgments,
orders, governmental directives, direct damages and losses, fines,
penalties, expenses (including without limitation reasonable consultants',
experts' and attorneys' fees), and costs which arise from the operation of
the Channels pursuant to Sprint's instruction as set forth in this
Agreement, programming provided by Sprint or the Third Party Licensee, and
the acts, omissions, negligence or willful misconduct of Sprint, its
officers, employees or agents in connection with Sprint's operation of the
Channels.
12. Notice. All notices and other communications given or made pursuant to
this Agreement will be in writing and will be deemed received as of the
first weekday (excluding Federal holidays) after being sent for next-day
delivery by United States Postal Service Express Mail, return receipt
requested, or by Federal Express, signature required, to the other party
at the following address:
If to Operator:
Fixed Wireless Holdings, LLC
Attn: Benjamin G. Wolff
10210 NE Points Road, Suite 210
Kirkland, WA 98033
Facsimile No. 425.828.8061
With a copy to:
Davis Wright Tremaine LLP
Attn: Julie Weston, Esq.
2600 Century Square
1501 Fourth Avenue
Seattle, WA 98101-1688
Facsimile No. 206.628.7699
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If to Sprint:
Sprint
[***]
With copy to: Sprint
Sprint
[***]
A party may change the address at which notices are to be given to it by giving
notice of such change to the other party in the manner hereinabove provided for
the giving of notices. Notwithstanding anything to the contrary contained
herein, in the case of any notice which in any manner alleges or pertains to a
breach of an obligation on the part of a party hereto, the notice will not be
effective unless such notice is also sent via facsimile to the other party and
to the copy addressees at the facsimile numbers provided hereinabove.
Furthermore, in the case of any notice contemplated by the preceding sentence
given by Operator, a copy of such notice will be sent contemporaneously with the
notice to the addressees listed hereinabove, and in the manner provided
hereinabove, to:
[***]
13. Assignment. This Agreement may not be assigned by Operator in whole or in
part, without the prior written consent of Sprint which may be withheld by
Sprint in its sole discretion; provided, however that this agreement may
be assigned without Sprint's consent in connection with the permitted
assignment of the Region 1 Agreement. Sprint has the absolute right to
assign or otherwise transfer its rights and obligations under this
Agreement, provided, however, that any such assignment shall not relieve
Sprint of its obligations under this Agreement.
14. Not A Lease. This Agreement and Operator's rights hereunder will not be
construed as a sublease, assignment, transfer or the granting of any
rights to use the Channels by Operator and Operator will have no right to
utilize the Channels for the transmission of content of Operator's
choosing, other than as required pursuant to paragraph 7. It is expressly
agreed that this Agreement is a contract for services.
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15. Force Majeure. If by reason of act of God, acts of public enemies, orders
of any branch of the government of the United States of America, any state
or any political subdivision thereof which are not the result of a breach
of or default under this Agreement, orders of any military authority,
insurrections, riots, epidemics, fires, civil disturbances, explosions, or
any other similar cause or event not reasonably within the control of
Operator, Operator is unable in whole or in part to perform its
obligations hereunder, Operator will not be deemed in violation or default
of this Agreement during the period of such inability.
16. No Waivers. The failure on the part of either party to exercise, or any
delay in exercising, any right or remedy hereunder will not operate as a
waiver of such right or remedy. Any single or partial exercise by either
party of any right or remedy hereunder will not preclude the exercise of
any other right or remedy or the further exercise of such right or remedy.
17. Relationship. The performance by each party of its duties and obligations
under this Agreement will be that of an independent contractor and nothing
herein will create or imply an agency relationship between the parties,
nor will this Agreement be deemed to constitute a joint venture or
partnership between the parties.
18. Governing Law. This Agreement will be governed by and construed in
accordance with the Communications Act of 1934, as amended, the FCC's
rules and policies, and the laws of the State of Kansas, without giving
effect to the conflicts of laws principles thereof.
19. Entire Understanding. Except for the Region 1 Agreement and the other
agreements referenced therein, this Agreement represents the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior or contemporaneous writings, correspondence and
memoranda with respect thereto.
20. Amendments. This Agreement may be modified or amended only by a written
amendment executed by all parties.
21. Severability. If any provision of this Agreement is determined by any
court, the FCC or any other governmental authority to be invalid, illegal
or incapable of being enforced, all other provisions will nevertheless
remain in full force and effect so long as the economic or legal substance
of the transactions contemplated hereby is not affected in any manner
materially adverse to any party.
22. Interpretation and Construction. The headings contained in this Agreement
are for convenience of reference only and do not affect in any way the
meaning or interpretations of this Agreement. If this Agreement requires
interpretation or construction, this Agreement will not be interpreted or
construed more strictly against any one party by reason of any rule of
interpretation or construction under which a document is to be construed
more strictly against the drafting party. As used in this Agreement, the
term "including" is deemed to mean "including, without limiting the
generality of the foregoing."
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23. Counterparts. This Agreement may be executed in counterparts, each of
which will be deemed an original, but all of which will constitute one and
the same instrument
[Remainder of page intentionally left blank; signature page(s) follow]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the Effective Date.
OPERATOR:
FIXED WIRELESS HOLDINGS, LLC
By:__________________________________________
Benjamin G. Wolff
Executive Vice President
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SPRINT:
* * *
By:__________________________________________
Todd A. Rowley
Vice President
* * *
By:__________________________________________
Todd A. Rowley
Vice President
* * *
By:__________________________________________
Todd A. Rowley
Vice President
* * *
By:__________________________________________
Todd A. Rowley
Vice President
* * *
By:__________________________________________
Todd A. Rowley
Vice President
SPRINT PROPRIETARY INFORMATION
EXHIBIT C - Transmission Facilities Operation and Maintenance Agreement
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* * *
By:__________________________________________
Todd A. Rowley
President
* * *
By:__________________________________________
Todd A. Rowley
Vice President
* * *
By:__________________________________________
Todd A. Rowley
Vice President
* * *
By:__________________________________________
Todd A. Rowley
Vice President
* * *
By:__________________________________________
Todd A. Rowley
Vice President
* * *
By:__________________________________________
Todd A. Rowley
Vice President
SPRINT PROPRIETARY INFORMATION
EXHIBIT C - Transmission Facilities Operation and Maintenance Agreement
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* * *
BY:__________________________________________
Todd A. Rowley
Vice President
* * *
By:__________________________________________
Todd A. Rowley
Vice President
* * *
By:__________________________________________
Todd A. Rowley
President
* * *
By:__________________________________________
Todd A. Rowley
Vice President
* * *
By:__________________________________________
Todd A. Rowley
Vice President
* * *
By:__________________________________________
Todd A. Rowley
Vice President
SPRINT PROPRIETARY INFORMATION
EXHIBIT C - Transmission Facilities Operation and Maintenance Agreement
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* * *
By:__________________________________________
Todd A. Rowley
Vice President
* * *
By:__________________________________________
Todd A. Rowley
Vice President
* * *
By:__________________________________________
Todd A. Rowley
Vice President
* * *
By:__________________________________________
Todd A. Rowley
Vice President
* * *
By:__________________________________________
Todd A. Rowley
Vice President
* * *
By:__________________________________________
Todd A. Rowley
President
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* * *
By:__________________________________________
Todd A. Rowley
Vice President
* * *
By:__________________________________________
Todd A. Rowley
President
* * *
By:__________________________________________
Todd A. Rowley
Vice President
SPRINT PROPRIETARY INFORMATION
EXHIBIT C - Transmission Facilities Operation and Maintenance Agreement
C-13
SCHEDULE 3
Fees
[ATTACHED]
SPRINT PROPRIETARY INFORMATION
EXHIBIT C - Transmission Facilities Operation and Maintenance Agreement
EXHIBIT D
[Date]
[Address]
Re: [Identify Lease Agreement] dated _________, ______ between _________
and _________________ ("Primary Lease"); Market Operation and
Sublicense Agreement dated ___________, 2004 among various
subsidiaries of Sprint Corporation and Fixed Wireless Holdings, LLC,
a wholly owned subsidiary of Clearwire Corporation.
Dear [Name]:
We are pleased to announce that various subsidiaries of Sprint Corporation
(collectively, "Sprint") have entered into the above referenced Market Operation
and Sublicense Agreement ("Market Operation Agreement") with Fixed Wireless
Holdings, a wholly owned subsidiary of Clearwire Corporation ("Clearwire").
While Sprint will remain actively involved in developing technology and
infrastructure for delivery of advanced "4G" mobile and portable broadband
wireless services, Sprint has entered into this Agreement in an effort to hasten
the deployment of commercially available broadband and wireless services in
certain small and midsize markets by leasing and subleasing Sprint's MMDS and
ITFS spectrum to Clearwire.
Sprint selected Clearwire to develop and operate the market because of
Clearwire's commitment to delivering broadband wireless services in markets
throughout the United States including the licensed area covered by your
spectrum. Clearwire currently offers self-installed broadband Internet access
with download speeds of up to 1.5 Mbps. Clearwire provides it service over MMDS
and ITFS spectrum, and has acquired such spectrum in numerous markets throughout
the United States. Clearwire is currently providing its services to customers in
Jacksonville, Florida, and intends to launch its services in several additional
markets by the end of 2004 and throughout 2005. Clearwire's management is a team
of telecommunications industry professionals led by Craig McCaw, who serves as
Clearwire's Chief Executive Officer. Mr. McCaw has been an active entrepreneur
and investor in the communications industry for over 35 years.
Pursuant to the Market Operation Agreement, Sprint has granted to Clearwire the
right to use your channels in the deployment of a wireless service. In return,
following a transition period, Clearwire will step into Sprint's shoes and
perform all obligations previously performed by Sprint under the Primary Lease.
Therefore, upon completion of the transition period, Clearwire will, to the
extent required under the Primary Lease:
1. operate and maintain all equipment used in connection with the
operation of your channels;
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EXHIBIT D - Form of Notice
D-1
2. maintain, repair and replace your ITFS receive site facilities(1/);
3. fulfill any obligations under the Primary Lease to provide
programming content for your use in satisfaction of the FCC's
minimum educational use requirements(2/);
4. directly pay to you all payments and reimbursements due under the
Primary Lease. [Determination of the revenue sharing component of
your compensation under the Primary Lease will be based upon the
revenues collected by Clearwire from its customers](3/); and
5. be responsible to ameliorate any materially adverse effect to your
programming(4/).
Furthermore, effective as of ______________, Sprint has granted Clearwire the
right to enforce the Primary Lease, including the right to modify the facilities
used in connection with your channels and request interference consents as
permitted under the Primary Lease. Therefore, unless notified otherwise by
Sprint, you should comply with all of Clearwire's instructions to the extent
consistent with the Primary Lease.
Please note that Clearwire has agreed to comply with all terms of the Primary
Lease, including restrictions on content, in connection with its use of your
channels. As Clearwire will have certain rights under and will perform all
obligations under the Primary Lease, all future notices under the Primary Lease
from you must be provided to Clearwire with a copy to Sprint. Exhibit A to this
letter provides the correct notice address for your use in the future.
This letter serves as Sprint's notice to you of the transfer of certain rights
held by Sprint pursuant to the Primary Lease. We look forward to your
cooperation in the transition of the operation of your channels to Clearwire. If
you have any questions regarding the Market Operation Agreement and the
continued lease of your channels by Sprint, please do not hesitate to contact
[INSERT LRD].
----------
(1/) Only applicable to ITFS leases.
(2/) Only applicable to ITFS leases.
(3/) Only applicable if Primary Lease has revenue share component.
(4/) Only applicable to ITFS leases.
SPRINT PROPRIETARY INFORMATION
EXHIBIT D - Form of Notice
D-2
EXHIBIT E
TRANSITION SERVICES AGREEMENT
THIS AGREEMENT (this "AGREEMENT") is entered into as of the ___ day
of _, 2004 by and among each of the undersigned wholly owned subsidiaries of
Sprint Corporation (collectively, "SPRINT"), and Fixed Wireless Holdings, LLC, a
Delaware limited liability company ("OPERATOR").
PRELIMINARY STATEMENTS
Pursuant to that certain Market Operation, Spectrum Lease and
Sublicense Agreement dated as of the date hereof among Sprint and Operator (the
"MARKET OPERATION AGREEMENT"), Sprint granted to Operator the right to use the
Spectrum, Sprint Equipment and Towers (as defined in the Market Operation
Agreement).
In order to facilitate the transition of the operation of the
Spectrum from Sprint to Operator, including performance of functions
traditionally associated with the maintenance of the Leased Spectrum (as defined
in the Market Operation Agreement), the parties desire to enter into this
Agreement.
AGREEMENT
In consideration of the agreements set forth herein and the
agreements between Sprint and Operator in the Market Operation Agreement, Sprint
and Operator hereby agree as follows:
ARTICLE 1
DEFINITIONS
Capitalized terms not otherwise defined herein will have the
meanings assigned to such terms in the Market Operation Agreement.
ARTICLE 2
PLANNING AND SERVICES
2.1 Transition Meetings. No later than 60 days following the date
hereof, operations management representatives of Operator will meet with
Sprint's spectrum management, lease portfolio management, and network operations
representatives at Sprint's corporate headquarters in Overland Park, Kansas. At
such meeting Operator will present to Sprint Operator's transition plan setting
forth with detail, including project completion dates, the steps necessary to
transition operation and management of the Spectrum, Sprint Equipment, Primary
Leases and Towers from Sprint to Operator. Sprint and Operator will mutually
revise such plan as the parties deem necessary and appropriate. No later than 90
days following the Effective Date, operations management representatives of
Sprint and Operator will meet at Operator's Kirkland, Washington corporate
headquarters. At such meeting, Operator will explain to Sprint and/or
demonstrate the controls and procedures which it will use in management of the
Spectrum, Primary Leases, Sprint
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EXHIBIT E - Transition Services Agreement
E-1
Equipment and Towers. Sprint will have the right to be present and observe
Operator's initial payments to Third Party Licensees following the Initial
Closing Date.
2.2 Transition Services. During each Market Term (as defined in
Article 5) with respect to such applicable Closed Market, Sprint will provide to
Operator those services described in Exhibit A to this Agreement (collectively,
the "SERVICES") in accordance with the terms set forth herein.
2.3 Additional Services. Operator may request that services other
than those set forth on Exhibit A (the "ADDITIONAL SERVICES") be provided by
Sprint. Sprint agrees to provide Additional Services which are necessary to
maintain the Primary Leases, Leased Spectrum and Sprint Authorizations, as
reasonably requested by Operator during the Term.
ARTICLE 3
FEES FOR SERVICES
3.1 Fees for Services.
(a) Reimbursement for Expenses. In addition to the fees set
forth in Sections 3.1(b) and 3.1(c), Operator will reimburse Sprint for
purchases of supplies, travel and other items necessary for performance
of the Services and Additional Services and all other reasonable costs
and expenses, including engineering and legal services, incurred by
Sprint in connection with the performance of the Services and Additional
Services; provided that such costs and expenses have not been otherwise
reimbursed or paid under the Market Operation Agreement or otherwise and,
to the extent any such costs and expenses exceed [***] for any calendar
month, Clearwire has approved such costs and expenses. Notwithstanding
anything to the contrary set forth herein, Sprint will not be obligated
to perform any Services or Additional Services if Operator has not agreed
to reimburse Sprint for the costs and expenses related to such Services
or Additional Services which otherwise are reimbursable pursuant to this
Agreement; provided that Operator has not suggested or provided a lower
cost alternative for the provision of such Services or Additional
Services.
(b) Additional Services. Operator will pay Sprint for the
Additional Services requested by Operator pursuant to Section 2.3
according to the rates and terms set forth in Exhibit B.
(c) Services Provided After Expiration of any Market Term. If,
for any reason, Sprint provides Services to Operator attributable to a
Closed Market following expiration of the applicable Market Term, in
addition to reimbursement of costs and expenses set forth in Section
3.l(a). Operator will pay Sprint according to the rates and terms as set
forth on Exhibit B attached hereto. Notwithstanding anything to the
contrary contained herein, in no event shall this Section be construed as
a waiver of any event of default or breach by Operator of the terms of the
Market Operation Agreement, it being understood and agreed that Sprint
rights pursuant to this Section 3.1(c) are independent and in addition to
any other rights Sprint has under the Market Operation Agreement.
3.2 Payment of Fees and Reimbursements. Sprint will deliver to
Operator, on a monthly basis, an invoice reflecting the total amount of the fees
for Additional Services and, as
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EXHIBIT E - Transition Services Agreement
E-2
applicable, Services provided by it during the prior month, along with costs and
expenses and copies of invoices to support reimbursement requests. For
avoidance of doubt, this Section 3.2 governs Operator's obligations to reimburse
Sprint for any costs and expenses which Operator has assumed pursuant to the
Market Operation Agreement to the extent such amounts are paid by Sprint on
behalf of Operator hereunder. Operator will pay the fees and charges reflected
on such invoices by wire transfer in immediately available funds no later than
10 days after receipt of any invoice. Any amount not paid hereunder when due
will bear interest at the rate of 13.5% per annum from the date due until such
amount, along with all accrued interest thereon, is paid in full.
3.3 Examination Right. Operator will be entitled to have its
authorized representative or independent accountants examine Sprint's records
pertaining to the respective fees and charges referenced in this Article 3. No
later than 20 days following written notice from Operator, not to be given more
than twice during the Term, Sprint will make such records available to Operator
by furnishing access to such information at Sprint's offices or, upon the
election of Sprint, by delivering copies of such records to Operator.
ARTICLE 4
STANDARD OF CARE
Sprint agrees to perform the Services with the same level of due
care with which such Services were performed prior to execution of the Market
Operation Agreement. At a minimum, Sprint will perform the Services in a
competent and workman-like manner using its commercially reasonable efforts and
in a manner which is consistent with the manner in which such Services were
performed immediately prior to execution of the Market Operation Agreement.
ARTICLE 5
TERM; TERMINATION
With respect to any Closed Market, the term of this Agreement will
commence on the Initial Closing Date or applicable Market Closing Date for such
Closed Market and will continue for a period of 90 days thereafter unless
otherwise agreed to in writing by the parties (each, a "MARKET TERM"). This
Agreement will expire on the earlier to occur of (a) the date on which the last
Market Term expires, or (b) 24 months following the Effective Date (such period
this Agreement is in effect, the "TERM"). Operator may terminate all of the
Services of a particular type which it is then receiving for all Closed Markets
by providing notice to Sprint specifying the effective date of such termination,
no later than 10 days prior to the effective date of such termination.
ARTICLE 6
MISCELLANEOUS PROVISIONS
6.1 Force Majeure. If by reason of act of God, acts of public
enemies, orders of any branch of the government of the United States of America,
any state or any political subdivision thereof which are not the result of a
breach of or default under this Agreement, orders of any military authority,
insurrections, riots, epidemics, fires, civil disturbances, explosions, or any
other similar cause or event not reasonably within the control of Sprint, Sprint
is unable in whole or in part to
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EXHIBIT E- Transition Services Agreement
E-3
perform its obligations hereunder, Sprint will not be deemed in violation or
default of this Agreement during the period of such inability.
6.2 No Waivers. The failure on the part of either party to exercise,
or any delay in exercising, any right or remedy hereunder will not operate as a
waiver of such right or remedy. Any single or partial exercise by either party
of any right or remedy hereunder will not preclude the exercise of any other
right or remedy or the further exercise of such right or remedy.
6.3 Notices. All notices and other communications given or made
pursuant to this Agreement will be in writing and will be deemed received as of
the first weekday (excluding Federal holidays) after being sent for next-day
delivery by United States Postal Service Express Mail, return receipt requested,
or by Federal Express, signature required, to the other party at the following
address:
If to Operator:
Fixed Wireless Holdings, LLC
Attn: Benjamin G. Wolff
10210 NE Points Road, Suite 210
Kirkland, WA 98033
Facsimile No. 425.828.8061
With a copy to:
Davis Wright Tremaine LLP
Attn: Julie Weston, Esq.
1501 Fourth Avenue
Seattle, WA 98101-1688
Facsimile No. 206.628.7698
If to Sprint:
Sprint
[***]
With copy to:
Sprint
[***]
A party may change the address at which notices are to be given to it by giving
notice of such change to the other party in the manner hereinabove provided for
the giving of notices. Notwithstanding
SPRINT PROPRIETARY INFORMATION
EXHIBIT E - Transition Services Agreement
E-4
anything to the contrary contained herein, in the case of any notice which in
any manner alleges or pertains to a breach of an obligation on the part of a
party hereto, the notice will not be effective unless such notice is also sent
via facsimile to the other party and to the copy addressees at the facsimile
numbers provided hereinabove. Furthermore, in the case of any notice
contemplated by the preceding sentence given by Operator, a copy of such notice
will be sent contemporaneously with the notice to the addressees listed
hereinabove, and in the manner provided hereinabove, to:
[***]
6.4 Relationship. The performance by each party of its duties and
obligations under this Agreement will be that of an independent contractor and
nothing herein will create or imply an agency relationship between the parties,
nor will this Agreement be deemed to constitute a joint venture or partnership
between the parties.
6.5 Governing Law. This Agreement will be governed by and construed
in accordance with the Communications Act of 1934, as amended, the FCC's rules
and policies, and the laws of the State of Kansas, without giving effect to the
conflicts of laws principles thereof.
6.6 Covenant of Further Assurances. The parties covenant and agree
that, subsequent to the execution and delivery of this Agreement and without any
additional consideration, each of the parties will execute and deliver, or cause
appropriate affiliates to execute and deliver, any further legal instruments and
will perform any acts which are or may become reasonably necessary to effect the
purposes of this Agreement.
6.7 Assignment. Neither party may assign any of its rights under
this Agreement without the prior written consent of the other parties which such
consent will not be unreasonably conditioned, withheld, or delayed, except that
either party may assign any of its rights under this Agreement to (i) any parent
company or subsidiary of the assigning party, or to any entity under common
ownership with the assigning party, provided that such assignee, or assignees,
have the resources and ability to perform the obligations of the assigning party
under this Agreement, (ii) any entity which acquires the assigning party's
interests under the Market Operation Agreement, or (iii) any entity which
acquires the assigning party or substantially all of the assets of the assigning
party, provided, however, that any such assignment shall not relieve the
assigning party of its obligations under this Agreement. Subject to the
preceding sentence, this Agreement will apply to, be binding in all respects
upon, and inure to the benefit of the successors and permitted assigns of the
parties. Nothing expressed or referred to in this Agreement will be construed to
give any Person other than Sprint and Operator any legal or equitable right,
remedy, or claim under or with respect to this Agreement or any provision of
this Agreement. This Agreement and all of its provisions and conditions are for
the sole and exclusive benefit of the parties to this Agreement, and their
respective permitted successors and assigns.
6.8 Entire Understanding. Except for the Market Operation Agreement
and other agreements referenced therein, this Agreement represents the entire
understanding of the parties with
SPRINT PROPRIETARY INFORMATION
EXHIBIT E - Transition Services Agreement
E-5
respect to the subject matter hereof and supersedes all prior or contemporaneous
writings, correspondence and memoranda with respect thereto.
6.9 Interpretation and Construction. The headings contained in this
Agreement are for convenience of reference only and do not affect in any way the
meaning or interpretations of this Agreement. If this Agreement requires
interpretation or construction, this Agreement will not be interpreted or
construed more strictly against any one party by reason of any rule of
interpretation or construction under which a document is to be construed more
strictly against the drafting party. As used in this Agreement, the term
"including" is deemed to mean "including, without limiting the generality of the
foregoing."
6.10 Amendments. This Agreement may be modified or amended only by a
written amendment executed by all parties.
6.11 Counterparts. This Agreement may be executed in counterparts,
each of which will be deemed an original, but all of which will constitute one
and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers effective as of the day and year
first above written.
OPERATOR:
FIXED WIRELESS HOLDINGS, LLC
By: _____________________________
Benjamin G. Wolff
Executive Vice President
SPRINT PROPRIETARY INFORMATION
EXHIBIT E - Transition Services Agreement
E-6
* * *
By: _____________________________
Todd A. Rowley
Vice President
* * *
By: _____________________________
Todd A. Rowley
Vice President
* * *
By: _____________________________
Todd A. Rowley
Vice President
* * *
By: _____________________________
Todd A. Rowley
Vice President
* * *
By: _____________________________
Todd A. Rowley
Vice President
SPRINT PROPRIETARY INFORMATION
EXHIBIT E - Transition Services Agreement
E-7
* * *
By: _____________________________
Todd A. Rowley
President
* * *
By: _____________________________
Todd A. Rowley
Vice President
* * *
By: _____________________________
Todd A. Rowley
Vice President
* * *
By: _____________________________
Todd A. Rowley
Vice President
* * *
By: _____________________________
Todd A. Rowley
Vice President
* * *
By: _____________________________
Todd A. Rowley
Vice President
SPRINT PROPRIETARY INFORMATION
EXHIBIT E - Transition Services Agreement
E-8
* * *
By: _____________________________
Todd A. Rowley
Vice President
* * *
By: _____________________________
Todd A. Rowley
Vice President
* * *
By: _____________________________
Todd A. Rowley
President
* * *
By: _____________________________
Todd A. Rowley
Vice President
* * *
By: _____________________________
Todd A. Rowley
Vice President
* * *
By: _____________________________
Todd A. Rowley
Vice President
SPRINT PROPRIETARY INFORMATION
EXHIBIT E - Transition Services Agreement
E-9
* * *
By: _____________________________
Todd A. Rowley
Vice President
* * *
By: _____________________________
Todd A. Rowley
Vice President
* * *
By: _____________________________
Todd A. Rowley
Vice President
* * *
By: _____________________________
Todd A. Rowley
Vice President
* * *
By: _____________________________
Todd A. Rowley
Vice President
* * *
By: _____________________________
Todd A. Rowley
President
SPRINT PROPRIETARY INFORMATION
EXHIBIT E - Transition Services Agreement
E-10
* * *
By: _____________________________
Todd A. Rowley
Vice President
* * *
By: _____________________________
Todd A. Rowley
President
* * *
By: _____________________________
Todd A. Rowley
Vice President
SPRINT PROPRIETARY INFORMATION
EXHIBIT E- Transition Services Agreement
E-l1
EXHIBIT A
TRANSITION SERVICES
Subject to Operator's reimbursement and payment obligations set forth in
Sections 3.1 and 3.2, Sprint will perform the following Services:
1. Maintenance of Sprint Equipment. Sprint will maintain all Sprint Equipment
and other equipment used in connection with the operation of the Spectrum in a
given Closed Market as of the applicable Initial Closing Date or Market Closing
Date to the extent necessary to operate the Spectrum in the subject Closed
Market. Furthermore, Sprint will repair or replace any non-operational Sprint
Equipment to the extent necessary to operate the Spectrum in the subject Closed
Market.
2. Primary Lease Maintenance.
a. Payment Services. Sprint will pay each Licensee any and all amounts due
and owed under the applicable Primary Leases.
b. Receive Site Equipment Services. Sprint will maintain, and to the
extent necessary, repair and replace, all ITFS receive site equipment
where required pursuant to applicable Primary Leases.
c. Enforcement Services. Sprint will monitor and demand compliance by the
Third Party Licensees with all material terms of the Primary Leases.
3. Programming/Operation Services.
a. ITFS Channels. Sprint will continue to provide the video programming
utilized by Licensees in compliance with the Primary Leases.
b. MDS Channels. Sprint will continue to provide programming over the MDS
Channels as Sprint provides as of the Initial Closing Date, or applicable
Market Closing Date.
4. Regulatory Compliance Services. Sprint will file all reports and other
materials required by the FCC with respect to the Sprint Spectrum. Furthermore,
Sprint will assist each Licensee with the filing of all reports and other
materials required by the FCC with respect to the Leased Spectrum.
5. Other Payment Services. During the applicable Market Term with respect to any
given Closed Market, Sprint will pay on behalf of Operator (subject to
reimbursement) monthly tower rent, utility fees and charges, taxes and licensing
fees, and such other payment obligations to third parties assumed by Operator
pursuant to the terms of the Market Operation Agreement.
SPRINT PROPRIETARY INFORMATION
EXHIBIT E - Transition Services Agreement
E-12
EXHIBIT B
FEES
Operator will pay Sprint for the Services and Additional Services at the hourly
rates set forth below for each hour of time that any Sprint employee or
contractor spends in delivering the Services or Additional Services. [***]
<TABLE>
<CAPTION>
Hourly Rate for Additional
Period Services Hourly Rate for Services
--------------------------------------- ---------------------------- ------------------------
<S> <C> <C>
1st through 60th days of Market Term [***] N/A
61st through 90th days of Market Term [***] N/A
Following the Market Term [***] [***]
</TABLE>
SPRINT PROPRIETARY INFORMATION
EXHIBIT E - Transition Services Agreement
E-13
EXHIBIT F
GUARANTY AND COVENANT AGREEMENT
This Guaranty and Covenant Agreement ("Guaranty") is executed and
delivered this_____day of__________, 2004 by Guarantor (as defined below), in
favor of Sprint (as defined below).
As used herein, the following terms will have the meanings set forth
below:
"Guarantor" means Clearwire Corporation, a Delaware corporation, and its
successors and assigns.
"Market Operation Agreement" means that certain Market Operation, Spectrum
Lease and Sublicense Agreement dated as of October_____, 2004 among Operator and
Sprint.
"Operator" means Fixed Wireless Holdings, LLC, a Delaware limited
liability company, and its successors and assigns.
"Sprint" means collectively the parties to the Market Operation Agreement
which are collectively referred to therein as Sprint, and each of their
successors and assigns.
Guarantor acknowledges that its execution and delivery of this Guaranty is
a condition to Sprint's agreement to the terms of the Market Operation
Agreement. Furthermore, Guarantor acknowledges that Operator is a wholly owned
subsidiary of Guarantor and that Guarantor will derive substantial benefit from
the Market Operation Agreement.
For value received, Guarantor does hereby unconditionally and irrevocably
guarantee, as primary obligor and not merely as surety, to Sprint, the accuracy
of each representation and warranty made by and the due and punctual
performance, observance and discharge of each term, provision, duty, covenant
and agreement of Operator contained in, and the due and punctual payment (when
and as the same may become due and payable) of each amount which the Operator is
or may become obligated to pay under or pursuant to, the Market Operation
Agreement and all other agreements executed in connection therewith
(collectively referred to herein as the "Guaranteed Obligations").
The Guarantor hereby waives promptness, diligence and notice as to the
obligations and covenants contained herein and acceptance of this Guaranty, and
waives any other circumstance which might otherwise constitute a legal or
equitable discharge, release or defense of a guarantor or surety, or that might
otherwise limit the obligations of the Guarantor hereunder, including without
limitation the failure of any security or the failure of any Person to perfect
any security interest. The Guarantor hereby agrees that it will not be entitled
to consent to, or receive any notice of, any amendment or modification of, or
waiver, release, consent or extension with respect to, or assignment of any
agreement giving rise to a Guaranteed Obligation that may be made or given as
provided therein. Except as expressly provided below, the Guarantor will have no
right to terminate this Guaranty or to be released or discharged from its
obligations hereunder for any reason whatsoever, including, without limitation,
any such
SPRINT PROPRIETARY INFORMATION
EXHIBIT F - Guaranty and Covenant Agreement
F-1
amendment, or modification of, or waiver, release, consent or extension, any
merger, consolidation, sale of assets or change in the ownership of any shares
of capital stock of the Operator or the assignment by the Operator of its rights
in any agreement giving rise to a Guaranteed Obligation or any insolvency,
bankruptcy, liquidation, reorganization or cessation of existence of the
Operator, unless and until all Guaranteed Obligations have been performed or
discharged in full. The Guarantor agrees to pay any reasonable costs and
expenses including but not limited to litigation expenses and reasonable
attorneys' fees in connection with the enforcement of this Guaranty.
The Guarantor agrees that this Guaranty will automatically be reinstated
if and to the extent that for any reason any payment by or on behalf of the
Operator is rescinded or must be otherwise restored, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise.
This Guaranty can be terminated (a) only with respect to obligations not
yet incurred; and (b) only by actual receipt by Sprint of written notice of
Guarantor's intent to terminate; plus (c) a reasonable lapse of time for Sprint
to act on such notice. This Guaranty cannot be terminated with respect to any
Obligations committed to or contracted for or outstanding at the time such
notice is received. For purposes of clarity, Guarantor acknowledges and agrees
that the contractual obligations under the Market Operation Agreement as it
exists on the date of this Guaranty are obligations which have been incurred.
Reference is made to Section 9.03 of that certain Amended and Restated
Stockholders Agreement dated March 16, 2004 ("Stockholders Agreement") among
Guarantor and the stockholders of Guarantor, pursuant to which Flux Fixed
Wireless, LLC and the McCaw Entities (as defined in section 9.03 of the
Stockholders Agreement) have agreed that Guarantor and its subsidiaries shall be
the McCaw Entities sole entities through which Craig O. McCaw acquires any right
to own or lease Multipoint Distribution Service ("MDS"), Multichannel Multipoint
Distribution Service ("MMDS") or Instructional Television Fixed Service ("ITFS")
spectrum in the United States for the purpose of providing wireless
point-to-multipoint fixed communications services (the "Non-Competition
Provisions"). Guarantor agrees that it will enforce the Non-Competition
Provisions as set forth in the Stockholders Agreement with respect to the Region
1 (as defined in the Market Operation Agreement). Guarantor further agrees that
it will not amend the provisions of the Non-Competition Provisions in any manner
which would permit the McCaw Entities greater rights to acquire ITFS, MMDS or
MDS spectrum than the McCaw Entities are currently permitted pursuant to the
Non-Competition Provisions without the prior written consent of Sprint, which
consent will not be unreasonably conditioned, delayed or withheld. During such
time as the Non-Competition Provisions may be enforced under the Stockholders
Agreement, and to the extent that Guarantor has actual knowledge of any such
lease or purchase, Guarantor will provide Sprint with prompt notice if any of
the McCaw Entities, other than Guarantor or its Subsidiaries, acquire or lease
any ITFS, MMDS or MDS spectrum within Region 1. Guarantor agrees that it will
comply with the terms and conditions set forth in Sections 5.5, 13.3 and 17.1 of
the Market Operation Agreement as an Operator Affiliate (as defined in the
Market Operation Agreement). Guarantor acknowledges and agrees that Sprint's
remedy at law for a breach or threatened breach of any of the provisions of this
paragraph would be inadequate and, in recognition of that fact, in the event of
a breach or threatened breach by Guarantor of the provisions of this paragraph,
it is agrees that, in addition to
SPRINT PROPRIETARY INFORMATION
EXHIBIT F - Guaranty and Covenant Agreement
F-2
its remedy at law, Sprint shall be entitled to equitable relief in the form of
specific performance, temporary restraining order, temporary or permanent
injunction or any other equitable remedy which may then be available. Nothing
herein contained shall be construed as prohibiting Sprint from pursuing any
other remedies available to it for such breach or threatened breach.
The Guarantor represents and warrants to Sprint that:
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power and
authority to enter into and perform its obligations under this Guaranty;
(b) This Guaranty has been duly authorized by all necessary corporate
action on its part, and has been duly executed and delivered by it, and neither
the execution or delivery hereof, nor the consummation of the transactions
contemplated hereby, nor compliance by it with any of the terms and provisions
hereof (i) requires any approval of its stockholders or approval or consent of
any trustee or holder of any of its indebtedness or obligations, (ii)
contravenes any existing law, judgment, governmental rule, regulation or order
applicable to or binding on it, or (iii) contravenes or results in any breach of
or constitutes any default under any indenture, mortgage, chattel mortgage, deed
of trust, conditional sales contract, bank loan or credit agreement, corporate
charter, bylaw or other agreement or instrument to which it is a party or by
which it or any of its properties may be bound or affected;
(c) Neither the execution and delivery by it of this Guaranty nor the
consummation of any of the transactions on its part contemplated hereby,
requires the consent, approval or authorization of, the filing or notice to, or
the registration with, the recording or filing of any document with, or the
taking of any other action in respect of, any governmental body, except for such
of the foregoing as have been obtained, given or done; and
(d) This Guaranty constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms.
This Guaranty is a guaranty of payment, performance and compliance and not
of collection and the Guarantor waives any right to require that any action be
brought against the Operator or to require that resort be made to any security.
This Guaranty will be binding upon the successors and assigns of the Guarantor
and will be governed, construed, applied and enforced in accordance with the
laws of the State of Kansas (disregarding any conflict of laws rule which might
result in the application of the laws of any other jurisdiction), including all
matters of construction, validity and performance.
All notices and other communications given or made pursuant to this
Guaranty will be in writing after being sent for next-day delivery by United
States Postal Service Express Mail, return receipt requested, or by Federal
Express, signature required, to the other person at the following address:
SPRINT PROPRIETARY INFORMATION
EXHIBIT F - Guaranty and Covenant Agreement
F-3
If to Guarantor:
Clearwire Corporation
10210 NE Points Road, Suite 210
Kirkland, WA 98033
Attention: Benjamin G. Wolff
Facsimile No. (425)828-8061
With a copy to:
Davis Wright Tremaine, LLP
2600 Century Square
1501 Fourth Avenue
Seattle, WA 98101
Attention: Julie Weston
Facsimile No. (206)628-7699
If to Sprint:
[***]
With a copy to:
[***]
Either party may change the address at which notices are to be given to it by
giving notice of such change to the other Party in the manner hereinabove
provided for the giving of notices.
[SIGNATURE PAGE FOLLOWS]
SPRINT PROPRIETARY INFORMATION
EXHIBIT F - Guaranty and Covenant Agreement
F-4
This Guaranty is executed effective as of the date first above written.
GUARANTOR
CLEARWIRE CORPORATION,
a Delaware corporation
By: _______________________________
Benjamin G. Wolff
Executive Vice President,
Corporate Affairs
SPRINT PROPRIETARY INFORMATION
EXHIBIT F - Guaranty and Covenant Agreement
F-5
EXHIBIT G
PUT/CALL TERM SHEET
Upon the determination of the identity of the Put Spectrum or Call
Spectrum, as the case may be, the Parties will negotiate and execute a Purchase
and Sale Agreement (the "Purchase Agreement") incorporating the concepts and
business terms identified in Section 17.2 or 17.3 as applicable, along with
customary provisions in similar agreements, including without limitation the
following terms and conditions:
1. Representations and Warranties. Operator will make representations and
warranties in substantially the form as set forth in Section 9.1 of the
Agreement Sprint will make representations and warranties in substantially the
form set forth in Section 9.2 of the Agreement, provided, however, that Sprint
will not be required to make any representations and warranties with respect to
any matters concerning the Primary Leases, Sprint Authorizations, Leased
Authorizations, Sprint Spectrum or Leased Spectrum, of which Operator is in a
better position to be aware of vis-a-vie Sprint as a result of its
administration of the Agreement (i.e. those events or circumstances occurring
during the Term).
2. Covenants Pending Closing. Through the date of any Put Closing or Call
Closing, as applicable:
(a) Each Party will use its Efforts to take and cause to be taken all
things necessary and proper and consistent with applicable law to
consummate the transaction in a reasonably timely manner;
(b) Each Party will use its Efforts to obtain all necessary consents to
the proposed transaction;
(c) Each Party will provide the other with notice of any fact or
circumstance which is reasonably likely to prevent, delay or
otherwise impair the consummation of the transaction;
(d) Each Party will execute and deliver such further documents and take
such further actions as are reasonably necessary to consummate the
transaction;
(e) Each Party will continue to perform all applicable obligations under
this Agreement.
3. Conditions to Closing.
(a) Conditions to Closing Applicable to Both Parties. Each Party's
obligations to consummate the transaction are subject to the
satisfaction or waiver of the following:
SPRINT PROPRIETARY INFORMATION
EXHIBIT G - Put/Call Term Sheet
G-1
(i) The FCC will have approved any assignment applications or
assignment notices as contemplated pursuant to Section 17.2 or
17.3 as applicable, of this Agreement;
(ii) There shall be no preliminary or permanent injunction or other
order, decree or ruling issued by any governmental authority
nor any law promulgated or enacted by any governmental
authority which shall be in effect that would impose material
limitations on the ability of either party to consummate the
transactions.
(b) Conditions of Closing Applicable to Sprint. Sprint's obligations to
consummate the transactions are subject to the Operator delivering
to Sprint the Purchase Price and all representations and warranties
of Operator given in the Purchase Agreement being true and correct
in all material respects as of the applicable closing date.
(c) Conditions to Closing Applicable to Operator. Operator's obligations
to consummate the transactions are subject to the satisfaction or
waiver on or prior to the applicable closing date of each of the
following:
(i) The representations and warranties of Sprint will be true and
correct in all material respects;
(ii) Any covenants and/or agreements of Sprint to be performed
under the Purchase Agreement at or prior to the applicable
closing will have been duly performed in all material
respects;
(iii) Sprint will have executed and delivered to Operator an
assignment of the Licensed Authorizations; assignment of the
Primary Leases, and a bill of sale for any Sprint Equipment
which Operator elects to purchase in a form reasonably
acceptable to Operator.
4. Post Closing Covenants. Operator will perform all obligations under each
Primary Lease and will indemnify and hold Sprint harmless for any breach of its
obligations to do so.
5. Indemnity. The Purchase Agreement will provide for customary indemnity
obligations of each Party. The representations and warranties of each Party will
survive for a period of one year following the applicable closing date.
Operator's obligations to indemnify Sprint for the breach of any obligation
under a Primary Lease will survive indefinitely. No party will be allowed or
entitled to an award of consequential damages.
SPRINT PROPRIETARY INFORMATION
EXHIBIT G - Put/Call Term Sheet
G-2
SCHEDULE R-1
SPRINT SUBSIDIARIES
[***]
[*** Confidential Treatment Requested]
SCHEDULE R-2
MARKETS, PRIMARY LEASES,
LICENSES AND LEASED AUTHORIZATIONS
[***]
[*** Confidential Treatment Requested]
SCHEDULE R-3
SPRINT AUTHORIZATIONS
[***]
[*** Confidential Treatment Requested]
SCHEDULE R-4
MARKETS
[***]
[*** Confidential Treatment Requested]
SCHEDULE 3.2 PRIMARY LEASE CONSENTS
[***]
[*** Confidential Treatment Requested]
SCHEDULE 3.2(B)
DISPUTED PRIMARY LEASES
<TABLE>
<S> <C> <C>
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
</TABLE>
[*** Confidential Treatment Requested]
SCHEDULE 4.1
SPRINT PRIMARY LEASE DUTIES
I. [***]
Pursuant to that certain Amended and Restated ITFS Lease Agreement dated as of
October 24, 2001 (as amended, the [***] Lease Agreement"), by and among the
[***] and American Telecasting, Inc., a Sprint Subsidiary, American Telecasting,
Inc. leases certain ITFS spectrum rights in the [***] Market Area and the [***]
Market Area (both as defined in the [***] Lease Agreement) from the [***]
Licensees. Unless otherwise noted, the meaning of all capitalized terms used in
this Section I of this Schedule 4.1 but not defined in this Agreement shall be
as defined in the [***] Lease Agreement.
Operator intends to sublease and operate the ITFS spectrum leased from the [***]
Licensees in the [***] Market Area only. Therefore, through this Agreement,
Operator assumes all of Sprint's obligations under the [***] Lease Agreement,
except to the extent such obligations relate to the [***] Market Area.
Accordingly, Sprint shall be responsible for the obligations under the [***]
Lease Agreement as it relates to the [***] Market Area, including the following
items pursuant to the [***] Lease Agreement: (i) payment of the Monthly Fee (as
defined in the [***] Lease Agreement) but only to the extent attributable to a
[***] Channel Group; (ii) maintenance of the Provided Transmission Equipment and
other equipment used in the [***] Market Area; (iii) installation of Internet
Access Sites in the [***] Market Area; (iv) installation and maintenance of
Additional ITFS Receive Sites in the [***] Market Area; (v) transmission of NTSC
formatted television signals over the Retained Capacity in the [***] Market
Area; and (vi) reimbursement of the [***] Licensee's reimbursable expenses
relating to the [***] Market Area.
In interpreting this Agreement with respect to the sublease and market operation
of the [***] Market Area, the [***] Lease Agreement will be interpreted broadly
such that any provision that could relate to the [***] Market Area alone
(including, but not limited to, provisions regarding FCC licenses,
modifications, equipment, facilities, and maintenance) shall apply to the
Operator.
With respect to the STL Facilities constructed and maintained for the [***]
Licensees by American Telecasting, Inc. to operate a point-to-point microwave
link system described in Section 4.3 of the [***] Lease Agreement, Operator and
Sprint will negotiate in good faith to enter into an agreement pursuant to which
Sprint and Operator will jointly undertake the obligation to maintain the STL
Facilities as required under Section 4.3 of the [***] Lease Agreement. Until
such agreement is executed by the parties Sprint will continue to maintain the
STL Facilities as required under Section 4.3 of the [***] Lease Agreement. It is
the intent of the Parties to execute such an agreement on or prior to the date
on which the [***] Market becomes a Closed Market.
[*** Confidential Treatment Requested]
SCHEDULE 4.3(B)
SPRINT LEASES--NON FLEX USE
LICENSES AND LEASED AUTHORIZATIONS
<TABLE>
<S> <C> <C>
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
</TABLE>
[*** Confidential Treatment Requested]
SCHEDULE 5.1(B)
SPECTRUM MANAGEMENT FEES
Operator will pay Sprint for the spectrum management services referenced in
Section 5.1(b) at the rate of [***] per each hour of time that any Sprint
employee spends in delivering such spectrum management services. All time will
be billed in quarter hour increments.
[*** Confidential Treatment Requested]
SCHEDULE 5.2(B)
SPRINT MANAGEMENT FEES FOR LEASED SPECTRUM
Operator will pay Sprint for the spectrum management services referenced in
Section 5.2(b) at the rate of [***] per each hour of time that any Sprint
employee spends in delivering such spectrum management services for leased
spectrum. All time will be billed in quarter hour increments.
[*** Confidential Treatment Requested]
SCHEDULE 5.5
EXISTING OPERATOR CONTROLLED SPECTRUM
The following are markets/channels which Operator is licensed to operate:
<TABLE>
<CAPTION>
Article I MARKET Article II CALL SIGN & CHANNELS
---------------- -------------------------------
<S> <C>
[***] [***]
</TABLE>
[*** Confidential Treatment Requested]
SCHEDULE 6.3
MARKET CLOSING PAYMENTS
Upon the Closing of each of the Markets set forth below, Operator will make
to Sprint the corresponding Market Closing Payment:
<TABLE>
<S> <C>
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
</TABLE>
[*** Confidential Treatment Requested]
<TABLE>
<S> <C>
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
</TABLE>
[*** Confidential Treatment Requested]
SCHEDULE 6.4
MONTHLY FEE BY MARKET
Upon the Closing of each of the Markets set forth below, the Monthly Fee
allocable to such Market will be the corresponding amounts set forth below:
<TABLE>
<S> <C> <C> <C> <C>
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
</TABLE>
[*** Confidential Treatment Requested]
<TABLE>
<S> <C> <C> <C> <C>
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
</TABLE>
[*** Confidential Treatment Requested]
SCHEDULE 6.9
SPECTRUM OPPORTUNITIES
[***]
[*** Confidential Treatment Requested]
SCHEDULE 7.1(A)
SPRINT TRANSMISSION EQUIPMENT
(SEE INDIVIDUAL MARKET SHEETS)
[***] Equipment Inventory
<TABLE>
<CAPTION>
Type Sub-Type Manufacturer Model or Spec Serial # Quan. Facility Channel
---- ------------------ ------------------- --------------- ---------------- ----- ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
[***]tenna
(transmit) directional - omni Andrew HMD12VX N/A 1 Transmit Site active
Coax 120' Andrew HJ7-50A N/A Transmit Site
Coax 130" Andrew HJ7-50A N/A Transmit Site
Combiner A-group combiner Microwave Filter Co 119545-A 9604018 1 Transmit Site
Combiner B-group combiner Microwave Filter Co 119545-B 9512029 1 Transmit Site
Combiner C-group combiner Microwave Filter Co 119545-C 9512030 1 Transmit Site
Combiner D-group combiner Microwave Filter Co 119545-D 9512031 1 Transmit Site
Combiner F-group combiner Microwave Filter Co 119545-F 9512032 1 Transmit Site
Combiner G-group combiner Microwave Filter Co 119545-G 9512033 1 Transmit Site
Combiner H-group combiner Microwave Filter Co 119545-H 9602005 1 Transmit Site
Combiner mds2 Microwave Filter Co 11951-mds 9605011 1 Transmit Site [***]
transmitter 20 watt EMCEE TTSOHS 144 1 [***]
transmitter 20 watt EMCEE TTS20HSX 145 1 [***]
transmitter 20 watt EMCEE TTOHS 146 1 [***]
transmitter 20 watt EMCEE TTOHS 147 1 [***]
transmitter 20 watt EMCEE TTS20HS 743 1 [***]
transmitter 20 watt EMCEE TTS20HS 744 1 [***]
transmitter 20 watt EMCEE TTS20HS 745 1 [***]
transmitter 20 watt EMCEE TTS20HS 746 1 [***]
transmitter 20 watt EMCEE TTS20HSX 126 1 [***]
transmitter 20 watt EMCEE TTS20HSX 127 1 [***]
transmitter 20 watt EMCEE TTS20HSX 128 1 [***]
transmitter 20 watt EMCEE TTS20HSX 129 1 [***]
transmitter 20 watt EMCEE TTS20HS 552 1 [***]
transmitter 20 watt EMCEE TTS20HS 475 1 [***]
transmitter EMCEE DIGACOM 200FB 1 [***]
transmitter 20 watt EMCEE TTH20HS 553 1 [***]
transmitter 20 watt EMCEE TTH20HSX 134 1 [***]
transmitter 20 watt EMCEE TTS20HSX 135 1 [***]
transmitter 20 watt EMCEE TTS20HSX 136 1 [***]
transmitter 20 watt EMCEE TTS20HSX 137 1 [***]
transmitter 20 watt EMCEE TTS20HSX 130 1 [***]
transmitter 20 watt EMCEE TTS20HSX 131 1 [***]
transmitter 20 watt EMCEE TTS20HSX 132 1 [***]
transmitter 20 watt EMCEE TTS20HSX 126 1 [***]
transmitter EMCEE DIGACOM 113 1 [***]
power amp EMCEE 501 1 [***]
up converter EMCEE 501 1 [***]
transmitter 20 watt EMCEE TTS20EB 149EB 1 [***]
transmitter 20 watt EMCEE TTS20HSX 141 1
transmitter 20 watt EMCEE TTS20HSX 142 1
transmitter 20 watt EMCEE TTS20HSX 143 1
transmitter 20 watt EMCEE TTS20HSX 1
Modulator EMCEE EMI 5160216 1 Transmit Site
Modulator EMCEE EMI 7660341 1 Transmit Site
Modulator EMCEE EMI 5160236 1 Transmit Site
Modulator EMCEE EMI 5160246 1 Transmit Site
Modulator EMCEE EMI 5160239 1 Transmit Site
Modulator EMCEE EMI 7660342 1 Transmit Site
Modulator EMCEE EMI 6760294 1 Transmit Site
Modulator EMCEE EMI 6760293 1 Transmit Site
Modulator EMCEE EMI 7660321 1 Transmit Site
Modulator EMCEE EMI 5160242 1 Transmit Site
Modulator EMCEE EMI 5160241 1 Transmit Site
Modulator EMCEE EMI 6760260 1 Transmit Site
Modulator EMCEE EMI 3460143 1 Transmit Site
Modulator EMCEE EMI 8950280 1 Transmit Site
Modulator EMCEE EMI 5160226 1 Transmit Site
Modulator EMCEE EMI 5160225 1 Transmit Site
Modulator EMCEE EMI 7660319 i Transmit Site
Modulator EMCEE EMI 5160215 1 Transmit Site
Modulator EMCEE EMI 5160228 1 Transmit Site
Modulator EMCEE EMI 5160227 1 Transmit Site
Modulator EMCEE EMI 6760270 1 Transmit Site
Modulator EMCEE EMI 3460144 1 Transmit Site
Modulator EMCEE EMI 6760269 1 Transmit Site
Modulator EMCEE EMI 6760259 1 Transmit Site
Modulator EMCEE EMI 5160235 1 Transmit Site
Modulator EMCEE EMI 5160245 1 Transmit Site
</TABLE>
[*** Confidential Treatment Requested]
[***] Equipment Inventory
<TABLE>
<CAPTION>
Type Sub-Type Manufacturer Model or Spec Serial # Quan. Facility Channel
---- ------------------ ------------------- --------------- ---------------- ----- ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Demodulator Cadco 375 C2475 1 Transmit Site
Demodulator Cadco 375 C2473 1 Transmit Site
Demodulator Cadco 375 C2471 1 Transmit Site
Demodulator Cadco 375 D3076 1 Transmit Site [***]
receiver EMCEE RSVA2 141 1 [***]
receiver EMCEE RSVA2 135 1 [***]
receiver EMCEE RSVA2 1 [***]
receiver EMCEE RSVA2 1 [***]
receiver EMCEE RSVA2 144 1 [***]
receiver EMCEE RSVA2 134 1 [***]
receiver EMCEE RSVA2 136 1 [***]
receiver EMCEE RSVA2 204R 1 [***]
receiver EMCEE RSVA2 1654 1 [***]
receiver EMCEE RSVA2 130 1 [***]
receiver EMCEE RSVA2 132 1 [***]
receiver EMCEE RSVA2 127 1 [***]
receiver EMCEE RSVA2 164R 1 [***]
receiver EMCEE RSVA2 1594 1 [***]
receiver EMCEE RSVA2 133 1 [***]
receiver EMCEE RSVA2 161R 1 [***]
receiver EMCEE RSVA2 143 1 [***]
receiver EMCEE RSVA2 166R 1 [***]
receiver EMCEE RSVA2 160R 1 [***]
receiver EMCEE RSVA2 1629 1 [***]
receiver EMCEE RSVA2 137 1 [***]
receiver EMCEE RSVA2 131 1 [***]
receiver EMCEE RSVA2 128 1 [***]
receiver EMCEE RSVA2 126 1 [***]
Combiner RF CUSTOM
Communications 18 flGHz) N/A 2 Transmit Site [***]
Demodulator G.I. 5890D 1 Transmit Site [***]
Demodulator AGILE CATEL D-950 1 Transmit Site [***]
Modulator S.A. 6340 1 Transmit Site [***]
Demodulator AGILE CATEL D-950 1 Transmit Site [***]
Demodulator G.I. 1 Transmit Site [***]
Modulator S.A. 6340 1 Transmit Site
Demodulator G.I. 1 Transmit Site
Modulator S.A. 6340 1 Transmit Site
Modulator S.A. 6340 1 Transmit Site
Demodulator AGILE CATEL D-950 1 Transmit Site
Modulator S.A. 6340 1 Transmit Site
Demodulator G.I. 1 Transmit Site
Modulator S.A. 6340 1 Transmit Site
Demodulator G.I. 1 Transmit Site
Modulator S.A. 6340 1 Transmit Site
Modulator EMCEE EMI 7660344 1 Transmit Site
Dehydrator Andrew MT-3100 1 Transmit Site
Rack 72" N/A. N/A N/A 7 Transmit Site
Alarm System Phonetics 1104 1 Transmit Site
Generator 60 KW Olympian CG070 2025111 1 Transmit Site
A/C Bard WA602-AOZEPXXXS 153A960975342-02 2 Transmit Site
</TABLE>
[*** Confidential Treatment Requested]
[***] Equipment Inventory
<TABLE>
<CAPTION>
Type Sub-Type Manufacturer Model or Spec Serial # Quan. Facility Channel
---- -------- ------------- ------------- ------------------------- ----- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Transmit Omni Andrews HMD12HO N/A 1 N/A Headend All
Hardline 470' ANDREW 1 5/8" N/A 1 N/A Headend N/A
Combiner A Axcera(ITS-AD ITS-68SE N/A 1 N/A Headend [***]
Combiner B Axcera(ITS-AD ITS-685E N/A 1 N/A Headend [***]
Combiner F Axcera(ITS-AD ITS-685E N/A 1 N/A Headend [***]
Combiner G Axcera(ITS-AD ITS-685E N/A 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 210831903 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 210831902 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 210831901 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 210831900 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 210831899 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 215900914 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 210831897 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 210831896 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 210831888 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 210831889 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 210831890 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 210831891 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 210831892 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 210831893 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 210831894 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 210831895 1 N/A Headend [***]
Transmitter 50watts Comwave SB4x10 S3015 1 N/A Headend [***]
Transmitter 50watts Comwave SB4x10 S3015 1 N/A Headend [***]
Transmitter 50watts Comwave SB4x10 S3015 1 N/A Headend [***]
Transmitter 50watts Comwave SB4x10 S3015 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 210831886 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 215900913 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 210837387 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 210837386 1 N/A Headend [***]
Receiver Dish 1000 R0023531529/S000483470203 1 N/A Headend [***]
Racks 72" unknow 21" wide N/A 4 N/A Headend [***]
A/C 10 Wall Site Owned Unknown 3 N/A Headend [***]
</TABLE>
[*** Confidential Treatment Requested]
[***] Equipment Inventory
<TABLE>
<CAPTION>
Type Sub-Type Manufacturer Model or Spec Serial # Quan. Facility Channel
---- ------------ -------------------- -------------- -------- ----- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Antenna (Tra Directional - Andrew HMD 24HC N/A 1 N/A Headend
Antenna (Tra Directional - Andrew HMD 24HC N/A 1 N/A Headend
Antenna (Tra Directional - Bogner N/A 1 N/A Headend
Waveguide 90' Andrew HJ7-50A N/A 1 N/A Headend
Waveguide 85' Andrew HJ7-50A N/A 1 N/A Headend
Waveguide 60' Andrew HJ7-50A N/A 1 N/A Headend
Heliax 10' 7/8" Foam N/A 1 N/A Headend
Heliax 12' 7/8" Foam N/A 1 N/A Headend
Heliax 12' 1/2" Superflex N/A 1 N/A Headend [***]
Combiner Axcer(ITS) 1694 8102056 1 N/A Headend [***]
Combiner Microwave Filter Co. 9004S 9162012 1 N/A Headend [***]
Combiner Microwave Filter Co. 9004S N/A 1 N/A Headend [***]
Combiner Axcer(lTS) 1694 8103056 1 N/A Headend [***]
Combiner Microwave Filter Co. 9004S 9409021 1 N/A Headend [***]
Combiner Microwave Filter Co. 9004S N/A 1 N/A Headend [***]
Combiner Microwave Filter Co. 9004S N/A 1 N/A Headend [***]
Combiner Axcer(ITS) 1693D 3761101 1 N/A Headend [***]
Diplexer Axcera(ITS-ADC) 658E 8097056 1 N/A Headend [***]
Diplexer Axcera(ITS-ADC) 658E 8098056 1 N/A Headend [***]
Diplexer Axcera(ITS-ADC) 658E 8099056 1 N/A Headend [***]
Diplexer Axcera(ITS-ADC) 658E 8100056 1 N/A Headend [***]
Diplexer Axcera(ITS-ADC) 658E M0048033 1 N/A Headend [***]
Diplexer Axcera(ITS-ADC) 658E 8101056 1 N/A Headend [***]
Diplexer Axcera(ITS-ADC) 658E 8104956 1 N/A Headend [***]
Diplexer Axcera(ITS-ADC) 658E 81050056 1 N/A Headend [***]
Diplexer Axcera(ITS-ADC) 658E 3795101 1 N/A Headend [***]
Diplexer Axcera(ITS-ADC) 658E M0518093 1 N/A Headend [***]
Diplexer Axcera(ITS-ADC) 658E M0519093 1 N/A Headend [***]
Transmitter 50 Watt Exc Comwave SB050B S4763 1 N/A Headend [***]
Transmitter 50 Watt Exc ITS (AXCERA) 1750C 8092056 1 N/A Headend [***]
Transmitter 50 Watt Exc ITS (AXCERA) 1750C 8093056 1 N/A Headend [***]
Transmitter 50 Watt Exc ITS (AXCERA) 1750C 8094056 1 N/A Headend [***]
Transmitter 50 Watt Exc ITS (AXCERA) 1750C 8095056 1 N/A Headend [***]
Transmitter 50 Watt Exc Comwave SB050B 11714 1 N/A Headend [***]
Transmitter 50 Watt Exc Comwave SB050B 11715 1 N/A Headend [***]
Transmitter 50 Watt Exc Comwave SB050B 11716 1 N/A Headend [***]
Transmitter 50 Watt Exc Comwave SB050B 11717 1 N/A Headend [***]
Transmitter 50 Watt Exc Comwave SB050B S4739 1 N/A Headend [***]
Transmitter 50 Watt Exc Comwave SB050B S4740 1 N/A Headend [***]
Transmitter 50 Watt Exc Comwave SB050B S4741 1 N/A Headend [***]
Transmitter 50 Watt Exc Comwave SB050B S4742 1 N/A Headend [***]
Transmitter 50 Watt Exc ITS (AXCERA) 1615E M0037033 1 N/A Headend [***]
Transmitter 50 Watt Exc ITS (AXCERA) 1750C 8096056 1 N/A Headend [***]
Transmitter 50 Watt Exc ITS (AXCERA) 1615E M0038033 1 N/A Headend [***]
Transmitter 50 Watt Exc ITS (AXCERA) 1615E M0039033 1 N/A Headend [***]
Transmitter 50 Watt Exc Comwave SB050B 10172 1 N/A Headend [***]
Transmitter 50 Watt Exc Comwave SB050B 10173 1 N/A Headend [***]
Transmitter 50 Watt Exc Comwave SB050B 10174 1 N/A Headend [***]
Transmitter 50 Watt Exc Comwave SB050B 10178 1 N/A Headend [***]
Transmitter 50 Watt Exc Comwave SB050B 10175 1 N/A Headend [***]
Transmitter 50 Watt Exc Comwave SB050B 10176 1 N/A Headend [***]
Transmitter 50 Watt Exc Comwave SB050B 10177 1 N/A Headend [***]
Transmitter 50 Watt Exc Comwave SB050B 10179 1 N/A Headend [***]
Transmitter 50 Watt Exc Comwave SB050B S4743 1 N/A Headend [***]
Transmitter 50 Watt Exc Comwave SB050B S4744 1 N/A Headend [***]
Transmitter 50 Watt Exc Comwave SB050B S4745 1 N/A Headend [***]
Transmitter 50 Watt Exc Comwave SB050B S4746 1 N/A Headend [***]
Transmitter 50 Watt Exc Emcee TTS10EB 502EBA 1 N/A Headend [***]
Transmitter 50 Watt Exc ITS (AXCERA) 1610E M0516093 1 N/A Headend [***]
Transmitter 50 Watt Exc ITS (AXCERA) 1610E M0517093 1 N/A Headend [***]
Transmitter 50 Watt Up Emcee TTS50EB 502EBA 1 N/A Headend [***]
Transmitter 50 Watt Up ITS (AXCERA) 1658E 9155096 1 N/A Headend [***]
Transmitter 50 Watt Up ITS (AXCERA) 1658E 9156096 1 N/A Headend [***]
</TABLE>
[*** Confidential Treatment Requested]
[***] Equipment Inventory
<TABLE>
<CAPTION>
Type Sub-Type Manufacturer Model or Spec Serial # Quan. Facility Channel
---- ---------- ------------ ------------- -------- ----- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Refemce Tray Comwave S4764 1 N/A
IF Modulator A/V Output Comwave TVM 102 11715 1 N/A Headend [***]
IF Modulator A/V Output Comwave TVM 102 11714 1 N/A Headend [***]
IF Modulator A/V Output Comwave TVM 102 11717 1 N/A Headend [***]
IF Modulator A/V Output Comwave TVM 102 11716 1 N/A Headend [***]
IF Modulator A/V Output Comwave TVM 102 2078 1 N/A Headend [***]
IF Modulator A/V Output Comwave TVM 102 S4739 1 N/A Headend [***]
IF Modulator A/V Output Comwave TVM 102 S4740 1 N/A Headend [***]
IF Modulator A/V Output Comwave TVM 102 S4741 1 N/A Headend [***]
IF Modulator A/V Output Comwave TVM 102 S4742 1 N/A Headend [***]
IF Modulator A/V Output Comwave TVM 102 10172 1 N/A Headend [***]
IF Modulator A/V Output Comwave TVM 102 10173 1 N/A Headend [***]
IF Modulator A/V Output Comwave TVM 102 10174 1 N/A Headend [***]
IF Modulator A/V Output Comwave TVM 102 10178 1 N/A Headend [***]
IF Modulator A/V Output Comwave TVM 102 10175 1 N/A Headend [***]
IF Modulator A/V Output Comwave TVM 102 10176 1 N/A Headend [***]
IF Modulator A/V Output Comwave TVM 102 10177 1 N/A Headend [***]
IF Modulator A/V Output Comwave TVM 102 10179 1 N/A Headend [***]
IF Modulator A/V Output Comwave TVM 102 10146 1 N/A Headend [***]
IF Modulator A/V Output Comwave TVM 102 10144 1 N/A Headend [***]
IF Modulator A/V Output Comwave TVM 102 10145 1 N/A Headend [***]
IF Modulator A/V Output Comwave TVM 102 10143 1 N/A Headend [***]
IF Modulator A/V Output EMCEE EM1 1 N/A Headend [***]
Demodulator CATV BT AD1 60845 1 N/A Headend [***]
Demodulator CATV BT AD1 18940 1 N/A Headend [***]
Demodulator CATV BT AD1 8300 1 N/A Headend [***]
Demodulator CATV Holland HMD 1 N/A Headend [***]
Demodulator CATV Holland HMD 1 N/A Headend [***]
Demodulator CATV BT AD1 39737 1 N/A Headend [***]
Demodulator CATV BT AD1 8294 1 N/A Headend [***]
Demodulator CATV Holland HMD 1 N/A Headend [***]
Demodulator CATV Holland HMD 1 N/A Headend [***]
Demodulator CATV BT AD1 31755 1 N/A Headend [***]
Demodulator CATV BT AD1 3660 1 N/A Headend [***]
Demodulator CATV BT AD1 12650 1 N/A Headend [***]
Demodulator CATV BT AD1 3780 1 N/A Headend [***]
Demodulator CATV BT AD1 60825 1 N/A Headend [***]
Demodulator CATV BT AD1 1 N/A Headend [***]
Demodulator CATV BT AD1 60816 1 N/A Headend [***]
Demodulator CATV BT AD1 22935 1 N/A Headend [***]
Demodulator CATV BT AD1 3746 1 N/A Headend [***]
Demodulator CATV BT AD1 8469 1 N/A Headend [***]
Demodulator CATV BT AD1 8201 1 N/A Headend [***]
Demodulator CATV Gl S890D 4034103 1 N/A Headend [***]
Demodulator CATV BT AD1 39762 1 N/A Headend [***]
Demodulator CATV BT AD1 5143 1 N/A Headend [***]
Demodulator CATV BT AD1 10938 1 N/A Headend [***]
Demodulator CATV BT AD1 3839 1 N/A Headend [***]
Demodulator CATV BT AD1 31687 1 N/A Headend [***]
Demodulator CATV BT AD1 22932 1 N/A Headend [***]
Demodulator CATV BT AD1 22933 1 N/A Headend [***]
Demodulator CATV BT AD1 39804 1 N/A Headend [***]
Demodulator CATV BT AD1 32926 1 N/A Headend [***]
Demodulator CATV BT AD1 8298 1 N/A Headend [***]
Dehydrator Andrew MT 300 9303MT32 1 N/A Headend [***]
Rack 72" ITS N/A N/A 8 N/A Headend [***]
Rack 96" N/A N/A N/A 2 N/A Headend [***]
Modulator CATV Standard TVM 450 56U540159 1 N/A Headend [***]
Modulator CATV Standard TVM 450 43U430083 1 N/A Headend [***]
Antenna (ST 6' N/A 1 N/A Headend [***]
</TABLE>
[*** Confidential Treatment Requested]
[***] Equipment Inventory
<TABLE>
<CAPTION>
Type Sub-Type Manufacturer Model or Spec Serial # Quan. Facility Channel
---- ------------------- -------------------- ------------- -------------- ----- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Antenna (Transmit) Andrew HMD16VC-W N/A 2 Headend [***]
Antenna (Transmit) MDS2A-Data Andrew HMD16VC-WNQ N/A 1 Headend [***]
Antenna (Transmit) MDS1 Andrew HMD16VC-WNQ N/A 1 Headend [***]
Waveguide 40' ANDREW EW-20 N/A 1 Headend [***]
Waveguide 40' ANDREW EW-20 N/A 1 Headend [***]
Transition Jumpers 10' ANDREW 7/8" N/A 4 Headend [***]
Connectors EW20 to EIA 7/8" Andrew E20NB-014 N/A 4 Headend [***]
Combiner A-Group Combiner ITS 1694-D M0250063 Headend [***]
Combiner B-Group Combiner ITS 1694-D 6039075 Headend [***]
Combiner C-Group Combiner ITS 1694-D M0362073 Headend [***]
Combiner D-Group Combiner ITS 1694-D 6040075 Headend [***]
Combiner E-Group Combiner ITS 1694-D 3622071 Headend [***]
Combiner F-Group Combiner ITS 1694-D 3632071 Headend [***]
Combiner G-Group Combiner ITS 1694-D M0365073 Headend [***]
Combiner H-Group Combiner ITS 1694-D 3597071 Headend [***]
Diplexer MDS1 Diplexer ITS 6830036 Headend [***]
Diplexer A-1 Diplexer rrs M02476063 Headend [***]
Diplexer A-2 Diplexer ITS M0247063 Headend [***]
Diplexer A-3 Diplexer ITS M0248063 Headend [***]
Diplexer A-4 Diplexer ITS M0249063 Headend [***]
Diplexer B-1 Diplexer ITS 6041075 Headend [***]
Diplexer B-2 Diplexer ITS 6042075 Headend [***]
Diplexer C-1 Diplexer ITS M0363073 Headend [***]
Diplexer C-2 Diplexer ITS M0370073 Headend [***]
Diplexer C-3 Diplexer ITS M0321073 Headend [***]
Diplexer C-4 Diplexer ITS M0372073 1 Headend [***]
Diplexer D-1 Diplexer ITS 6045075 1 Headend [***]
Diplexer D-2 Diplexer ITS 6046075 1 Headend [***]
Diplexer D-3 Diplexer ITS 6047075 1 Headend [***]
Diplexer D-4 Diplexer ITS 6048075 1 Headend [***]
Diplexer E-1 Diplexer ITS 3830091 1 Headend [***]
Diplexer E-2 Diplexer ITS 3831091 1 Headend [***]
Diplexer E-3 Diplexer rrs 3832091 1 Headend [***]
Diplexer E-4 Diplexer ITS 3833091 1 Headend [***]
Diplexer F-1 Diplexer rrs 3630071 1 Headend [***]
Diplexer F-2 Diplexer ITS 3631071 1 Headend [***]
Diplexer F-3 Diplexer ITS 3633071 1 Headend [***]
Diplexer F-4 Diplexer ITS 3634071 1 Headend [***]
Diplexer G-1 Diplexer ITS M0364073 1 Headend [***]
Diplexer G-2 Diplexer ITS N0373073 1 Headend [***]
Diplexer G-3 Diplexer ITS M0374073 1 Headend [***]
Diplexer G-4 Diplexer ITS N0375073 1 Headend [***]
Diplexer H-1 Diplexer ITS 3595071 1 Headend [***]
Diplexer H-2 Diplexer ITS 3596071 1 Headend [***]
Diplexer H-3 Diplexer ITS 3655071 1 Headend [***]
Transmitter 20 Watt ITS 1510E 1 Headend [***]
Transmitter 20 Watt rrs 1610E M0243063A2 1 Headend [***]
Transmitter 20 Watt ITS 1610E M0244063A3 1 Headend [***]
Transmitter 20 Watt ITS 1610E M0245063A4 1 Headend [***]
Transmitter 20 Watt ITS 1720A 6035075B1 1 Headend [***]
Transmitter 20 Watt ITS 1720A 6036075B2 1 Headend [***]
Transmitter 20 Watt ITS 1610E M0354073C1 1 Headend [***]
Transmitter 20 Watt ITS 1610E M0355073C2 1 Headend [***]
Transmitter 20 Watt ITS 1610E M0356073C3 1 Headend [***]
Transmitter 20 Watt ITS 1610E M0357073C4 1 Headend [***]
Transmitter 50 Watt Agile ITS 1750C 6049075 1 Headend [***]
Transmitter 20 Watt ITS 1750C B944086D2 1 Headend [***]
Transmitter 20 Watt ITS 1720A 6037075D3 1 Headend [***]
Transmitter 20 Watt ITS 1720A 6038075D4 1 Headend [***]
Transmitter 20 Watt ITS 1610E 3618071 E1 1 Headend [***]
Transmitter 20 Watt ITS 1610E 3619071 E2 1 Headend [***]
Transmitter 20 Watt ITS 1610E 3620071 E3 1 Headend [***]
Transmitter 20 Watt ITS 1610E 3621071 E4 1 Headend [***]
Transmitter 20 Watt ITS 1750A 3628071F1 1 Headend [***]
Transmitter 20 Watt ITS 1610E N2764025F2 1 Headend [***]
Transmitter 20 Watt ITS 1610E 3609071F3 1 Headend [***]
Transmitter 20 Watt ITS 1610E M2765025F4 1 Headend [***]
Transmitter 20 Watt ITS 1610E M0358073G1 1 Headend [***]
Transmitter 20 Watt ITS 1610E M0359073G2 1 Headend [***]
Transmitter 20 Watt ITS 161OE M0360075G3 1 Headend [***]
Transmitter 20 Watt ITS 1610E M0361073G4 1 Headend [***]
Transmitter 20 Watt ITS 1610E 3593071H1 1 Headend [***]
Transmitter 20 Watt ITS 161OE 35994071H2 1 Headend [***]
Transmitter 20 Watt ITS 1610E 3613071H3 1 Headend [***]
Transmitter 10 Watt ITS 1510E M1639064 1 Headend [***]
Exciter 5 Watt ITS 7525 212366984 1 Headend [***]
Amplifler 25 Watt Average ITS 1586-1004 212316976 1 Headend [***]
CMD CMD 2000 Downstrea Hybrid 7520P9-34H F-2955500011 1 Headend [***]
Modulator Baseband to IF HYBRID HEM-2204B N/A 1 Headend [***]
De-Modulator Agile General Instruments 06C0000150166 1 Headend [***]
De-Modulator Agile General Instruments 0810000128166 1 Headend [***]
De-Modulator Ante General Instruments 0810000119166 1 Headend [***]
De-Modulator Agile General Instruments 0810000106166 1 Headend [***]
De-Modulator Agile General Instruments 0810000116166 1 Headend [***]
De-Modulator Agile Genera] Instruments 0810000173166 1 Headend [***]
De-Modulator Agile General Instruments 0810000190166 1 Headend [***]
Da-Modulator Agile General Instruments 0810000110166 1 Headend [***]
De-Modulator Agile General Instruments 0810000104166 1 Headend [***]
De-Modulator Agile General Instruments 0810000141168 1 Headend [***]
De-Modulator Agile General Instruments 0810000101166 1 Headend [***]
De-Modulator Agile General Instruments 0810000171166 1 Headend [***]
De-Modulator Agile General Instruments 0810000118166 1 Headend [***]
</TABLE>
[*** Confidential Treatment Requested]
[***] Equipment Inventory
<TABLE>
<CAPTION>
Type Sub-Type Manufacturer Model or Spec Serial # Quan. Facility Channel
---- ---------------- -------------------- --------------- -------------- ------ -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
De-Modulator Agile General Instruments 0810000150166 1 Headend [***]
De-Modulator Agile General Instruments 0810000133166 1 Headend [***]
De-Modulator Agile General instruments 0810000135166 1 Headend [***]
De-Modulator Agile General Instruments 0810000175166 1 Headend [***]
De-Modulator Agile General Instruments 0810000142166 1 Headend [***]
De-Modulator Agile General Instruments 0810000167166 1 Headend [***]
De-Modulator Agile General Instruments 0810000113166 1 Headend [***]
De-Modulator Agile General Instruments 0810000183166 1 Headend [***]
De-Modulator Agile General Instruments 0810000195166 1 Headend [***]
De-Modulator Agile General Instruments 0810000176166 1 Headend [***]
De-Modulator Agile General Instruments 0810000162166 1 Headend [***]
De-Modulator Agile General Instruments 0810000172166 1 Headend [***]
De-Modulator Agile General Instruments 0810000185166 1 Headend [***]
De-Modulator Agile General Instruments 00810000111166 1 Headend [***]
De-Modulator Agile General Instruments 00810000189166 1 Headend [***]
De-Modulator Agile General Instruments 0810000149166 1 Headend [***]
Outdoor RF Head
(receive) 18.142-18.580GHZ CHANNEL MASTER 6633-18 C3339980001 2 Headend [***]
Indoor baseband
unit
(receive) 23.275GHZ MA23VX MRC 845270-2 509VXSA555 1 Headend [***]
Indoor baseband
unit
(receive) 23.475GHZ MA23VX MRC 845270-3 509VXSA556 1 Headend [***]
Outdoor RF Head
(receive) 23.275GHZ MA23VX MRC 845379-2 509VXSA555 1 Headend [***]
Outdoor RF Head
(receive) 23.475GHZ MA23VX MRC 845379-3 509VXSA55G 1 Headend [***]
Antenna
(Receive-
Data) 4ft. 18GHZ MRC N/A 1 Headend [***]
Antenna
(Receive-
AML) 6ft. 18GHZ-AML Andrew N/A 1 Headend [***]
Antenna
(Receive-
ITFS) 6ft. 23GHZ Gabriel N/A 1 Headend [***]
Rack 72" ADC N/A N/A 1 Headend [***]
Rack 72" ADC N/A N/A 1 Headend [***]
Rack 72" ADC N/A N/A 1 Headend [***]
Rack 72" ADC N/A N/A 1 Headend [***]
Rack 72" ADC N/A N/A 1 Headend [***]
Rack 72" ADC N/A N/A 1 Headend [***]
Rack 72" ADC N/A N/A 1 Headend [***]
Reck 72" ADC N/A N/A 1 Headend [***]
Rack 72" ADC N/A N/A 1 Headend [***]
Transmitter 50 Watt ITS 1750C 6829036-MDS1 1 Headend [***]
Alarm System ENTRY/TEMP ADT 1 Headend [***]
UPS 5kva TOPAZ 88051 U1362EE00073 1 Headend [***]
UPS 10kva TOPAZ 88101 U1315AC00040 1 Headend [***]
A/C 5 ton Headend [***]
Antenna
(Transmit-
AML) 6ft. 18GHZ-AML Andrew N/A 1 TVRO [***]
Outdoor RF Head
(transmit) 18.142-18.580GHZ CHANNEL MASTER ? 1 TVRO [***]
Modulator Agile DX Communications D800211 1 TVRO [***]
Modulator Agile DX Communications D800238 1 TVRO [***]
Modulator Agile DX Communications E800338 1 TVRO [***]
Modulator Agile DX Communications 0800239 1 TVRO [***]
Modulator Agile DX Communications E800374 1 TVRO [***]
TVRO Sat.
Receivers STANDARD MT810AA 87U070076 1 TVRO [***]
TVRO Sat.
Receivers STANDARD MT 650 49U740388 1 TVRO [***]
TVRO Sat.
Receivers STANDARD MT 650 49U740362 1 TVRO [***]
TVRO Sat.
Receivers STANDARD MT 650 57U930478 1 TVRO [***]
TVRO Sat.
Receivers STANDARD MT 650 4FU730038 1 TVRO [***]
TVRO Sat.
Receivers STANDARD MT 650 48U730039 N/A TVRO [***]
Broadcast
controller 2 Channel,
8 Device Ad-Tech Liten-ing N/A 1 TVRO [***]
VCR SVHS JVC SR-S360U 078X0049 1 TVRO [***]
VCR SVHS JVC SR-S360U 177X0003 1 TVRO [***]
VCR SVHS JVC SR-S365U 8551422 1 TVRO [***]
VCR SVHS JVC SR-S365U 8551538 1 TVRO [***]
VCR SVHS JVC SR-S365U 8551430 1 TVRO [***]
VCR SVHS JVC SR-S365U 8551548 1 TVRO [***]
VCR SVHS JVC SR-S365U 8551545 1 TVRO [***]
TVRO Earth
Station 3.8M Patriot N/A 1 TVRO [***]
TVRO Earth
Station 3.8M Patriot N/A 1 TVRO [***]
TVRO Earth
Station 3.8M Patriot N/A 1 TVRO [***]
TVRO Earth
Station 3.8M Patriot N/A 1 TVRO [***]
TVRO Earth
Station 3.8M Patriot N/A 1 TVRO [***]
TVRO Earth
Station 3.8M Patriot N/A 1 TVRO [***]
TVRO Earth
Station 3.7M Miralife N/A 1 TVRO [***]
TVRO Earth
Station 3.7M Miralite N/A 1 TVRO [***]
TVRO Earth
Station 3.7M Mlralite N/A 1 TVRO [***]
Earth Station
LNB LNB California Amplifier 140105-1 N/A 16 TVRO [***]
Hardline 200' 1/2" N/A 1 TVRO [***]
Hardline 200' 1/2" N/A 1 TVRO [***]
Tower 40' Rhone N/A N/A 1 TVRO [***]
UPS UPS Batteries Power Works Deltec 101615015-061 BQ454C1078 1 TVRO [***]
UPS UPS Batteries Power Works Deltec 101615015-061 BQ454C1073 1 TVRO [***]
UPS UPS Power Works Deltec ET6001-PP BQ445C0481 1 TVRO [***]
UPS UPS Batteries APC SU24XLBP WS9845007694 1 TVRO [***]
UPS UPS Batteries APC SU24XLBP WS9845007695 1 TVRO [***]
UPS UPS Batteries APC SU24XLBP WS9845007698 1 TVRO [***]
UPS UPS Batteries APC SU24XLBP WS9845007697 1 TVRO [***]
UPS UPS APC SU1000XLNET WS9807001017 1 TVRO [***]
Alarm System ENTRY ADT 1 TVRO [***]
Generator 40 KWK Generac 1 TVRO [***]
A/c 3 ton Goodman MFG CO PC024-1B 9809475424 TVRO [***]
Antenna
(Transmit-
ITFS) 6ft. 23GHZ Gabriel N/A 1 BSU [***]
Indoor baseband
unit
(transmit) 23.275GHZ MA23VX MRC 845270-1 509VXSA555 1 BSU [***]
Indoor baseband
unit
(transmit) 23.475GHZ MA23VX MRC 845270-2 509VXSA556 1 BSU [***]
Outdoor RF Head
(transmit) 23.275GHZ MA23VX MRC 845379-1 509VXSA555 1 BSU [***]
Outdoor RF Head
(transmit) 23.475GHZ MA23VX MRC 845379-2 509VXSA556 1 BSU [***]
</TABLE>
[*** Confidential Treatment Requested]
[***] Equipment Inventory
<TABLE>
<CAPTION>
Type Sub-Type Manufacturer Model or Spec Serial # Quan. Facility Channel
---- ----------------- -------------------- -------------- ------------ ------ -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Antenna
(Transmit) Cardioid-Vertical Andrew HMD16VC N/A 1 Headend [***]
Waveguide 300' WE 30 N/A 1 Headend [***]
Combiner Magic T Communication and
Enemy Corp. 1
Heliax 12' 7/8" Foam N/A 1 Headend
Heliax 9' 7/8" Foam N/A 1 Headend
Heliax 3' 7/8" Foam N/A 1 Headend [***]
Combiner Axcer(ITS) 1690 M2781025 1 Headend [***]
Combiner Axcer(ITS) 1694D M1992094 1 Headend [***]
Combiner Axcer(ITS) 1694D M1994094 1 Headend [***]
Combiner Axcer(ITS) 1694D M1996094 1 Headend [***]
Combiner Axcer(ITS) 1694D M1989094 1 Headend [***]
Combiner Axcer(ITS) 1694D M1991094 1 Headend [***]
Combiner Axcer(ITS) 1694D M1993094 1 Headend [***]
Combiner Axcer(ITS) 1694D M1995094 1 Headend [***]
Diplexer Microwave Filter CO. 10759 9409036 1 Headend [***]
Diplexer Microwave Filter CO. 10759 N/A 1 Headend [***]
Diplexer Microwave Filter CO. 10759 N/A 1 Headend [***]
Diplexer Microwave Filter CO. 10759 N/A 1 Headend [***]
Diplexer Axcera(ITS-ADC) 658E M0044033 1 Headend [***]
Diplexer Axcera(ITS-ADC) 658E M0045033 1 Headend [***]
Diplexer Axcera(ITS-ADC) 658E M0047033 1 Headend [***]
Transmitter ITS (AXCERA) 1610E M0520093 1 Headend [***]
Transmitter ITS (AXCERA) 1610E M0521093 1 Headend [***]
Transmitter ITS (AXCERA) 1610E M0522093 1 Headend [***]
Transmitter ITS (AXCERA) 1610E M0523093 1 Headend [***]
Transmitter ITS (AXCERA) 5524 15248 1 Headend [***]
Transmitter ITS (AXCERA) 5724 15220 1 Headend [***]
Transmitter ITS (AXCERA) 5524 15247 1 Headend [***]
Transmitter Emcee DS 20 221DS 1 Headend [***]
Transmitter Emcee DS 20 227DS 1 Headend [***]
Transmitter Emcee DS 20 225DS 1 Headend [***]
Transmitter Emcee DS 20 223DS 1 Headend [***]
Transmitter Emcee DS 20 220DS 1 Headend [***]
Transmitter ITS (AXCERA) 1610E M0033033 1 Headend [***]
Transmitter ITS (AXCERA) 1610E M0034033 1 Headend [***]
Transmitter Emcee DS 20 224DS 1 Headend [***]
Transmitter ITS (AXCERA) 1610 M0003633 1 Headend [***]
Transmitter ITS (AXCERA) 1610E M0035033 1 Headend [***]
Transmitter ITS (AXCERA) 1710 M1803074 1 Headend [***]
Transmitter ITS (AXCERA) 1610E 5157013 1 Headend [***]
Transmitter ITS (AXCERA) 1750 1 Headend [***]
Transmitter Emcee DS 20 216DS 1 Headend [***]
Transmitter ITS (AXCERA) 657C 1635 1 Headend [***]
Transmitter ITS (AXCERA) 658E M2087094 1 Headend [***]
Transmitter ITS (AXCERA) 657C 1652 1 Headend [***]
Transmitter ITS (AXCERA) 657C 1655 1 Headend [***]
Transmitter ITS (AXCERA) 658E M2084094 1 Headend [***]
Transmitter ITS (AXCERA) 658E M2086094 1 Headend [***]
Transmitter ITS (AXCERA) 658E M2085094 1 Headend [***]
IF Modulator A/V Output Scientific Atlanta 6340 1 Headend [***]
IF Modulator A/V Output Scientific Atlanta 6340 1 Headend [***]
IF Modulator A/V Output Scientific Atlanta 6340 1 Headend [***]
IF Modulator A/V Output Scientific Atlanta 6340 1 Headend [***]
IF Modulator A/V Output Scientific Atlanta 6340 1 Headend [***]
Power Distribution Leithc Xplus 0044142 1 Headend
Power Distribution EMCEE Video Switcher 1 Headend
Dehydrator Andrew MT 300 9704MT30490A 1 Headend
Dehydrator Andrew MH-12 9711MHM425A 1 Headend
Rack 72" Emcore N/A N/A 12 Headend
A/C 5 Ton Lennox CHA16-651-5P 5697H00949 1 Headend
A/C 5 Ton Lennox CHA16-651-5P 5697H05406 1 Headend
A/C 5 Ton Lennox CHA16-651-5P 5697G03802 1 Headend
</TABLE>
[*** Confidential Treatment Requested]
[***] Equipment Inventory
<TABLE>
<CAPTION>
Type Sub-Type Manufacturer Model or Spec Serial # Quan. Facility Channel
---- ------------- ------------ ------------- -------- ----- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Antenna (Transmit OMNI Andrew HMD12HO-W0 11577 1 Headend [***]
Waveguide Andrew LDF5-50A 150' Headend [***]
Combiner Filterplexer MFC 11754S-G 1 Headend [***]
Transmitter Comwave SB050B 11505 1 Headend [***]
Transmitter Comwave SB050B 11509 1 Headend [***]
Transmitter Comwave SB050B 11514 1 Headend [***]
Transmitter Comwave SB050B 11520 1 Headend [***]
Upconverter Digital Agile Thomcast 47266213 14163 1 Headend [***]
Local Oscilator Digital Agile Thomcast 4726617 14163 1 Headend [***]
Power Supply Digital Agile Thomcast 4726613 14163 1 Headend [***]
Amplifier Digital Agile Thomcast 47266181 14163 1 Headend [***]
Amplifier Digital Agile Thomcast 47266181 14163 1 Headend [***]
modulator Comwave TVM-102 11519 1 Headend [***]
modulator Comwave TVM-102 11505 1 Headend [***]
modulator Comwave TVM-102 11509 1 Headend [***]
modulator Comwave TVM-102 11520 1 Headend [***]
Satelite Receiver Dish Network CDSR-6198 42930 1 Headend [***]
Satelite Receiver Dish Network CDSR-6198 26447 1 Headend [***]
Satelite Receiver Dish Network CDSR-6198 42936 1 Headend [***]
Satelite Receiver Dish Network CDSR-6198 45127 1 Headend [***]
Satelite Receiver Dish Network CDSR-6198 37234 1 Headend [***]
Reference Drawer Comwave 2126 14922 1 Headend [***]
Rack ITS 72" 1 Headend [***]
</TABLE>
[*** Confidential Treatment Requested]
[***] Equipment Inventory
<TABLE>
<CAPTION>
Type Sub-Type Manufacturer Model or Spec Serial # Quan. Facility Channel
---- -------------------------- -------------------- -------------- ------------- ----- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Antenna Transmit Omni Andrew HMD-12HO N/A 2 Headend
Wavequide 190' ANDREW EW-20 N/A 1 Headend
Connectors EW-20 Connector Andrew 120R-3 N/A 4 Headend
Waveguide 187' ANDREW EW-20 N/A 1 Headend
Transition Jumpers 10' ANDREW 7/8" Air N/A 1 Headend
Transition Jumpers 10' ANDREW 7/8" Air N/A 1 Headend
Transition Jumpers 4' ANDREW 1/2" Foam N/A 1 Headend [***]
Transition Jumpers 4' ANDREW 1/2" Foam N/A 1 Headend [***]
Combiner A-Gtoup MFC 9004 N/A 1 Headend [***]
Combiner B-Gtoup MFC 9004 N/A 1 Headend [***]
Combiner C-Gtoup MFC 9004 N/A 1 Headend [***]
Combiner D-Gtoup MFC 9004 N/A 1 Headend [***]
Combiner E-Gtoup MFC 9004 N/A 1 Headend [***]
Combiner F-Gtoup MFC 9004 N/A 1 Headend [***]
Combiner G-Gtoup MFC 9004 N/A 1 Headend [***]
Combiner H-Gtoup MFC 9004 N/A 1 Headend [***]
Transmitter 50W COMWAVE SB-50B 8556 1 Headend [***]
Transmitter 50W COMWAVE SB-50B 8557 1 Headend [***]
Transmitter 50W COMWAVE SB-50B 4751 1 Headend [***]
Transmitter 50W COMWAVE SB-50B 4752 1 Headend [***]
Transmitter 50W COMWAVE SB-50B 4753 1 Headend [***]
Transmitter 50W COMWAVE SB-50B 4754 1 Headend [***]
Transmitter 50W COMWAVE SB-50B 8558 1 Headend [***]
Transmitter 50W COMWAVE SB-50B 8559 1 Headend [***]
Transmitter 50W COMWAVE SB-50B 3716 1 Headend [***]
Transmitter 50W COMWAVE SB-50B 3715 1 Headend [***]
Transmitter 50W COMWAVE SB-50B 4759 1 Headend [***]
Transmitter 50W COMWAVE SB-50B 4760 1 Headend [***]
Transmitter 50W COMWAVE SB-50B 4761 1 Headend [***]
Transmitter 50W COMWAVE SB-50B 4762 1 Headend [***]
Transmitter 50W COMWAVE SB-50A 2250 1 Headend [***]
Transmitter 50W COMWAVE SB-50A 2251 1 Headend [***]
Transmitter 50W COMWAVE SB-50A 2252 1 Headend [***]
Transmitter 50W COMWAVE SB-50A 2253 1 Headend [***]
Transmitter 50W COMWAVE SB-50A 2254 1 Headend [***]
Transmitter 50W COMWAVE SB-50A 2255 1 Headend [***]
Transmitter 50W COMWAVE SB-50A 2256 1 Headend [***]
Transmitter 50W COMWAVE SB-50A 2257 1 Headend [***]
Transmitter 50W COMWAVE SB-50B 4729 1 Headend [***]
Transmitter 50W COMWAVE SB-50B 4730 1 Headend [***]
Transmitter 50W COMWAVE SB-50B 3712 1 Headend [***]
Transmitter 50W COMWAVE SB-50B 3712 1 Headend [***]
Transmitter 50W COMWAVE SB-50B 2258 1 Headend [***]
Transmitter 50W COMWAVE SB-50B 2259 1 Headend [***]
Upconverter COMWAVE SB-50A 2250 1 Headend [***]
Upconverter COMWAVE SB-50A 2251 1 Headend [***]
Upconverter COMWAVE SB-50A 2252 1 Headend [***]
Upconverter COMWAVE SB-50A 2253 1 Headend [***]
Upconverter COMWAVE SB-50A 2254 1 Headend [***]
Upconverter COMWAVE SB-50A 2255 1 Headend [***]
Upconverter COMWAVE SB-50A 2256 1 Headend [***]
Upconverter COMWAVE SB-50A 2257 1 Headend [***]
Transmitter 50W COMWAVE SB-50B 8554 1 Headend [***]
Transmitter 50W COMWAVE SB-50B 8555 1 Headend [***]
Modulator IF Comwave TVM-102 8554 1 Headend [***]
Modulator IF Comwave TVM-102 8555 1 Headend [***]
Modulator IF Comwave TVM-102 8556 1 Headend [***]
Modulator IF Comwave TVM-102 8557 1 Headend [***]
Modulator IF Comwave TVM-102 4751 1 Headend [***]
Modulator IF Comwave TVM-102 4752 1 Headend [***]
Modulator IF Comwava TVM-102 4747 1 Headend [***]
Modulator IF Comwave TVM-102 4754 1 Headend [***]
Modulator IF Comwave TVM-102 4753 1 Headend [***]
Modulator IF Comwave TVM-102 11045 1 Headend [***]
Modulator IF Comwave TVM-102 3723 1 Headend [***]
Modulator IF Comwave TVM-102 12768 1 Headend [***]
Modulator IF Comwave TVM-102 4759 1 Headend [***]
Modulator IF Comwave TVM-102 4760 1 Headend [***]
Modulator IF Comwave TVM-102 4761 1 Headend [***]
Modulator IF Comwave TVM-102 4762 1 Headend [***]
Modulator IF Catel CTM-20 2250 1 Headend [***]
Modulator IF Catel CTM-20 2251 1 Headend [***]
Modulator IF Catel CTM-20 2252 1 Headend [***]
Modulator IF Comwave TVM-102 No# 1 Headend [***]
Modulator IF Catel CTM-20 2254 1 Headend [***]
Modulator IF Catel CTM-20 2255 1 Headend [***]
Modulator IF Catel CTM-20 2256 1 Headend [***]
Modulator IF Catel CTM-20 2257 1 Headend [***]
Modulator IF Comwave TVM-102 4748 1 Headend [***]
Modulator IF Comwave TVM-102 4730 1 Headend [***]
Modulator IF Comwave TVM-102 8021 1 Headend [***]
Modulator IF Comwave TVM-102 8565 1 Headend [***]
Modulator IF Catel CTM-20 2258 1 Headend [***]
Modulator IF Catel CTM-20 2259 1 Headend [***]
</TABLE>
[*** Confidential Treatment Requested]
[***] Equipment Inventory
<TABLE>
<CAPTION>
Type Sub-Type Manufacturer Model or Spec Serial # Quan. Facility Channel
---- -------------------------- -------------------- -------------- ------------- ----- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Enclosures/Drawers GI HVP III D5H0001926343 1 headend
Enclosures/Drawers GI HVP III 215420003 1 headend
Enclosures/Drawers GI HVP III DSH0001085343 1 headend
Enclosures/Drawers GI HVP III 4590001 1 headend
Video Card GI 24 headend
Channel Card GI 24 headend
Sat Receivers STANDARD 1 Headend [***]
Sat Receivers STANDARD 1 Headend [***]
Sat Receivers STANDARD 1 Headend [***]
Sat Receivers STANDARD 1 Headend [***]
Sat Receivers STANDARD 1 Headend [***]
Sat Receivers STANDARD 1 Headend [***]
Sat Receivers STANDARD 1 Headend [***]
Sat Receivers STANDARD 1 Headend [***]
Sat Receivers STANDARD 1 Headend [***]
Sat Receivers STANDARD 1 Headend [***]
Sat Receivers STANDARD 1 Headend [***]
Sat Receivers Uniden 1 Headend [***]
Sat Receivers STANDARD 1 Headend [***]
Sat Receivers STANDARD 1 Headend [***]
Sat Receivers STANDARD 1 Headend [***]
Sat Receivers STANDARD 1 Headend [***]
Sat Receivers STANDARD 1 Headend [***]
Sat Receivers STANDARD 1 Headend [***]
Sat Receivers GI 1 Headend [***]
Sat Receivers GI 1 Headend [***]
Sat Receivers STANDARD 1 Headend [***]
Sat Receivers STANDARD 1 Headend [***]
Sat Receivers STANDARD 1 Headend [***]
Sat Receivers STANDARD 1 Headend [***]
Sat Receivers STANDARD 1 Headend [***]
Sat Receivers STANDARD 1 Headend [***]
Sat Receivers Uniden 1 Headend [***]
Sat Receivers Motorola 1 Headend [***]
Sat Receivers STANDARD 1 Headend [***]
Sat Receivers SciAtl 1 Headend [***]
Sat Dish 3.2 meters Macom 1 Headend [***]
Sal Dish 3.2 meters Macom 1 Headend [***]
Sat Dish 3.2 meters Macom 1 Headend [***]
Sat Dish 3.7 meters Patroit 1 Headend [***]
Sat Dish 3.7 meters Patroit 1 Headend [***]
Sat Dish 2 meters Winguard 1 Headend [***]
Waveguide 150' ANDREW EW-85 N/A 1 Headend [***]
Dehydrator Andrew Dryline MT-300 N/A 1 headend [***]
STL Receiver 6565-6645Mhz California Microwave MFR 63661 32665 1 Headend
Controller Compaq Proliant 800 3CDHA01135X 1 headend
EAS Monroe WIP925S 1 headend
EAS Monroe R177M 4 headend
EAS Monroe 9509-15577 1 headend
Rack 82" N/A N/A N/A 5 Headend
Rack 76" EMCEE N/A N/A 6 Headend [***]
Monitoring Device DPS Alpha Max 82A 1 Headend [***]
A/C 5 Ton Indoor Out door unit Gibson GS3BA-060KA GS3000550257 1 Headend [***]
A/C 2 Ton window type 220 volt Carrier 2 Headend [***]
</TABLE>
[*** Confidential Treatment Requested]
[***] Equipment Inventory
<TABLE>
<CAPTION>
Type Sub-Type Manufacturer Model or Spec Serial # Quan. Facility Channel
---- -------------------------- -------------------- -------------- ------------- ----- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Antenna Omni Andrews HMD12VO N/A 1 Headend [***]
Antenna 140Deg Bogner 140/8-VO N/A 1 Headend [***]
Hardline 160' ANDREW 1 5/8" N/A 1 Headend [***]
Hardline 160' ANDREW 7/8" N/A 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-1750 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-1750 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-1750 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-1750 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-1750 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-1750 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-1750 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-1750 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5524 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5524 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5524 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5524 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5524 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5524 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5524 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5524 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-1615 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-1615 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-1615 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-1615 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5524 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5524 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5524 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5524 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5524 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 1 Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5524 1 Headend [***]
controller data encoder tray Pacmono data encoder 56983 1 Headend [***]
drawer encoder card trays Pacmono encoder card
tray 56983 5 Headend [***]
TVRO Sat. Rec IRD G.I. 1500 D12004411 1 Headend [***]
TVRO Sat. Rec IRD G.I. 1500 D15024722 1 Headend [***]
TVRO Sat. Rec IRD G.I. 4500 839670026416 1 Headend [***]
TVRO Sat. Rec IRD G.I. 1500 D12003599 1 Headend [***]
TVRO Sat. Rec IRD S.A. 9225 314611087093 1 Headend [***]
TVRO Sat. Rec IRD G.I. 1500 D15030625 1 Headend [***]
TVRO Sat. Rec IRD G.I. 1500 D12002294 1 Headend [***]
TVRO Sat. Rec IRD G.I. 1500 D15023460 1 Headend [***]
Dernod IRD BLOND. BLDEMOD524 9665 1 Headend [***]
TVRO Sat. Rec IRD G.I. 1500 D15030616 1 Headend [***]
TVRO Sat. Rec IRD G.l. 1500 D45023723 1 Headend [***]
TVRO Sat. Rec IRD G.I. 1500 D15035696 1 Headend [***]
TVRO Sat. Rec IRD G.I. 1500 D15024723 1 Headend [***]
TVRO Sat. Rec IRD S.A. 4500 839670026410 1 Headend [***]
TVRO Sat. Rec IRD G.I. 1500 D15023611 1 Headend [***]
TVRO Sat. Rec IRD G.I. 4500 812760044234 1 Headend [***]
TVRO Sat. Rec IRD S.A. 9225 65253 1 Headend [***]
TVRO Sat. Rec IRD G.I. 1500 D150027447 1 Headend [***]
TVRO Sat. Rec IRD G.I. 1500 D45023752 1 Headend [***]
TVRO Sat. Rec IRD G.I. 4500 820790003886 1 Headend [***]
TVRO Sat. Rec IRD G.I. 1500 D12003909 1 Headend [***]
TVRO Sat. Rec IRD G.I. 1500 D15032258 1 Headend [***]
TVRO Sat. Rec IRD G.I. 1500 D15026961 1 Headend [***]
TVRO Sat. Rec IRD G.I. 1500 D12003741 1 Headend [***]
TVRO Sat. Rec IRD G.I. 1500 D15030234 1 Headend [***]
TVRO Sat. Rec IRD G.I. 1500 D12003254 1 Headend [***]
TVRO Sat. Rec IRD G.I. 1500 D15025515 1 Headend [***]
TVRO Sat. Rec IRD WEG MPEG2 51292 1 Headend [***]
TVRO Sat. Rec IRD G.I. 1500 D15034842 1 Headend [***]
TVRO Sat. Rec IRD G.I. 1500 D12003468 1 Headend [***]
TVRO Sat. Rec IRD G.I. 1500 D15030235 1 Headend [***]
TVRO Sat. Rec IRD G.I. 1500 D15025792 1 Headend [***]
Generator 80kW Generac Gen 80kW None 1 Headend [***]
UPS 50kW Powerware PowerwarePLus
5 None 1 Headend [***]
A/C 10 Bard 10 ton x 2 None 2 Headend [***]
Racks 72" unknow 21" wide N/A 18 Headend [***]
</TABLE>
[*** Confidential Treatment Requested]
[***] Equipment Inventory
<TABLE>
<CAPTION>
Type Sub-Type Manufacturer Model or Spec Serial # Quan. Controllar Facility Channel
---- -------- --------------- ------------- --------- ----- ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Transmit Cardioid Andrews HMD12HO N/A 1 N/A Headend [***]
Transmit Cardioid Andrews HMD12VO N/A 1 N/A Headend [***]
Hardline 40' ANDREW 1 5/8" N/A 2 N/A Headend [***]
Combiner A Axcera(ITS-ADC) ITS-685E N/A 1 N/A Headend [***]
Combiner D Axcera(ITS-ADC) ITS-685E N/A 1 N/A Headend [***]
Combiner G Axcera(ITS-ADC) ITS-685E N/A 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 213559789 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 213559790 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 213559791 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 213559792 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 213559793 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 213559794 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 213559795 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 213559796 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 213559797 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 213559798 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 213559799 1 N/A Headend [***]
Transmitter 50watts ITS (AXCERA) ADC-5724 213559800 1 N/A Headend [***]
Direct tv 0.5 Direct tv N/A N/A 1 N/A Headend [***]
Direct tv 0.5 Direct tv N/A N/A 1 N/A Headend [***]
Direct tv 0.5 Direct tv N/A N/A 1 N/A Headend [***]
Racks 72" unknow 21" wide N/A 4 N/A Headend [***]
A/C 1 Window Units Site owned unknown 1 N/A Headend [***]
</TABLE>
[*** Confidential Treatment Requested]
[***] Equipment Inventory
<TABLE>
<CAPTION>
Type Sub-Type Manufacturer Model or Spec Serial # Quan. Facility Channel
---- -------------------------- -------------------- -------------- ------------- ----- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Antenna Transmit Horizontal-Omni Andrew HMD-12HO/W0.5 N/A 1 Headend
Waveguide 290' ANDREW 7/8" Air N/A 1 Headend
Transition Jumper 20' ANDREW 7/8" Air N/A 1 Headend
Transition Jumper 12' ANDREW 7/8" Air N/A 1 Headend
Connectors Tansition EW20 to 7/8" Andrew Transition
EW20 to 7/8" 2 Headend
Connectors E 7/8" EIA Andrew E 7/8" EIA 4 Headend
Combiner A-group combiner MFC 11754 N/A 1 Headend [***]
Combiner B-group combiner MFC 11754 N/A 1 Headend [***]
Combiner C-group combiner MFC 11754 N/A 1 Headend [***]
Combiner D-group combiner MFC 11754 N/A 1 Headend [***]
Combiner F-group combiner MFC 11754 N/A 1 Headend [***]
Combiner G-group combiner MFC 11754 N/A 1 Headend [***]
Combiner COMBINER MAJIC T MFC N/A 1 Headend [***]
Combiner H-group combiner MWF 11754SA-H N/A 1 Headend [***]
Transmitter 25W Comwave Sb025A 1 Headend [***]
Transmitter 10W Comwave SB010A 1 Headend [***]
Transmitter 25W Comwave SB025A 1 Headend [***]
Transmitter 25W Comwave SB025A 1 Headend [***]
Transmitter 50W Comwave SB050D 15138 1 Headend [***]
Transmitter 50W Comwave SB050D 15139 1 Headend [***]
Transmitter 50W Comwave SB050D 15140 1 Headend [***]
Transmitter 50W Comwave SB050D 15141 1 Headend [***]
Transmitter 50W Comwave SB050D 15132 1 Headend [***]
Transmitter 50W Comwave SB050D 15145 1 Headend [***]
Transmitter 50W Comwave SB050D 15146 1 Headend [***]
Transmitter 50W Comwave SB050D 15147 1 Headend [***]
Transmitter 50W Comwave SB050D 15133 1 Headend [***]
Transmitter 50W Comwave SB050D 15148 1 Headend [***]
Transmitter 50W Comwave SB050D 15149 1 Headend [***]
Transmitter 50W Comwave SB050D 15150 1 Headend [***]
Transmitter 50W Comwave SB050-MRC 1 Headend [***]
Transmitter 50W Comwave SB050-MRC 1 Headend [***]
Transmitter 50W Comwave SB050-MRC 1 Headend [***]
Transmitter 50W Comwave SB050-MRC 1 Headend [***]
Transmitter 50W Comwave SB050D 15134 1 Headend [***]
Transmitter 50W Comwave SB050D 15135 1 Headend [***]
Transmitter 50W Comwave SB050D 15136 1 Headend [***]
Transmitter 50W Comwave SB050D 15137 1 Headend [***]
Transmitter 50W Comwave SB050D 10226 1 Headend [***]
Transmitter 50W Comwave SB050D 10227 1 Headend [***]
Transmitter 50W Comwave SB050D 10228 1 Headend [***]
Modulator IF Comwave TVM-102 n/a 1 Headend [***]
Modulator IF Comwave TVM-102 4743 1 Headend [***]
Modulator IF Comwave TVM-102 3712 1 Headend [***]
Modulator IF SA 9650 895031b 1 Headend [***]
Modulator IF Comwave TVM-102 15138 1 Headend [***]
Modulator IF Comwave TVM-102 15139 1 Headend [***]
Modulator IF Comwave TVM-102 15140 1 Headend [***]
Modulator IF Comwave TVM-102 15141 1 Headend [***]
Modulator IF Comwave TVM-102 15132 1 Headend [***]
Modulator IF Comwave TVM-102 15145 1 Headend [***]
Modulator IF Comwave TVM-102 15146 1 Headend [***]
Modulator IF Comwave TVM-102 15147 1 Headend [***]
Modulator IF Comwave TVM-102 15133 1 Headend [***]
Modulator IF Comwave TVM-102 15148 1 Headend [***]
Modulator IF Comwave TVM-102 15149 1 Headend [***]
Modulator IF Comwave TVM-102 15150 1 Headend [***]
Modulator IF Comwave TVM-102 6001 1 Headend [***]
Modulator IF Comwave TVM-102 4737 1 Headend [***]
Modulator IF Comwave TVM-102 n/a 1 Headend [***]
Modulator IF Comwave TVM-102 n/a 1 Headend [***]
Modulator IF Comwave TVM-102 15134 1 Headend [***]
Modulator IF Comwave TVM-102 15135 1 Headend [***]
Modulator IF Comwave TVM-102 15136 1 Headend [***]
Modulator IF Comwave TVM-102 15137 1 Headend [***]
Modulator IF Comwave TVM-102 10226 1 Headend [***]
Modulator IF Comwave TVM-102 10227 1 Headend [***]
Modulator IF Comwave TVM-102 10228 1 Headend [***]
A/V Distribution A 16 Output Videotronics VDA-500 1 Headend
A/V Distribution A 4 Output Tandy Corp VDA 4 Headend
Sat Receiver EchoStar S001373206373 1 Headend [***]
Sat Receiver EchoStar S001373222941 1 Headend [***]
Sat Receiver EchoStar S001373206878 1 Headend [***]
Sat Receiver EchoStar S001373206474 1 Headend [***]
Sat Receiver EchoStar S000740964861 1 Headend [***]
Sat Receiver EchoStar S000835535976 1 Headend [***]
Sat Receiver EchoStar S001373206070 1 Headend [***]
Sat Receiver EchoStar S001373206272 1 Headend [***]
Sat Dich 36" Dish Network Dual Feed 1 Headend [***]
Dehydrator Andrew MT-300 9801mt30143a 1 Headend
reference tray 10MHz Comwave 15142 1 Headend [***]
montoring Device Alpha Max DPS Alpha Max 82A 1 Headend
A/C 3 Ton 2 Headend
Rack N/A N/A WA Headend
Headend Television Sony Trinitron 8024956 1 Headend
</TABLE>
[*** Confidential Treatment Requested]
[***] Equipment Inventory
<TABLE>
<CAPTION>
Type Sub-Type Manufacturer Model or Spec Serial # Quan. Facility Channel
---- ------------------ -------------------- ------------- ------------- ----- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Antenna (Transmit) Cardloid -Vertical Andrew HMD12VC N/A 1 Headend Active
Antenna (Transmit) Cardloid -Vertical Andrew HMD12VC N/A 1 Headend Active
Antenna (Transmit) Cardloid -Vertical Andrew HMD12VC N/A 1 Headend Active
Antenna (Transmit) Cardloid -Vertical Andrew HMD12VC N/A 1 Headend Active
Waveguide Andrew HJ7-50A N/A 1 Headend Active
Waveguide Andrew HJ7-50A N/A 1 Headend Active
Waveguide Andrew HJ7-50A N/A 1 Headend Active
Waveguide Andrew HJ7-50A N/A 1 Headend Active
Heliax 8" Andrew 7/8" Foam N/A 1 Headend Active
Heliax 10' Andrew 7/8" Foam N/A 1 Headend Active
Heliax 10" Andrew 7/8" Foam N/A 1 Headend Active
Heliax 3" Andrew 7/8" Foam N/A 1 Headend Active
Combiner Microwave Filter Co. 9004S N/A 1 Headend Active [***]
Combiner Microwave Filter Co. 9004S N/A 1 Headend Active [***]
Combiner Microwave Filter Co. 9004S N/A 1 Headend Active [***]
Combiner Axcer(ITS) 1694D 7673046 1 Headend Active [***]
Combiner Axcer(ITS) 1694D 4315032 1 Headend Active [***]
Combiner Axcer(ITS) 1694D 4316032 1 Headend Active [***]
Combiner Axcer(ITS) 1694D 7674046 1 Headend Active [***]
Combiner Axcer(ITS) 1893D 4317032 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 585 6258095 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 15287 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 685 3348041 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 685 3349041 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 685 3350041 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 685 3351041 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 685E 4095012 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 685E 4096012 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 685E 4097012 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 685E 4237012 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 685 3362041 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 685D 3085011 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 685D 3086011 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 685D 3087011 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 685E 7679046 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 685E 7680046 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 685E 7581046 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 685E 7682046 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 685E 4304032 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 685E 4305032 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 685E 4306032 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 685E 4307032 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 685E 4308032 1 Headend Active [***]
Diplaxer Axcera(ITS-ADC) 685E 4309032 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 685E 4310032 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 685E 4311032 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 685E M0051033 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 685E M0052033 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 685E M0053033 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 685E M0054033 1 Headend Active [***]
Diplexer Axcera(ITS-ADC) 685E 4312032 1 Headend Active [***]
Diplexer Axcera(ITS) 685E 4313032 1 Headend Active [***]
Diplexer Axcera(ITS) 685E 4314032 1 Headend Active [***]
Transmitter 20W Axcera(ITS) 1720C 6259095 1 Headend Active [***]
Transmitter 50W Axcera(ITS) 5524 15283 1 Headend Active [***]
Transmitter 20W Axcera(ITS) 1610E 3330041 1 Headend Active [***]
Transmitter 20W Axcera(ITS) 1610E 3331041 1 Headend Active [***]
Transmitter 2OW Axcera(ITS) 1610E 3332041 1 Headend Active [***]
Transmitter 20W Axcera(ITS) 1610E 3333041 1 Headend Active [***]
Transmitter 20W Axcera(ITS) 161OE 4089012 1 Headend Active [***]
Transmitter 20W Axcera(ITS) 1610E 4090012 1 Headend Active [***]
Transmitter 20W Axcera(ITS) 1610E 4091012 1 Headend Active [***]
Transmitter 20W Axcera(ITS) 1610E 4236012 1 Headend Active [***]
Transmftter 20W Axcera(ITS) 1610E 3361041 1 Headend Active [***]
Transmitter 20W Axcera(ITS) 1610D 3085011 1 Headend Active [***]
Transmitter 20W Axcera(ITS) 1610D 3086011 1 Headend Active [***]
Transmttter 20W Axcera(ITS) 1610D 3087011 1 Headend Active [***]
Transmitter 20W Axcera(ITS) 1610E 5160013 1 Headend Active [***]
Transmitter 20W Axcera(ITS) 1610E 5161013 1 Headend Active [***]
Transmitter 20W Axcera(ITS) 1610E 5162013 1 Headend Active [***]
Transmitter 2OW Axcera(ITS) 1610E 5163013 1 Headend Active [***]
Transmitter 20W Axcera(ITS) 1610E 4293032 1 Headend Active [***]
Transmitter 20W Axcera(ITS) 1610E 4294032 1 Headend Active [***]
Transmitter 20W Axcera(ITS) 1610E 4295032 1 Headend Active [***]
Transmitter 20W Axcera(ITS) 1610E 4296032 1 Headend Active [***]
Transmitter 20W Axcera(ITS) 1610E 4297032 1 Headend Active [***]
Transmitter 20W Axcera(ITS) 1610E 4298032 1 Headend Active [***]
Transmitter 20W Axcera(ITS) 1610E 4299032 1 Headend Active [***]
Transmitter 20W Axcera(ITS) 1610E 4300032 1 Headend Active [***]
Transmitter 20W Axcera(ITS) 1610E M0040033 1 Headend Active [***]
Transmitter 20W Axcera(ITS) 1610E M0041033 1 Headend Active [***]
Transmitter 20W Axcera(ITS) 1610E M0042033 1 Headend Active [***]
Transmitter 20W Axcera(ITS) 1610E M0043033 1 Headend Active [***]
Transmittor 20W Axcera(ITS) 1610E 4301032 1 Headend Active [***]
Transmitter 20W Axcera(ITS) 1610E 4302032 1 Headend Active [***]
Transmitter 20W Axcera(ITS) 1610E 4303032 1 Headend Active [***]
</TABLE>
[*** Confidential Treatment Requested]
[***] Equipment Inventory
<TABLE>
<CAPTION>
Type Sub-Type Manufacturer Model or Spec Serial # Quan. Facility Channel
---- ------------------ -------------------- ------------- ------------- ----- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Downstream Router Hybrid CMD 2000 G-3206000004 1 Headend Active
EAS Encoder SAM MIP 921e 2378 1 Headend Active
EAS Printer NCI 122X D51422275 1 Headend Active
EAS Master Switch Monroe R177M 4 Headend Active
A/V Switcher Leightronix Pro 8 P80518 1 Headend Active
TVRO Sat. Recivers Standard MT 650 1 Headend Active [***]
TVRO Sat. Recivers Standard MT 650 1 Headend Active [***]
Radio
(point-to-point
TX/RX) 12.9125 GHz Microwave Radio 905464-013 705FLR12R4819 1 Headend Active
Radio
(point-to-point
TX/RX) 12.9125 GHz Microwave Radio 905900-013 7O5FLR12R4818 1 Headend Active
Radio
(point-to-point
TX/RX) 22.025GHz Microwave Radio 8451722-2 706CXSA222 1 Headend Active
IRD Standard Agile IRD II 59U960732 1 Headend Backup
IRD Standard Agile IRD II 57U920290 1 Headend Backup
IRD Blonder Tongue IRD 2001 34U410184 1 Headend Spare
LNB 4O deqree Cal Amp CS42157-Pro 98907 1 Headend Spare
LNB 45 degree Cal Amp CS42157-SLHMT 1 Headend Spare
LNB 20 degree Cal Amp 140194-1 2 Headend Backup
LNB 20k Cal Amp 140194-1 8 Headend Active
LNB 25k Cal Amp 140105 8 Headend Active
TVRO Earth Station 3.7 m N/A N/A N/A 1 spare
TVRO Earth Station Comtech 1 Headend Active
TVRO Earth Station Comtech 1 Headend Active
TVRO Earth Station Multi-feed Comtech 1 Headend Active
TVRO Earth Station Patriot 1 Headend Active
TVRO Earth Station Patriot 1 Headend Active
TVRO Earth Station Wienguard 1 Headend Active
Antenna (STL) 6' Andrew N/A 1 Headend Active [***]
Rack 72" N/A N/A N/A 11 Headend Active
Generator 75kW Kohler 100RZ 367201 1 Headend Active
Transfer Switch Kohler K164231-400 K61838 1 Headend Active
A/C 5 Ton BDP 588ANW060100 1795G80949 1 Headend Active
A/C 5 Ton BDP 588DJX060000 2995G20989 1 Headend Active
</TABLE>
[*** Confidential Treatment Requested]
[***] Equipment Inventory
<TABLE>
<CAPTION>
Type Sub-Type Manufacturer Model or Spec Serial # Quan. Facility Channel
---- ------------------ ------------------- --------------- ---------------- ----- ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Antenna (Transmit) DIRECTIONAL Andrew HMD12VP-W125 N/A 1 Headend N/A
Antenna (Transmit) OMNI Andrew Headend
Antenna (Transmit) DIRECTIONAL Andrew HMD12VP-W125 N/A 1 Headend
Waveguide Andrew EW-20 200 Headend
Combiner Filterplexer ITS/Axcera 676D ADJACENT 8 Headend [***]
Transmitter ITS/Axcera 1750C 14964 Headend [***]
Transmitter ITS/Axcera 1750C 14965 Headend [***]
Transmitter ITS/Axcera 1750C 14966 1 Headend [***]
Transmitter ITS/Axcera 1750C 14969 1 Headend [***]
Transmitter ITS/Axcera 1750 M1436054 1 Headend [***]
Transmitter ITS/Axcera 1750 M1437054 1 Headend [***]
Transmitter ITS/Axcera 1750 M1438054 1 Headend [***]
Transmitter ITS/Axcera 1750 M1439054 1 Headend [***]
Transmitter ITS/Axcera 1750 M1440054 1 Headend [***]
Transmitter ITS/Axcera 1750 M1441054 1 Headend [***]
Transmitter ITS/Axcera 1750 M1442054 1 Headend [***]
Transmitter ITS/Axcera 1750 M1443054 1 Headend [***]
Transmitter ITS/Axcera 1750 M1444054 Headend [***]
Transmitter ITS/Axcera 1750 M1445054 Headend [***]
Transmitter ITS/Axcera 1750 M1446054 Headend [***]
Transmitter ITS/Axcera 1750 M1447054 Headend [***]
Transmitter ITS/Axcera 1750C 14968 1 Headend [***]
Transmitter ITS/Axcera 1750C 14967 1 Headend [***]
Transmitter ITS/Axcera 1750C 14970 1 Headend [***]
Transmitter ITS/Axcera 1750C 14971 1 Headend [***]
Transmitter ITS/Axcera 1750 M1195034 1 Headend [***]
Transmitter ITS/Axcera 1750 M1196034 1 Headend [***]
Transmitter ITS/Axcera 1750 M1197034 1 Headend [***]
Scrambling GI/Tocom HVP 4 Headend [***]
STL MRC 905900 1 Headend [***]
STL MRC 905900 1 Headend [***]
STL MRC 905900 1 Headend [***]
STL MRC 905900 1 Headend [***]
Modulator Standard MOD 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
STL MRC 905900 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satellite Dish Maralite 3.7 4 Headend [***]
Satellite Dish Headend [***]
Satellite Dish Headend [***]
Satellite Dish Headend [***]
Stero Generator Learning MTS-2C 8 Headend
Baseband Switch EAS R177M 4 Headend [***]
Generator Kohler 150ROZJ 1 Headend [***]
AC BARD 5 TON Wall Lessor supplied 2 Headend
STL Dishes Andrew 8' 3 Headend
MMDS RX Dish Andrew 2.5-2.68 8' 1 Headend
Video Switcher Monroe MP-8 1 Headend
</TABLE>
[*** Confidential Treatment Requested]
[***] Equipment Inventory
<TABLE>
<CAPTION>
Type Sub-Type Manufacturer Model or Spec Serial # Quan. Facility Channel
---- ------------------ ------------------- --------------- ---------------- ----- ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Antenna (Transmit) OMNI Andrew HMD 16HO N/A 2 Headend N/A
Waveguide Andrew EW-130 110' Headend
Waveguide Andrew EW-20 225' Headend
Waveguide Andrew EW-20 225' Headend
Combiner Filterplexer MFC 9004S 5 Headend [***]
Transmitter EMCEE TTS10HS 838 1 Headend [***]
Transmitter EMCEE TTS10HS 839 1 Headend [***]
Transmitter EMCEE TTS10HS 840 1 Headend [***]
Transmitter EMCEE TTS10HS 841 1 Headend [***]
Transmitter EMCEE TTS10HS 1317 1 Headend [***]
Transmitter EMCEE TTS10HS 1318 1 Headend [***]
Transmitter EMCEE TTS10HS 1319 1 Headend [***]
Transmitter EMCEE TTS10HS 1320 1 Headend [***]
Transmitter EMCEE TTS10HS 842 1 Headend [***]
Transmitter EMCEE TTS10HS 843 1 Headend [***]
Transmitter EMCEE TTS10HS 844 1 Headend [***]
Transmitter EMCEE TTS10HS 845 1 Headend [***]
Transmitter EMCEE TTS10HS 850 1 Headend [***]
Transmitter EMCEE TTS10HS 851 1 Headend [***]
Transmitter EMCEE TTS10HS 852 1 Headend [***]
Transmitter EMCEE TTS10HS 853 1 Headend [***]
Transmitter EMCEE TTS10HS 854 1 Headend [***]
Transmitter EMCEE TTS10HS 855 1 Headend [***]
Transmitter EMCEE TTS10HS 856 1 Headend [***]
Transmitter EMCEE TTS10HS 857 1 Headend [***]
Amplifier EMCEE TSA50HS 838 1 Headend [***]
Amplifier EMCEE TSA50HS 839 1 Headend [***]
Amplifier EMCEE TSA50HS 840 1 Headend [***]
Amplifier EMCEE TSA50HS 841 1 Headend [***]
Amplifier EMCEE TSA50HS 1317 1 Headend [***]
Amplifier EMCEE TSA50HS 1318 1 Headend [***]
Amplifier EMCEE TSASOHS 1319 1 Headend [***]
Amplifier EMCEE TSA50HS 1320 1 Headend [***]
Amplifier EMCEE TSA50HS 842 1 Headend [***]
Amplifier EMCEE TSA50HS 843 1 Headend [***]
Amplifier EMCEE TSA50HS 844 1 Headend [***]
Amplifier EMCEE TSA50HS 845 1 Headend [***]
Amplifier EMCEE TSA50HS 850 1 Headend [***]
Amplifier EMCEE TSA50HS 851 1 Headend [***]
Amplifier EMCEE TSA50HS 852 1 Headend [***]
Amplifier EMCEE TSA50HS 853 1 Headend [***]
Amplifier EMCEE TSA50HS 854 1 Headend [***]
Amplifier EMCEE TSA50HS 855 1 Headend [***]
Amplifier EMCEE TSA50HS 856 i Headend [***]
Amplifier EMCEE TSA50HS 857 1 Headend [***]
Upconverter Comwave 1751 1 Headend [***]
Amplifier Comwave S Band 1751 1 Headend [***]
Driver Comwave SDA 2500 11974 1 Headend [***]
Amplifier Comwave SD 2500 11974 1 Headend [***]
Scrambling GI/Tocom HVP 3 Headend [***]
Satelite Receiver GI DSR4500 1 Headend
Satelite Receiver SA POWERVU 1 Headend
Satelite Receiver GI DSR4500 1 Headend
Satelite Receiver SA POWERVU 1 Headend
Satelite Receiver Standard AGILE 1 Headend
Satelite Receiver Standard STANDARD 1 Headend
Satelite Receiver Standard STANDARD 1 Headend
Satelite Receiver Standard STANDARD 1 Headend
Satelite Receiver Standard STANDARD 1 Headend
Satelite Receiver Standard STANDARD 1 Headend
Satelite Receiver SA POWERVU 1 Headend
Satelite Receiver GI DSR4500 1 Headend
Satelite Receiver GI DSR 4400X 1 Headend
Satelite Receiver Standard STANDARD 1 Headend
Satelite Receiver Standard STANDARD Headend
Satelite Receiver Standard STANDARD 1 Headend
Satelite Receiver Standard STANDARD 1 Headend
Satelite Receiver Standard STANDARD 1 Headend
Satelite Receiver Standard STANDARD Headend
Satelite Receiver Standard STANDARD 1 Headend
Satelite Receiver Standard STANDARD 1 Headend
Satelite Receiver Standard STANDARD 1 Headend
modulator Bindr long agll 1 Headend
modulator SA 6340 21 Headend
modulator Comwave TVM 102 2 Headend
Satelite Receiver Learning sap gen 1 Headend
Tuner Monroe 3000 1 Headend
Receiver Monroe Cut tone 1 Headend
Relay Monroe Aud/Vis 1 Headend
Receiver MRC Ma-12x 2 Headend
Satellite Dish Comtech Simuisat 1 Headend [***]
UHF Antenna Local Scala Ch 27 1 Headend
Generator Kohler 100R262 1 Headend
AC Sun 42000 BTU 3 Headend
Tower Rohn SSV 200' 1 Headend
Building Rohn EST 1084 96 12' x 1 Headend
Propane Tank Trinity 109624 190 Gal. 1 Headend
TV Sony 19" 1 Headend
Surge Suppresso DataSystem P24XAA 1 Headend
Transfer Switch Kohler 1 Headend
Rack EMCEE 72" 9 Headend
Compessor Andrew MT 3000 1 Headend
LoopCouplar MFC 9085 OdB Dw 1 Headend
Site Lock EMCEE SLR 33 1 Headend
Transmitter EMCEE TTS20 408 1 Headend [***]
</TABLE>
[*** Confidential Treatment Requested]
[***] Equipment Inventory
<TABLE>
<CAPTION>
Type Sub-Type Manufacturer Model or Spec Serial # Quan. Facility Channel
---- ------------------ ------------------- --------------- ---------------- ----- ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Antenna (Transmit) DIRECTIONAL Andrew HMD32VC N/A 1 Headend [***]
Antenna (Transmit) OMNI Andrew HMD12V0-W N/A 1 Headend
Antenna (Transmit) DIRECTIONAL Andrew HMD16VC-Q 1 Headend
Waveguide Andrew EW-20 170 Headend
Combiner Filterplexer ITS/Axcera 676D ADJACENT 7 [***]
Transmitter ITS/Axcera 1750C 1 Headend [***]
Transmitter ITS/Axcera 1750C 1 Headend [***]
Transmitter ITS/Axcera 1750C 1 Headend [***]
Transmitter ITS/Axcera 1750C 1 Headend [***]
Transmitter ITS/Axcera 1750C 1 Headend [***]
Transmitter ITS/Axcera 1750C 1 Headend [***]
Transmitter ITS/Axcera 1750C 1 Headend [***]
Transmitter ITS/Axcera 1750C 1 Headend [***]
Transmitter ITS/Axcera 1750C 1 Headend [***]
Transmitter ITS/Axcera 1750C 1 Headend [***]
Transmitter ITS/Axcera 1750C 1 Headend [***]
Transmitter ITS/Axcera 1750C 1 Headend [***]
Transmitter ITS/Axcera 1750C 1 Headend [***]
Transmitter ITS/Axcera 1750C 1 Headend [***]
Transmitter ITS/Axcera 1750C 1 Headend [***]
Transmitter ITS/Axcera 1750C 1 Headend [***]
Transmitter ITS/Axcera 1615E 1 Headend [***]
Transmitter ITS/Axcera 1615E 1 Headend [***]
Transmitter ITS/Axcera 1615E 1 Headend [***]
Transmitter ITS/Axcera 1615E 1 Headend [***]
Transmitter ITS/Axcera 1615E 1 Headend [***]
Transmitter ITS/Axcera 1615E 1 Headend [***]
Transmitter ITS/Axcera 1615E 1 Headend [***]
Transmitter ITS/Axcera 1615E 1 Headend [***]
Transmitter ITS/Axcera 1750C 1 Headend [***]
Transmitter ITS/Axcera 1750C 1 Headend [***]
Transmitter ITS/Axcera 1750C 1 Headend [***]
Transmitter ITS/Axcera 1750C 1 Headend [***]
Scrambling GI/Tocom HVP 4 Headend [***]
Satelite Receiver Drake DRAKE 1240 1 Headend [***]
Satelite Receiver Standard STANDARD 1 Headend [***]
Satelite Receiver Blonder Tounge BLND TNG 6175 1 Headend [***]
Satelite Receiver GI DSR4400 1 Headend [***]
Satelite Receiver Standard STANDARD 1 Headend [***]
Satelite Receiver Standard STANDARD 1 Headend [***]
Satelite Receiver SA SA PWR VW 1 Headend [***]
Satelite Receiver Standard STANDARD 1 Headend [***]
Satelite Receiver Drake DRAKE 1240 1 Headend [***]
Demodulator DMD 141A 1 Headend [***]
Satelite Receiver Standard STANDARD 1 Headend [***]
Satelite Receiver sa SA PWR VW 1 Headend [***]
Satelite Receiver GI DSR4400X 1 Headend [***]
Demodulator DM141A 1 Headend [***]
Satelite Receiver Headend [***]
Demodulator DM141A 1 Headend [***]
Satelite Receiver GI DSR 4200V 1 Headend [***]
Satelite Receiver Standard STANDARD 1 Headend [***]
Satelite Receiver Headend [***]
Satelite Receiver Standard STANDARD 1 Headend [***]
Satelite Receiver Standard STANDARD 1 Headend [***]
Satelite Receiver Standard STANDARD 1 Headend [***]
Satelite Receiver Standard STANDARD 1 Headend [***]
Demodulator DM141A 1 Headend [***]
Satelite Receiver Standard STANDARD 1 Headend [***]
Satelite Receiver Standard STANDARD 1 Headend [***]
Satelite Receiver Standard STANDARD 1 Headend [***]
Satelite Receiver Standard STANDARD 1 Headend [***]
Satellite Dish PATRIOT 3.7 1 Headend [***]
Satellite Dish SAM I 2.5 1 Headend [***]
Satellite Dish COMTECH 3 1 Headend [***]
Satellite Dish COMTECH 3 1 Headend [***]
Satellite Dish COMTECH 3 1 Headend [***]
Satellite Dish SCI-ATL 3 1 Headend [***]
UHF Antenna Local Scala CH 30 1 Headend
Generator KATOLIGHT 12TC2A 1 Headend
AC Timberline 42000 BTU 3 Headend
</TABLE>
[*** Confidential Treatment Requested]
[***] Equipment Inventory
<TABLE>
<CAPTION>
Type Sub-Type Manufacturer Model or Spec Serial # Quan. Facility Channel
---- ------------------ ------------------- --------------- ---------------- ----- ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Antenna (Transmit) Directional/ver Bogner B16SH-V 1 Headend [***]
Antenna (Transmit) Directional/ver Bogner B16SD-V 1 Headend
Waveguide Andrew LDF6-50 300' Headend
Combiner Filterplexer 1 Headend
Notch Filter Thales 3 Headend [***]
Transmitter Agile Thales SBCA-50C 2 Headend [***]
Transmitter Thales SDA 1500 1 Headend [***]
Modulator Thales IRT 1000 1 Headend
Reference Drawer Thales 2126 2 Headend [***]
Rack ITS 72" 1 Headend
Programmer Thales 4ch 2 Headend [***]
Receiver Blndr Tongue CDSR-6198 2 Headend
LNA Blndr Tongue DTV32 1 Headend
Dish receive Blndr Tongue DS2078 1 Headend
Switcher 2x4 Blndr Tongue DTV3x4 1 Headend
</TABLE>
[*** Confidential Treatment Requested]
[***] Equipment Inventory
<TABLE>
<CAPTION>
Type Sub-Type Manufacturer Model or Spec Serial # Quan. Facility Channel
---- -------- ------------- ------------- ------------------------- ----- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Tower 40' Rohn N/A N/A 1 N/A Headend [***]
Transmit
antenna 14.5DB
gain Andrew HMD8VC-W05 N/A 2 N/A Headend
Combiner A-group
combiner ComWave 9004S-A 1 N/A Headend
Combiner D-group
combiner ComWave 9004S-D 1 N/A Headend
Combiner E-group
combiner ComWave 9004S-E 1 N/A Headend
Combiner F-group
combiner ComWave 9004S-F 1 N/A Headend
Combiner G-group
combiner ComWave 9004S-G 1 N/A Headend
Combiner H-group
combiner ComWave 9004S-H 1 N/A Headend
Diplexer G2 A/V
combiner Microwave 10759-G2 1 N/A Headend
Diplexer G3 A/V
combiner Microwave 10759-G3 1 N/A Headend
Diplexer G4 A/V
combiner Microwave 10759-G4 1 N/A Headend
Transmitter
/Agile 10 Watt COMWAVE SBSA-10 S4655 1 N/A Headend [***]
Upconverter 10 Watt COMWAVE SB010MRC S1049 1 N/A Headend [***]
Amplifier 10 Watt COMWAVE SB010MRC S1049 1 N/A Headend [***]
Upconverter 10 Watt COMWAVE SB010MRC S1050 1 N/A Headend [***]
Amplifier 10 Watt COMWAVE SBO10MRC S1050 1 N/A Headend [***]
Transmitter 10 Watt COMWAVE SB010A S1907 1 N/A Headend [***]
Upconverter 10 Watt COMWAVE SB010MRC S1052 1 N/A Headend [***]
Amplifier 10 Watt COMWAVE SB010MRC S1052 1 N/A Headend [***]
Transmitter 10 Watt COMWAVE SB010A-1 S3238 1 N/A Headend [***]
Transmitter 10 Watt COMWAVE SB010A-1 S3122 1 N/A Headend [***]
Transmitter 10 Watt COMWAVE SB010A-1 S3121 1 N/A Headend [***]
Transmitter 10 Watt COMWAVE SB010A-1 S3124 1 N/A Headend [***]
Transmitter 10 Watt COMWAVE SB010A S1863 1 N/A Headend [***]
Transmitter 10 Watt COMWAVE SB010A S1864 1 N/A Headend [***]
Transmitter 10 Watt COMWAVE SB010A S1065 1 N/A Headend [***]
Transmitter 10 Watt COMWAVE SB010A S1866 1 N/A Headend [***]
Transmitter 20 Watt EMCEE TTS20HS 488 1 N/A Headend [***]
Transmitter 20 Watt EMCEE TTS20HS 489 1 N/A Headend [***]
Transmitter 20 Watt EMCEE TTS20HS 490 1 N/A Headend [***]
Transmitter 20 Watt EMCEE TTS20HS 491 1 N/A Headend [***]
Transmitter 20 Watt COMWAVE SB010A S3238 1 N/A Headend [***]
Transmitter 20 Watt ITS 1610E 3629071 1 N/A Headend [***]
Transmitter 20 Watt ITS 1610E 3610071 1 N/A Headend [***]
Transmitter 20 Watt ITS 1710 M18010 1 N/A Headend [***]
Transmitter 20 Watt EMCEE TTS20HS 751 1 N/A Headend [***]
Transmitter 20 Watt EMCEE TTS20HS 752 1 N/A Headand [***]
Transmitter 20 Watt EMCEE TTS20HS 765 1 N/A Headend [***]
Modulator Comwave Comwave TVM-102 S4719 1 N/A Headend [***]
modulator Comwave Comwave TVM-102 S6503 1 N/A Headend [***]
Modulator Comwave Comwave TVM-102 2674 1 N/A Headend [***]
Modulator Catel Catel CTM20 300384 1 N/A Headend [***]
Modulator Catel Catel CTM20 300316 1 N/A Headend [***]
Modulator Emcee Emcee EM1 300576 1 N/A Headend [***]
Modulator Emcee Emcee EM1 6750196 1 N/A Headend [***]
Modulator IF S/A 6340 8817 1 N/A Headend [***]
Modulator IF S/A 6340 9491 1 N/A Headend [***]
Modulator IF S/A 6340 9494 1 N/A Headend [***]
Modulator Comwave Comwave TVM-102 S2896 1 N/A Headend [***]
Modulator ITS ITS ITS-1610E 3629071 1 N/A Headend [***]
Modulator ITS ITS ITS-1610E 3610071 1 N/A Headend [***]
Modulator ITS ITS ITS-1710 M18010 1 N/A Headend [***]
Modulator IF S/A 6340 9485 1 N/A Headend [***]
Modulator IF S/A 6340 8733 1 N/A Headend [***]
Modulator IF S/A 6340 8787 1 N/A Headend [***]
Modulator Catel Catel CTM20 802384- 1 N/A Headend [***]
Modulator Catel Calel CTM20 80384-8 1 N/A Headend [***]
Modulator Comwave Comwave TVM-102 301978 1 N/A Headend [***]
Modulator RCA RCA CTM20 797 1 N/A Headend [***]
Modulator Catel Catel CTM20 30089 1 N/A Headend [***]
Modulator Comwave Comwave TVM-102 68119 1 N/A Headend [***]
EAS Monroe Electr R177M Master 116943 1 N/A Headend [***]
EAS Monroe Electr R177M Master 116944 1 N/A Headend [***]
EAS Monroe Electr R177M Master 116945 1 N/A Headend [***]
IRD S/A 9640 CC3500 1 N/A Headend [***]
Sat.
Recivers Standard IRD II 52U820 1 N/A Headend [***]
Sat.
Recivers Standard IRD II 52U820 1 N/A Headend [***]
Sat.
Recivers Standard IRD II 81U300 1 N/A Headend [***]
IRD S/A Powervu DV3 3828801 1 N/A Headend [***]
IRD S/A 9650 CE1S00 1 N/A Headend [***]
IRD S/A 9650 CC3S00 1 N/A Headend [***]
IRD S/A 9650 CE1S00 1 N/A Headend [***]
Sat.
Recivers Standard IRD II 58U940 1 N/A Headend [***]
IRD S/A 9650 CL2S00 1 N/A Headend [***]
IRD S/A 9650 CE1S00 1 N/A Headend [***]
IRD S/A IRD II 52U820 1 N/A Headend [***]
IRD S/A 9650 CE1S00 1 N/A Headend [***]
IRD S/A 9650 CCFS00 1 N/A Headend [***]
IRD S/A 9650 CL2S00 1 N/A Headend [***]
Sat.
Recivers Blonder Tong Vid. Cipher
RS NO SER 1 N/A Headend [***]
IRD S/A 9650 C62S00 1 N/A Headend [***]
IRD S/A Vid. Cipher
II Plu VE0S00 1 N/A Headend [***]
IRD S/A 9650 CC3S00 1 N/A Headend [***]
Sat.
Recivers Drake Vid. Cipher
II Plu 900248 1 N/A Headend [***]
Sat
Recivers Standard IRD II 81U300 1 N/A Headend [***]
Demodulator Holland S/A HDM 8397813 1 N/A Headend [***]
Demodulator Holland S/A HDM 8397682 1 N/A Headend [***]
Demodulator Holland S/A HDM 7716516 1 N/A Headend [***]
Off-Air
Receive
anten Unknown 1 Unknown N/A 1 N/A Headend
Off-Air
Receive
anten Unknown 1 Unknown N/A 1 N/A Headend
Low Noise
UHF Pre-a N/A Blonder Tong 1264 1 N/A Headend
A/C 5 ton Carrier 53QAB060-5 1 N/A Headend [***]
A/C Window
unit Kenmora 11800BTU 1 N/A Headend [***]
A/C Window
unit Fedders N/A 1 N/A Headend [***]
</TABLE>
[*** Confidential Treatment Requested]
[***] Equipment Inventory
<TABLE>
<CAPTION>
Type Sub-Type Manufacturer Model or Spec Serial # Quan. Facility Channel
---- ------------------ ------------------- --------------- ---------------- ----- ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Antenna (Transmit) DIRECTIONAL Andrew HMD12VP N/A 1 Headend [***]
Antenna (Transmit) OMNI Andrew Headend
Antenna (Transmit) DIRECTIONAL Andrew HMD12VP N/A 1 Headend
Waveguide Andrew EW-20 200 Headend
Combiner Filterplexer ITS/Axcera 676D ADJACENT 8 Headend [***]
Transmitter ITS/Axcera Headend [***]
Transmitter ITS/Axcera Headend [***]
Transmitter ITS/Axcera 1610E M0134043 1 Headend [***]
Transmitter ITS/Axcera 1610E M0135043 1 Headend [***]
Transmitter ITS/Axcera 1720A 6146085 1 Headend [***]
Transmitter ITS/Axcera 1720A 6147085 1 Headend [***]
Transmitter ITS/Axcera 1720A 6148085 1 Headend [***]
Transmitter ITS/Axcera 1720A 6149085 1 Headend [***]
Transmitter ITS/Axcera 1720C 10005126 1 Headend [***]
Transmitter ITS/Axcera 1720C 10006126 1 Headend [***]
Transmitter ITS/Axcera 1610E M0136043 1 Headend [***]
Transmitter ITS/Axcera 1610E M0137043 1 Headend [***]
Transmitter ITS/Axcera 1720C 10001126 1 Headend [***]
Transmitter ITS/Axcera 1720C 10002126 1 Headend [***]
Transmitter ITS/Axcera 1720C 10003126 1 Headend [***]
Transmitter ITS/Axcera 1720C 10004126 1 Headend [***]
Transmitter ITS/Axcera 1610E M0138043 1 Headend [***]
Transmitter ITS/Axcera 1610E M0139043 1 Headend [***]
Transmitter ITS/Axcera 1610E M0140043 1 Headend [***]
Transmitter ITS/Axcera 1610E M0141043 1 Headend [***]
Transmitter ITS/Axcera 1610E 3448061 1 Headend [***]
Transmitter ITS/Axcera 1610E 3449061 1 Headend [***]
Transmitter ITS/Axcera 1610E 3450061 1 Headend [***]
Transmitter ITS/Axcera 1610E 3451061 1 Headend [***]
Transmitter TS/Axcera 1610E M0748123 1 Headend [***]
Transmitter ITS/Axcera 1610E M0479123 1 Headend [***]
Transmitter ITS/Axcera 1610E M0750123 1 Headend [***]
Transmitter ITS/Axcera 1610E M0751123 1 Headend [***]
Transmitter ITS/Axcera 1610E 3711081 1 Headend [***]
Transmitter ITS/Axcera 1610E M0147043 1 Headend [***]
Transmitter ITS/Axcera 1610E M0148043 1 Headend [***]
Scrambling Gl/Tocom HVP 4 Headend [***]
AML CABLE AML 3 CH. 1 Headend [***]
Modulator Standard MOD 3 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
AML Cable AML AML 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
off air mod off air Mod off air 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
STL MRC 905900 1 Headend [***]
AML Cable AML AML 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satelite Receiver DX DX Sat. DIR 657 1 Headend [***]
Satellite Dish Simulsate ATCi 5.5 1 Headend [***]
Satellite Dish Headend [***]
Satellite Dish Headend [***]
Satellite Dish Headend [***]
Stero Generator Leamlnq MTS-2C 8 Headend
Video Switcher Monroe MP-8 1 Headend
Baseband Switch EAS R177M 4 Headend [***]
Generator Kohler 45KW 1 Headend
AC 5 TON Wall 2 Headend
STL Dishes Andrew 6' 1 Headend
Off Air Ant. Bogner quad array 1 Headend [***]
</TABLE>
[*** Confidential Treatment Requested]
[***] Equipment Inventory
<TABLE>
<CAPTION>
Type Sub-Type Manufacturer Model or Spec Serial # Quan. Facility Channel
---- -------- ------------- ------------- ------------------------- ----- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Transmit Omni Andrews HMD8VO-WNQ N/A 1 N/A Headend [***]
Hardline 50' ANDREW 1 5/8" N/A 1 N/A Headend [***]
Combiner A Axcera(ITS-
ADC) ITS-685E none on combiners 1 N/A Headend [***]
Combiner C Axcera(ITS-
ADC) ITS-685E none on combiners 1 N/A Headend [***]
Transmitter 20watts ITS (AXCERA) ADC-5522 15097 1 N/A Headend [***]
Transmitter 20watts ITS (AXCERA) ADC-5522 15098 1 N/A Headend [***]
Transmitter 20watts ITS (AXCERA) ADC-5522 15099 1 N/A Headend [***]
Transmitter 20watts ITS (AXCERA) ADC-5522 15100 1 N/A Headend [***]
Transmitter 20watts ITS (AXCERA) ADC-5522 15101 1 N/A Headend [***]
Transmitter 20watts ITS (AXCERA) ADC-5522 15102 1 N/A Headend [***]
Transmitter 20watts ITS (AXCERA) ADC-5522 15103 1 N/A Headend [***]
Transmitter 20watts ITS (AXCERA) ADC-5522 15104 1 N/A Headend [***]
Transmitter 20watts ITS (AXCERA) ADC-5522 2545 1 N/A Headend [***]
Receiver dss DISH 1000 R0019844883/S000301515879 1 N/A Headend [***]
Receiver dss DISH 1000 R0020199420/S000301508707 1 N/A Headend [***]
Receiver dss DISH 1000 R0020591850/S000301507090 1 N/A Headend [***]
Receiver dss DISH 1000 R0020594840/S000301515273 1 N/A Headend [***]
Receiver dss DISH 1000 R0020597817/S000295252743 1 N/A Headend [***]
Receiver dss DISH 1000 R0020590833/S000301507494 1 N/A Headend [***]
Receiver dss DISH 1000 R0019604919/S000301516283 1 N/A Headend [***]
Receiver dss DISH 1000 R0020591722/S000301495170 1 N/A Headend [***]
Racks 72" unknow 21" wide N/A 1 N/A Headend [***]
</TABLE>
[*** Confidential Treatment Requested]
[***] Equipment Inventory
<TABLE>
<CAPTION>
Type Sub-Type Manufacturer Model or Spec Serial # Quan. Facility Channel
---- ---------- ------------- ------------- ------------------------- ----- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Antenna
Transmit Horizontal Andrew HMD-12HO/w0.5 N/A 2 Windom Headend
Wavegulde 315' ANDREW EW-20 N/A 2 Windom Headend
Transition
Jumpers 12' ANDREW 7/8" Air N/A
Transition
Jumpers 4' ANDREW 7/8" Air N/A 2 Windom Headend
Connectors Wr340 to
7/8" Andrew Wr340 to 7/8" N/A 4 Windom Headend
Combiner A-Group MFC 9004 N/A 1 Windom Headend [***]
Combiner B-Group MFC 9004 N/A 1 Windom Headend [***]
Combiner D-Group MFC 9004 N/A 1 Windom Headend [***]
Combiner E-Group MFC 9004 N/A 1 Windom Headend [***]
Combiner F-Group MFC 9004 N/A 1 Windom Headend [***]
Combiner H-Group MFC 9004 N/A 1 Windom Headend [***]
Transmitter 20W Comwave SB010A 8560 1 Windom Headend [***]
Transmitter 20W Comwave SB010A 11826 1 Windom Headend [***]
Transmitter 10W Comwave SB010A 1929 1 Windom Headend [***]
Transmitter 10W Emcee TTS10HS 374 1 Windom Headend [***]
Transmitter 10W Emcee TTS10HS 373 1 Windom Headend [***]
Transmitter 10W Emcee TTS10HS 376 1 Windom Headend [***]
Transmitter 10W Comwave SB010A 2893 1 Windom Headend [***]
Transmitter 10W Comwave SB010A 3123 1 Windom Headend [***]
Transmitter 10W Comwave SB010A 2707 1 Windom Headend [***]
Transmitter 10W Comwave SB010-MRC 1314 1 Windom Headend [***]
Transmitter 50W Comwave SB010-MRC 1876 1 Windom Headend [***]
Transmitter 50W Comwave SB010-MRC 1877 1 Windom Headend [***]
Transmitter 50W Comwave SB010-MRC 1878 1 windom Headend [***]
Transmitter 50W Comwave SB010-MRC 1879 1 Windom Headend [***]
Transmitter 5OW Comwave SB010-MRC 1880 1 Windom Headend [***]
Transmitter 50W Comwave SB010-MRC 1881 1 Windom Headend [***]
Transmitter 50W Comwave SB010-MRC 1882 1 Wlndom Headend [***]
Transmitter 50W Comwave SB010-MRC 1883 1 Windom Headend [***]
Transmitter 50W Comwave SB050B 3146 1 Windom Headend [***]
Transmitter 6OW Comwave SB060B 3271 1 Wlndom Headend [***]
Transmitter
reference 50W Comwave SB050B 3273 1 Windom Headend [***]
tray 10MHZ Comwave 3147 1 Windom Headend [***]
Modulator IF Comwave TVM-102 8559 1 Windom Headend [***]
Modulator IF Comwave TVM-103 11826 1 Windom Headend [***]
Modulator IF Catel CTM-20 2895 1 Windom Headend [***]
Modulator IF Catel CTM-20 1905 1 Windom Headend [***]
Modulator IF Catel CTM-20 No# 1 Windom Headend [***]
Modulator IF Catel CTM-20 6019 1 Windom Headend [***]
Modulator IF Catel CTM-20 1458 1 Windom Headend [***]
Modulator IF Comwave TVM-102 7214 1 Windom Headend [***]
Modulator IF Catel CTM-20 No# 1 Windom Headend [***]
Modulator IF Comwave TVM-102 3572 1 Windom Headend [***]
Modulator IF Catel CTM-20 1876 1 Wlndom Headend [***]
Modulator IF Catel CTM-20 1877 1 Wlndom Headend [***]
Modulator IF Catel CTM-20 1878 1 Windom Headend [***]
Modulator IF Catel CTM-20 1879 1 windom Headend [***]
Modulator IF Catel CTM-20 1880 1 Windom Headend [***]
Modulator IF Catel CTM-20 1881 1 Windom Headend [***]
Modulator IF Catel CTM-20 1882 1 Windom Headend [***]
Modulator IF Catel CTM-20 1883 1 Windom Headend [***]
Modulator IF Comwave TVM-102 3146 1 Windom Headend [***]
Modulator IF Comwave TVM-103 3271 1 Windom Headend [***]
Modulator IF Comwave TVM-104 4600 1 Windom Headend [***]
Demodulator IF Olsen ODT-2000 No# 1 Windom Headend [***]
Enclosure General
Instruments HVPIII D500000745343 1 Windom headend
Enclosure General
Instruments HVPIII 2151300042 1 Windom headend
Encoding
Cards General
Instruments Data Card 28 Windom headend
EAS Switcher Monroe R177m n/a 4 Windom Headend
EAS Control
Unit Hollywell M1P921S 2624 1 Windom headend
EAS Printer Hollywell 9509-15577 d5h22254 1 Windom headend
Sat
Receivers STANDARD Agile IRD Windom Headend
Sat
Receivers STANDARD Agile IRD Windom Headend
Sat
Receivers STANDARD Agile IRD Windom Headend [***]
Sat
Receivers Sci Atl 8650 Windom Headend [***]
Sat
Receivers Sci Atl 9650 Windom Headend [***]
Sat
Receivers Sci Atl 9650 Windom Headend [***]
Sat
Receivers Sci Atl 9650 Windom Headend [***]
Sat
Receivers STANDARD MT-650 Windom Headend [***]
Sat
Receivers STANDARD MT-651 Windom Headend [***]
Sat
Receivers STANDARD MT-652 Windom Headend [***]
Sat
Receivers Sci Atl 9650 Windom Headend [***]
Sat
Receivers STANDARD MT-650 Windom Headend [***]
Sat
Receivers Sci Atl 9650 Windom Headend [***]
Sat
Receivers Sci Atl 9650 Windom Headend [***]
Sat
Receivers Sci Atl 9650 Windom Headend [***]
Sat
Receivers Sci Atl 9650 Windom Headend [***]
Sat
Receivers Sci Atl 9650 Windom Headend [***]
Sat
Receivers Gl ASR-1000 Windom Headend [***]
Sat
Receivers Sci Atl 9650 Windom Headend [***]
Sat
Receivers Sci Atl 9650 Windom Headend [***]
Sat Dish 3.7M SA Windom Headend [***]
Sat Dish 3.2M Macom Windom Headend [***]
Sat Dish 3.2M Macom Windom Headend [***]
Sat Dish 3.7M Patriot Windom Headend [***]
Dehydrator Andrew MT-300 1809 1 Windom headend [***]
Rack 72' N/A N/A N/A 8 Windom Headend
monitoring
Device Alpha
Max DPS Alpha Max 82A 1 Windom Headend
monitoring
Device Alpha
Max DPS Alpha Max UPS 1 Windom Headend
A/C 3
Ton/
Condenser Weather Kinq 10AJA6001 6764 1 Windom Headend [***]
A/C 3 Ton
blower GMC A060-00 9504046370 1 Windom Headend [***]
A/C 3 ton Bard WA 361 1 Windom Headend [***]
A/C 1 Ton Carrier 51 CM 1 Windom Headend [***]
</TABLE>
[*** Confidential Treatment Requested]
[***] Equipment Inventory
<TABLE>
<CAPTION>
Type Sub-Type Manufacturer Model or Spec Serial # Quan. Facility Channel
---- -------- ------------- ------------- ------------------------- ----- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Transmit Omni Andrews HMD12H N/A 1 N/A Headend [***]
Transmit Omni Andrews HMD12H N/A 1 N/A Headend [***]
Transmit Cardioid NSI 20SA90V N/A 1 N/A Headend [***]
Waveguide 130' ANDREW EW-20 N/A 1 N/A Headend [***]
Waveguide 130' ANDREW EW-20 N/A 1 N/A Headend [***]
Hardline 150' ANDREW 1 5/8" N/A 1 N/A Headend [***]
Combiner H Axcera(ITS-
ADC) 1693D 4423032 1 N/A Headend [***]
Combiner B Axcera(ITS-
ADC) 1693D 12918 1 N/A Headend [***]
Combiner D Axcera(ITS-
ADC) 1694D M0347073 1 N/A Headend [***]
Combiner F Axcera(ITS-
ADC) 1994D 4465042 1 N/A Headend [***]
Combiner A Axcera(ITS-
ADC) 1694D 5146122 1 N/A Headend [***]
Combiner C Axcera(ITS-
ADC) 1694D M0346073 1 N/A Headend [***]
Combiner E Axcera(ITS-
ADC) 1694D 4463042 1 N/A Headend [***]
Combiner G Axcera(ITS-
ADC) 1694D 12917 1 N/A Headend [***]
Diplexer A-1 Axcera(ITS-
ADC) ITS-685E 5142122-A1 1 N/A Headend [***]
Diplexer A-2 Axcera(ITS-
ADC) ITS-685E 5143122-A2 1 N/A Headend [***]
Diplexer A-3 Axcera(ITS-
ADC) ITS-685E 5144122-A3 1 N/A Headend [***]
Diplexer A-4 Axcera(ITS-
ADC) ITS-685E 5145122-A4 1 N/A Headend [***]
Diplexer B-1 Axcera(ITS-
ADC) ITS-685E 12922-B1 1 N/A Headend [***]
Diplexer B-2 Axcera(ITS-
ADC) ITS-685E 12922-B2 1 N/A Headend [***]
Diplexer B-3 Axcera(ITS-
ADC) ITS-685E 12922-B3 1 N/A Headend [***]
Diplexer B-4 Axcera(ITS-
ADC) ITS-885E 12922-B4 1 N/A Headend [***]
Diplexer C-1 Axcera(ITS-
ADC) ITS-685E W0344073-C1 1 N/A Headend [***]
Diplexer C-2 Axcera(ITS-
ADC) ITS-685E M0345073-C2 1 N/A Headend [***]
Diplexer C-3 Axcera(ITS-
ADC) ITS-685E M0348073-C3 1 N/A Headend [***]
Diplexer C-4 Axcera(ITS-
ADC) ITS-685E M0349073-C4 1 N/A Headend [***]
Diplexer D-1 Axcera(ITS-
ADC) ITS-685E M0350073-D1 1 N/A Headend [***]
Diplexer D-2 Axcera(ITS-
ADC) ITS-685E M0351O73-D2 1 N/A Headend [***]
Dlplexer D-3 Axcera(ITS-
ADC) ITS-685E M0352O73-D3 1 N/A Headend [***]
Diplexer D-4 Axcera(ITS-
ADC) ITS-685E M0353073-D4 1 N/A Headend [***]
Diplexer E-1 Axcera(ITS-
ADC) ITS-685E 5974065-E1 1 N/A Headend [***]
Diplexer E-2 Axcera(ITS-
ADC) ITS-685E 5975065-E2 1 N/A Headend [***]
Diplexer E-3 Axcera(ITS-
ADC) ITS-685E 881607&E3 1 N/A Headend [***]
Diplexer E-4 Axcera(ITS-
ADC) ITS-685E 8818076-E4 1 N/A Headend [***]
Diplexer F-1 Axcera(ITS-
ADC) ITS-685E 4568042-F1 1 N/A Headend [***]
Diplexer F-2 Axcera(ITS-
ADC) ITS-685E 4569042-F2 1 N/A Headend [***]
Diplexer F-3 Axcera(ITS-
ADC) ITS-685E 4570042-F3 1 N/A Headend [***]
Diplexer F-4 Axcera(ITS-
ADC) ITS-685E 4571042-F4 1 N/A Headend [***]
Diplexer G-1 Axcera(ITS-
ADC) ITS-685E 12921-G1 1 N/A Headend [***]
Diplexer G-2 Axcera(ITS-
ADC) ITS-685E 12921-G2 1 N/A Headend [***]
Diplexer G-3 Axcera(ITS-
ADC) ITS-685E 12921-G3 1 N/A Headend [***]
Diplexer G-4 Axcera(ITS-
ADC) ITS-685E 12921-G4 1 N/A Headend [***]
Diplexer H-1 Axcera(ITS-
ADC) ITS-685E 4421032-H1 1 N/A Headend [***]
Diplexer H-2 Axcera(ITS-
ADC) ITS-685E 3462051-H2 1 N/A Headend [***]
Diplexer H-3 Axcera(ITS-
ADC) ITS-685E 4422032-H3 1 N/A Headend [***]
Diplexer AGILE Axcera(ITS-
ADC) ITS-685E 44264876-ag 1 N/A Headend [***]
Transmitter 20 Watts ITS (AXCERA) 1610E 5139122-A2 1 N/A Headend [***]
Transmitter 20 Watts ITS (AXCERA) 1610E 5140122-A3 1 N/A Headend [***]
Transmitter 20 Watts ITS (AXCERA) 161OE 5141122-A4 1 N/A Headend [***]
Transmitter 20 Watts ITS (AXCERA) 1720C 12923-B1 1 N/A Headend [***]
Transmitter 20 Watts ITS (AXCERA) 1720C 12924-B2 1 N/A Headend [***]
Transmitter 20 Watts ITS (AXCERA) 1720C 12925-B3 1 N/A Headend [***]
Transmitter 20 Watts ITS (AXCERA) 1720C 12926-B4 1 N/A Headend [***]
Transmitter 20 Watts ITS (AXCERA) 1610E M0336073-C1 1 N/A Headend [***]
Transmitter 20 Watts ITS (AXCERA) 1610E M0337073-C2 1 N/A Headend [***]
Transmitter 20 Watts ITS (AXCERA) 161QE M0338073-C3 1 N/A Headend [***]
Transmitter 20 Watts ITS (AXCERA) 1610E M0339073-C4 1 N/A Headend [***]
Transmitter 20 Watts ITS (AXCERA) 1610E M0340073-D1 1 N/A Headend [***]
Transmitter 20 Watts ITS (AXCERA) 161OE M0341073-D2 1 N/A Headend [***]
Transmitter 20 Watts ITS (AXCERA) 1610E M0342073-D3 1 N/A Headend [***]
Transmitter 20 Watts ITS (AXCERA) 161OE M0343073-D4 1 N/A Headend [***]
Transmitter 50W@20W ITS (AXCERA) FA1750 6366105 AGILE 1 N/A Headend [***]
Transmitter 50W@20W ITS (AXCERA) 1750A 5971065-E2 1 N/A Headend [***]
Transmitter 50W@20W ITS (AXCERA) 1750A 8B15076-E3 1 N/A Headend [***]
Transmitter 50W@20W ITS (AXCERA) 1750A 8817075-E4 1 N/A Headend [***]
Transmitter 20 Watts ITS (AXCERA) 1720C 12086-F1 1 N/A Headend [***]
Transmitter 20 Watts ITS (AXCERA) 1720C 12087-F2 1 N/A Headend [***]
Transmitter 20 Watts ITS (AXCERA) 1720C 12088-F3 1 N/A Headend [***]
Transmitter 20 Watts ITS (AXCERA) 1720C 12089-F4 1 N/A Headend [***]
Transmitter 20 Watts ITS (AXCERA) 1720C 12624-G1 1 N/A Headend [***]
Transmitter 20 Watts ITS (AXCERA) 1720C 12625-G2 1 N/A Headend [***]
Transmitter 20 Watts ITS (AXCERA) 1720C 12626-G3 1 N/A Headend [***]
Transmitter 20 Watts ITS (AXCERA) 1720C 12627-G4 1 N/A Headend [***]
Transmitter 20 Watts ITS (AXCERA) 161OC 4419031-H1 1 N/A Headend [***]
Transmitter 20 Watts ITS (AXCERA) 1610C 3461051-H2 1 N/A Headend [***]
Transmitter 20 Watts ITS (AXCERA) 161OC 4420032-H3 1 N/A Headend [***]
Transmitter 50 Watts ITS (AXCERA) 1750 na 1 N/A Headend [***]
controller Data
Encoder
Tra Pacmono Data Enco 56988 1 N/A headend [***]
drawer Data
Card
Tray Pacmono Data Card 56988 5 N/A headend [***]
</TABLE>
[*** Confidential Treatment Requested]
[***] Equipment Inventory
<TABLE>
<CAPTION>
Type Sub-Type Manufacturer Model or Spec Serial # Quan. Facility Channel
---- -------- ------------- ------------- ------------------------- ----- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TVRO Sat.
Receiver IRD DX 775-A A0200FB36 1 IN THE CLEAR Headend [***]
TVRO Sat.
Receiver IRD DX 775-A A0200C475 1 A0200FB36 Headend [***]
TVRO Sat.
Receiver IRD DX 775-A 1536616-0 1 A0200C475 Headend [***]
TVRO Sat.
Receiver IRD SA 775-A A020C5F54 1 1536616-0 Headend [***]
TVRO Sat.
Receiver IRD DX 775-A A020C5F5C 1 A020C5F54 Headend [***]
TVRO Sat.
Receiver IRD DX 775-A A020BAC95 1 A020C5F5C Headend [***]
TVRO Sat.
Receiver IRD DX 775-A 2071339-3 1 A020BAC95 Headend [***]
TVRO Sat.
Receiver IRD SA 1500 A020B4DEB 1 2071339-3 Headend [***]
TVRO Sat.
Receiver IRD DX 1500 A02012452 1 A020B4DEB Headend [***]
TVRO Sat.
Receiver IRD DX 775A 311103489184 1 A02012452 Headend [***]
TVRO Sat.
Receiver IRD DX 4500 311121373005 1 311103489184 Headend [***]
TVRO Sat.
Receiver IRD DX 775A A020BF7EE 1 311121373005 Headend [***]
TVRO Sat.
Receiver IRD JER 775A IN THE CLEAR 1 A020BF7EE Headend [***]
TVRO Sat.
Receiver IRD DX 4400D O313742287230 1 IN THE CLEAR Headend [***]
TVRO Sat.
Receiver IRD DX 4400D 311097976254 1 O313742287230 Headend [***]
TVRO Sat.
Receiver IRD SA 4400D 51271 1 311097976254 Headend [***]
TVRO Sat.
Receiver IRD WEG MPEG-2 A0208DAF4 1 51271 Headend [***]
TVRO Sat.
Receiver IRD DX 775A 47891 1 A0208DAF4 Headend [***]
TVRO Sat.
Receiver IRD WEG 775A A020C529C 1 47891 Headend [***]
TVRO Sat.
Receiver IRD SA MPEG-2 2926205-2 1 A020C529C Headend [***]
TVRO Sat.
Receiver IRD SA 1500 A0208DD2B 1 2926205-2 Headend [***]
TVRO Sat.
Receiver IRD DX 4500 31372357039 1 A0208DD2B Headend [***]
TVRO Sat.
Receiver IRD GI 775A A02012401 1 31372357039 Headend [***]
TVRO Sat.
Receiver IRD DX 1500 A020C4D85 1 A02012401 Headend [***]
TVRO Sat.
Receiver IRD SA 1500 A20BF7F3 1 A020C4D85 Headend [***]
TVRO Sat.
Receiver IRD DX 775A 00031461068718 1 A20BF7F3 Headend [***]
TVRO Sat.
Receiver IRD DX 775A A0208DD1C 1 000314610687183 Headend [***]
TVRO Sat.
Receiver IRD DX 775A IN THE CLEAR 1 A0208DD1C Headend [***]
TVRO Sat.
Receiver Demod CADCO 1500 313868245096 1 IN THE CLEAR Headend [***]
TVRO Sat.
Receiver IRD DX 775A O315383528199 1 313868245096 Headend [***]
TVRO Sat.
Receiver IRD GI 775A O314104863085 1 0315383528199 Headend [***]
TVRO Sat.
Receiver IRD DX 2341 A0208ADA2 1 0314104863085 Headend [***]
TVRO Sat.
Receiver IRD DX 775A O315383528199 1 A0208ADA2 Headend [***]
WINEGAURD 3 WINEGAURD 3 none 1 N/A Headend [***]
PATRIOT 4 PATRIOT 4 none 1 N/A Headend [***]
PATRIOT 4.5 PATRIOT 4.5 none 1 N/A Headend [***]
WINEGAURD 4.5 WINEGAURD 4.5 none 1 N/A Headend [***]
PATRIOT 4 PATRIOT 4 none 1 N/A Headend [***]
PATRIOT 4.5 PATRIOT 4.5 none 1 N/A Headend [***]
SA 4.5 SA 4.5 none 1 N/A Headend [***]
SA 4.5 SA 4.5 none 1 N/A Headend [***]
Racks 72" unknow 21" wide N/A 16 N/A Headend [***]
Generator 40KW Winco unknown none 1 N/A Headend [***]
UPS 30KW unknown unknown none 1 N/A Headend [***]
A/C 5 unknown unknown none 1 N/A Headend [***]
A/C 1 Window Units unknown none 3 N/A Headend [***]
</TABLE>
[*** Confidential Treatment Requested]
Schedule 7.1(b) Equipment Service Level Requirements
[***]
[*** Confidential Treatment Requested]
Schedule 7.5
Receive Site and Studio-Transmitter Link Obligations
SCHEDULE 9.1(F)
FINANCING COMMITMENTS
[Letter Attached]
SCHEDULE 9.2(C)
NO VIOLATION
None.
SCHEDULE 9.2(D)
LITIGATION
None.
SCHEDULE 9.2(e)(iii)
PENDING FCC APPLICATIONS
FOR SPRINT OWNED LICENSES
[***]
NONE
SCHEDULE 9.2(e)(iii)
PENDING FCC APPLICATIONS
FOR SPRINT LEASED LICENSES
[***]
[*** Confidential Treatment Requested]
SCHEDULE 9.2(E)(IV)
VALID AUTHORIZATIONS
Pursuant to that certain Purchase Agreement dated August 20,1998, by and
between American Telecasting Development, Inc. and [***] as amended by that
certain First Amendment to Purchase Agreement dated January 4, 1999
(collectively, the "Partition Agreement"), American Telecasting Development,
Inc., agreed to sell and thereby partition certain rights under its
authorization for BTA [***] A copy of such Partition Agreement and the
application to the FCC has been provided to Operator.
[*** Confidential Treatment Requested]
SCHEDULE 9.2(E)(V)
PRIMARY LEASE DEFAULTS
The transmitters for channels [***] are inoperable. Sprint will repair the
transmitters at its sole cost and expense, and will indemnify, defend and hold
Operator harmless from any liabilities, claims, expenses and costs relating
thereto or arising therefrom
[*** Confidential Treatment Requested]
SCHEDULE 9.2(E)(VI)
TOWER LEASE DEFAULTS
Pursuant to an unwritten lease agreement, the [***] is using space on the tower
for the purpose of translating and retransmitting its programming. The
underlying ground lease prohibits the subletting of tower space without its
consent. There is no record that consent to this sublease arrangement was
obtained. Sprint will be responsible, at its sole cost and expense, for curing
such default if one exists, and will indemnify, defend and hold Operator
harmless from any liabilities, claims, expenses and costs relating thereto or
arising therefrom.
[*** Confidential Treatment Requested]
SCHEDULE 9.2(E)(VII)
SPRINT INTERFERENCE CONSENTS
For all Markets, the various Sprint Licensees may foe subject to the terms and
conditions set forth in the form of document commonly known as the [***]
For individual Markets, see attached pages:
[***]
[*** Confidential Treatment Requested]
SCHEDULE 9.2(E)(VIII)
LICENSEE INTERFERENCE CONSENTS
For all Markets, the various Third Party Licensees may be subject to the terms
and conditions set forth in the form of document commonly known as the [***]
Agreement.
For individual Markets, see attached pages:
[***]
[*** Confidential Treatment Requested]
SCHEDULE 16
TOWER LEASES (SPRINT)
[***]
[*** Confidential Treatment Requested]
SCHEDULE 17.1(H)
EXAMPLE OF PAID IN FEES
This example is based on the computation of the Paid in Fees for the[***]
Market assuming that the Recapture Closing takes nine months following the date
on which the [***] Market becomes a Closed Market. This example assumes no
Rejected Primary Leases.
Initial Fee attributable to the [***] Market:
Computed as: [***] (the MHz HH for [***]) divided by
[***] (the Total MHz for al1 Proposed Spectrum as of the
Effective Date), multiplied by [***] (the Initial Fee): [***]
Market Closing Payment (from Schedule 6.3) [***]
Monthly Fees: [***]
Computed as [***] (from Schedule 6.3) multiplied by 9
months(1): [***]
Primary Lease Fees:
Computed as monthly minimums of [***]mo. multiplied by 9
months(2): [***]
Paid In Fees (figure is a per MHz HH computation):
Subtotal from above: [***] divided by [***] (MHz HH for
all Proposed Spectrum in [***]) Market as of the
Effective Date: [***]
----------
(1) In actual situation, Monthly Fees paid to Sprint may be less as Monthly
Fees are paid no later than 30 days after the month in question.
(2) Assumes the monthly minimums are the only amounts paid under the Primary
Lease. In actual situation amount would reflect total amount actually paid
under the Primary Lease.
[*** Confidential Treatment Requested]
SCHEDULE 17.2(A)
EXAMPLE OF COMPUTATION OF PUT PRICE
FOLLOWING [***]
This example is based on the computation of the Put Price for the [***]
Market assuming that the Put Closing takes place on the [***] of the date on
which the [***] Market becomes a Closed Market. This example assumes no Rejected
Primary Leases, no Spectrum has been lost, and that Sprint is putting all
Spectrum to Operator in the [***] Market.
Put Subtotal:
[***] (MHz HH for Put Spectrum) multiplied by
[***] (Put Price per MHz HH): [***]
Less:
Market Closing Payment: [***]
Initial Fee
[***] (MHz HH for [***]) divided by
[***] (MHz HH for all Proposed Spectrum)
multiplied by [***] [***]
Monthly Fees(1):
60 mo. @ [***] [***]
12 mo. @ [***] [***]
Subtotal: [***]
Primary Lease Fees(2): [***]
72 months multiplied by [***] [***]
SUBTOTAL: [***]
PUT PRICE: [***]
----------
(1) Monthly Fees paid to Sprint may be less as Monthly Fees are paid no later
than 30 days after the month in question.
(2) Assumes the monthly minimums are the only amounts paid under the Primary
Lease. In actual situation amount would reflect total amount actually paid
under the Primary Lease.
[*** Confidential Treatment Requested]
EXHIBIT 10.29
SUBSCRIPTION AGREEMENT
This Subscription Agreement (this "Agreement") is entered into by and
between Bell Canada, a Canadian corporation incorporated under the Canada
Business Corporations Act ("Bell Canada"), and Clearwire Corporation, a Delaware
corporation ("Clearwire" or the "Company"). The Company and Bell Canada agree as
follows:
1. SUBSCRIPTION FOR SHARES. Bell Canada agrees to subscribe for and the
Company agrees to issue to Bell Canada 25,000,000 shares of the Class A Common
Stock of Clearwire (the "Purchased Shares") on the terms and conditions set
forth in this Agreement.
2. SUBSCRIPTION PRICE. The purchase price for the Purchased Shares shall
be $4.00 per share for an aggregate subscription price of U.S. $100,000,000.00
(the "Purchase Price").
3. PAYMENT OF PURCHASE PRICE. Bell Canada agrees to pay the aggregate
Purchase Price for the Purchased Shares to Clearwire upon the Closing (as
defined below). The Purchase Price shall be paid in immediately available funds
by wire transfer to the Company in accordance with the wiring instructions
provided by the Company.
4. CLOSING DATE. The closing of Bell Canada's purchase of the Purchased
Shares shall take place remotely via the exchange of documents and signatures,
at 10:00 a.m. (Pacific time), on the date that is two business days following
the termination of the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
thereunder (the "HSR Act"), or at such other time and place as the Company and
Bell Canada mutually agree upon, orally or in writing (which time and place are
designated as the "Closing").
5. CLEARWIRE CLOSING DELIVERIES. At the Closing, Clearwire shall deliver
to Bell Canada the following documents:
(a) a stock certificate representing the Purchased Shares, free and
clear of all liens, registered in Bell Canada's name;
(b) a certificate of good standing of Clearwire issued by the
Delaware Secretary of State;
(c) a certificate, executed by the Secretary of the Company,
attaching thereto: (i) the Company's Certificate of Incorporation and Bylaws in
effect on the date of this Agreement, and (ii) resolutions of the Board of
Directors of the Company (x) authorizing the Transaction Agreements (as defined
below) and the transactions contemplated thereby and (y) appointing Michael J.
Sabia to the Board Directors of the Company effective immediately after the
Closing;
(d) a certificate, executed by an officer of the Company, certifying
(i) that there has been no event or occurrence that has had a material adverse
effect on the Company's business, properties, prospects or financial condition
("Material Adverse Effect"), (ii) either (A) that no Dilutive Issuance (as
defined in the Side Agreement, which is defined below) has
Page 1 - SUBSCRIPTION AGREEMENT
occurred since the date of this Agreement, or (B) if there has been a Dilutive
Issuance during such period, the number of additional shares to be issued to
Bell Canada at the Closing as a result of such Dilutive Issuance and how such
number of additional shares was determined, and (iii) that, as of the Closing,
the Purchased Shares are not subject to any preemptive rights under the
Stockholders Agreement (as defined below);
(e) the joinder agreement, attached as Exhibit A hereto (the "SA
Joinder Agreement"), to that certain Amended and Restated Stockholders
Agreement, dated as of March 16, 2004, between Clearwire and its stockholders
(the "Stockholders Agreement"), executed by Clearwire;
(f) the joinder agreement, attached as Exhibit B hereto (the "RRA
Joinder Agreement"), to that certain Registration Rights Agreement between
Clearwire and certain of its stockholders, dated March 16, 2004 (the
"Registration Rights Agreement"), executed by Clearwire;
(g) the Side Agreement, attached as Exhibit C hereto (the "Side
Agreement"), dated as of the date of Closing, by and among Bell Canada,
Clearwire and Eagle River Holdings, LLC, a Washington limited liability company
("ERH"), executed by Clearwire and ERH;
(h) the Master Supply Agreement, attached as Exhibit D hereto (the
"Master Agreement" and collectively with this Agreement, the Stockholders
Agreement, the SA Joinder Agreement, the Registration Rights Agreement, the RRA
Joinder Agreement and the Side Agreement, the "Transaction Agreements"), dated
as of the date of Closing, by and between Bell Canada, BCE Nexxia Corporation,
Clearwire and Clearwire, LLC, executed by Clearwire and Clearwire, LLC; and
(i) a legal opinion of Davis Wright Tremaine LLP in the form
attached hereto as Exhibit E.
6. BELL CANADA CLOSING DELIVERIES. At the Closing, Bell Canada shall
deliver to Clearwire the following documents:
(a) the Purchase Price in accordance with Section 3;
(b) the Transaction Agreements, each executed by Bell Canada;
(c) the Master Agreement executed by Bell Canada and BCE Nexxia
Corporation; and
(d) a certificate, executed by an officer of Bell Canada certifying
that the representations and warranties of Bell Canada contained in Section 7
are true and correct in all material respects as of the Closing.
7. REPRESENTATIONS AND WARRANTIES OF BELL CANADA. Bell Canada represents
and warrants to the Company that the following statements are true and correct
on the date of this Agreement:
Page 2 - SUBSCRIPTION AGREEMENT
(a) Bell Canada is an "accredited investor" as that term is defined
in Rule 501 of Regulation D promulgated under the Securities Act of 1933, as
amended (the "Securities Act"). Bell Canada is not a "U.S. person" as that term
is defined under Rule 902 of Regulation S promulgated under the Securities Act.
Bell Canada is not acquiring the Securities for the account or benefit of any
U.S. person.
(b) The Purchased Shares subscribed for (the "Securities'") are
being acquired by Bell Canada for investment purposes only, for Bell Canada's
own account and not with the view to any resale or distribution thereof, and
Bell Canada is not participating, directly or indirectly, in an underwriting of
such Securities, and will not take, or cause to be taken, any action that would
cause Bell Canada to be deemed an "underwriter" of such Securities as defined in
Section 2(11) of the Securities Act.
(c) Bell Canada acknowledges that Bell Canada has been offered an
opportunity to ask questions of, and received answers from, Clearwire concerning
the Company and its proposed investments, and that, to Bell Canada's knowledge,
the Company has fully complied with any request for such information.
(d) Bell Canada has been furnished Clearwire's Disclosure
Memorandum, dated March 4, 2005 (the "Disclosure Memorandum"), the exhibits
thereto and any other documents which may have been made available upon request
(collectively, the "Offering Documents"). Bell Canada has carefully read the
Offering Documents and understands and has evaluated the risks of a purchase of
the Securities, including the risks set forth in the Offering Documents under
"Risk Factors".
(e) Bell Canada has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Securities, is able to bear such risks, and has obtained, in
Bell Canada's judgment, sufficient information from the Company to evaluate the
merits and risks of an investment in the Securities. Bell Canada has evaluated
the risks of investing in the Company and has determined that the Securities are
a suitable investment for Bell Canada.
(f) Bell Canada has full power and authority to enter into this
Agreement and to perform its obligations hereunder.
(g) Neither the Company nor any person acting on the Company's
behalf has offered, offered to sell, offered for sale or sold the Purchased
Shares to Bell Canada by means of any form of general solicitation or general
advertising.
(h) The execution, delivery and performance by Bell Canada of this
Agreement and the other Transaction Agreements are within Bell Canada's powers,
have been duly authorized, will not constitute or result in a breach or default
under or conflict with any order, ruling or regulation of any court or other
tribunal or of any governmental commission or agency, or any agreement or other
undertaking, to which Bell Canada is a party or by which Bell Canada is bound,
and will not violate any provisions of the incorporation papers, bylaws, or
stockholders agreement, as may be applicable, of Bell Canada. The signature of
Bell Canada on the Transaction Agreements is genuine, and the Transaction
Agreements constitute legal, valid and binding obligations of Bell Canada,
enforceable in accordance with their terms.
Page 3 - SUBSCRIPTION AGREEMENT
(i) Bell Canada is not relying on the Company with respect to tax
and other economic considerations involved in this transaction. Bell Canada
acknowledges that Bell Canada has been advised by the Company to consult with
its tax or financial consultants prior to entering into this Agreement.
(j) This Agreement has been executed by Bell Canada outside the
"United States" (as defined in Rule 902(1) of Regulation S). Bell Canada is
acquiring the Securities in an "offshore transaction" (as defined in Rule 902(h)
of Regulation S). The Securities were not offered to Bell Canada in the United
States and at the time of execution of this Agreement and the time of any offer
to Bell Canada to purchase the Securities hereunder, Bell Canada was physically
outside of the United States.
8. REPRESENTATIONS AND WARRANTIES OF CLEARWIRE. Clearwire represents and
warrants to Bell Canada that, except as set forth on the Schedules attached to
this Agreement, each of which shall be deemed to be an exception to or exclusion
from only the particular representation and warranty against which it is listed
(unless it is readily apparent from a reading of the disclosure that such
disclosure is applicable to other representations and warranties), whether or
not the listed representation and warranty includes a reference to such
Schedule, and which exceptions (and all other disclosures) set forth in the
Schedules shall be deemed to be representations and warranties of Clearwire, the
following statements are true and correct on the date of this Agreement. Any
reference to the knowledge of any person shall mean the actual knowledge,
information and belief of such person after making reasonable inquiry of such
person's Chief Executive Officer, Chief Operating Officer and each Executive
Vice President. For each of these executives, reasonable inquiry shall mean
checking with their direct reports. In addition, for purposes of these
representations and warranties, the term "the Company" shall include any entity
in which Clearwire owns more than 50% of the outstanding equity interests and
which has assets of $10,000,000 or more as of the date hereof, including,
without limitation, the following: NextNet Wireless, Inc.; Clearwire
International LLC; Clearwire, LLC; Clearwire Technologies Inc. and Fixed
Wireless Holdings, LLC (the "Subsidiaries"). The term "Clearwire" shall mean
Clearwire Corporation (excluding its Subsidiaries).
(a) The execution, delivery and performance by Clearwire of this
Agreement and the other Transaction Agreements are within Clearwire's powers,
have been duly authorized, will not constitute or result in a breach or default
or conflict with any order, ruling or regulation of any court or other tribunal
or of any governmental commission or agency, or any agreement or other
undertaking, to which Clearwire is a party or by which Clearwire is bound, and
will not violate any provisions of the Certificate of Incorporation, Bylaws, or
Stockholders Agreement of Clearwire. The signature of Clearwire on the
Transaction Agreements is genuine, and the Transaction Agreements constitute
legal, valid and binding obligations of Clearwire, enforceable in accordance
with their terms.
(b) The Company is duly incorporated or organized, as applicable,
and validly existing under the laws of the jurisdiction of its incorporation or
formation, as applicable, and is in good standing under such laws. The Company
is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a Material Adverse
Effect. The Company has full power and authority:
Page 4 - SUBSCRIPTION AGREEMENT
(i) to own its properties and assets;
(ii) to carry on its business as presently conducted; and
(iii) to enter into the Transaction Agreements and to perform
its obligations thereunder, including the issuance, sale
and delivery of the Purchased Shares.
(c) Copies of all Board of Directors and stockholder meeting minutes
and consent actions of Clearwire have been made available to Bell Canada. These
copies are true and complete copies of all resolutions evidencing actions taken
by the Board of Directors and stockholders of Clearwire since its date of
incorporation.
(d) Clearwire does not own or control, directly or indirectly, any
Subsidiaries other than those listed in Schedule 8(d) attached hereto, and the
shares of the capital stock or membership interests, as applicable, of these
Subsidiaries owned by Clearwire are duly authorized, validly issued, fully paid,
and non-assessable, and free and clear of all liens, charges, claims and
encumbrances imposed by or through such Subsidiaries.
(e) The authorized capital stock of Clearwire and the shares of
capital stock of Clearwire issued and outstanding are as set forth on Schedule
8(e) attached hereto. All of the outstanding shares of the capital stock of
Clearwire are duly authorized, validly issued, fully paid, and non-assessable,
and free and clear of all liens, charges, claims and encumbrances imposed by or
through Clearwire. The Purchased Shares, when issued, sold and delivered in
accordance with the terms and for the consideration set forth in this Agreement,
will be duly authorized, validly issued, fully paid, and non-assessable, and
free and clear of all liens, charges, claims and encumbrances imposed by or
through Clearwire. Additionally, the Purchased Shares are free of restrictions
on transfer other than restrictions on transfer under this Agreement, the
Stockholders Agreement and the Side Agreement and under applicable state and
federal securities laws. The outstanding securities of Clearwire are owned by
the stockholders, optionholders and securityholders and in the numbers specified
in Schedule 8(e) attached hereto.
(f) Other than as disclosed in Schedule 8(f) attached hereto, the
Company does not have, is not bound by, and has no obligation to grant or enter
into, any outstanding subscriptions, options, warrants, rights (including
without limitation conversion or preemptive rights), calls, commitments, or
agreements of any character calling for it to issue, deliver, or sell, or cause
to be issued, delivered, or sold, any shares or any other equity securities or
equity securities convertible into, exchangeable for, or representing the right
to subscribe for, purchase, or otherwise acquire any shares or any other equity
securities in the capital of the Company. Other than the Stockholders Agreement
and the Side Agreement and as disclosed in Schedule 8(f), the Company is not a
party or subject to any agreement or understanding, and, to the Company's
knowledge, there is no agreement or understanding between any persons and/or
entities, which affects or relates to the voting or giving of written consents
with respect to any security or by a director of the Company.
(g) Other than as disclosed in Schedule 8(g) attached hereto, the
Company:
Page 5 - SUBSCRIPTION AGREEMENT
(i) has no outstanding obligations, contractual or
otherwise, to repurchase, redeem, or otherwise acquire
any shares or other equity securities in the capital of
the Company; and
(ii) is not a party to or bound by any agreement or
instrument under which any person has the right to
require it to effect, or to include any securities held
by such person in, any registration under any securities
legislation or to distribute any such securities to the
public.
(h) All of the outstanding shares of capital stock of Clearwire were
offered, issued, and sold in compliance in all material respects with all
applicable federal and state securities laws. Assuming the accuracy of the
representations of Bell Canada in Section 7, upon the closing of the
transactions contemplated hereby, the Purchased Shares will have been offered,
issued and sold in compliance with all applicable federal, state and provincial
securities laws.
(i) Except(i) as disclosed in Schedule 8(i) attached hereto, and
(ii) for filings required under the HSR Act, no consent, approval,
authorization, declaration, filing, or registration with any governmental
authority, regulatory authority or other party is required to be made or
obtained by Clearwire in connection with:
(i) the execution and delivery of any of the Transaction
Agreements; or
(ii) the performance by the Company of its obligations under
the Transaction Agreements.
(j) The Company owns its property and assets, including without
limitation the property and assets reflected in the unaudited balance sheet of
Clearwire dated September 30, 2004, free and clear of all mortgages, liens,
licenses, security interests and other encumbrances, except such encumbrances
and liens that arise in the ordinary course of business and do not materially
impair the Company's ownership or use of such property or assets. With respect
to the property and assets it leases (including without limitation BRS and EBS
spectrum), the Company is in compliance with such leases and, to its knowledge,
holds a valid leasehold interest free of any liens, claims or encumbrances other
than those of the lessors of such property or assets, except with respect to
leases which the termination of or loss of rights under would, in the aggregate,
not have a Material Adverse Effect.
(k) To the Company's knowledge, the Company has timely filed all
returns, declarations, reports, and information statements ("Returns") required
to be filed in respect of any and all material Taxes (as defined below). Such
Returns are true, correct, and complete in all material respects. The Company
has paid all material Taxes due and payable on a timely basis, whether or not
shown on such Returns, except those material Taxes contested by the Company in
good faith that are listed in Schedule 8(k) attached hereto. The provision for
Taxes of the Company as shown in the Financial Statements (as defined below) is
adequate for material Taxes due or accrued as of the date of the Financial
Statements. The Company has not elected
Page 6 - SUBSCRIPTION AGREEMENT
pursuant to section 1362(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), to be treated as an S corporation, and the Company has not made
any other elections pursuant to the Code (other than elections that relate
solely to methods of accounting, depreciation, or amortization) that would have
a material effect on the Company, its financial condition, its business as
presently conducted or as proposed to be conducted, or any of its properties or
material assets. None of the Company's Returns has ever been audited by any
applicable governmental authority, and there is no current audit, action, suit,
proceeding, or deficiency proposed or assessed against the Company with respect
to material Taxes. The Company has not executed any waiver of any statute of
limitations on the assessment or collection of any material Taxes. Since the
date of the Financial Statements, the Company has not incurred any material
Taxes other than in the ordinary course of business, and the Company has made
adequate provisions on its books of account for all material Taxes with respect
to its business, properties and operations for such period. There are no liens
for material Taxes upon any of the assets of the Company, except liens for
material Taxes not yet due and payable. The Company has withheld and collected
all material Taxes required to be withheld or collected under the Code or other
applicable law, and has paid such material Taxes to the proper governmental
authority, all on a timely basis. Pursuant to section 1.897-2(h)(1)(i) of the
Treasury Regulations, the Company represents under penalty of perjury that the
Purchased Shares are not a "United States real property interest," as defined in
section 897(c) of the Code, and the Company has filed or will timely file with
the Internal Revenue Service all statements that are required to be filed under
section 1.897-2(h) of the Treasury Regulations. For purposes of this Agreement,
the term "Taxes" means all charges, fees, levies, or other assessments,
including, without limitation, all net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license, withholding,
payroll, employment, social security, unemployment, excise, estimated,
severance, stamp, occupation, property, or other taxes, together with all
interest and penalties on such taxes.
(l) Except as disclosed in Schedule 8(1) attached hereto, no
litigation, arbitration, action, suit, proceeding, or investigation (whether
conducted by or before any judicial or regulatory body, arbitrator, or other
person) is pending or, to the knowledge of the Company, currently threatened or
contemplated, against the Company, nor is there any basis therefore known to the
Company that would reasonably be expected to have individually or in the
aggregate a Material Adverse Effect. The Company is not a party or subject to
the provisions of any order, writ, injunction, judgment or decree of any court
or government agency or instrumentality. There is no action, suit, proceeding or
investigation by the Company currently pending or that the Company currently
intends to initiate.
(m) Except as set forth on Schedule 8(m) attached hereto, there are
no agreements, understandings or proposed actions between the Company and any of
its officers, directors, stockholders, affiliates, or any affiliate thereof.
Except as set forth on Schedule 8(m) attached hereto, there are no binding
agreements, instruments or contracts to which the Company is a party or by which
it is bound that may involve (i) obligations (contingent or otherwise) of, or
payments to the Company in excess of, $1,000,000, (ii) the acquisition, lease,
sublease, license, transfer or assignment of BRS or EBS spectrum, (iii) the
license of any patent, copyright, trade secret or other proprietary right to or
from the Company, other than standard end-user object code license agreements,
or (iv) provisions that in the aggregate materially restrict or affect the
development, manufacture or distribution of the Company's products or services.
Except as set
Page 7 - SUBSCRIPTION AGREEMENT
forth on Schedule 8(m) attached hereto, the Company has not (W) declared or paid
any dividends or authorized or made any distribution upon or with respect to any
class or series of its capital stock, (X) incurred any indebtedness for money
borrowed or any other liabilities individually in excess of $1,000,000 or, in
the case of indebtedness and/or liabilities individually less than $1,000,000,
in excess of $2,000,000 in the aggregate, (Y) made any loans or advances to any
person, other than ordinary advances for travel or other out-of-pocket expenses,
or (Z) sold, exchanged or otherwise disposed of any of its material assets or
rights, other than the sale of its inventory in the ordinary course of business.
For the purposes of this Section 8(m), all indebtedness, liabilities, binding
agreements, instruments and contracts involving the same person or entity
(including persons or entities the Company has reason to believe are affiliated
therewith) shall be aggregated for the purpose of meeting the individual minimum
dollar amounts of this Section 8(m). Each agreement, instrument, contract,
judgment, order, writ and decree set forth on Schedule 8(m) attached hereto to
which Clearwire is a party is a valid, binding and enforceable obligation of the
Company, and to the knowledge of the Company, of the other party or parties
thereto, and is in full force and effect. To the knowledge of the Company, each
agreement, instrument, contract, judgment, order, writ and decree set forth on
Schedule 8(m) attached hereto to which each of the Subsidiaries is a party is a
valid, binding and enforceable obligation of such Subsidiary and of the other
party or parties thereto, and is in full force and effect. Neither the Company,
nor to the knowledge of the Company, any other party thereto, is, or is
considered by any other party thereto to be, in breach of or non-compliance with
any term of any agreement, instrument, contract, judgment, order, writ and
decree set forth on Schedule 8(m) attached hereto (nor, to the knowledge of the
Company, is there any basis for any of the foregoing) that could result in the
termination of such agreement, instrument or contract or in a Material Adverse
Effect.
(n) Except as disclosed in Schedule 8(n) attached hereto, no
employee, officer, director or stockholder of the Company or member of his or
her immediate family is indebted to the Company, nor is the Company indebted (or
committed to make loans or extend or guarantee credit) to any of them, other
than in connection with expenses or advances of expenses incurred in the
ordinary course of business or employee relocation expenses.
(o) None of this Agreement (including and as qualified by all
exhibits and schedules hereto), the Disclosure Memorandum (including all
exhibits and schedules thereto), the Transaction Agreements or any other written
statements or certificates made directly by the Company in connection herewith
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements herein or therein not misleading in light
of the circumstances under which they were made.
(p) To the knowledge of the Company, the Company has sufficient
title and ownership of all patents, patent applications, trademarks, service
marks, trade names, copyrights, trade secrets, information, proprietary rights
and processes necessary for its business as now conducted, without any conflict
with or infringement of the rights of others. To the knowledge of the Company,
the Company is not in violation of, or by conducting its business as presently
or proposed to be conducted, would violate, any technology licenses to which the
Company is a party to, including without limitation, any software licenses or
open source licenses. Schedule 8(p) attached hereto contains a complete list of
all patents, pending patent applications, trademarks and pending trademark
applications of the Company. Except as set forth on
Page 8 - SUBSCRIPTION AGREEMENT
Schedule 8(p) attached hereto, the Company owns all of such patents, pending
patent applications, trademarks and pending trademark applications free and
clear of all mortgages, liens, licenses, security interests and other
encumbrances. To the knowledge of the Company, the Company is not in violation
of or, by conducting its business as presently or proposed to be conducted,
would violate any of the patents, trademarks, service marks, trade names,
copyrights or trade secrets or other proprietary rights of any other person or
entity.
(q) To the knowledge of the Company, the wireless broadband services
offered by the Company have not experienced (i) any failures related to the
continuous provision of service, (ii) any breaches of security or (iii) any
instances of hacking, in each instance that have had a Material Adverse Effect.
Further, the Company has no knowledge of (a) any likely failures related to the
continuous provision of service, (ii) any likely source of security breach, or
(iii) any likely source of vulnerability for hacking, in each instance that
could have a Material Adverse Effect.
(r) The Company has delivered to Bell Canada its audited financial
statements (balance sheet and income statement, statement of shareholders'
equity and statement of cash flows) as of December 31, 2003 and for the fiscal
year then ended and unaudited financial statements (balance sheet and income
statement) as of September 30, 2004 and for the nine months then ended (the
"Financial Statements"). The Financial Statements (i) are in accordance with the
books and records of the Company (which are true and complete in all material
respects), and (ii) have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated, except that the unaudited Financial Statements do not contain all
footnotes and other disclosures required by generally accepted accounting
principles. The Financial Statements fairly present in all material respects the
financial condition and operating results of the Company as of the dates, and
for the periods, indicated therein, subject to normal audit adjustments with
respect to the September 30, 2004 Financial Statements. Except as set forth in
the Financial Statements or on Schedules 8(s) or 8(u), the Company has no
material liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business subsequent to September 30, 2004,
and (ii) obligations under contracts and commitments incurred in the ordinary
course of business and not required under generally accepted accounting
principles to be reflected in the Financial Statements, which, in both cases,
individually or in the aggregate, are not material to the financial condition or
operating results of the Company.
(s) Schedule 8(s) attached hereto identifies all material
outstanding loans, debts, notes, mortgages, indentures, security agreements,
commitments and other obligations of the Company individually in excess of
$1,000,000 or, in the case of such obligations individually less than
$1,000,000, in excess of in the aggregate $2,000,000 (collectively, the
"Obligations"). To the Company's knowledge, except as disclosed in Schedule 8(s)
attached hereto, the Company is not in default under (and has not received any
notice that it has breached or committed any material default under) any of the
Obligations, and no event or condition has occurred which, with the lapse of
time or the giving of notice, or both, would constitute such a default.
(t) To the knowledge of the Company, the Company has all franchises,
permits, licenses, and any similar authority necessary for the conduct of its
business as now
Page 9 - SUBSCRIPTION AGREEMENT
being conducted by it, and the Company believes it can obtain, without undue
burden or expense, any similar authority for the conduct of its business as
planned to be conducted. To the knowledge of the Company, the Company is not in
default in any respect under any of such franchises, permits, licenses or other
similar authority.
(u) Except as set forth on Schedule 8(u) attached hereto, since
September 30, 2004 there has not been:
(i) any material change in the assets, liabilities,
financial condition or operating results of the Company
from that reflected in the Financial Statements that has
had a Material Adverse Effect;
(ii) any damage, destruction or loss, whether or not covered
by insurance, that has had or is expected to have a
Material Adverse Effect;
(iii) any waiver, compromise or default by the Company of a
valuable right or of a material debt or obligation owed
to it;
(iv) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company,
except in the ordinary course of business and that is
not material to the assets, properties, financial
condition, operating results or business of the Company;
(v) any transfer of or granting of any security interest in
any material asset of the Company; or
(vi) any material agreement or commitment by the Company to
do any of the things described in this Section 8(u).
(v) To the Company's knowledge, the Company is not in violation of
any applicable statute, law or regulation relating to the environment or
occupational health and safety, and no material expenditures are or will be
required in order to comply with any such existing statute, law or regulation.
During the period that the Company has owned, licensed or leased its properties
and facilities, (a) there have been no disposals, releases or threatened
releases of Hazardous Materials (as defined below) from such properties or
facilities, (b) neither the Company nor, to the Company's knowledge, any third
party, has used, generated, manufactured or stored on, under or about such
properties or facilities or transported to or from such properties or facilities
any Hazardous Materials. The Company has no knowledge of any presence, disposals
on, or releases or threatened releases of Hazardous Materials from, or under any
of such properties or facilities, which may have occurred prior to the Company
having taken possession of any of such properties or facilities. For the
purposes of this Section 8(s), the terms "disposal," "release," and "threatened
release" shall have the definitions assigned thereto by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980. 42 U.S.C.
Section 9601 et seq., as amended ("CERCLA"). For the purposes of this Section
8(s), "Hazardous Materials" shall mean any hazardous or toxic substance,
material or waste which is regulated under, or defined as a "hazardous
substance," "pollutant," "contaminant," "toxic chemical," "hazardous material,"
"toxic substance," or "hazardous chemical" under
Page 10 - SUBSCRIPTION AGREEMENT
(i) CERCLA; (ii) the Emergency Planning and Community Right-to-Know Act, 42
U.S.C. Section 11001 et seq.; (iii) the Hazardous Materials Transportation Act,
49 U.S.C. Section 5101, et seq.; (iv) the Toxic Substances Control Act, 15
U.S.C. Section 2601 et seq.; (v) the Occupational Safety and Health Act of 1970,
29 U.S.C. Section 651 et seq.; (vi) regulations promulgated under any of the
above statutes; or (vii) any applicable state or local statute, ordinance, rule,
or regulation that has a scope or purpose similar to those statutes identified
above.
(w) Except as disclosed in Schedule 8(w) attached hereto and for
rights granted under the Registration Rights Agreement, the Company has not
granted or agreed to grant any registration rights, including without limitation
any piggyback or demand rights, to any person or entity.
(x) Except as set forth in Schedule 8(x) attached hereto, the
Company is not bound by or subject to (and none of its assets or properties is
bound by or subject to) any written or oral, express or implied, contract,
commitment or arrangement with any labor union, and no labor union has requested
or, to the Company's knowledge, has sought to represent any of the employees,
representatives or agents of the Company. There is no strike or other labor
dispute involving the Company pending, or to the Company's knowledge,
threatened, nor is the Company aware of any labor organization activity
involving its employees. To the Company's knowledge, the Company has complied in
all material respects with all applicable state and federal equal employment
opportunity and other laws related to employment.
(y) Except as disclosed in Schedule 8(y) attached hereto, the
Company is not party to or bound by any currently effective employment or
consultancy contracts involving payments by the Company in excess of $350,000
per annum, excluding discretionary bonuses, deferred compensation agreements,
bonus plans, incentive plans, profit sharing plans, retirement agreements or
plans, pension plans or other employee compensation arrangements. Except as
disclosed in Schedule 8(y) attached hereto, and subject to general principles
related to wrongful termination of employees, the employment of each officer and
employee of the Company is terminable at the will of the Company.
(z) Except as disclosed in Schedule 8(z) attached hereto, each
current officer, employee and consultant of the Company and, to the Company's
knowledge, each former officer, employee and consultant that contributed to the
intellectual property currently being used by the Company has executed in the
Company's favor a standard agreement regarding confidentiality and proprietary
information used by the Company and assignment of intellectual property rights
in favour of the Company. To the Company's knowledge, none of its current or
former employees, officers and consultants is in violation thereof. No such
person has excluded works or intellectual property rights made prior to his or
her employment or other contractual relationship with the Company from his or
her assignment of inventions pursuant to such agreement. Subject to any
limitations on such vesting imposed by applicable law, full title and ownership
of all inventions and proprietary rights, processes or methods developed or
invented by any and all employees and consultants during the period of their
employment and/or consultancy and resulting directly or indirectly from their
work for the Company vest in the Company pursuant to each such agreement. The
Company does not believe it is or will be
Page 11 - SUBSCRIPTION AGREEMENT
necessary to utilize any inventions of any of its employees (or people it
currently intends to hire) made prior to or outside the scope of their
employment by the Company.
(aa) The Company holds the Federal Communications Commission ("FCC")
licenses, permits and authorizations set forth on Schedule 8(aa) attached hereto
(the "FCC Authorizations").
(bb) To the Company's knowledge, except as set forth on Schedule
8(bb), the FCC Authorizations are in full force and effect and have not been
revoked, suspended, cancelled, rescinded or terminated and have not expired,
except where renewal applications are currently pending. To the Company's
knowledge, there is not pending or threatened any action by or before the FCC to
revoke, suspend, cancel, rescind or modify any of the FCC Authorizations (other
than proceedings to amend FCC rules of general applicability), and there is not
now issued or outstanding or pending or threatened, by or before the FCC, any
order to show cause, notice of violation, notice of apparent liability, or
notice of forfeiture or complaint against the Company or any of its subsidiaries
or any System. Neither the Company nor any of its subsidiaries is aware of any
facts and has received no notice or communication, formal or informal,
indicating that the FCC is considering revoking, suspending, cancelling,
rescinding or terminating any FCC Authorization.
(cc) To the Company's knowledge, all material reports and filings
required to be filed by the Company with the FCC have been timely filed, and all
such reports and filings are accurate and complete. To the Company's knowledge,
all regulatory fees required to be paid by the Company to the FCC have been
timely filed and paid.
(dd) The Systems include wireless systems operating in whole or in
part on BRS, EBS, or other spectrum licensed by the FCC to third parties (each a
"Lessor") and used or leased by the Company under certain spectrum leases,
capacity use agreements or other similar arrangements between the Company (or
subsidiaries of the Company) and the Lessors (each a "Spectrum Lease"). Except
for Spectrum Leases grandfathered under the Commission's rules, Clearwire
believes each Spectrum Lease complies with the FCC's rules, including but not
limited to Sections 1.9020 and 1.9030, and otherwise complies with the
Communications Laws. Except for Spectrum Leases grandfathered under the
Commission's rules, Clearwire believes each Spectrum Lease constitutes either a
"manager" lease (each a "Manager Lease") or a "de facto transfer" Lease (each a
"Transfer Lease") as described in the FCC's rules.
(ee) To the extent required under the FCC's rules and except for
Spectrum Leases grandfathered under the FCC's rules, the Company (or its
applicable subsidiary) has timely filed each Manager Lease with the FCC. To the
extent required under the FCC's rules and except for Spectrum Leases
grandfathered under the FCC's rules, the Company (or its applicable subsidiary)
has filed for and is awaiting (and the FCC Authorizations will include) FCC
consent to each Transfer Lease. To the knowledge of the Company, (i) each Lessor
holds all FCC licenses, permits and authorizations (the "Lessor Licenses")
necessary to operate the License that is subject to the Spectrum Lease to which
it is a party, (ii) the representations and warranties set forth in Section
8(bb) are true and correct with respect to the Lessor Licenses, and the
representations and warranties set form in Section 8(cc) are true and correct
with respect to the Lessors, and (iii) the representations and warranties made
by the Lessors under the Spectrum
Page 12 - SUBSCRIPTION AGREEMENT
Leases are true and correct. Each Spectrum Lease is set forth on Schedule 8(ee)
and identified as a grandfathered Lease, a Manager Lease or a Transfer Lease.
9. RESTRICTED SECURITIES. Bell Canada understands that the Securities have
not been, and will not be, registered under the Securities Act, by reason of a
specific exemption from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of the investment intent
and the accuracy of Bell Canada's representations as expressed herein. Bell
Canada understands that the Securities are "restricted securities" under
applicable U.S. federal and state securities laws, and Bell Canada agrees not to
transfer the Securities unless the transfer of the Securities is made (i) in
accordance with the provisions of Regulation S under the Securities Act, (ii)
pursuant to an effective registration under the Securities Act and qualification
under any applicable state securities laws, or (iii) pursuant to an available
exemption from such registration and qualification requirements. Bell Canada
further agrees not to engage in hedging transactions with regard to the
Securities unless in compliance with the Securities Act. Bell Canada
acknowledges that the Company has no obligation to register or qualify the
Securities for resale except as set forth in the Registration Rights Agreement
and that the Company is required to refuse to register any transfer not made in
accordance with the provisions of this Section 9. Bell Canada further
acknowledges that if an exemption from registration or qualification is
available, it may be conditioned on various requirements including, but not
limited to, the time and manner of sale, the holding period for the Securities,
and on requirements relating to the Company which are outside of Bell Canada's
control, and which the Company is under no obligation and may not be able to
satisfy. Bell Canada also acknowledges that the certificates representing the
Securities shall bear the restrictive legends required under applicable federal
and state securities laws and the Stockholders Agreement. The provisions of this
Section 9 shall survive the Closing.
10. STOCKHOLDERS AGREEMENT; SIDE AGREEMENT. Bell Canada and Clearwire
acknowledge and agree that the Purchased Shares shall be subject to all of the
terms of the Stockholders Agreement and the Side Agreement, including, among
other provisions, the restrictions on transfer and confidentiality obligations
set forth therein. Bell Canada and Clearwire also agree that, in the event of a
conflict, the terms set forth in this Agreement and in the Side Agreement will
prevail over the provisions set forth in the Stockholders Agreement. In the
event there is a conflict between this Agreement and the Side Agreement, the
Side Agreement will prevail. Bell Canada further agrees, on the date hereof, to
sign the SA Joinder Agreement and to become bound by the terms and conditions of
the Stockholders Agreement. The provisions of this Section 10 shall survive the
Closing.
11. REGISTRATION RIGHTS AGREEMENT. At the Closing, Bell Canada shall
become a party to the Registration Rights Agreement, by executing the RRA
Joinder Agreement.
12. SIDE AGREEMENT AND MASTER AGREEMENT. At the Closing, Bell Canada and
Clearwire shall enter into the Side Agreement and the Master Agreement.
13. SURVIVAL OF WARRANTIES. Except as otherwise provided herein, the
warranties, representations and covenants of the Company and Bell Canada
contained in or made pursuant to this Agreement shall survive the execution and
delivery of this Agreement and the Closing for a period of one (1) year
following the Closing. Notwithstanding the foregoing, nothing in this
PAGE 13 - SUBSCRIPTION AGREEMENT
Section 13 shall be construed to extend the representations, warranties and
covenants contained herein beyond the period set forth in the applicable statute
of limitations.
14. INDEMNITY. Bell Canada and Clearwire will indemnify and hold each
other, as well as their respective officers, directors, stockholders, agents,
attorneys and affiliates (the "Indemnified Parties") harmless from and against,
and will reimburse the Indemnified Parties for, any and all losses, damages,
debts, liabilities, obligations, judgments, orders, awards, writs, injunctions,
decrees, fines, penalties, taxes, costs or expenses (including but not limited
to any legal and accounting fees and expenses) ("Losses") arising out of or
based upon any false representation or warranty or breach or failure by Bell
Canada or Clearwire, as the case may be, to comply with any covenant or
agreement made by Bell Canada or Clearwire, as the case may be, in this
Agreement or in any other document furnished by Bell Canada or Clearwire, as the
case may be, to the other in connection with this Agreement (excluding the other
Transaction Agreements).
15. REQUIRED FILINGS; COOPERATION. As promptly as practicable but in no
event more than five (5) days after the date of this Agreement, each of
Clearwire and Bell Canada will make all filings required to be made by them in
order to complete the transactions contemplated under this Agreement (including
all filings under the HSR Act). Between the date of this Agreement and the
Closing, each party will (a) cooperate with the other party with respect to all
filings that such other party elects to make or is required by applicable laws
to make in connection with the transactions contemplated under this Agreement,
and (b) cooperate with the other party, including taking all actions reasonably
requested by such other party, to cause early termination of any applicable
waiting period under the HSR Act.
16. REVOCABILITY. Bell Canada and Clearwire understand and agree that
neither party may cancel, terminate, or revoke this Agreement.
17. NOTICE. Any notices or other communications in connection herewith
shall be sufficiently given if sent by registered or certified mail, postage
prepaid, or by facsimile transmission, and:
(i) if to the Company, at
Clearwire Corporation
5808 Lake Washington Blvd. NE, Suite 300
Kirkland,WA 98033
Facsimile No: 425-216-7900
Attn: Vice President, Legal Affairs
With a copy to:
2300 Carillon Point
Kirkland, WA 98033
Facsimile No: 425-828-8061
Attn: Benjamin G. Wolff, Executive Vice President, Global Corporate
Development
Page 14 - SUBSCRIPTION AGREEMENT
(ii) if to Bell Canada, at
Bell Canada
1000, De La Gauchetiere West,
Suite 3700
Montreal, Quebec
H3B4Y7
Facsimile No: 514-870-4877
Attn: Chief Legal Officer, Bell Canada
with copy by email to:
Scott Thomson, Vice-President - Mergers & Acquisitions at:
scott.thomson@bell.ca; and
- and to -
Michel Lalande, Vice-President-General Counsel at:
michel.lalande@bell.ca
or at such other address as either Bell Canada or the Company shall
designate to the other by notice in writing.
18. ASSIGNABILITY; SUCCESSORS AND ASSIGNS. Neither party may assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of the other party. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
19. MODIFICATION. Neither this Agreement nor any provision hereof shall be
modified, discharged or terminated except by an instrument in writing signed by
the party against whom any waiver, change, discharge or termination is sought.
20. ENTIRE AGREEMENT. This Agreement, the Transaction Agreements and the
documents referred to herein and therein constitute the entire agreement among
the parties with respect to the subject matter hereof and thereof and no party
shall be liable or bound to any other party in any manner by any warranties,
representations, covenants or agreements except as specifically set forth herein
or therein.
21. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the state of Delaware and, to the extent it involves
any United States statute, in accordance with the laws of the United States.
22. FINDERS' FEES. Except as provided otherwise in Schedule 22 attached
hereto, each party represents that it neither is nor will be obligated for any
finders' fees or commissions in connection with this Agreement or the
transactions contemplated hereby. Bell Canada agrees
Page 15 - SUBSCRIPTION AGREEMENT
to indemnify and to hold harmless the Company from any liability for any
commission or compensation in the nature of finders' fees (and the costs and
expenses (including legal, travel and out-of-pocket expenses) of defending
against such liability or asserted liability) for which Bell Canada or any of
its officers, directors, employees, or representatives is responsible. The
Company agrees to indemnify and hold harmless Bell Canada from any liability for
any commission or compensation in the nature of a finders' fee (and the costs
and expenses (including legal, travel and out-of-pocket expenses) of defending
against such liability or asserted liability) for which the Company or any of
its officers, employees or representatives is responsible.
23. SEVERABILITY. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
24. FEES AND EXPENSES. Except as otherwise expressly provided for in this
Agreement, the Company, on the one hand, and Bell Canada, on the other hand,
shall each pay all of its own expenses incurred in connection with the
transactions contemplated by this Agreement, including any and all legal,
accounting, investment banking and consulting fees and expenses incurred in
negotiating, executing and delivering this Agreement and the other agreements,
exhibits, schedules, documents and instruments contemplated by this Agreement.
Notwithstanding the foregoing, each of the Company and Bell Canada shall pay
one-half of the filing fees under the HSR Act related to the transactions
contemplated by this Agreement.
25. CURRENCY. All dollar amounts referred to in this Agreement, including
the symbol "$", refer to lawful money of the United States of America.
26. COUNTERPARTS. This Agreement may be executed in two (2) or more
original or facsimile counterparts all of which together shall constitute one
and the same instrument.
[Remainder of this page is intentionally left blank.]
Page 16 - SUBSCRIPTION AGREEMENT
The undersigned have duly executed this Agreement as of this 8th day of March,
2005.
SUBSCRIBER:
BELL CANADA
By: /s/ Martine Turcotte
------------------------------------
Title: Chief Legal Officer
CLEARWIRE CORPORATION
By: /s/ Ben Wolff
------------------------------------
Title: Executive, Vice President
Page 17 - SUBSCRIPTION AGREEMENT
JOINDER IN STOCKHOLDERS AGREEMENT
This Joinder in Stockholders Agreement ("Joinder") is made and entered
into this 16 day of March, 2004, by and between Clearwire Corporation, a
Delaware corporation (the "Company"), and the party whose signature appears
below (the "Joining Party").
R E C I T A L S:
WHEREAS, the Joining Party has acquired or intends to acquire shares of capital
stock of the Company; and
WHEREAS, pursuant to Section 13.09 of that certain Amended and Restated
Stockholders Agreement, between the Company and its stockholders, dated as of
March 16, 2004 (the "Stockholders Agreement"), the Joining Party may become a
party to the Stockholders Agreement by execution of an instrument such as this
Joinder.
NOW, THEREFORE, the Joining Party agrees as follows:
1. JOINDER
By execution of this Joinder by the Joining Party and acceptance hereof by
the Company, the Joining Party is and agrees to become a party to, subject to
all the conditions, restrictions, obligations and duties of a Stockholder of the
Company under the Stockholders Agreement, including the restrictions on transfer
of the shares acquired from the Company and the requirement that the Joining
Party vote its shares in accordance with the terms thereof.
2. AGREEMENT TO BE BOUND BY AGREEMENT
This Joinder shall in all respects, including all matters of construction,
validity and performance, be governed by, and construed and enforced in
accordance with, the laws of the State of Delaware, without reference to any
rules governing conflicts of laws.
3. COUNTERPARTS
This Joinder may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one instrument.
COMPANY:
By: /s/ Ben Wolff
--------------------------------
Name: Ben Wolff
--------------------------------
Title: Executive Vice President
--------------------------------
Date: March 16, 2005
--------------------------------
JOINING PARTY:
By: /s/ J. Trevor Anderson
--------------------------------
Name: J. Trevor Anderson
--------------------------------
Title: SVP Technology
--------------------------------
Date: March 15th, 2006
--------------------------------
1
JOINDER
In consideration of the permitted issuance, sale, pledge, or other
transfer to the undersigned of Registerable Securities in the Company, the
undersigned hereby consents and agrees to become a party to and be bound by the
Registration Rights Agreement dated as of the 16th day of March, 2004, as
amended, receipt of a copy of which is hereby acknowledged, as fully as if the
undersigned were one of its original parties, and all of the Registrable
Securities owned by the undersigned will be held in accordance with and
restricted by the terms of such Registration Rights Agreement.
Dated: March 15th 2005
Name of Stockholder: /s/ ILLEGIBLE
------------------------------------
Sign Name: /s/ J. Trevor Anderson
------------------------------------
Print Name: J. Trevor Anderson
------------------------------------
Address: Floor 6 10th
------------------------------------
483 Bay Street
------------------------------------
Toronto, Ontario MSC 2C9
------------------------------------
SSN/EIN:
------------------------------------
Approved by the Company:
COMPANY: CLEARWIRE CORPORATION
By: /s/ Ben Wolff
-----------------------------
Name: Ben Wolff
-----------------------------
Title: Executive Vice President
-----------------------------
Dated: March 16, 2005
-----------------------------
1
EXHIBIT C
(TO EX. 10.38)
FILED AS EXHIBIT 10.40
EXHIBIT D
(TO EX. 10.38)
FILED AS EXHIBIT 10.39
EXHIBIT 10.30
CONFIDENTIAL
THIS MASTER SUPPLY AGREEMENT is made as of March 16, 2005.
BETWEEN:
BCE NEXXIA CORPORATION, a
company incorporated pursuant
to the laws of state of
Delaware, and having a place of
business at 1209 Orange Street,
c/o Corporation Trust Center,
Wilmington, Delaware, United
States, 19801, and
BELL CANADA, a company
incorporated pursuant to the
laws of Canada, and having a
place of business at 483 Bay
Street, Toronto, Ontario,
Canada, M5G 2C9
OF THE FIRST PART
AND:
CLEARWIRE CORPORATION, a
company incorporated pursuant
to the laws of state of
Delaware, and having a place of
business at 5808 Lake
Washington Blvd NE, Suite 300,
Kirkland, WA, 98033, and
CLEARWIRE LLC, a limited
liability company formed
pursuant to the laws of the
state of Nevada, and having a
place of business at 5808 Lake
Washington Blvd NE, Suite 300,
Kirkland, WA 98033.
OF THE SECOND PART
WHEREAS Clearwire is a provider of broadband Internet wireless services in the
Territory and wishes to include VoIP Services as part of its offerings of
broadband Internet products and services;
AND WHEREAS Clearwire and BCE Nexxia desire to leverage their respective assets
and core competencies to develop a balanced approach between the highest quality
VoIP services and the lowest possible cost and to enable Clearwire to deliver
those VoIP services to Clearwire customers at competitive rates;
BCE NEXXIA/CLEARWIRE MASTER SUPPLY AGREEMENT
CONFIDENTIAL
2
AND WHEREAS Clearwire wishes to take advantage of BCE Nexxia's abilities to
effectively, efficiently and economically (a) provide or arrange for the
provision of hardware, Software, procurement services, management services, and
other components necessary for Clearwire to provide VoIP Services to its End
Users in the Territory, and (b) provide day-to-day management and operation of
the components and services necessary for Clearwire to provide VoIP Services to
its End Users in the Territory;
AND WHEREAS BCE Nexxia wishes to provide the Services to Clearwire, as set forth
in this Agreement;
AND WHEREAS BCE Nexxia and Clearwire wish to implement this Agreement in support
of the relationship between the Parties described in this Agreement and to
establish a framework for facilitating cooperation between the Parties with
respect to the delivery of the Services to Clearwire and to create a framework
to facilitate the strategic review and the development of Future Services;
NOW THEREFORE in consideration of the premises and the mutual covenants herein
and other good and valuable consideration (the receipt and sufficiency of which
is hereby acknowledged by each of the parties) the Parties hereto covenant and
agree as follows:
SECTION 1
DEFINITIONS & INTERPRETATION
1.1 DEFINITIONS: In this Agreement, unless the context requires otherwise,
"ACCEPTABLE USE POLICY" means the acceptable use policy attached hereto as
Schedule 2.
"ADDITIONAL LINE" has the meaning given to such term in Section 3.2(a).
"ADVERSE MATERIAL IMPACT" means with respect to proposed Changes to either
of Dedicated Systems or Non-Dedicated Systems that results in "dual
logical instances", i.e, a situation wherein BCE Nexxia must establish or
expand the scope of either routine or occasional (e.g., new feature
introduction) processes to support the Services that are materially
different from those required by Bell Canada to service it's domestic
consumer VoIP customer base, as determined by Bell Canada acting
reasonably.
"AFFECTED PARTY" has the meaning given to such term set out in
Section 18.1.
"AFFILIATE" means any Person, however organized, that, directly or
indirectly, Controls, is Controlled by or is under common Control with the
applicable Party. For purposes of this Agreement, "CONTROL", and
variations of "CONTROL" means: (a) ownership of a majority of the voting
power of those classes of voting stock entitled to vote in the election of
directors, whether as a result of equity ownership interests, voting
agreements or otherwise; or (b) ownership of a majority of the beneficial
interests in income and capital of an entity other than a corporation.
BCE NEXXIA/CLEARWIRE MASTER SUPPLY AGREEMENT
CONFIDENTIAL
3
"AGREEMENT" means this agreement together with the following Schedules (and any
amendments or additions thereto made in writing in accordance herewith), all of
which are incorporated by reference herein:
Schedule 1 - SOW
Schedule 2 - Acceptable Use Policy
Schedule 3 - Term Sheet - Financing
Schedule 4 - Appointments
Schedule 5 - Take Back Service Elements
Schedule 6 - Future Services
"APPLICABLE LAWS" means all statutes, laws, regulations, ordinances, rules
orders and all amendments thereto, from time to time in force and effect, and
requirements of governmental authorities, Regulatory Authorities or other public
authorities, including interpretations thereof by any such authorities acting
within their jurisdiction with respect to matters involving the Services or VoIP
Services, and not stayed or otherwise made not binding as a result of judicial
or other action of a body with review authority.
"AT RISK PARTY" has the meaning given to such term in Section 4.2(b).
"BCE NEXXIA" means BCE Nexxia Corporation and Bell Canada (and any of their
respective Affiliates providing or supporting the provision of Services
pursuant to this Agreement). The Parties understand that Bell Canada and its
Canadian Affiliates are to provide and support those Services to be performed in
Canada and BCE Nexxia Corporation and its U.S. Affiliates are to provide and
support those Services to be performed in the U.S.
"BCE NEXXIA DEPLOYED IP" means the Intellectual Property owned or licensed by
BCE Nexxia and made available to Clearwire by or through BCE Nexxia in order for
Clearwire to provide VoIP Services to End Users. The BCE Nexxia Deployed IP
excludes BCE Nexxia's or any of its Affiliates' brands or other trade-marks
associated with the BCE Nexxia Deployed IP. The BCE Nexxia Deployed IP is
subject to any limitations or restrictions which are imposed by the owners of
such Intellectual Property and is subject to any other third party rights in the
BCE Nexxia Deployed IP.
"BCE NEXXIA FIELD OF USE" means the development, provisioning, management,
support and integration of IP Telephony, together with the marketing, sale and
distribution of related products and services.
"BCE NEXXIA INVENTIONS" means those Inventions that are either (i) made solely
by employees of BCE Nexxia in the performance of this Agreement, (ii)
Derivatives of copyrights or Patents on or to BCE Nexxia Deployed IP whether or
not such Derivatives have been developed jointly by the Parties, or (iii)
developed jointly by employees of Clearwire and BCE Nexxia while performing the
Services, but excluding any Inventions set out in subsection (iii) of Clearwire
Inventions.
BCE NEXXIA/CLEARWIRE MASTER SUPPLY AGREEMENT
CONFIDENTIAL
4
"BCE NEXXIA IS/IT AND TELECOM SYSTEMS" means BCE Nexxia's facilities, platforms,
Software, databases (excluding Confidential Information of Clearwire contained
therein), operational support systems, business support systems, solution
architectures, methodologies, processes, graphical user interfaces, know how,
documentation and prototypes including any Intellectual Property Rights related
to the foregoing and such other equipment or property owned or licensed by BCE
Nexxia or its Affiliates and necessary for or used in the provision of the
Services.
"BCE NEXXIA OUT-OF-POCKET TERMINATION COSTS" means all of the Contract
Termination Costs, together with reasonable, demonstrable, incremental
out-of-pocket costs, fees and expenses incurred by BCE Nexxia in connection with
the termination of the Agreement.
"BUSINESS DAYS" means regular workdays, not including holidays and weekends,
when businesses ordinarily operate in the state of Washington and the province
of Ontario.
"CANADIAN COMPETITOR" means any of the following entities, and their respective
successors, assigns, and Affiliates: [***]
"CHANGE" means any addition, upgrade, update, reduction, replacement, deletion,
modification, improvement, amendment or adjustment to the Services.
"CHANGE COMMUNICATION" means the written communication required under Section 7
and to be exchanged by the Parties with respect to any proposed Changes to the
Services and to Service Elements.
"CHANGE MANAGEMENT PROCESS" has the meaning given to such term in Section 7.1.
"CHANGE OF CONTROL" means, in respect of any Person (the "CONTROLLED PERSON"),
the occurrence of the following, or the execution of an agreement the
performance of which will cause or result in the occurrence of the following
(whether by merger, amalgamation, arrangement, recapitalization, share exchange
or any other transaction or event): that any Person or related group of Persons,
other than the Person that Controls such Controlled Person immediately prior to
the occurrence of such transaction or event or the entering into of such
agreement, would have Control of such controlled Person upon the occurrence of
such transaction or event.
"CHANGE RESPONSE" has the meaning given to such term in Section 7.5(b).
"CHARGES" [***]
[*** Confidential Treatment Requested]
BCE NEXXIA/CLEARWIRE MASTER SUPPLY AGREEMENT
CONFIDENTIAL
5
[***]
"CLEARWIRE" means Clearwire Corporation and any of its Affiliates providing VoIP
Services from time to time in the Territory.
"CLEARWIRE ENABLING IP" means the Intellectual Property owned or licensed by
Clearwire from parties other than BCE Nexxia and its Affiliates and made
available by Clearwire to BCE Nexxia in order for BCE Nexxia to perform Services
under this Agreement. The Clearwire Enabling IP excludes Clearwire's or any of
its Affiliates' brands or other trade-marks associated with Clearwire Products.
The Clearwire Enabling IP is subject to any limitations or restrictions which
are imposed by the owners of such Intellectual Property and is subject to any
other, third party rights in the Clearwire Enabling IP.
"CLEARWIRE FIELD OF USE" means the deployment of broadband wireless access
systems and the marketing, sale and distribution of related products and
services.
"CLEARWIRE INVENTIONS" means those Inventions that are (i) made solely by
employees of Clearwire in the performance of this Agreement, (ii) Derivatives
of copyrights or Patents on or to Clearwire Enabling IP whether or not such
Derivatives have been jointly developed by the Parties, or (ii) developed
jointly by employees of Clearwire and BCE Nexxia while engaged in work pursuant
to this Agreement, provided that such Inventions are integrated solely into
Clearwire Products and are not part of or integrated into any BCE Nexxia IS/IT
and Telecom Systems related to IP Telephony.
"CLEARWIRE PRODUCTS" means the hardware and Software manufactured by or for
Clearwire for the deployment of broadband wireless access systems by Clearwire.
"CONFIDENTIAL INFORMATION" means all oral, written or machine-readable data or
information that is prominently identified as confidential or by its nature is
confidential and that is not known generally in the trade or industry, and
which pertains to a Party or its business or operations, disclosed or acquired
directly in connection with this Aggrements and includes all documents and
information which incorporate or are derived from any such data or information.
Without in any way limiting the foregoing, Confidential Information includes all
information relating to End Users and other customers of Clearwire, any
research, development or business activities, information disclosed at any
meetings and demonstrations between the Parties at any time before or after the
Effective Date, products, schedules, methodologies, algorithms, processes,
procedures, documentation, policies, pricing, market analysis, equipment,
statistics, technology, sales, projections and corporate/business or financial
information, technical information, network design information, actual and
potential accounts, ideas, concepts,
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techniques, processes, devices, compilations, research, development,
manufacturing, purchasing, data processing, engineering, marketing, drawings,
models, sketches, all written material including programs and subroutines
(whether in source or object code form) and updates and modifications thereto,
tapes, diskettes, listings, and other programming and system documentation,
manuals and copies thereof containing such information.
"CONTRACT TERMINATION COSTS" means BCE Nexxia's reasonable, demonstrable
out-of-pocket costs resulting from the early termination of subcontracts, or
commitment related to the supply or acquisition of Service Elements, including
any penalties or one-time charges incurred by BCE Nexxia in connection
therewith.
"CONVERTIBLE SECURITIES" has the meaning given to such term in Section 3.2(c).
"COSTS" [***]
"DEDICATED" means, with respect to a Service Element, when such Service Element
is provided by a Third Party Provider pursuant to a Dedicated Third Party
Provider Agreement for the sole purpose of providing or facilitating the
provision of Services hereunder.
"DEDICATED SYSTEMS" means the systems provided to Clearwire by BCE Nexxia or by
any Third Party Providers, from time to time, which could include operating
platforms used for purposes such as web sales applications, self-care
applications, order management, activation, customer care, provided that the
same shall not be concurrently used by BCE Nexxia, or any of its Affiliates, for
the provision and management of VoIP services to their respective consumer base.
"DEDICATED THIRD PARTY PROVIDER AGREEMENTS" has the meaning given to such term
in Section 2.6.
"DEFAULTING PARTY" has the meaning given to such term in Section 4.2(a).
"DERIVATIVES" means (i) for material subject to copyright protection, any work
that is based upon one or more pre-existing works, such as a revision,
modification, translation, abridgment, condensation, expansion, collection,
compilation or any other form in which such pre-existing works may be recast,
transformed or adapted, or (ii) for patentable or patented materials, any
adaptation, subset, addition, improvement or combination.
"DEVELOPMENT TEAM" has the meaning given to such term in Section 6.1(d).
"DIRECT EXPENSES" means third party charges that are to be paid directly by
Clearwire and administered by BCE Nexxia as part of the Services.
"DISPUTE" has the meaning given to such term in Section 17.1.
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"EFFECTIVE DATE" shall mean -, 2005.
"END USER(s)" means a consumer of Clearwire's VoIP Services that has a billing
relationship with Clearwire, or a Person receiving Clearwire's VoIP Services
through a reseller where such Person has a billing relationship with such
reseller.
"EXECUTIVE OPERATING COMMITTEE" has the meaning given to such term in
Section 5.1.
"FUTURE SERVICES" means the services which may be identified from time to time
on Schedule 6, as updated from time to time by BCE Nexxia, and which are
provided on a commercial basis by BCE Nexxia to its customers or are under late-
stage development for commercial deployment by BCE Nexxia.
"IMPOSITIONS" means all contribution and commodity taxes, including but not
limited to, all sales, retail, use, goods and services, harmonized, value added,
excise, and similar taxes imposed, levied or assessed by any federal,
provincial, state or local government authority or Regulatory Authorities,
other than taxes on income, capital, owned property and employees, and
withholding taxes or other amounts, if any, that may be required under
Applicable Law to be withheld by Clearwire from payment of the fee referred to
in Section 3.2 (a).
"INDEMNITEE" has the meaning given to such term in Section 9.1.
"INDEMNITOR" has the meaning given to such term in Section 9.1.
"INFORMANT" shall mean a Party to this Agreement (including an Affiliate of such
Party) providing any Confidential Information to another Party to this Agreement
(including an Affiliate of such Party).
"INITIAL QUARTERLY PLANNING DOCUMENT" has the meaning given to such term in
Section 5.2(a)
"INTELLECTUAL PROPERTY" means all (i) Patents and Patent Rights, (ii) copyrights
and other rights in copyrightable works, together with copyright registrations
and applications for registrations, (iii) mask works and registrations and
applications for registration thereof, (iv) proprietary know-how and trade
secrets, (v) trademarks, service marks, trade names, Internet domain names and
applications for registration and registrations therefore, and all goodwill
symbolized thereby and associated therewith, (vi) other proprietary rights
relating to any of the foregoing existing at any time in Canada, the U.S., or
elsewhere throughout the world, (vii) all works protected by any of the above
rights, and (viii) all works protected by any of the above rights.
"INTELLECTUAL PROPERTY RIGHT" means any right, whether granted or recognized
under Canadian, U.S., or other foreign law, by common law, registration,
license, assignment or otherwise, in Intellectual Property.
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"INVENTIONS" means any Software, hardware, systems, material, works,
information, discoveries, inventions, processes, data or products, including
Derivatives, that are (i) copyrightable, patentable or subject to trade secret
protection, and (ii) created by BCE Nexxia or Clearwire in the performance of
this Agreement. Inventions are Clearwire Inventions, BCE Nexxia Inventions or
Joint Inventions.
"IP TELEPHONY" means person-to-person speech and speech related multi-media
communications using Internet Protocol, as the same may evolve over time.
"JOINT INVENTIONS" means those Inventions made jointly by employees of Clearwire
and BCE Nexxia while performing the functions described in this Agreement that
are not BCE Nexxia Inventions or Clearwire Inventions.
"MAJOR PROVIDER" means any of the following entities, and their respective
successors, assigns, and Affiliates: [***].
"MATERIAL BREACH" means any breach by either BCE Nexxia on the one hand or
Clearwire on the other hand, of any covenant, obligation or duty contained in
this Agreement that would materially and adversely affect a fundamental business
purposes or economic and financial benefits of this Agreement to BCE Nexxia or
Clearwire respectively, including but not limited to, BCE Nexxia's failure to
deliver the Services in accordance with and subject to this Agreement, including
Schedule 1, in any material respect, or Clearwire's failure to make payment for
Charges when due as set forth in Section 3.
"NEW ADDITIONAL LINES" has the meaning given to such term in Section 3.2(a).
"NEW DEVELOPMENT INITIATIVES" has the meaning given to such term in
Section 6.1(a).
"NEW END USERS" has the meaning given to such term in Section 3.2(a).
"NEW END USERS PAYMENT" has the meaning given to such term in Section 3.2(a).
"NON-DEDICATED SYSTEMS" means the BCE Nexxia IS/IT and Telecom Systems used by
BCE Nexxia as part of the Services which include OSS platforms used for the
purposes of providing Clearwire with functions such as trouble management,
network management, usage presentment, and SS7 system and where the same are
provided to Clearwire and are concurrently used by BCE Nexxia, or any of its
Affiliates, for the provision and management of VoIP services to their
respective consumer base.
"NOTICE TO ARBITRATE" has the meaning given to such term in Section 17.3.
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"PARTY" means a signatory to this Agreement, and "PARTIES" means all signatories
to this Agreement.
"PASS-THROUGH EXPENSES" [***].
"PATENTS" means all classes or types of patents (including, without limitation,
originals, divisions, continuations, continuations-in-part, extensions or
reissues), and applications for these classes or types of patents in all
countries of the world.
"PATENT RIGHTS" means those rights arising from or related to Patents, and any
equivalent rights in all countries of the world.
"PERMITTED ASSIGN" has the meaning given to such term in Section 19.1.
"PERSON" means any individual, entity or organization, and includes an
individual, a corporation, a partnership, a trust, an unincorporated
organization or association, the government of a country or any political
subdivision thereof, or any agency or department of any such, government, and
the executors, administrators or other legal representatives of an individual in
such capacity.
"PROJECT MANAGEMENT OFFICE" has the meaning given to such term in
Section 5.2.
"QUARTERLY PLANNING DOCUMENT" has the meaning given to such term in
Section 5.2(a).
"RECIPIENT" means the Party (including an Affiliate of such Party) receiving any
Confidential Information from the other Party.
"REGULATORY AUTHORITIES" means the regulatory, or other governmental or
quasi-governmental authorities in Canada, the U.S. or elsewhere with
jurisdiction over the Services or VoIP Services.
"RIGHT OF FIRST PROPOSAL" or "ROFP" has the meaning given to such term in
Section 6.2.
"ROFP NOTICE" has the meaning given to such term in Section 6.2(b).
"SERVICES" means the services provided by BCE Nexxia identified in Schedule 1
attached hereto and any Future Services that may be included from time to time
by BCE Nexxia
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and Clearwire pursuant to the terms and conditions set forth herein, including
without limitation Services or Future Services provided pursuant to the Right of
First Proposal.
"SERVICE ELEMENTS" means, without limitation, tools, systems, equipment,
Intellectual Property, real property, or services of any nature or kind provided
by Third Party Providers in connection with the provision of the Services.
"SERVICE PLANS" has the meaning given to such term in Section 6.1(d).
"SIDE AGREEMENT" has the meaning set out in Section 3.2(f).
"SOFTWARE" includes applications software (which refers to a group of computer
based programs of any format, which performs specific functions or applications,
together with supporting documentation and materials) and systems software
(which refers to the software programs which are generally known as operating
software, utilities or system software that are used in conjunction with the
hardware to perform tasks basic to the functioning of a computer and which are
required to operate the applications software, together with supporting
documentation and materials).
"SOURCE CODE" means, with respect to Software, a complete copy of the source
code version of software, appropriately labeled to denote the version or release
thereof, and the currency date thereof, in each of (i) machine-readable form on
machine-readable storage medium suitable for long term storage and which, when
compiled, will produce the object code version of the Software; and (ii)
human-readable form with annotations in the English language on bond paper
Suitable for long term archival storage.
"SOW" means the statement of work attached hereto as Schedule 1.
"TAKE BACK SERVICE ELEMENTS" has the meaning given to such term in Section 2.8.
"TARIFFS" means the tariffs of Bell Canada as approved by the Canadian
Radio-television and Telecommunications Commission or other relevant Regulatory
Authorities of competent jurisdiction from time to time.
"TERM" has the meaning given to such term in Section 4.1.
"TERM SHEET" means the term sheet for vendor financing attached hereto as
Schedule 3.
"TERMINATING PARTY" has the meaning given to such term in Section 4.2(b).
"TERMINATION DISPUTE" has the meaning given to such term in Section 4.2(c).
"TERMINATION TRANSITION ASSISTANCE" means the reasonable transition assistance
to be provided by BCE Nexxia in the event of a termination by either BCE Nexxia
or Clearwire, pursuant to Section 4.
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"TERMINATION TRANSITION PERIOD" means the period relating to the performance of
Termination Transition Assistance, which shall be the period designated by
Clearwire, up to a maximum of twelve (12) months and shall commence only upon
the termination of this Agreement.
"TERRITORY" means the U.S.
"THIRD PARTY PROVIDERS" means a Person that is not a Party to this Agreement
which provides services, Intellectual Property, tangible or real property, to
either BCE Nexxia or Clearwire, as the case may be, in order to facilitate the
provision by BCE Nexxia of the Services.
"URGENT DISPUTE" has the meaning given to such term in Section 17.4.
"U.S." means the fifty (50) states of the United States of America and the
District of Columbia.
"VOIP SERVICES" means the various combinations of IP Telephony products and
services provided by Clearwire to its End Users.
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1.2 INTERPRETATION: In this Agreement, unless the subject matter or context
otherwise requires:
(a) All references to a designated "Article", "Section", "Subsection" or
other subdivision or to a Schedule is to the designated Article,
Section, Subsection or other subdivision of, or Schedule to, this
Agreement.
(b) The words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular Article, Section, Subsection or other subdivision or
Schedule.
(c) The headings and captions are for convenience only and do not form
part of this Agreement and are not intended to interpret, define, or
limit the scope, extent or intent of this Agreement or any
provisions hereof.
(d) The singular of any term includes the plural, and vice versa, the
use of any term is equally applicable to any gender and, where
applicable, a body corporate.
(e) The word "or" is not exclusive and the word "including" means
"including, without limitation," and the words "include" and
"includes" have the corresponding meanings.
(f) Any accounting term not otherwise defined has the meaning assigned
to it and all accounting matters will be determined in accordance
with generally accepted accounting principles in the Canada.
(g) Any reference to a statute includes and is a reference to that
statute and to the regulations made pursuant thereto, with all
amendments made thereto and in force from time to time, and to any
statute or regulation that may be passed which has the effect of
supplementing or superseding that statute or regulation.
(h) A reference to a time or date is to the local time or date at New
York, New York.
(i) A reference to an approval, authorization, consent, designation,
waiver or notice means written approval, authorization, consent,
designation, waiver or notice.
SECTION 2
SERVICES AND OBLIGATIONS OF THE PARTIES
2.1 SERVICES TO BE PROVIDED: BCE Nexxia shall provide the Services to Clearwire,
on terms and conditions set forth in this Agreement as the same may be amended
or modified from to time in accordance with the terms and conditions hereof.
2.2 EXCLUSIVE USE OF BCE NEXXIA SERVICES: During the Term of this Agreement,
except during any Transition Assistance Period, and provided that BCE Nexxia is
not in Material Breach of this
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Agreement as agreed among the Parties or as finally determined under Section 17,
Clearwire (and any entity under Clearwire's Control) shall fulfill and discharge
all of its requirements for the Services, or services of a similar nature, in
the Territory, in support of IP Telephony, through BCE Nexxia if Clearwire can
do so without violating its fiduciary duties to a third party and without
breaching any binding agreement with a third party, provided, however, that
"Service Elements" shall not constitute "services of a similar nature" under
this Section 2.2. If Clearwire determines that the potential for a violation of
Applicable Laws, fiduciary duties or agreements with third parties exists,
Clearwire shall provide BCE Nexxia with reasonable advance notice, prior to
relying on the exception provided in this Section 2.2 for potential violation of
Applicable Laws, fiduciary duties or agreements with third parties, setting
forth in sufficient detail the nature of the potential violation, in an effort
to allow consultation between Clearwire and BCE Nexxia regarding Clearwire's
assessment of the applicability of such exception. If it disagrees with
Clearwire's determination BCE Nexxia shall be entitled to invoke the dispute
resolution process provided in Section 17.1; provided, however, specific
performance shall not be a remedy available to BCE Nexxia. Notwithstanding the
foregoing, this Section 2.2 shall not apply to Clearwire's purchase of any
services similar to the Services if BCE Nexxia has elected not to provide such
services to Clearwire. Subject to the terms of this Section 2.2, (a) for
entities under Clearwire's Control, Clearwire shall use commercially reasonable
efforts to promote the Services to such entities and to promote the execution by
such entities of a joinder to this Agreement, pursuant to which such entities
will be bound by this Section 2.2, and (b) for entities in which Clearwire has
an ownership interest but does not have Control, Clearwire shall use
commercially reasonable efforts to promote the Services to such entities.
Nothing in this Agreement shall be construed to limit Clearwire's right to sell
any types of VoIP Services through any channel, including retail and wholesale.
2.3 WARRANTY: BCE Nexxia warrants, and Clearwire recognizes, that the Services
to be supplied under this Agreement shall be of a nature and quality
substantially equivalent to the services of a similar nature BCE Nexxia provides
solely for its own account except that BCE Nexxia does not warrant any portion
of the Services supplied by Third Party Providers. In addition, nothing in this
Agreement shall be construed or interpreted as BCE Nexxia providing a warranty,
as it relates to sufficiency or adequacy of the delivery of VoIP Services to
Clearwire's End Users. With respect to Service Elements provided by Third Party
Providers, BCE Nexxia will use commercially reasonable efforts to include in the
Dedicated Third Party Provider Agreements a provision to pass through to
Clearwire all warranties received by BCE Nexxia from such Third Party Providers.
Furthermore, if the Parties agree in writing after the date of this Agreement
that any specific Service Elements to be supplied under this Agreement are to be
of a lesser nature and quality than those provided by BCE Nexxia for its own
account, then the above mentioned warranty will only extend to such lesser
threshold. Subject to the foregoing limitations, BCE Nexxia also warrants that
the Services shall be provided in a good, careful, and professional manner, in
compliance with Applicable Law. Clearwire and BCE Nexxia will monitor industry
developments of quality and performance standards for services similar to the
Services and VoIP Services. Clearwire and BCE Nexxia agree that, in addition to
the warranties and performance standards stated elsewhere in this Agreement, it
is their intent and BCE Nexxia shall endeavor to achieve the result that the
Services will meet or exceed industry standards for quality and performance as
such standards are developed and as they may change over time.
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2.4. NON-EXCLUSIVITY: Nothing in this Agreement shall be construed or
interpreted as limiting or restricting the rights of BCE Nexxia to promote,
market and sell any services of a nature substantially similar to the Services,
in the Territory or outside the Territory, to any Person, provided that BCE
Nexxia does so without using any Clearwire Enabling IP or any Service Elements
provided on a Dedicated basis paid for by Clearwire and without violating BCE
Nexxia's obligations under Section 12.
2.5 ACCESS BCE NEXXIA IS/IT SYSTEMS AND TELECOM SYSTEMS: During the Term, as
recipient of the Services, Clearwire shall, subject to any restrictions set
forth in this Agreement, and to the extent practicable, be afforded access and
use of BCE Nexxia IS/IT Systems and Telecom Systems, provided that the use or
access to BCE Nexxia IS/IT Systems and Telecom Systems shall not constitute a
transfer or assignment to Clearwire of any rights, property rights or other
form of entitlements or beneficial interest, including any Intellectual Property
Right. The compensation from Clearwire to BCE Nexxia for Clearwire's access to
and use of BCE Nexxia IS/IT Systems and Telecom Systems is included as part of
the Charges.
2.6 DEDICATED THIRD PARTY PROVIDER AGREEMENTS: Subject to Section 2.7, unless
otherwise required by Clearwire from time to time in its discretion with respect
to any particular Service Element (which may be provided by Clearwire, its
contractors or agents as provided in this Agreement), BCE Nexxia shall identify
and recommend Third Party Providers in order to obtain the Service Elements, on
a Dedicated basis, and to negotiate the terms and conditions of all agreements
in such respect with Third Party Providers (the "DEDICATED THIRD PARTY PROVIDERS
AGREEMENTS"). Notwithstanding the foregoing, Clearwire shall approve or reject
Third Party Providers recommended by BCE Nexxia, through the Project Management
Office, for Dedicated Third Party Provider Agreements, provided, however, that
Clearwire agrees that [***] is an approved Third Party Provider for purposes of
VoIP softswitch, VoIP application systems, PSTN gateways and other related VoIP
telecom services equipment, further provided that Clearwire acknowledges that
BCE Nexxia may convert and migrate to an alternative Third Party Provider for
voicemail systems application. Unless doing so would result in Clearwire having
to pay higher Charges than those that would have been payable had a Dedicated
Third Party Provider Agreement been entered into with BCE Nexxia as principal,
Clearwire shall execute such Dedicated Third Party Provider Agreements as
principal and shall be directly liable to the Third Party Provider for all
obligations under such Dedicated Third Party Provider Agreement and will be
entitled to benefit from all rights and recourses thereunder. Otherwise, such
Dedicated Third Party Provider Agreement will be executed by BCE Nexxia as
principal and Clearwire will assume all costs and expenses thereunder as part of
the Charges. Clearwire agrees that, for any Dedicated Third Party Provider
Agreement entered into by BCE Nexxia as principal, BCE Nexxia shall use
commercially reasonable efforts to obtain the right to assign such Dedicated
Third Party Provider Agreements to Clearwire upon Clearwire's request, provided
that Clearwire shall indemnify and hold BCE Nexxia harmless with respect to any
and all obligations or liabilities which arise following the date of an
assignment of a Dedicated Third Party Provider Agreement and shall use
commercially reasonable efforts to obtain a release of all liabilities BCE
Nexxia may have thereunder other than those relating to a BCE Nexxia breach. All
Third Party Provider Agreements in which Clearwire is principal shall include
provisions that identify BCE Nexxia as Clearwire's agent and give to BCE Nexxia
the right as agent to control, at Clearwire's expense,
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all rights to enforce the terms and conditions thereof. Provided BCE Nexxia
exercises its enforcement rights under any such Dedicated Third Party Provider
Agreement, whether as principal or as Clearwire's agent, as the case may be, BCE
Nexxia shall be deemed to have fulfilled all of its obligations and duties to
enforce such Dedicated Third Party Provider Agreements and to provide Services
in accordance with the performance standards and obligations set forth in
Section 2.3 and under this Section 2.6 to the extent of the adverse impact
resulting from the breach of such Dedicated Third Party Provider Agreements.
BCE Nexxia shall (unless otherwise requested by Clearwire in its sole discretion
from time to time), on and from the Effective date, be responsible for managing
on behalf of Clearwire Third Party Providers under the Dedicated Third Party
Provider Agreements. To that end, where BCE Nexxia is acting either as an agent
of Clearwire or as principal under a Dedicated Third Party Provider Agreement,
BCE Nexxia shall conduct itself in such a manner and use commercially reasonable
efforts to reduce the financial responsibility and liabilities of Clearwire
under the applicable Dedicated Third Party Provider Agreements. For greater
certainty, and provided that BCE Nexxia complies with the obligations set out in
this Section 2.6, BCE Nexxia shall not be liable to Clearwire, under any
circumstances, for the performance or non-performance of Third Party Providers
pursuant to Dedicated Third Party Provider Agreements.
2.7 IDEM: Prior to the execution of any Dedicated Third Party Agreements, unless
otherwise directed by Clearwire, and through the Project Management Office, BCE
Nexxia shall:
(a) Consult with Clearwire during the course of the negotiations, and
obtain written approval from Clearwire as provided in Section 2.6;
and
(b) make commercially reasonable efforts to negotiate arrangements that
shall provide Clearwire access to such Third Party Providers'
services on commercially advantageous terms, including appropriate
service level agreements and pricing parameters.
Without limiting the generality of the foregoing and subject to the limitation
on its liability set forth in Section 2.6, BCE Nexxia shall keep Clearwire
informed about performance issues or alleged breaches under any Dedicated Third
Party Provider Agreements, and shall undertake either as principal or as agent
for Clearwire such enforcement actions as may be directed by Clearwire from time
to time (including settlement of the dispute), provided that the action
requested by Clearwire does not violate Applicable Law, that Clearwire agrees to
reimburse BCE Nexxia for its reasonable, out-of-pocket costs in such enforcement
action, and that when acting upon such instructions BCE Nexxia is relieved of
its warranty obligations set forth in Section 2.3 to the extent impacted by such
instructions. Clearwire shall not take any action, or cause any action to be
taken, which would impair or jeopardize the delivery of services pursuant to the
Dedicated Third Party Provider Agreements.
2.8 TAKE BACK OF SERVICE ELEMENTS: Clearwire may, from time to time, request BCE
Nexxia to transfer or otherwise assign the accountability and responsibility for
the Service Elements provided on a Dedicated basis by Third Party Providers and
identified in Schedule 5 (the "TAKE BACK SERVICE ELEMENTS"), and BCE Nexxia
shall promptly accomplish such transfer or
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assignment. Such requests shall be deemed Change Communications hereunder and
shall be managed and administered by the Parties pursuant to Section 7 hereof.
For greater certainty, Clearwire hereby acknowledges that in assuming
accountability and responsibility for the delivery of Service Elements, which
were previously provided by BCE Nexxia, BCE Nexxia's ability to comply with the
obligation set out in Section 2.3 and Section 2.6 may be impacted and BCE Nexxia
shall be released from such obligation to the extent BCE Nexxia's compliance is
adversely affected by such transfer or assignment.
2.9 TITLE: Clearwire and BCE Nexxia agree that Clearwire shall own all rights to
equipment and third party Software, that are paid for by Clearwire and provided
on a Dedicated basis, even if the procurement was arranged and managed by BCE
Nexxia and even if such property is located on the premises of BCE Nexxia or a
Third Party Provider. BCE Nexxia shall deliver to Clearwire, at Clearwire's
request from time to time, bills of sale and other documents evidencing
Clearwire's ownership or other interests under this Agreement.
2.10 COOPERATION: The Parties shall cooperate with each other, including
providing information, approvals and acceptances, and making available
management decisions, as reasonably required by either Party so that it may
accomplish its obligations and responsibilities under this Agreement.
2.11 FULFILLMENT OF OBLIGATIONS: In order to give effect to this Agreement each
Party shall be required to perform its respective obligations under this
Agreement in a manner which is timely and reasonably complete. The Parties
acknowledge that any failure to perform by one Party in this respect may
negatively impact the other Party's ability to perform its own obligations.
2.12 CONDUCT OF BUSINESS: Each Party shall comply with all Applicable Laws and
shall conduct its business in a professional, competent and ethical manner so as
to enhance the business, reputation and goodwill associated with the Services
and VoIP Services.
2.13 OTHER OBLIGATIONS OF CLEARWIRE:
(a) CLEARWIRE PROVIDED EQUIPMENT OR SOFTWARE: Clearwire shall be
responsible for any equipment or Software which it provides, for
the supply, installation and maintenance of such equipment at sites
designated by Clearwire, and for ensuring that such equipment or
Software is (i) installed and maintained according to the
manufacturer's specifications and any specifications of BCE Nexxia
with respect to interoperability for the purpose of providing the
Services, and (ii) compatible with, and does not interfere with, the
Services; and(iii) in compliance with all Applicable Laws;
(b) ACCESS TO INFORMATION: Clearwire shall provide information,
including Confidential Information, and assistance as is reasonably
required by BCE Nexxia in order to enable BCE Nexxia to meet its
obligations under this Agreement;
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(c) FORECASTS: Clearwire shall endeavor to provide BCE Nexxia with
detailed forecast information, including demand for VoIP Service, as
part of the Quarterly Planning Documents, and network capacity
requirements, to assist BCE Nexxia with capacity and other Services
planning. BCE Nexxia acknowledges that Clearwire is a start-up
business, with limited experience forecasting usage of VoIP Service,
and that forecasts provided by Clearwire from time to time under
this Section or otherwise might be materially in error. Clearwire
acknowledges that the lack of accurate forecasts (if such forecasts
are materially in error) may impact BCE Nexxia's ability to
efficiently and effectively deliver the Services in the most cost
effective manner. The Parties acknowledge that such forecasts merely
provide an estimate of future requirements and do not reflect or
create any commitments or obligations which are binding on either
Party;
(d) MAINTENANCE INTERRUPTIONS: Clearwire shall, as reasonably required
by and in the reasonable discretion of BCE Nexxia, permit BCE Nexxia
to interrupt the Services from time to time in order to provide
maintenance in respect of the Services, on reasonable notice to
Clearwire;
(e) OUT OF TERRITORY OBLIGATION: Where Clearwire and/or any of its
Affiliates, may do so without violation of any Applicable Laws,
fiduciary duties or agreements with third parties, Clearwire and/or
its Affiliates shall consider BCE Nexxia as its preferred supplier
for the provision of services of a nature substantially similar to
the Services outside of the Territory, and to that end Clearwire and
its Affiliates shall, subject to the qualifications stated above in
this paragraph, provide BCE Nexxia with a ROFP pursuant mutatis
mutandis to Section 6.2 hereof, in all instances where Clearwire, or
any of its Affiliates, wishes to deploy VoIP services similar to the
VoIP Services outside of the Territory. If Clearwire had determined
that the potential for a violation of Applicable Laws, fiduciary
duties or agreements with third parties exists, Clearwire shall
provide BCE Nexxia with reasonable advance notice, prior to relying
on the exception provided in this Section 2.13 for potential
violation of Applicable Laws, fiduciary duties or agreements with
third parties, setting forth in sufficient detail the nature of the
potential violation in an effort to allow consultation between
Clearwire and BCE Nexxia regarding Clearwire's assessment of the
applicability of such exception. If it disagrees with Clearwire's
determination BCE Nexxia shall be entitled to invoke the dispute
resolution process provided in Section 17.1; provided, however,
specific performance shall not be a remedy available to BCE Nexxia.
In addition, Clearwire shall exercise reasonable efforts to generate
ROFP opportunities for BCE Nexxia for services substantially similar
in nature to the Services in all instances where Clearwire has an
equity or debt interest or otherwise has contracted arrangements
with an entity outside the Territory that is not an Affiliate and
wishes to deploy VoIP services similar in nature to the VoIP
Services outside of the Territory;
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(f) USAGE OF THE SERVICES: Clearwire shall take commercially reasonable
steps to ensure that its End Users do not: (i) use the VoIP Services
in such a manner that causes interference, or tampers with another
authorized user's use of the BCE Nexxia network; (ii) use VoIP
Services in a manner that violates the Acceptable Use Policy; or
(Hi) violate Applicable Laws;
(g) TAMPERING WITH SERVICES: Clearwire, its agents, employees or
representatives, shall not permit or assist others to use the
Services (i) in any manner which interferes unreasonably with BCE
Nexxia's network, or access thereto by other Persons; or (ii) for
any purpose or in any manner directly or indirectly in violation of
Applicable Laws;
(h) IMMEDIATE SUSPENSION OF SPECIFIC SERVICES AS A RESULT OF END-USER
ACTIONS: Clearwire shall include, as part of its End User
agreements, provisions which include an acceptable use policy
containing terms that are substantially similar to the terms of the
Acceptable Use Policy. In addition, Clearwire shall ensure that the
End User agreements include a provision disclaiming liability for
underlying service providers or suppliers (including BCE Nexxia) and
to the extent that any such policy or agreement includes
indemnification from a Clearwire End User, BCE Nexxia, in its
capacity as a service provider or supplier, shall be a beneficiary
thereof. Clearwire shall require each Clearwire End User accessing
the VoIP Services to agree to the terms set forth in an acceptable
use policy as contemplated above. Clearwire shall determine in its
sole discretion how the acceptable use policy will be presented to
its End Users, provided that such presentation shall be in such
manner as to be enforceable under the terms of the End User
agreement. The Parties shall establish within sixty (60) days from
the Effective Date a process respecting discontinuance of VoIP
Services to any particular End User that is identified by BCE Nexxia
or Clearwire as having violated the applicable acceptable use
policy. If the Parties are unable to agree on the foregoing process
respecting discontinuance of VoIP Services, BCE Nexxia shall have
the right, acting reasonably, to discontinue or suspend provision of
the Services, solely with respect to the activities of an End User
which gives rise to a breach of the Acceptable Use Policy and only
after Providing Clearwire with reasonable advance notice in the
circumstances;
(i) CLEARWIRE AFFILIATES: Clearwire shall cause all Persons which
subsequently become Affiliates and which provide VoIP Services in
the Territory to become parties to this Agreement, so long as doing
so is not in violation of Applicable Laws, fiduciary duties or
agreements with third parties. If Clearwire has determined that the
potential for a violation of Applicable Laws, fiduciary duties or
agreements with third parties exists, Clearwire shall provide BCE
Nexxia with reasonable advance notice, prior to relying on the
exception provided in this Section 2.13 for potential violation of
Applicable Laws, fiduciary duties or agreements with third parties
setting forth in sufficient detail the nature of the potential
violation in an effort to allow consultation between Clearwire and
BCE Nexxia regarding Clearwire's assessment of the applicability of
such exception.
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If it disagrees with Clearwire's determination BCE Nexxia shall be
entitled to invoke the dispute resolution process provided in
Section 17.1; provided, however, specific performance shall not be a
remedy available to BCE Nexxia.
2.14 OTHER OBLIGATIONS OF BCE NEXXIA:
(a) BCE NEXXIA PROVIDED EQUIPMENT OR SOFTWARE: Subject to the assistance
of Clearwire in providing maintenance and installation services in
the Territory, BCE Nexxia shall be responsible, for any equipment or
Software which it provides other than through Dedicated Third Party
Provider Agreements, for the supply, installation and maintenance of
such equipment and for ensuring that such equipment or Software is
(i) installed and maintained according to the manufacturer's
specifications, (ii) compatible with, and does not interfere with,
the Services or the VoIP Services, and (iii) in compliance with all
Applicable Laws.
(b) ACCESS TO INFORMATION: BCE Nexxia shall provide information,
including Confidential Information, and assistance as is reasonably
required by Clearwire in order to enable Clearwire to monitor BCE
Nexxia's performance under this Agreement and for Clearwire to
provide VoIP Services to End Users.
2.15 CLEARWIRE REPRESENTATIONS AND WARRANTIES: Clearwire Corporation and each of
its Affiliates signatory to this Agreement represents and warrants to BCE Nexxia
Corporation and Bell Canada as follows, and agrees that each of their
representations and warranties in this Agreement shall continue to be true and
correct throughout the Term of this Agreement:
(a) ORGANIZATION AND GOOD STANDING. It is a corporation duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation.
(b) AUTHORIZATION AND VALIDITY OF AGREEEMENT. It has full corporate
power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution, delivery and
performance by it of this Agreement have been duly and validly
authorized and no additional corporate authorization or consent is
required in connection with the execution delivery and performance
by it of this Agreement. This Agreement has been duly and validly
executed and constitutes its valid and legally binding obligation,
enforceable against Clearwire in accordance with its terms, subject
to bankruptcy, insolvency, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors'
rights and to general principles of equity.
(c) CONFLICTS WITH OTHER AGREEMENTS. The execution of this Agreement by
it and the performance of its obligations hereunder does not and
will not violate or conflict with the terms and conditions of any
other agreement, arrangement or understanding entered into by it.
(d) AUTHORIZATIONS. It has obtained and shall maintain in full force
during the Term such federal, state and local authorizations,
including, but not limited to, from
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Regulatory Authorities, as are necessary to perform its obligations
under this Agreement.
(e) COMPLIANCE WITH LAW AND EXPORT CONTROLS. It shall at all times
comply with all applicable U.S. and foreign federal, state, and
local laws, rules, and regulations relating to the execution,
delivery, and performance of this Agreement. It shall not export or
re-export such items or any direct product thereof or undertake any
transaction in violation of any such laws or regulations. It shall
cooperate with BCE Nexxia, and shall coordinate compliance with BCE
Nexxia regarding all such export laws in respect of all such items
exported or imported hereunder.
(f) CAPITALIZATION. All Securities when issued and delivered by
Clearwire pursuant to the terms of this Agreement will be duly
authorized, validly issued, fully paid, and non-assessable, and free
and clear of all liens, changes, claims and encumbrances imposed by
or through Clearwire. The number of Class A Shares issuable pursuant
to the terms of this Agreement will be duly authorized, reserved and
maintained for issuance and delivery in accordance with the terms of
this Agreement at the time of issuance or, at any time during the
Term, Clearwire does not have a sufficient number of authorized but
unissued Class A Shares to enable Clearwire to meet its issuance and
delivery obligations pursuant to this Agreement, Clearwire will use
its best efforts to amend its certificate of incorporation to
increase its Class A Shares in an amount sufficient to comply with
its issuance and delivery obligations pursuant to this Agreement.
2.16 BCE NEXXIA REPRESENTATIONS AND WARRANTIES: Each of BCE Nexxia Corporation
and Bell Canada represents and warrants to Clearwire Corporation as follows and
agrees that each of their representations and warranties in this Agreement shall
continue to be true and correct throughout the Term of this Agreement:
(a) ORGANIZATION AND GOOD STANDING. It is a corporation duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation.
(b) AUTHORIZATION AND VALIDITY OF AGREEMENT. It has full corporate power
and authority to execute and deliver this Agreement and to perform
its obligations hereunder. The execution, delivery and performance
by it of this Agreement have been duly and validly authorized and no
additional corporate authorization or consent is required in
connection with the execution delivery and performance by it of this
Agreement. This Agreement has been duly and validly executed and
constitutes its valid and legally binding obligation of it,
enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditors' rights
and to general principled of equity.
(c) CONFLICTS WITH OTHER AGREEMENTS. The execution of this Agreement by
it and the performance of its obligations hereunder does not and
will not violate or conflict with the terms and conditions of any
other agreement, arrangement, or understanding entered into by it
where such a violation or conflict would have a
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materially adverse effect on it or its ability to perform its
obligations under this Agreement.
(d) AUTHORIZATIONS. It shall obtain and shall maintain in full force
during the Term such federal, state and local authorizations,
including, but not limited to, from Regulatory Authorities, as are
necessary to perform its obligations under this Agreement.
(e) COMPLIANCE WITH LAW AND EXPORT CONTROLS. It shall at all times
comply with all applicable U.S. and foreign federal, state, and
local laws, rules, and regulations relating to the execution,
delivery, and performance of this Agreement and Services, technology
and software covered by this Agreement provided by BCE Nexxia. It
shall not export or re-export such items or any direct product
thereof or undertake any transaction in violation of any such laws
or regulations. It shall cooperate with Clearwire, and shall
coordinate compliance with Clearwire regarding all such export laws
in respect of all such items exported or imported hereunder.
SECTION 3
CHARGES AND FINANCING
3.1 INVOICING TERMS:
(a) FREQUENCY; DETAIL: BCE Nexxia shall invoice Clearwire for Charges on
a monthly baiss specifying in each case whether the Charges were
incurred by it in Canadian or U.S. denominated amounts. Each invoice
shall be accompanied by a detailed description of the Services that
resulted in the Charges, and an itemization of the Charges,
including unit costs, usage calculations, recurring and
non-recurring charges, and other detail.
(b) PRICING PRINCIPLE EXCEPTION: Notwithstanding the general principle
that Services under this Agreement are to be provided by BCE Nexxia
to Clearwire on an [***] nothing herein shall be construed or
interpreted as to impose an obligation on BCE Nexxia to provide the
Services on an [***]
(i) [***]
(ii) [***]
[*** Confidential Treatment Requested]
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(c) PAYMENTS:
(i) Except to the extent disputed in good faith pursuant to Section
3.1(d), Clearwire shall pay each invoice in Canadian or U.S.
currency (as specified in the invoice) within thirty (30) days from
the date of its receipt, subject to a late payment charge at the
rate specified in such invoices together with any applicable
Impositions. The interest rate, which rate may vary from time to
time but shall not exceed 1.5% per month (19.56% per year), shall be
calculated from the date an invoice is received, if not paid within
the prescribed period.
(ii) Notwithstanding Section 3.1(b)(i) and subject to the notice
requirements set forth below, BCE Nexxia does not have any
obligation to continue to provide particular Service Elements that
are provided by Third Party Providers if BCE Nexxia's total
financial exposure arising from [***] and commitments made for the
benefit of Clearwire with respect to the Third Party Providers of
such particular Service Elements in the applicable Third Party
Provider Agreements, exceeds [***] Conversion from Canadian to U.S.
funds in making this calculation are to be based upon interbank
rates published in the Wall Street Journal on the day that the test
is applied, or the most recent, prior publication day. BCE Nexxia
shall provide Clearwire with regular written reports reflecting the
calculation of the amount of BCE Nexxia's financial exposure. Ten
(10) Business Days prior to the suspension of Services, BCE Nexxia
shall provide Clearwire with written notice that its financial
exposure exceeds [***] during which time Clearwire may provide BCE
Nexxia with assurances limiting BCE Nexxia's financial exposure in a
manner reasonably acceptable to the Parties, e.g., immediate payment
in cash or cash equivalents, prepayment of amounts due with respect
to the Third Party Provider providing the particular Service
Elements referred to above, the establishment of appropriate letters
of credit, securitization of Clearwire's obligations, or third party
guaranties from financially sound Persons.
(c) CHALLENGE: Subject to the provisions of Section 5.3, if Clearwire
challenges any amounts included within the definition of Charges,
BCE Nexxia shall deliver to Clearwire an officer's certificate
attesting to the accuracy of the challenged Charges and providing
reasonably detailed explanation and support for such Charges. If
Clearwire still challenges the Charges, either Party may submit the
matter to the Dispute resolution process in Section 17. Clearwire
shall not be required to pay the disputed portion of any invoice
until the dispute is resolved, either directly by the Parties or
through the Dispute resolution process in Section 17.
3.2 ADDITIONAL FEE: In addition to any payment for Charges, BCE Nexxia shall be
entitled to an additional fee during the Term of this Agreement, calculated and
payable as follows:
[*** Confidential Treatment Requested]
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(a) DETERMINATION OF FEE:
(i) Increase in the Number of End Users: At the end of each calendar
quarter, Clearwire shall promptly, but no later than thirty (30)
days following the end of such quarter, determine the number of
Clearwire End Users as of such date who have paid Clearwire for
three (3) months of VoIP Services where VoIP Services are identified
as a separate line item or charge or, if not identified as a
separate line item or charge, where Clearwire has been paid for
three (3) months of any services comprised at least in part of VoIP
Services. The increase, if any, in the number of End Users over the
highest number of End Users for any calendar quarter preceding such
calendar quarter (the "NEW END USERS") shall be multiplied by
applicable New End User Payment (as defined below) to determine the
amount due to BCE Nexxia and payable as provided below. The "NEW END
USER PAYMENT" shall be equal to [***] until such time as the
aggregate total of all of Clearwire's End Users equals [***] at
which time the amount shall be reduced, on a going forward basis, to
[***] if there are no New End Users for a given calendar quarter or
there is a decrease in the number of Clearwire's End Users for a
given calendar quarter, then no fee shall be payable under this
Section 3.2(a)(i) for such calendar quarter. For purposes of the
calculation of New End Users, only End Users of VoIP Services that
are supported by BCE Nexxia through the arrangement and supply of
the Services as provided herein shall be included.
(ii) ADDITIONAL Lines: An End User may purchase additional service
from Clearwire that enables a separate and distinct simultaneous
conversation ("ADDITIONAL LINES"), as distinguished from multiple
numbers. At the end of each calendar quarter, Clearwire shall
promptly, but no later than thirty (30) days following the end of
such quarter, determine the number of Additional Lines for each
Clearwire End User as of such date who have paid Clearwire for three
(3) months of Additional Lines where Additional Lines are identified
as a separate line item or charge or, if not identified as a
separate line item or charge, where Clearwire has been paid for
three (3) months of any services comprised at least in part of
Additional Lines. The increase, if any, in the number of Additional
Lines over the highest number of Additional Lines for any calendar
quarter preceding such calendar quarter (the "NEW ADDITIONAL LINES")
shall be multiplied by Clearwire's average revenue per New
Additional Line during such quarter, taking into account for
purposes of determining such average only those Additional Lines for
which Clearwire charges its End Users, and payable as provided
below. If there are no New Additional Lines for a given calendar
quarter or there is a decrease in the number of Additional Lines for
a given calendar quarter, then no fee shall be payable under this
Section 3.2(a)(ii) for such calendar quarter. For purposes of the
calculation of this portion of the additional fee, only Additional
Lines of End Users of VoIP Services that are supported by BCE Nexxia
through the arrangement and supply of the Services as provided
herein shall be included.
(b) CHALLENGE: BCE Nexxia may challenge Clearwire's New End User
calculation
[*** Confidential Treatment Requested]
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pursuant to Section 3.2 (a), if BCE Nexxia, acting in good faith,
believes that Clearwire's calculation is in error, in which case
Clearwire shall deliver to BCE Nexxia an officer's certificate
attesting to the accuracy of the challenged number of New End Users
and providing reasonably detailed explanation and support for such
calculation. If BCE Nexxia still challenges the number of New End
Users for the purpose of Section 3.2(a), either Party may submit the
matter to the Dispute resolution process in Section 17, in which
event no payment shall be due with respect to the disputed
calculation until resolution of the Dispute in accordance with
Section 17. Notwithstanding the foregoing, Clearwire shall be
required to issue Class A Shares or make cash payment, pursuant to
Section 3.2(c), with respect to any undisputed New End User.
(c) PAYMENT IN EQUITY OR CASH. If Clearwire has closed a round of equity
financing in which shares of Clearwire's Class A common stock
("CLASS A SHARES") or any other equity securities convertible into
Class A Shares ("CONVERTIBLE SECURITIES") were sold to Persons other
than current shareholders of Clearwire exercising conversion rights
previously granted (provided that any sale to any Affiliate of
Clearwire shall be for an amount of at least Ten Million Dollars
($10,000,000) in order to be an admissible round of equity financing
under this Section 3.2), within ninety (90) days prior to the end of
the applicable calendar quarter, the amount, if any, due to BCE
Nexxia for such calendar quarter under Section 3.2(a) shall be paid
by the issuance to BCE Nexxia Corporation or Bell Canada (as
designated by BCE Nexxia) by Clearwire of additional Class A Shares.
The number of Class A Shares pursuant to Section 3.2(a) to be issued
shall be calculated by dividing the total amount due to BCE Nexxia
for such calendar quarter by the price per share paid for any Class
A Shares (or the conversion price at the time of issuance of any
such Convertible Securities, as applicable) by such Persons in such
equity financing. If no such round of equity financing has been
closed within such ninety (90) day period, Clearwire shall, at its
option, either pay BCE Nexxia Corporation or Bell Canada (as
designated by BCE Nexxia) the amount due in cash or by the issuance
to BCE Nexxia Corporation or Bell Canada (as designated by BCE
Nexxia) of Class A Shares based upon the price per share paid for
any Class A Shares (or the conversion price at the time of issuance
of any such Convertible Securities, as applicable) in the most
recently closed round of equity financing regardless of when such
round of equity financing closed (giving effect to any stock split,
stock dividend, reserve stock split, recapitalization,
reorganization or other distribution). In any case, the Class A
Shares shall be issued or the cash payment made within fifteen (15)
days following the date that Clearwire confirms the number of New
End Users. If the fee payable in respect of New End Users receiving
Clearwire's VoIP Services through a reseller becomes unreasonable in
light of Clearwire's arrangements with such reseller in the
reasonable determination of the Parties, then the Parties will
negotiate in good faith appropriate changes to the amount payable to
BCE Nexxia for each such New End User under this Section 3.2. In the
event of a termination of this Agreement for any reason, other than
as a result of a Material Breach by BCE Nexxia, a determination of
the number of New End Users at the date of
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termination (following, for greater certainty, the Transition
Assistance Period) will be made as provided above and Clearwire
shall pay to BCE Nexxia Corporation or Bell Canada (as designated by
BCE Nexxia) an amount equal to the number of such New End Users
multiplied by the applicable New End User Payment. In all cases,
Clearwire shall be obligated to pay Impositions, if any, applicable
to the payment of the Additional Fees.
(d) TAX EFFICIENCIES. The Parties agree to fully cooperate with each
other to enable each to more accurately determine the proper
treatment of applicable Impositions to the Services provided
pursuant to this Agreement, in order to determine their respective
tax liability and to minimize such liability to the extent legally
permissible. BCE Nexxia shall provide to Clearwire at appropriate
intervals, a completed and executed Form, W-8BEN, Certificate of
foreign Status of Beneficial Owner for United States Tax
Withholding, in support of BCE Nexxia's claim that all or a portion
of the payments made by Clearwire pursuant to Section 3.2 are exempt
from any withholding taxes or are eligible to a reduced rate of
withholding taxes.
(e) REPRESENTATIONS AND WARRANTIES. Each of BCE Nexxia Corporation and
Bell Canada represents and warrants to Clearwire that the following
statements are true and correct on the Effective Date and will be
true and correct on the date of issuance of any Class A Shares under
this Section 3.2:
(i) It is an "accredited investor" as that term is defined in Rule
501 of Regulation D promulgated under the Securities Act of 1933, as
amended (the "SECURITIES ACT"). Bell Canada is not a "U.S.Person" as
that term is defined under Rule 902 of Regulation S Promulgated
under the Securities Act. Bell Canada is not acquiring the
Securities for the account or benefit of any U.S. Person.
(ii) The Class A Shares to be acquired under this Section 3.2 (the
"SECURITIES") are being acquired by BCE Nexxia for investment
purpose only, for its own account and not with the view to any
resale or distribution thereof, and it is not participating,
directly or indirectly, in an underwriting of such Securities, and
will not take, or cause to be taken, any action that would cause it
to be deemed an "underwriter" of such Securities as defined in
Section 2(11) of the Securities Act.
(iii) It acknowledges that is has been offered an opportunity to ask
questions of, and received answers from, Clearwire Corporation
concerning Clearwire Corporation and its proposed investments, and
that, to its knowledge, Clearwire Corporation has fully complied
with any request for such information.
(iv) It has been furnished Clearwire Corporation's Disclosure
Memorandum, dated January 10, 2005, the exhibits thereto and any
other documents which may have been made available upon request
(collectively, the "OFFERING DOCUMENTS"). It has carefully read the
Offering Documents and understands and
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has evaluated the risks of a purchase of the Securities, including
the risks set forth in the Offering Documents under "Risk Factors".
(v) It has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of an
investment in the Securities, is able to bear such risks, and has
obtained, in its judgment, sufficient information from Clearwire
Corporation to evaluate the merits and risks of an investment in the
Securities. It has evaluated the risks of investing in Clearwire
Corporation and has determined that the Securities are a suitable
investment for it.
(vi) Neither Clearwire nor any person acting on Clearwire's behalf
has offered, offered to sell, offered for sale of sold the Class A
Shares to be issued under this Section 3.2 to it by means of any
form or general solicitation or general advertising.
(vii) It is not relying on Clearwire Corporation with respect to tax
and other economic considerations involved in this transaction. It
acknowledges that it has been advised by Clearwire Corporation to
consult with its tax or financial consultants prior to entering
into this Agreement.
(viii) This Agreement has been executed by Bell Canada outside the
"United States" (as defined in Rule 902 (i) of Regulation S). Bell
Canada is acquiring the Securities in an "offshore transaction" (as
defined in Rule 902(h) of Regulation S). The Securities were not
offered to Bell Canada in the United States and at the time of
execution of this Agreement and the time of any offer to Bell Canada
to purchase the Securities hereunder, Bell Canada was physically
outside of the United States.
(f) RESTRICTED SECURITIES. Each of BCE Nexxia Corporation and Bell
Canada understands that the Securities have not been, and will not
be, registered under the Securities Act, by reason of a specific
exemption from the registration provisions of the Securities Act
which depends upon, among other things, the bona fide nature of the
investment intent and the accuracy of BCE Nexxia Corporation and
Bell Canada's respresentations as expressed herein. Each of BCE
Nexxia Corporation and Bell Canada understands that the Securities
are "restricted securities" under applicable U.S. federal and state
securities laws, and it agrees not to transfer the Securities unless
the transfer of the Securities is made (i) in accordance with the
provisions of Regulation S under the Securities Act, (ii) pursuant
to an effective registration under the Securities Act and
qualification under any applicable state securities laws, or (iii)
pursuant to an available exemption from such registration and
qualification requirements. Each of BCE Nexxia Corporation and Bell
Canada further agrees not to engage in hedging transactions with
regard to the Securities unless in compliance with the Securities
Act. Each of BCE Nexxia Corporation and Bell Canada acknowledge that
Clearwire Corporation has no obligation to register or qualify the
Securities for resale, except as set forth in that certain
Registration Rights Agreement between Clearwire and certain of its
stockholders, dated March 16, 2004, and that Clearwire Corporation
is required to refuse to register any transfer not made in
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accordance with the provisions of this Section 3.2 (d) Each of BCE
Nexxia Corporation and Bell Canada further acknowledges that if an
exemption from registration or qualification is available, it may be
conditioned on various requirements including, but not limited to,
the time and manner of sale, the holding period for the Securities,
and on requirements relating to Clearwire Corporation which are
outside of its control, and which Clearwire Corporation is under no
obligation to satisfy and may not be able to satisfy. Each of BCE
Nexxia Corporation and Bell Canada also acknowledges that the
certificates representing the Securities shall bear the restrictive
legends required under applicable federal and state securities laws
and the Stockholders Agreement (as defined below).
(g) STOCKHOLDERS AND OTHER AGREEMENTS. As a condition to Clearwire
Corporation's obligation to issue any Class A Shares to BCE Nexxia
Corporation and Bell Canada hereunder, each of BCE Nexxia
Corporation and Bell Canada agrees to execute to the extent not
already done a joinder to that certain Amended and Restated
Stockholders Agreement, dated as of March 16, 2004 between Clearwire
Corporation and its stockholders (THE "STOCKHOLDERS AGREEMENT") and
become bound thereby and benefit from the rights thereunder.
Clearwire Corporation also agrees to execute such joinder. In
addition, to the extent BCE Nexxia Corporation or Bell Canada is not
a party thereof at the time it becomes an owner of Class A Shares
under this Section 3.2, the Parties agree to execute: (i) a joinder
to that certain Registration Rights Agreement between Clearwire
Corporation and certain of its stockholders, dated March 16, 2004
and (ii) that certain side agreement between Clearwire Corporation,
Bell Canada and Eagle River Holdings, LLC, dated as of the date of
this Agreement ("SIDE AGREEMENT").
(h) ASSIGNMENT TO AFFILIATES. Each of BCE Nexxia Corporation and Bell
Canada shall be permitted to assign its rights under this Section
3.2 to any one of its Affiliates; provided, that such Affiliate
makes the representations and warranties set forth in this Section
3.2 to Clearwire and agrees to fulfill BCE Nexxia Corporation and
Bell Canada's obligations hereunder, including, without limitation,
the obligation to execute a joinder to the Stockholders Agreement.
3.3 FINANCING: BCE Nexxia shall make available to Clearwire financing in the
amount of Ten Million Dollars ($10,000,000) as outlined in the Term Sheet,
attached hereto as Schedule 3. Clearwire shall have the right to draw the entire
amount of such financing in one or more draws, on or after the date of execution
of the loan documents evidencing such financing, but Clearwire will not have the
right to re-borrow amounts borrowed and repaid by Clearwire.
3.4 [***]
[*** Confidential Treatment Requested]
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[***]
SECTION 4
TERM AND TERMINATION
4.1 TERM: The term and conditions of this Agreement shall remain in effect from
the Effective Date until terminated in accordance herewith (the "TERM");
provided, however, either Party may terminate this Agreement without cause, upon
twelve (12) months prior written notice, which termination notice can be served
by either Party to the other at any time beginning on October 1, 2007 provided
however that BCE Nexxia will be entitled to serve such termination notice at any
time following a Change of Control of Clearwire LLC or Clearwire Corporation in
favor of a Major Provider or a Canadian Competitor, and that Clearwire will be
entitled to serve such termination notice at any time following a Change of
Control of BCE Nexxia, BCE Inc. or Bell Canada in favor of a Major Provider. A
party that receives a notice of a proposed Change of Control (the "NON-CHANGING
PARTY") in accordance with this Section 4.1 shall respond within sixty days of
receipt of such notice to inform the other Party as to the Non-Changing Party's
election regarding the exercise of its termination rights under this section
4.1. A failure of a Non-Changing Party to respond within such sixty day period
shall constitute a decision by the Non-Changing Party not to terminate this
Agreement as provided in this Section 4.1 as a result of such Change of Control.
For greater certainty and for the purpose of this Agreement, the Term shall also
be deemed to include any Termination Transition Period as contemplated by this
Agreement except as otherwise provided in this Agreement.
4.2 TERMINATION FOR CAUSE:
(a) Either Party (the "NON-DEFAULTING PARTY") may elect to terminate, in
whole or in part, without liability, this Agreement upon the other
Party's (the "DEFAULTING PARTY") failure to cure a curable Material
Breach hereunder within thirty (30) days after delivery of written
notice thereof. Notwithstanding the foregoing, if the Material
Breach by the Defaulting Party reasonably requires more than thirty
(30) days to cure, the Defaulting Party shall be deemed in
compliance with the terms and conditions of the Agreement, provided
that the
[*** Confidential Treatment Requested]
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action taken to cure the Material Breach is promptly commenced upon
receipt by the Defaulting Party of a notice of Material Breach, and
is thereafter continuously prosecuted with due diligence to
completion and is completed within a reasonable period of time, and
provided that the Defaulting Party keeps the Non-Defaulting Party
well informed at all times of its progress in curing the
non-compliance. The failure by Clearwire to pay any undisputed
amounts due or issue any of the equity interests under Section 3
within thirty (30) days after receipt of notice of non-payment,
without any requirement for any additional notice, shall constitute
a Material Breach for which BCE Nexxia may terminate this Agreement.
(b) Either Party (the "TERMINATING PARTY") may elect to terminate this
Agreement with no liability, if the other party, or such other
Party's parent becomes Financially Uncertain (the "AT RISK PARTY").
For the purpose of this Section a Party, or its parent, shall be
considered "Financially Uncertain" if it:
(i) generally fails to pay, or admits in writing its inability to
pay, material debts when they become due, and fails to pay
such debts within thirty (30) days following its receipt of
notice from any other entity that payment is past due;
(ii) subject to any writ, judgement, warrant of attachment,
execution, or similar process issued or levied against a
substantial part of its property, assets, or business; or
(iii) takes or has taken or has instituted against it any action or
proceeding whether voluntary or involuntary which has an
object or may result in the bankruptcy or winding up or
reorganization of a Party, or a Party's parent other than a
voluntary winding up or reorganization by members for the
purpose of a reconstruction or amalgamation, or is placed
under official management or enters into a compromise or other
arrangement with its creditors or any class of them or an
administrator, trustee, receiver, manager, or similar person
is appointed to carry on its business or to take control or
possession of any of its assets for the benefit of its
creditors or any of them.
The At Risk Party shall notify the Terminating Party of the
occurrence of any event specified above within three (3) Business
Days, or within a reasonable period thereafter, of their receipt of
notice of, or knowledge of, any occurrence of such an event, or
alternatively provide confirmation in writing within three (3)
Business Days, or within a reasonable period thereafter, upon
request from the Terminating Party, whether or not any of the above
event has occurred. In addition, if a proceeding is commenced under
any provision of the United States Bankruptcy Code, voluntary of
involuntary, by or against a Party or a Party's parent, and this
Agreement has not been terminated, the other Party may file a
request with the Bankruptcy Court to have the court set a date
within sixty (60)
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days after the commencement of the case, by which the debtor shall
assume or reject this Agreement, and the debtor shall cooperate and
take whatever steps are necessary to assume or reject such contracts
by such date.
A Party shall not be considered an At Risk Party under the foregoing
descriptions if an involuntary bankruptcy procedure is instituted
against that Party by any third party and the Party contests the
involuntary bankruptcy procedure in good faith and within a
reasonable period of time. A Party shall not be considered an At
Risk Party under the foregoing descriptions if a writ, warrant of
attachment, execution, or similar process is issued or levied
against a substantial part of the Party's property, assets or
business as a result of an involuntary bankruptcy procedure filed by
any third party and the Party contests the involuntary bankruptcy
procedure in good faith and within a reasonable period of time.
(c) In the event the Parties are unable to reach an agreement on an
appropriate manner for addressing whether (each of the following a
"TERMINATION DISPUTE"):
(i) a Party is Financially Uncertain pursuant to Section 4.2(b);
(ii) a Material Breach has occurred;
(iii) a Material Breach is cured as contemplated in
Section 4.2(a); or
(iv) a Material Breach is not capable of being remedied,
either Party may request in writing that such matter be referred to the dispute
resolution mechanism set out in Section 17 for an appropriate resolution.
4.3 TERMINATION TRANSITION ASSISTANCE: In the event of a termination for
convenience or for cause by either BCE Nexxia or Clearwire pursuant to Section
4.1, BCE Nexxia shall provide Termination Transition Assistance accordance with
the provisions hereof, including the preparation of one or more plans in respect
thereof which shall include, without limitation, the transfer of possession or
assignment of any Take Back Service Elements pursuant to Section 2.8. The
Parties shall act in good faith and reasonably and shall develop and implement
transition plan(s); with the intent to reduce the likelihood of any material
adverse impact to End Users, including suspension of VoIP Services to End Users
or degradation in the Services. For greater certainty, BCE Nexxia shall not be
required and Clearwire shall not be authorized, as part of Termination
Transition Assistance, to respectively provide or seek the removal of any BCE
Nexxia Deployed IP when such BCE Nexxia Deployed IP was deployed in Canada prior
to the commencement of a Termination Transition Period.
4.4 TERMINATION FOR CONVENIENCE - CHARGES FOR TRANSITION: In the event of a
termination by Clearwire for convenience pursuant to Section 4.1, and in
consideration for providing Termination Transition Assistance to Clearwire, in
accordance with Section 4.3, to the extent that the Services are being provided
on a continuing basis as part of the Termination Transition Assistance,
Clearwire shall pay the Charges, as contemplated in Section 3.1 and any fees
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pursuant to Section 3.2. In addition to the foregoing, Clearwire shall
compensate and indemnify BCE Nexxia for any BCE Nexxia Out-of-Pocket Termination
Costs other than any Contract Termination Costs that result from BCE Nexxia's
breach of an agreement with a Third Party Provider, where such breach has not
been caused by or as a result of the termination of this Agreement by Clearwire
pursuant to this Section 4.4.
4.5 BCE NEXXIA TERMINATION - CHARGES FOR TRANSITION: In the event of a
termination by Clearwire for cause pursuant to Section 4.2, or a termination by
BCE Nexxia for convenience pursuant to Section 4.1, BCE Nexxia shall provide,
during a Termination Transition Period, Termination Transition Assistance in
accordance with Section 4.3. For greater certainty nothing herein shall be
construed as releasing Clearwire, during the Termination Transition Period, from
the obligation to pay to BCE Nexxia the Charges associated with the provision of
the Services, as contemplated in Section 3.1 and the payment of any fees
pursuant to Section 3.2, provided that Clearwire shall not be required to make
any payment to BCE Nexxia with respect to BCE Nexxia Out-of-Pocket Termination
Costs (other than Contract Termination Costs associated with Dedicated Third
Party Provider Agreements) and that if Clearwire terminates this Agreement for
cause, Clearwire shall not be required to pay any fees pursuant to Section 3.2
for any period after termination of this Agreement.
4.6 CLEARWIRE TERMINATION FOR CAUSE - TERMINATION COSTS: In the event of a
termination by BCE Nexxia for cause pursuant to Section 4.2 hereof, provided
that Clearwire agrees to pay in advance all Charges incurred by BCE Nexxia in
the Termination Transition Assistance Period, BCE Nexxia shall provide, during a
Termination Transition Period, Termination Transition Assistance in accordance
with Section 4.3. Clearwire shall pay to BCE Nexxia all Charges associated with
the supply of Services and any additional Fees pursuant to Section 3.2 hereof,
up to and including the actual date of termination of this Agreement, and shall
compensate and indemnify BCE Nexxia for any BCE Nexxia Out-of-Pocket Termination
Costs other than any Contract Termination Costs that result from BCE Nexxia's
breach of an agreement with a Third Parry Provider.
4.7. CONSEQUENCES OF TERMINATION: Upon the termination (on the date specified in
a notice of termination or otherwise herein provided for) and except as
otherwise set forth herein or as otherwise agreed to for the Termination
Transition Period:
(a) each Party shall reconvey, relinquish and release to the other Party
all rights and privileges granted by this Agreement, except that a
Party shall not relinquish any Intellectual Property Rights that
have been perpetually licensed to a a Party under Section 11.6 of
this Agreement with respect to Joint Inventions;
(b) each Party shall cease using Confidential Information and
Intellectual Property of the other Party. All licenses to each
Party's Intellectual Property granted under Section 11 shall
terminate. BCE Nexxia grants to Clearwire, effective as of
termination of this Agreement, a world wide, non-exclusive and fully
paid license to Inventions developed jointly by employees of
Clearwire and BCE Nexxia while engaged in work pursuant to this
Agreement, provided that such Inventions (i) are integrated into
Clearwire Products that exist as of the date of
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termination of this Agreement, and that they are also integrated in
any End Users hardware device (including existing inventory as of
the date of termination of this Agreement) and (ii) are used by
existing End Users as of the date of termination of this Agreement
(save and except with respect to existing inventory as of the date
of termination of this Agreement). Should Clearwire require any
licenses to any specific BCE Nexxia Deployed IP such BCE Nexxia
Deployed IP (except as the same relates to Non-Dedicated Systems)
may be made available, subject to the Parties agreeing to
commercially reasonable terms and only to the extent that such
requested BCE Nexxia Deployed IP is also made available to
non-Affiliated entities of BCE Nexxia; and return of any and all
Clearwire assets located on BCE Nexxia premises, and assignment of
all Take Back Service Elements upon Clearwire's request.
SECTION 5
GOVERNANCE
5.1 EXECUTIVE OPERATING COMMITTEE; The Parties hereby agree to establish an
operating committee (the "EXECUTIVE OPERATING COMMITTEE")to provide strategic
guidance and oversight in connection with the Parties' objectives and
obligations set forth herein.
(a) The Executive Operating Committee shall consist of an equal number
of representatives of each Party. The initial designees to the
Executive Operating Committee are set out in Schedule 4. The members
of the Executive Operating Committee shall be at the senior
executive level of each Party, and each representative shall have
appropriate knowledge and experience relevant to the substance of
the relationship contemplated herein.
(b) The Executive Operating Committee shall facilitate the resolution of
material disagreements between the Parties to the extent they have
not been resolved by the Project Management Office.
(c) The Executive Operating Committee shall review Quarterly Planning
Documents prepared and submitted by the Project Management Office,
including the settlement of any disputes arising out of the
preparation of such Quarterly Planning Documents.
(d) The Executive Operating Committee shall consider and consult on
market trends, sales and marketing strategies, product development,
quality of service, customer satisfaction and other matters agreed
upon by the Parties, for the purpose, among other matters, of
maximizing efficiencies and facilitating the provision of the
Services and the delivery of VoIP Services to End Users.
(e) Each Party, in its reasonable discretion, may replace its
representatives on the Executive Operating Committee, as each Party
deems appropriate upon five (5) days prior written notice to the
other Party. In addition, the number of members
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on the Executive Operating Committee may be increased or decreased
as mutually agreed to by the Parties.
(f) The Parties shall consult with each other prior to appointing their
representatives on the Executive Operating Committee, but
appointments shall be made in the sole discretion of the appointing
Party.
(g) Each Party shall name one of its representatives to serve as a
co-chairperson of the Executive Operating Committee.
(h) The Executive Operating Committee shall meet on a quarterly each
year in person. The meetings shall be held alternatively at each
Party's place of business (or as otherwise agreed from time to time
by the Parties). Except for the regular, quarterly meetings, all
Executive Operating Committee representatives must be present at a
meeting of the Executive Operating Committee either by phone, in
person or by proxy. The Executive Operating Committee shall also
meet (which meeting may be in person or by proxy or by
teleconference) within ten (10) Business Days' written request by
either BCE Nexxia or Clearwire to review an unresolved claim or
issue.
(i) The Executive Operating Committee may appoint subcommittees for
individual projects and for any other activities for which the
Executive Operating Committee determines a subcommittee is
appropriate.
(j) In addition to the foregoing, the Executive Operating Committee
shall meet to: (a) review progress on any projects or initiatives of
the Parties; (b) facilitate the resolution of any disputes between
the Parties; and (c) direct the Project Management Office to perform
additional activities as it sees fit.
(k) At the end of each calendar quarter during the term of the
Agreement, the co-chairpersons of the Executive Operating Committee
shall jointly agree on an "Executive Operating Committee Progress
Report" for delivery to designated senior executives of the Parties.
(l) the Executive Operating Committee shall not have authority to modify
the terms of this Agreement or to waive the rights of either Party.
Any such modification or waiver must be in writing, as provided in
this Agreement. All actions of the Executive Operating Committee are
subject to approval by both Parties.
5.2 PROJECT MANAGEMENT OFFICE: The Parties shall create a project management
office (the "PROJECT MANAGEMENT OFFICE"). The Project Management Office shall
consist of an equal number of representatives of each Party, or any additional
employees or representatives from BCE Nexxia and Clearwire whose involvement
shall be required from time to time. The initial designees to the Project
Management Office are set out in Schedule 4. Staffing requirements of the
Project Management Office shall be reviewed by the Executive Operating Committee
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quarterly, or on "as needed" basis.
(a) The representatives of each Party on the Project Management Office
shall prepare and submit for approval to the Executive Operating
Committee, within forty-five (45) days of the Effective Date, a
quarterly operations plan for the first quarter following the
Effective Date together with a view of the following two quarters
(the "INITIAL QUARTERLY PLANNING DOCUMENT") which shall establish
the expected role of each Party, asset ownership, coordination of
the acquisition of Service Elements and their deployment schedule,
together with, without limitation, roadmaps as the same relate to
the delivery of the Services and the deployment of a VoIP Services
offerings to End Users. Fifteen (15) Business Days prior to the end
each quarterly period, the Project Management Office shall develop
and submit for approval to the Executive Operating Office a revised
operations plan for the following quarter, with a view of the
following two quarters (each such quarterly business plans being a
"QUARTERLY PLANNING DOCUMENT"). Included in the Initial Quarterly
Planning Document and each subsequent Quarterly Planning Document
shall be a complete description of the Charges BCE Nexxia intends to
incur in connection with providing Services to Clearwire together
with a description of all Dedicated Third Party Provider Agreements
it proposes to enter into pursuant to Section 2.7 hereof. The
written approval of the Initial Quarterly Document and any
subsequent Quarterly Planning Document by a Clearwire officer
holding the title of Vice President or President shall constitute
Clearwire's authorization to incur the costs and expenses included
in Charges. Clearwire may not challenge decisions to incur Charges
included in the Initial Quarterly Planning Document or any
subsequent Quarterly Planning Document once it has been approved in
the manner provided in this Section 5.2.
(b) Subject to the Executive Operating Committee's oversight, the
Project Management shall, without limitation:
(i) oversee general operational activities as such activities
relate to the supply by BCE Nexxia and the purchase by
Clearwire of the Services and other day-to-day business
operations;
(ii) oversee the identification of Future Services, including the
development of Service Plans in association therewith,
together with the administration of the First Right of
Proposal pursuant to Section 6.2; and
(iii) perform other activities as the Executive Operating Committee
may from time-to-time direct.
(c) Each Party, in its reasonable discretion, may replace its
representatives on the Project Management Office as each Party deems
appropriate upon five (5) days prior written notice to the other
Party. In addition, the number of members on the Project Management
Office may be increased or decreased as mutually agreed to by the
Parties.
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(d) The Project Management Office shall meet on a monthly basis until
such time as there are twenty thousand (20,000) End Users
subscribing to the VoIP Services and on a quarterly basis, or as
otherwise requested by Clearwire, thereafter. The meetings shall be
held alternatively at each Party's place of business (or as
otherwise agreed from time to time by the Parties). All Project
Management Office representatives must be present at a meeting of
the Project Management Office either by phone, in person or by
proxy. The Project Management Office shall also meet (which meeting
may be in person or by teleconference) within ten (10) Business
Days' of a written request by either BCE Nexxia or Clearwire to
review an unresolved claim or issue.
(e) The Project Management Office shall not have authority to modify the
terms of this Agreement or to waive the rights of either Party. Any
such modification or waiver must be in writing, as provided in this
Agreement. All actions of the Project Management Office are subject
to approval by both Parties.
5.3 BUDGET: Subject to Section 2.13(c), as part of the Services, BCE Nexxia
shall develop and provide Clearwire with, on a quarterly basis, a detailed
budget for the Services, for Clearwire's review and approval which shall be
included in the applicable Quarterly Planning Document. BCE Nexxia shall update
the budget in reasonable intervals, as circumstances warrant, and shall give
Clearwire written notice if any budgeted item or category of expenses or Charges
is expected to exceed the budget for such item in a material amount. BCE Nexxia
shall provide such notice before incurring the charge that is in excess of the
budget for such item. Upon receipt of such notice, Clearwire shall promptly
review the proposed Charges and budget and either approve such Charges or
consult with BCE Nexxia regarding any necessary changes to adhere to the budget.
For greater certainty Clearwire hereby acknowledges that the budget for the
initial period commencing on the Effective Date and including the next two (2)
full calendar quarters, shall represent estimated categories plus amounts for
Charges.
SECTION 6
FUTURE SERVICES AND RIGHT OF FIRST PROPOSAL
6.1 FUTURE SERVICES: Without limiting BCE Nexxia's rights pursuant to Section
6.2 hereof, the Parties agree to work cooperatively and in good faith as
follows:
(a) The Parties intend to explore such opportunities with a view to
increasing the opportunities for the use and deployment of the
Future Services (the "NEW DEVELOPMENT INITIATIVES"). Further to the
development of New Development Initiatives the Parties shall develop
a common understanding of service trends and suggestions for
improved cost effectiveness and enhancement with respect to the
provisioning of Future Services.
(b) The Project Management Office shall, within ninety (90) days
following the appointment of the Project Management Office, develop
an initial list of New Development Initiatives to be examined by the
Executive Operating Committee.
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(c) The list of and relative priority to be accorded to each of the New
Development Initiatives shall be reviewed and updated each quarter
by the Project Management Office. If the Project Management Office
determines not to pursue a New Development Initiative, or cannot
agree as to how to pursue a New Development Initiative, the Project
Management Office, or any of its members, shall report on an
expedited basis the recommendation of the Project Management Office,
or lack thereof, to the Executive Operating Committee.
(d) Upon the determination by the Project Management Office that a
sufficient commonality of interest exists for the joint development
of a New Development Initiative, it shall designate a team
("DEVELOPMENT TEAM") consisting of a representative from each of BCE
Nexxia and Clearwire with the applicable expertise to be responsible
for the New Development Initiative. The Development Team shall be
instructed to prepare and submit to the Project Management Office a
timetable for the presentation of a series of recommendations in
respect of the New Development Initiatives ("SERVICE PLANS"). The
Services Plans shall include long range plans and short range plans
as such plans relate to the evolution and telecommunications
requirements. To that end, the Development Team shall include as
part of the Service Plans, without limitation, a comprehensive and
strategic analysis of network and telecommunications trends and
directions, recommendations regarding price, performance and
technology trends, long range/short range recommendations for
improving cost effectiveness and service levels and an assessment of
the appropriate direction for the applications and network platform
architecture in light of best business practices, strategies,
forecasted demands and competitive market decision. Both Parties
agree that nothing herein shall be construed as requiring any Party
to incur any costs or expenses in connection with the Services Plans
unless otherwise agreed to in writing by the Parties or to disclose
information which is considered, by a Party, as confidential
6.2 RIGHT OF FIRST PROPOSAL: In addition to the rights and obligations of the
Parties pursuant to Section 6.1, the Parties shall:
(a) Where Clearwire has requirements for the delivery of any Future
Services, Clearwire shall grant to BCE Nexxia a Right of First
Proposal ("ROFP") with respect to the supply of all required
services and products in support of the Future Services pursuant to
this Section 6.2.
(b) Where Clearwire has a requirement for the delivery of Future
Services, Clearwire shall provide written notice (the "ROFP NOTICE")
to BCE Nexxia as it relates to such requirements. The ROFP Notice
shall contain Clearwire's requirements with sufficient detail to
enable the formulation of an informed decision by BCE Nexxia. Within
ten (10) Business Days after receipt of the
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ROFP Notice, BCE Nexxia shall notify Clearwire, in writing, of its
interest in supporting the applicable Future Services identified in
the ROFP Notice.
(c) If BCE Nexxia either does not notify Clearwire of its interest
within ten (10) Business Days or advises Clearwire that it is not
interested in pursuing the support of the Future Services, Clearwire
may make alternative arrangements regarding such Future Services
with a third party; provided that, if there is any material change
in Clearwire's requirements or a material change in the terms
Clearwire is prepared to consider or accept with any such third
party, Clearwire shall deliver a new ROFP Notice (before concluding
arrangements with any third party) and the process described in this
Section shall be repeated accordingly.
(d) If BCE Nexxia advises Clearwire that it is interested in providing
to Clearwire the Future Services, then the Parties shall enter into
negotiations, in good faith, with respect to the appropriate terms
and conditions of the arrangement, including without limitation,
price, service standard, ordering and delivery, terms of sale,
reporting, billing format, marketing and promotional materials,
advertising, service specifications product development, service
design and performance, schedule for service delivery, training and
support. Upon agreement between the Parties as it relates to the
Future Services to be provided by BCE Nexxia to Clearwire, such
Future Services shall be considered thereafter as being part of the
services for the purpose of this Agreement.
(e) If BCE Nexxia fails to meet within thirty (30) days (or such longer
period of time reasonably required due to the complexity of the
Future Services sought by Clearwire) any material conditions of the
ROFP (or if the Parties fail to reach agreement on applicable terms
within thirty (30) days after commencement of negotiations, despite
their good faith efforts to do so) and provided that BCE Nexxia has
been given due notice and the reasons for its failure to meet such
ROFP conditions along with a reasonable opportunity to cure such
failure (which shall not exceed ten (10) days), Clearwire shall have
the right, at any time, to terminate any negotiation, acting
reasonably and in good faith, and to pursue alternative arrangements
for the Future Services covered by the ROFP Notice with a third
party; provided that Clearwire notifies BCE Nexxia of such intention
and does not enter into such third party arrangement for a period of
ten (10) Business Days following such notice; and further provided
that, if there is any material change in Clearwire's requirements or
a material change in the terms Clearwire is prepared to consider or
accept with any such third party, Clearwire shall deliver a new ROFP
Notice to BCE Nexxia (before concluding arrangements with any third
party) and the process described in this Section shall be repeated
accordingly.
SECTION 7
CHANGE MANAGEMENT PROCESS
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7.1 CHANGE MANAGEMENT PROCESS: The procedure set forth in this Section 7 (the
"CHANGE MANAGEMENT PROCESS") shall be used for any Change to the Services. All
Change Communications and Change Responses issued by a Party hereunder shall
only be submitted by and accepted through the Project Management Office
representatives of each Party or their authorized designees.
7.2 EXCEPTIONS: All Changes shall be made in compliance with the Change
Management Process with the exception of:
(a) any temporary Changes or Changes reasonably made by BCE Nexxia in
connection with an event described in Section 18, which shall promptly be
documented by BCE Nexxia and reported to Clearwire; and
(b) any Change that BCE Nexxia, acting reasonably, deems necessary to
maintain the continuity or competitiveness of Bell Canada's consumer VoIP
service that is appropriately documented and reported to Clearwire and
which is otherwise not possible to remedy within sixty (60) calendar days;
and
(c) ordinary course and routine operational changes.
7.3 BCE NEXXIA INITIATED CHANGES TO SERVICES: If BCE Nexxia wishes to make
Changes to the Services, the Parties shall act as follows:
(a) Sixty (60) Business Days prior to making any Changes to the Services,
BCE Nexxia shall provide Clearwire with a change Communication setting out
in reasonable detail, the scope and expected impact of the proposed
Change(s) on the financial, technical, scheduling and other aspects of the
Services.
(b) With respect to a change to a Non-Dedicated System, Clearwire shall
have the right, acting reasonably, to approve or reject any such proposed
Change, but may reject only if such proposed Change would result in
material adverse effect on the delivery of VoIP Services to Clearwire's
End Users, as determined by Clearwire. If Clearwire rejects the proposed
Change to a Non-Dedicated System, BCE Nexxia shall have the right to
terminate this Agreement as provided in Section 4.1 hereof.
(c) With respect to a Change to a Dedicated System, Clearwire shall have
the right, acting reasonably, to approve or reject any such proposed
Change, provided that if Clearwire rejects the proposed Change BCE Nexxia
shall be released of its obligations under Section 2.3 hereof to the
extent that the nature and quality of Services is negatively impacted by
the failure to effectuate the Change. Notwithstanding the foregoing, if
Clearwire rejects the proposed Change and such rejection has an Adverse
Material Impact on BCE Nexxia, BCE Nexxia shall have the right, acting
reasonably, to terminate this Agreement as provided under Section 4.1
hereof.
7.4 CLEARWIRE INITIATED CHANGES: If Clearwire wishes to make Changes to the
Services, the Parties shall act as follows:
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(a) Clearwire may seek Changes at any time and from time to time during
the Term of the Agreement by providing a Change Communication as provided
in Section 7.1 above.
(b) Each such Change Communication shall set out the scope, intent,
description, objective, any expected impact on existing obligations of the
Parties, expected implementation date and any other relevant matters
relating to the proposed Change.
(c) With respect to a proposed Change by Clearwire to a Non-Dedicated
System, BCE Nexxia, acting reasonably, may reject such proposed Change.
(d) With respect to a proposed Change by Clearwire to a Dedicated System,
BCE Nexxia shall accept such proposed Change unless the proposed Change
has an Adverse Material Impact on BCE Nexxia.
(e) If BCE Nexxia accepts a proposed Change from Clearwire to either a
Non-Dedicated System or a Dedicated System, BCE Nexxia shall respond to a
Change Communication, unless otherwise agreed by the Parties, by
delivering a Change Response to Clearwire ("CHANGE RESPONSE") within ten
(10) days, or such longer period as deemed reasonable in the circumstances
due to the complexity of the proposed Change. Each Change Response shall
be reasonably sufficient to permit informed evaluation of the proposed
Change, including any proposed adjustment to the Services and Charges
and/or other amounts payable by Clearwire in connection with such Changes,
and any other relevant matters raised in the Change Communication.
(f) Accepted Changes shall be implemented in accordance with the
applicable provisions of the Change Communication or Change Response, as
the case may be.
7.5 THIRD PARTY PROVIDER INITIATED CHANGES: If a Third Party Provider, under a
Dedicated Third Party Provider Agreement wishes to make any Changes, the Parties
shall act as follows:
(a) BCE Nexxia shall notify Clearwire, through a Change Communication,
promptly following receipt by it of a Third Party Provider proposed
Change, which written notice shall set out in reasonable detail the scope
and expected impact of the proposed Change(s) on financial, technical,
scheduling and other aspects of the Services.
(b) BCE Nexxia shall have the right, acting reasonably and in accordance
with the terms of the Dedicated Third Party Provider Agreement, to approve
or reject the proposed Change. If BCE Nexxia accepts the proposed Change,
Clearwire must accept the proposed Change.
(c) If a Third Party Provider's proposed Change is not in accordance with
the terms of the Dedicated Third Party Provider Agreement, Clearwire may
reject the proposed Change, but only if such proposed Change would result
in material adverse effect on delivery of VoIP Services to Clearwire's End
Users, as determined by Clearwire. If the
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rejected Change related to a Non-Dedicated System, BCE Nexxia shall have
the right to reject such proposed Change or terminate this Agreement
pursuant to Section 4.5 hereof, but only where the proposed Change would
have an Adverse Material Impact on BCE Nexxia.
7.6 CHANGES IN APPLICABLE LAW: If a change in Applicable Laws requires a Change
to the Services, both Parties shall have the right to request the Change, and
Clearwire shall have the right, acting reasonably, to approve or reject the
Change. If approved, BCE Nexxia shall implement the Change unless it would have
an Adverse Material Impact on BCE Nexxia, in which case BCE Nexxia may terminate
this Agreement pursuant to Section 4.5. If rejected, the Parties will take the
following steps in declining order of priority: (a) oppose or seek a Waiver from
the change in Applicable Law; (b) negotiate in good faith any necessary
Change(s) to the Service with the intent of making the smallest and least costly
Change or (c) terminate the Agreement pursuant to Section 4.5.
7.7 GENERAL: A Party making a Change Communication shall be responsible for its
own costs and the reasonable and actual costs incurred by the other Party
directly related to the evaluation and preparation of a Change Communication or
with respect to any response thereto, including the costs incurred in conducting
any investigations required in connection therewith.
SECTION 8
WARRANTY
8.1: EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, (a) BCE NEXXIA MAKES NO
REPRESENTATIONS OR WARRANTIES EXPRESS OR IMPLIED, UNDER THIS AGREEMENT AND
SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, OR NONINFRINGEMENT, AND (b) BCE NEXXIA DOES
NOT REPRESENT OR WARRANT THAT THE SERVICES (i) WILL BE UNINTERRUPTED OR
ERROR-FREE, (ii) WILL MEET CLEARWIRE'S REQUIREMENTS OR (iii) WILL PREVENT
UNAUTHORIZED ACCESS BY THIRD PARTIES. BCE NEXXIA DOES NOT AUTHORIZE ANYONE,
EXCEPT FOR AUTHORIZED REPRESENTATIVES OF BCE NEXXIA IN A SIGNED WRITTEN
AGREEMENT, TO MAKE A REPRESENTATION, WARRANTY OR CONDITION OF ANY KIND ON ITS
BEHALF AND CLEARWIRE SHOULD NOT RELY ON ANYONE MAKING SUCH STATEMENTS.
SECTION 9
GENERAL AND INTELLECTUAL PROPERTY INDEMNITY
9.1 GENERAL INDEMNITY: Each Party (in this Section 9.1, the "INDEMNITOR") shall
defend, indemnify and hold the other Party, its Affiliates and their respective
directors, officers and employees (in this Section 9.1, the "INDEMNITEE")
harmless with respect to any claim, demand, action, cause of action, damage,
loss, cost, liability or expense directly resulting from (a) any breach by the
Indemnifying Party of its obligations hereunder including any breach of the
warranties and representations made by that Party herein, and (b) for any
amounts not withheld
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by Clearwire that were required to be withheld under Applicable Law from
payments by Clearwire under Section 3.2, and any fines, penalties or interest
imposed under Applicable Law and relating thereto, in which case, BCE Nexxia
shall be the Indemnitor and Clearwire shall be the Indemnitee for purposes of
this clause (b).
9.2 INTELLECTUAL PROPERTY INDEMNITY: Without limiting the generality of the
foregoing, each Party (as Indemnitor) will defend or settle, at its own expense,
the following third Party claims brought against the other Party (as
Indemnitee), and indemnify and hold the Indemnitee harmless for:
(a) BCE NEXXIA AS INDEMNITOR: claims against Clearwire alleging that a
Service infringes any Intellectual Property Right in Canada, except
to the extent the claim arises out of, or results from: (i)
Clearwire Products or hardware or Software provided by Clearwire to
BCE Nexxia pursuant to this Agreement; (ii) Clearwire's or any End
User's content in connection with the Services; (iii) modifications
to the Services made by, or combinations of the Services with
services or products provided by or at the direction of Clearwire;
(iv) BCE Nexxia's adherence to Clearwire's written instructions to
modify the Services; or (v) use of the Services by Clearwire in
violation of this Agreement.
(b) CLEARWIRE AS INDEMNITOR: claims against BCE Nexxia (i) for libel,
slander, defamation, or violation of a right of privacy or publicity
arising from the use of the VoIP Services by Clearwire or an End
User; or (ii) arising from Clearwire's marketing activities,
including Clearwire's violation of laws and regulations applicable
to the authorization and proof of authorization necessary to convert
an End User to Clearwire's service.
9.3 OBLIGATION TO COOPERATE: In each case under this Section 9 in which an
Indemnitee seeks indemnification, the Indemnitee must (a) promptly notify the
Indemnitor in writing of the claim, provided that failure to do so will not
affect the Indemnitor's obligations except to the extent the Indemnitor is
prejudiced by the failure; (b) give the Indemnitor all requested information
which the Indemnitee has concerning the claim; (c) reasonably cooperate with and
assist the Indemnitor in defending or settling the claim, at the Indemnitor's
expense; and (d) not make any admissions relating to the claim.The Indemnitee
may participate in the defense of the claim at its expense through counsel of
its choosing, and the Indemnitor will in any event consult with the Indemnitee
about the defense of the claim and any proposed settlement at the Indemnitee's
request. If not settled the Indemnitor will pay all damages and costs (including
reasonable attorneys' fees) that by final judgment may be assessed against
Indemnitee.
9.4 IN THE EVENT OF A CLAIM OF INFRINGEMENT: The Indemnitor may at its option
either procure the right to continue using, or replace or modify, the alleged
infringing item so that the item becomes non infringing and substantially
compliant with applicable requirements.
SECTION 10
LIMITATION OF LIABILITY
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10.1 LIMITATION OF LIABILITY: IF NOT OTHERWISE EXPLICITLY LIMITED OR EXCLUDED
ELSEWHERE IN THIS AGREEMENT, AND EXCEPT FOR BREACHES OF SECTION 12, A PARTY'S
OBLIGATION TO INDEMNIFY FOR CLAIMS OF THIRD PARTIES, AND ACTIONS RESULTING IN
PERSONAL INJURY OR DEATH, EACH PARTY'S LIABILITY TO THE OTHER UNDER THIS
AGREEMENT FOR DAMAGES, REGARDLESS OF THE FORM OF ACTION AND WHETHER THE
LIABILITY ARISES IN CONTRACT, (INCLUDING FUNDAMENTAL BREACH) TORT (INCLUDING
NEGLIGENCE), STRICT LIABILITY, BREACH OF REPRESENTATION, WARRANTY, CONDITION OR
OTHERWISE, SHALL BE LIMITED TO DIRECT DAMAGES, AND SHALL NOT EXCEED IN THE
AGGREGATE DURING ANY TWELVE (12) MONTH PERIOD A SUM EQUAL TO TWELVE TIMES THE
MONTHLY GROSS REVENUES OF CLEARWIRE FROM VOIP SERVICES PROVIDED TO END USERS
THAT ARE SUPPORTED BY BCE NEXXIA THROUGH THE MANAGEMENT AND SUPPLY OF THE
SERVICES AS PROVIDED HEREIN FOR THE MONTH IN WHICH THE DAMAGE CLAIM ARISES BUT
NOT MORE THAN [***]
10.2 EXCLUSION OF LIABILITY: EXCEPT FOR BREACHES OF SECTION 12, A PARTY'S
OBLIGATION TO INDEMNIFY FOR CLAIMS OF THIRD PARTIES AND ACTIONS RESULTING IN
PERSONAL INJURY OR DEATH, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY
INCIDENTAL, CONSEQUENTIAL, RELIANCE, SPECIAL OR OTHER INDIRECT DAMAGES,
INCLUDING LOST PROFITS, BUSINESS, GOODWILL OR ANTICIPATED REVENUE, LOSS OF DATA
DOWNTIME OR BUSINESS INTERRUPTION, OR INCREASED COST OF OPERATIONS, OR FOR
EXEMPLARY OR PUNITIVE DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
SERVICES, REGARDLESS OF THE FORM OF ACTION AND WHETHER THE LIABILITY ARISES IN
CONTRACT (INCLUDING FUNDAMENTAL BREACH), TORT, (INCLUDING NEGLIGENCE) STRICT
LIABILITY, BREACH OF REPRESENTATION, WARRANTY, CONDITION OR OTHERWISE AND
WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
10.3 FURTHER LIMITATION OF LIABILITY: EXCEPT AS THIS AGREEMENT MAY OTHERWISE
EXPRESSLY PROVIDE, AND PROVIDED BCE NEXXIA COMPLIES WITH THE TERMS OF THIS
AGREEMENT, BCE NEXXIA SHALL NOT BE LIABLE FOR ANY DAMAGES ARISING OUT OF, OR
RESULTING FROM: (a) SERVICE IMPAIRMENTS OR INTERRUPTIONS OR LOST, ALTERED OR
MISDIRECTED TRANSMISSIONS OR MESSAGES; (b) INTEROPERABILITY, INTERCONNECTION OR
PERFORMANCE PROBLEMS, INCLUDING PROBLEMS CAUSED BY OR WITH APPLICATIONS,
EQUIPMENT, SERVICES OR NETWORKS PROVIDED BY EITHER PARTY OR A THIRD PARTY; (c)
INABILITY OF CLEARWIRE OR ITS END USERS TO ACCESS OR INTERACT WITH OTHER SERVICE
PROVIDERS, NETWORKS, USERS, CONTENT OR SERVICES; (d) CONTENT OR SERVICES OF, OR
INTERACTIONS WITH, A THIRD PARTY, EVEN IF HOSTED, CACHED, SUPPORTED OR OTHERWISE
ENABLED BY BCE NEXXIA; (e) SERVICES, EQUIPMENT OR SOFTWARE PROVIDED BY THIRD
PARTIES; (f) UNAUTHORIZED ACCESS BY A THIRD PARTY TO THE TRANSMISSION FACILITIES
OR PREMISES EQUIPMENT OF CLEARWIRE, ITS END USERS, OR ANY
[*** Confidential Treatment Requested]
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OTHER THIRD PARTY; OR (g) UNAUTHORIZED ACCESS TO OR ALTERATION, THEFT, LOSS OR
DESTRUCTION OF CLEARWIRE'S OR ITS OR END USERS' OR ANY THIRD PARTY'S NETWORKS,
SYSTEMS, CONTENT, APPLICATIONS, DATA FILES, PROGRAMS, PROCEDURES OR INFORMATION
BY ANY MEANS INCLUDING ACCIDENT OR FRAUDULENT MEANS OR DEVICES.
10.4 ALLOCATION OF RISK; Each Party acknowledges that the disclaimers of
representations, warranties and conditions, limitations of liability, and
limitations of remedies in the, Agreement fairly allocate risks between them.
SECTION 11
INTELLECTUAL PROPERTY
11.1 OWNERSHIP: Except for the licenses expressly granted under this Agreement,
(i) BCE Nexxia shall, with respect to Clearwire, possess and retain all
Intellectual Property Rights in the BCE Nexxia Deployed IP; BCE Nexxia IS/IT and
Telecom Systems and (ii) Clearwire shall, with respect to BCE Nexxia, possess
and retain all Intellectual Property Rights in the Clearwire Enabling IP. BCE
Nexxia shall have exclusive ownership of BCE Nexxia Inventions, and Clearwire
shall have exclusive ownership of Clearwire Inventions. The parties' rights in
Joint Inventions are set forth and defined in Sections 11.6 below.
11.2 GRANT OF LICENSE: BCE Nexxia hereby grants to Clearwire, for the Term, a
worldwide, non-exclusive, non-assignable, non-transferable and fully paid
license (without the right to sublicense), but only to the extent that BCE
Nexxia has the right to grant such licenses, to use, reproduce and create
Derivatives of BCE Nexxia IS/IT Systems and Telecom Systems (excluding
Non-Dedicated Systems), components of BCE Nexxia IS/IT Systems and Telecom
Systems (excluding any Non-Dedicated Systems), and to BCE Nexxia Deployed IP
(but excluding in all three (3) cases any Non-Dedicated Systems) but solely for
the purpose of providing VoIP Services to End Users in the Territory (only to
the extent that such End Users of VoIP Services are supported by BCE Nexxia
through the arrangement and supply of the Services that are provided herein) in
accordance with this Agreement, and to provide support services to such End
Users. Clearwire hereby grants to BCE Nexxia, for the Term, a worldwide,
non-exclusive, non-assignable, non-transferable and fully paid license (without
the right to sublicense) to use, reproduce and create Derivatives of Clearwire
Products and/or Clearwire Enabling IP, but solely for the purpose of providing
the Services to Clearwire and only to the extent Clearwire has the right to
grant such a license. With respect to Software, unless specifically otherwise
agreed in writing by the licensing party, and subject to any terms and
conditions which may be reasonably required by the licensing party, the license
rights granted under this Section shall not include any rights or license to
access or use the Source Code of such Software. Moreover, the license rights
granted under this Section shall not include any right to reverse engineer,
decompile and/or disassemble for Clearwire, any of the BCE Nexxia Deployed IP,
and for BCE Nexxia, any of the Clearwire Enabling IP. The Parties understand
that the licenses granted hereunder are for the use of, or the right to use the
specified items set forth above, including know-how, or for the use of, or the
right to use information concerning industrial, commercial or scientific
experience.
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11.3 NOTIFICATION OF AND ASSIGNMENT OF DERIVATIVES: Clearwire shall promptly
notify BCE Nexxia of the creation of any Derivatives of the BCE Nexxia Deployed
IP that are created by or on behalf of Clearwire. Clearwire hereby assigns and
transfers all such Derivatives and all related Intellectual Property Rights in
such Derivatives to BCE Nexxia, and shall promptly execute any document and
perform such further acts to confirm the ownership of such works by BCE Nexxia
as BCE Nexxia may request. BCE Nexxia shall promptly notify Clearwire of the
creation of any Derivatives of the Clearwire Enabling IP that are created by or
on behalf of BCE Nexxia. BCE Nexxia hereby assigns and transfers all such
Derivatives and all related Intellectual Property Rights in such Derivatives to
Clearwire, and shall promptly execute any document and perform such further acts
to confirm the ownership of such works by Clearwire as Clearwire may request.
11.4 THIRD PARTY LICENSES: BCE Nexxia shall make commercially reasonable efforts
to arrange for the Intellectual Property which is licensed from third parties in
connection with the Services to be either sub-licensed by BCE Nexxia to
Clearwire or licensed directly by Clearwire from the third party licensors, and
Clearwire shall be responsible for obtaining any such licenses which may be
required from such third party licensors and shall be responsible for payments
which may be required to be made to any third parties as a result of Clearwire's
use of such Intellectual Property.
11.5 FILING OF PATENT APPLICATIONS: BCE Nexxia, with respect to BCE Nexxia
Inventions, and Clearwire, with respect to Clearwire Inventions, shall have the
exclusive right to file any Patent applications arising from such inventions any
where in the world at its own sole expense, and shall thereafter own all such
applications and any continuations, continuations-in-part, divisions,
extensions, reissues and reexaminations of any such applications, as well as any
Patents resulting from such applications. BCE Nexxia and Clearwire, with respect
to Joint Inventions made pursuant to this Agreement, shall each have the right
to file any Patent applications arising from such Inventions anywhere in the
world at its own sole expense and BCE Nexxia and Clearwire shall there after
co-own all such applications and any continuations, continuations-in-part,
divisions, extensions, reissues and reexaminations of any such applications, as
well as any Patents resulting from such applications. Each party and its
Affiliates shall have the unrestricted right to use (but not license) Joint
Inventions without the consent of, or accounting to, the other party, provided
that (a) Clearwire's copyrights and trade secrets in all such Joint Inventions
(which have been disclosed to BCE Nexxia in the course of performing this
Agreement) shall be licensed to BCE Nexxia under Section 11.8 below for use in
the BCE Nexxia Field of Use, and Clearwire shall take no action that would in
any way jeopardize such license or lead to the public disclosure of any jointly
owned trade secret, and (b) BCE Nexxia's copyrights and trade secrets in all
such Joint Inventions (which have been disclosed to Clearwire in the course of
performing this Agreement) shall be licensed to Clearwire under Section 11.8
below for use in the Clearwire Field of Use and BCE Nexxia shall take no action
that would in any way jeopardize such license or lead to the public disclosure
of any jointly owned trade secret. Any licensing of Joint Inventions to a third
party and any division of resulting royalties must be mutually approved by
Clearwire and BCE Nexxia.
11.6 RECIPROCAL LICENSE TO JOINT INVENTIONS: Clearwire grants to BCE Nexxia a
world-wide, irrevocable, transferable, fully-paid perpetual license (with the
right to sublicense) under
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Clearwire's copyrights and trade secrets (which have been disclosed to BCE
Nexxia in the performance of this Agreement), to reproduce, have reproduced,
prepare and have prepared Derivatives of, translate, display, distribute and
perform Joint Inventions, but only within the BCE Nexxia Field of Use. BCE
Nexxia grants to Clearwire a world-wide, irrevocable, transferable, fully-paid
perpetual license (with the right to sublicense) under BCE Nexxia's copyrights
and trade secrets (which have been disclosed to Clearwire in the performance of
this Agreement), to reproduce, have reproduced, prepare and have prepared
Derivatives of, translate, display and distribute Joint Inventions, but only
within the Clearwire Field of Use.
11.7 LICENSING FREEDOM: For greater certainty, each Party shall have the right
to license independently to any third party any Intellectual Property Rights
arising from any of its own Inventions. All royalties resulting from such
licensing may be retained solely by the licensor, and there shall be no
requirement for accounting to the other party to this Agreement. Each party
shall only have the right to license to a third party (except to an Affiliate)
any Intellectual Property Rights arising from any Joint Inventions with the
expressed written permission of the other party, which shall not be unreasonably
withheld. All division of royalties resulting from such licensing shall be
negotiated between the Parties prior to the effectiveness of any such license.
Notwithstanding the above, each Party shall have the right to license
independently to any Affiliate any Intellectual Property Rights arising from any
Joint Inventions provided that no further sub-license rights are granted to the
said Affiliates. All royalties resulting from such licensing may be retained
solely by the licensor, and there shall be no requirement for accounting to the
other party to this Agreement.
11.8 NO IMPLIED LICENSES: Except as provided for in the fully paid licenses
described herein, no license or other right is granted by either Party or any of
its Affiliates to the other by implication, estoppels or otherwise, under any
Patents, trade secrets, copyrights, or other Intellectual Property now or
hereafter owned or controlled by such Party or any of its Affiliates except for
the licenses and rights granted in this Agreement. Nothing contained in this
Agreement shall be construed as:
(a) a warranty or representation by either Party as to the validity,
enforceability, and/or scope of any Intellectual Property or
Intellectual Property Right;
(b) imposing upon either Party any obligation to institute any suit or
action for infringement of any Intellectual Property or Intellectual
Property Right, or to defend any suit or action brought by a third
party which challenges or concerns the validity, enforceability, or
scope of any Intellectual Property Right;
(c) imposing on either Party any obligation to file any Patent
application or other Intellectual Property Right application or
registration or to secure or maintain in force any Patent or other
Intellectual Property;
(d) a license to any of BCE Nexxia's or its Affiliates' Intellectual
Property, Clearwire's or its Affiliates' Intellectual Property, BCE
Nexxia Inventions or Clearwire Inventions.
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SECTION 12
CONFIDENTIAL INFORMATION
12.1 RESTRICTED USE: Each Recipient shall use the Informant's Confidential
Information solely for the purposes of fulfilling its obligations or exercising
its rights under this Agreement. Each Recipient shall not disclose the
Informant's Confidential Information except as expressly provided by this
Agreement. Confidential Information shall be marked confidential, restricted or
propriety by the Informant, provided, however, that the failure of either Party
to so mark any material shall not relieve the Recipient of the obligation to
maintain the confidentiality of any unmarked material which the Recipient knows
or should have reasonably known contains Confidential Information.
12.2 RETURN OF CONFIDENTIAL INFORMATION: Immediately upon receipt an Informant's
request, the Recipient shall return to the Informant, or certify as destroyed,
any and all tangible materials concerning Confidential Information, together
with all copies, whether such materials were made or compiled by the Recipient
or furnished by the Informant. Notwithstanding the foregoing, the Recipient
shall not be obligated to comply with the preceding obligations in this Section
12.2. in the event that the Confidential Information is incorporated into board
of directors or committee minutes of the Recipient or the Recipient's parent
corporation or if the retention by the Recipient of such Confidential
Information is required under applicable law, including but not limited to the
Sarbanes-Oxley Act; provided, however, that in any such case the Recipient shall
provide the Informant with written notice describing in detail the nature of the
Confidential Information that is not being destroyed or returned to the
Informant, and identifying the reason that such Confidential Information
qualifies for the exception from the destruction or return requirement.
12.3 SCOPE OF OBLIGATIONS: Each Recipient will take the precautions used by the
Recipient to maintain the secrecy of its own confidential information, which in
no event shall be less than all reasonable precautions, to maintain the secrecy
of all Confidential Information disclosed to it by the Informant.
12.4 RESTRICTED DISCLOSURE: Unless it has received the prior written consent of
the Informant, except as provided in this Section 12 or in the Side Agreement,
the Recipient will disclose Confidential Information of the Informant only to
those directors, officers, employees, agents, subcontractors and professional
advisors of the Recipient with a necessary and direct need to know the
Confidential Information for the purposes of this Agreement, and covenants and
warrants that all Persons to whom Confidential Information is disclosed in
accordance with this will maintain the secrecy of such Confidential Information.
12.5 EXCEPTIONS: The obligations set out in this Section 12 shall not apply to
any Confidential Information that:
(a) at the time of disclosure to the Recipient is in the public domain;
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(b) shall become generally known through no wrongful act of the
Recipient (but only after it is published or becomes part of the
public domain);
(c) was disclosed in good faith to the Recipient by a third party having
legitimate possession and the right to make such disclosure and who
did not require the Recipient to hold it in confidence;
(d) was in legitimate possession of the Recipient prior to its
disclosure by the Informant as evidenced by its business records and
was not acquired by the Recipient under an obligation of confidence;
(e) is independently developed by the Recipient without use of the
Confidential Information as evidenced by its business records; or
(f) the Recipient is required by a judicial, administrative,
governmental body or stock exchange (in the reasonable opinion of
Recipient's counsel) to disclose, provided that prior to disclosing
any Confidential Information, the Recipient promptly notifies the
Informant and cooperates with the Informant to seek appropriate
protective orders with respect to such portion of the Confidential
Information as is the subject of any such required disclosure.
12.6 INFORMANT NOT OBLIGATED TO DISCLOSE: Subject to the terms of this
Agreement, each Party acknowledges that notwithstanding the execution of this
Agreement, the Informant maintains the sole and absolute discretion to determine
what, if any, of the Confidential Information it will release to a Recipient.
12.7 NO RIGHTS OR INTEREST TO CONFIDENTIAL INFORMATION: Ownership of and all
right, title and interest to any and all Confidential Information, copies and
other material shall at all times vest exclusively in the Informant. The
disclosure of Confidential Information shall not be construed as granting to the
Recipient any rights, by license or otherwise under any copyrights, copyright
applications, trade secrets, trade-marks or other Intellectual Property Rights
in any country relating to any of the Confidential Information which the
Informant or an associated corporation may now or hereafter own or to which it
may hold licensing rights.
12.8 RIGHT TO INJUNCTIVE RELIEF: In the event of a breach or threatened breach
of this Section 12, the Parties agree that the harm suffered by the injured
Party would not be compensable by monetary damages alone and, accordingly, that
the injured Party shall, in addition to other available legal or equitable
remedies, be entitled to apply for an injunction or other such equitable remedy
as against such breach or threatened breach without the other Party's consent.
SECTION 13
REGULATORY MATTERS
13.1: Nothing in this Agreement shall require either Party to take any action
prohibited, or omit to take any action required by a Regulatory Authority having
jurisdiction with respect thereto, including, without limitation, as a result of
a change in the Applicable Laws.
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SECTION 14
PUBLICITY
14.1 Except as otherwise provided under the Side Agreement, each Party shall
consult with the other before issuing any press release or making any other
public announcement with respect to this Agreement or the transactions
contemplated hereby (other than any promotional or marketing material of such
Party which merely identifies, to the extent applicable, the other Party as a
customer or supplier, as applicable, of such Party), and none of the Parties
shall issue any such press release or make any such public announcement without
the prior written consent of the other provided, however, that any Party may,
without such consent, make such disclosure if the same is required by Applicable
Law, any stock exchange on which any of the securities of such Party or any of
its Affiliates are listed or posted for trading, or any securities commission or
other similar Regulatory Authorities having jurisdiction over such Party or any
of its Affiliates, and if such disclosure is required, the Party making the
disclosure shall use all commercially reasonable efforts to give prior oral or
written notice to the other, and if such prior notice is not possible, to give
such notice immediately following the making of such disclosure.
SECTION 15
AMENDMENT
15.1 No modification of or amendment to this Agreement shall be valid or binding
unless set forth in writing and duly executed by each of the Parties.
SECTION 16
COSTS
16.1 Each of the Parties shall be responsible for all of its own costs and
expenses incurred in the course of conducting due diligence and negotiating and
preparing the documentation contemplated by this Agreement and in attending
meetings of the Executive Operating Committee, the Project Management Office or
such other meetings as are contemplated in this Agreement.
SECTION 17
DISPUTES
17.1 If a dispute, claim, question or difference between the Parties (a
"DISPUTE") arises with respect to this Agreement or the Parties' performance,
enforcement or breach, the Parties shall use their best reasonable efforts to
settle the Dispute and the representative of each Party on the Project
Management Office, or other designated managers of each Party, shall consult and
negotiate with each other for at least ten (10) Business Days, or such other
longer period of time the Parties may agree, in good faith and understanding of
their mutual interests, in an attempt to reach a just and equitable solution
satisfactory to all Parties, prior to escalating any such Dispute to the
Executive Operating Committee.
17.2 If the Dispute remains unresolved by the Executive Operating Committee
after a period of fifteen (15) Business Days, or such longer period of time the
Parties may agree, the Dispute shall
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be escalated to a senior executive (a direct report to the CEO) of each Party
and such senior executive shall have thirty (30) days, or such longer period as
the Parties may agree, to resolve the Dispute.
17.3 If a settlement cannot be reached at senior executive level pursuant to
Section 17.2, a Party may provide written notice to the other Party (a "NOTICE
TO ARBITRATE") and may refer the Dispute to binding arbitration to be held in
accordance with the provisions of rules of the American Arbitration Association.
The Dispute will be finally settled by the arbitration from which there shall be
no appeal. The arbitration shall be heard by a single arbitrator to be agreed by
the Parties and, failing such agreement, each Party will appoint one arbitrator
and the two arbitrators will mutually select a third one. The Notice to
Arbitrate shall set out a concise description of the Dispute to be submitted to
arbitration and shall be delivered to the other Party. The arbitration shall
take place in New York, New York. The language to be used in the arbitration
shall be English. Nothing in this section precludes a Party from seeking interim
relief by way of an injunction (mandatory or otherwise) or other interim
equitable relief in the courts located in New York, New York in connection with
this Agreement. Judgment of the award rendered by the arbitrator may be entered
in any court having jurisdiction thereof.
17.4 Notwithstanding Section 17.1 and 17.2 hereof, where a Dispute involves a
matter that requires resolution or relief urgently and where there are
reasonable grounds to believe a delay in obtaining such resolution or relief
would cause a Party significant harm that would not practically be compensable
by damages alone (an "URGENT DISPUTE"), that Party may submit the Urgent Dispute
for arbitration in accordance with Section 17.3 hereof at any time and without
having first attempted to resolve the Urgent Dispute in accordance with the
escalation process set forth herein.
17.5 Notwithstanding the foregoing, nothing in this Section 17 shall restrict
either Party from:
(a) seeking injunctive relief, including, but not limited to a temporary
restraining order against the other Party for alleged breaches of
this Agreement; and
(b) taking formal action relating to proprietary rights, including
Intellectual Property Rights and confidentiality.
SECTION 18
FORCE MAJEURE
18.1: If a Party's performance of this Agreement or any obligation (other than
the obligation to make payments for Services rendered) hereunder is prevented,
restricted or interfered with by causes beyond its reasonable control, (and
where such cause could not have been avoided by taking reasonable precautions,
including precautions taken by BCE Nexxia with respect to its own network and
services it provides to its customers), including, but not limited to, acts of
God, fire, explosion, vandalism, power grid outages (beyond any required battery
back-up or generator capacity), storm or other similar occurrence including rain
fade or other atmospheric conditions, any law, order, regulation, direction,
action or requirement of any governmental authority or national, provincial,
state or local governments, or of any department, agency, commission,
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court, bureau, corporation or other instrumentality of any one or more of said
governments, or of any civil or military authority, or by national emergencies,
insurrections, riots, wars, acts of terrorism, strikes, lockouts or work
stoppages or other labor difficulties, supplier failures, shortages, breaches or
delays, then the Party affected by such force majeure event (the "AFFECTED
PARTY") shall be excused from such performance on a day-to-day basis to the
extent of such prevention, restriction or interference. The Affected Party shall
make commercially reasonable efforts under the circumstances to avoid and remove
such causes of non-performance and shall proceed to perform with reasonable
dispatch whenever such causes cease. If an event giving rise to force majeure
should continue for a period of three (3) months, the Party which is not subject
to that force majeure event shall have the right to terminate this Agreement.
SECTION 19
GENERAL PROVISIONS
19.1 ASSIGNMENT: This Agreement may not be assigned in whole or in part without
the prior written consent of the other Party. Notwithstanding the foregoing, but
subject to the provisions of Section 4.1, each Party shall have the right to
assign, in whole or in part, its rights, interests and obligations under this
Agreement, without the prior consent of the other Party, to an Affiliate,
provided such Affiliate agrees in writing to be bound by all of the obligations
of the assigning Party under this Agreement. In addition, subject to the
provisions of Section 4.1, each Party shall have the right to assign in whole or
in part its rights, interests and obligations under this Agreement to a company
with whom it merges or consolidates or who acquires all or substantially all of
the stock or assets of the assigning Party (each such company, a "PERMITTED
ASSIGN"), provided that the Permitted Assign agrees in writing to be bound by
all of the obligations of the assigning Party under this Agreement. In all
circumstances, the assigning Party shall not be released from its liabilities
under this Agreement except to the extent the non-assigning Party otherwise
agrees. Any attempted assignment, sub-license, transfer, encumbrance or other
disposal of this Agreement without such required consent will be void and
ineffective, and will constitute a material default and breach of this
Agreement. This Agreement shall be binding upon and will inure to the benefit of
the Parties and their respective successors and Permitted Assigns.
19.2 ENTIRE AGREEMENT: This Agreement (including the Schedules attached hereto)
constitutes the entire agreement between Clearwire and BCE Nexxia with respect
to the subject matter, merging and superseding all prior agreements,
understandings, commitments, undertakings and representations on the subject
matter.
19.3 ENUREMENT: This Agreement shall be binding upon and enure to the benefit of
the Parties and their respective successors and permitted assigns.
19.4 GOVERNING LAW: Except to the extent governed by the U.S. Communications Act
or other U.S. federal law, this Agreement and all matters related thereto will
be governed by the internal laws of the State of New York, without giving effect
to any choice of law provisions thereof. Each Party consents to jurisdiction of
the provincial or federal courts located in the State of New York, located in
New York, New York in connection with any action brought under this
BCE NEXXIA/CLEARWIRE MASTER SUPPLY AGREEMENT
CONFIDENTIAL
51
Agreement. Neither Party shall commence any such action or claim other than in
the courts located in New York, New York.
19.5 INTERPRETATION: In this Agreement, the headings are for convenience of
reference only and shall not affect its construction or interpretation.
19.6 NON-WAIVER: No waiver of any term or provision or of any breach or default
shall be valid unless in writing and signed by the party giving such waiver, and
no such waiver shall be deemed a waiver of any other terms or provision of any
subsequent breach or default of the same or similar nature.
19.7 NOTICES AND REQUESTS: All notices and requests in connection with this
Agreement shall be deemed to have been duly and properly given as of the earlier
of: (i) the date such notice has been received, including by electronic or
facsimile means, with reliable evidence confirming receipt; (ii) the day of
guaranteed delivery if sent by overnight courier service, charges prepaid and
with designation for next-day delivery; or (iii) five (5) days after deposit of
such notice in the national postal service of the U.S. or Canada, as applicable,
postage prepaid, certified or registered, return receipt requested; addressed to
the recipient Parties at the address shown below or at such address as such
Parties may subsequently designate in writing:
BCE Nexxia
Floor 6N
483 Bay Street
Toronto, Ontario
M5G 2C9
Attention: Trevor Anderson
Fax: (416) 597-3300
and with a cc to: Scott Thomson
Floor 37
1000, rue de la Gauchetiere, Ouest
Montreal, Quebec
H3B 4Y7
Fax: 514-786-6794
Email: scott.Thomson@bell.ca
and with a cc to: Michel Lalande
Floor 39
1000, rue de la Gauchetiere, Ouest
Montreal, Quebec
H3B 4Y7
Fax: 514-391-8386
Email: michel.lalande@bell.ca
CLEARWIRE:
BCE NEXXIA/CLEARWIRE MASTER SUPPLY AGREEMENT
CONFIDENTIAL
52
5808 Lake Washington Blvd. NE, Suite 300
Kirkland, WA 98033
Attention: Benjamin G. Wolff
Fax: 425.216.7900
with a cc to:
Attention: Law Department
Fax: 425.216.7900
and a cc to:
Davis Wright Tremaine
2600 Century Square
1501 Fourth Avenue
Seattle, WA 98101-1688
Attn: Julie Weston
Fax: 206.628.7699
19.8 SEVERABILITY: If any provision of this Agreement is found to be invalid,
illegal or unenforceable, the other provisions of this Agreement shall not be
affected or impaired, and the offending provision shall automatically be
modified to the least extent necessary in order to be valid, legal and
enforceable.
19.9 COUNTERPARTS: This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original and all of which, taken together,
shall constitute one and the same instrument.
19.10 COMPLIANCE: The Parties shall at all times comply with all Applicable
Laws. Without limiting the generality of the foregoing, the Parties shall, where
required, obtain any authorizations, certifications or other forms of approval
from all appropriate regulatory and governmental tribunals, agencies or bodies.
19.11 FURTHER ASSURANCES: The Parties shall, with reasonable diligence do all
such things and provide all such reasonable assurances as may be required for
the carrying out of this Agreement and each Party hereto shall provide such
further documents or instruments required by the other Party as may be
reasonably necessary or desirable to effect the purpose of this Agreement.
19.12 NO THIRD PARTY BENEFICIARIES: This Agreement and each Service Order do not
provide and are not intended to provide third parties (including, but not
limited to, End Users) with any remedy, claim, liability, reimbursement, cause
of action, or any other right. As such, no provision of this Agreement shall be
enforceable by any third party.
19.13 ORDER OF PRECEDENCE: In the event of any conflict or inconsistency among
or between a Schedule and the main body of this Agreement, the main body of this
Agreement shall have precedence.
19.14 RELATIONSHIP OF THE PARTIES: This Agreement shall not form a joint
venture, partnership or similar business arrangement between the parties hereto,
and nothing contained herein shall be
BCE NEXXIA/CLEARWIRE MASTER SUPPLY AGREEMENT
CONFIDENTIAL
53
deemed to constitute a partnership, joint venture or similar business
arrangement
19.15 CURRENCY: Unless otherwise expressly contemplated herein, all references
in this Agreement or any Schedule hereto to sums of money shall be, unless the
contrary is expressly indicated, to lawful money of the U.S.
19.16 SURVIVAL: The following provisions survive termination of this Agreement:
Section 4, 8 through 12, 14, 15, 17, 18, 19.4 through 19.7, 19.13, 19.15 and
19.16, and any other provisions which survive by operation of law.
EACH PARTY ACKNOWLEDGES AND EXPRESSLY AGREES TO THE LIMITATION OF LIABILITY SET
OUT IN THIS AGREEMENT.
AGREED BY THE DULY AUTHORIZED REPRESENTATIVES OF THE PARTIES THIS 16th DAY OF
MARCH, 2005.
CLEARWIRE CORPORATION BCE NEXXIA CORPORATION
SIGNATURE: /s/ Ben Wolff SIGNATURE: /s/ Barry Pickford
----------------------- --------------------------
NAME: Ben Wolff NAME: Barry Pickford
TITLE: Executive Vice President TITLE: V-P, Finance and Corporate Secretary
CLEARWIRE LLC BELL CANADA
SIGNATURE: /s/ Ben Wolff SIGNATURE: /s/ Trevor Anderson
----------------------- --------------------------
NAME: Ben Wolff NAME: Trevor Anderson
TITLE: Executive Vice President TITLE: SVP. Technology
BCE NEXXIA/CLEARWIRE MASTER SUPPLY AGREEMENT
54
SCHEDULE 1
STATEMENT OF WORK
STATEMENT OF WORK
Subject to the terms and conditions of the Master Supply Agreement ("MSA"),
this document sets forth the responsibilities that each Party has with respect
to the overall accountability for delivering the VoIP Services. Both Parties
acknowledge that the specific boundaries between each Party's areas of
accountabilities are subject to change, from time to time, in accordance with
the terms and conditions set out in the MSA. In performing its obligations as
contemplated herein, BCE Nexxia, subject to the terms and conditions of the
MSA, shall do so in proactive consultation with Clearwire. The delivery of all
Service Elements required for the provision of VoIP Service to End User shall
be performed by Clearwire, except as otherwise expressly contemplated herein as
being required to be performed by BCE Nexxia. For greater certainty, the
functions assigned to BCE Nexxia hereunder shall be deemed the "Services" for
the purpose of this Statement of Work and the MSA. In this Statement of Work,
"CW" has the same meaning as "Clearwire" under the MSA.
Appendix I attached to this Statement of Work as well as the remainder of this
page are a description of the Services that is intended to be used as a
guideline for interpretation of the various obligations of the Parties under
this Statement of Work, but does not create any independent obligations or
supersede any unambiguous provision of this Statement Work or the MSA.
As of the Effective Date, the scope of BCE Nexxia's responsibilities is
summarized (non-exhaustively) as follows:
[o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
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[o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
A more complete description of each Party's responsibilities as they relate to
the delivery of Services follows in this Statement of Work and supersedes the
foregoing summary.
1. BCE NEXXIA RESPONSIBILITIES (THE SERVICES)
[***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
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[o [***]
o [***]
o [***]
[***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
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[ o [***]
o [***]
o [***]
o [***] ]
2. CLEARWIRE RESPONSIBILITIES
2.1 IT SERVICE ELEMENTS
Clearwater will work with BCE Nexxia to develop a project plan that defines
deliverables, allocates resources and confirms estimate and schedules. See below
responsibility matrix for proposed responsibility framework.
[ [***]
o [***]
o [***]
o [***]
o [***]
o [***]
3. [***] ]
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[ [***] ]
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4. JOINT CW AND BELL NEXXIA IT/SYSTEMS COMPONENTS MILESTONES AND
RESPONSIBILITY MATRIX
The milestones set out below are estimates and are subject to change.
[***]
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[***]
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[***]
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[***]
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APPENDIX 1
CONSUMER SERVICES DEVELOPMENT
VOICE OVER IP COMMERCIAL SERVICE
PRODUCT DESCRIPTION DOCUMENT
VERSION 2.1
FEBRUARY 24, 2005
BCE NEXXIA RESTRICTED
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1.0 DOCUMENT OBJECTIVES................................................... 4
2.0 INTRODUCTION.......................................................... 5
2.1 NOTATION........................................................... 5
2.2 BACKGROUND......................................................... 5
3.0 PROJECT DESCRIPTION................................................... 6
3.1 REQUIREMENTS....................................................... 6
3.2 OFFERING:.......................................................... 7
3.3 OUT OF SCOPE FOR COMMERCIAL LAUNCH................................. 8
3.4 OVERALL ASSUMPTIONS................................................ 9
4.0 VOIP NETWORK.......................................................... 10
4.1 NETWORK ARCHITECTURE............................................... 10
4.2 SERVICE LEVEL OBJECTIVES (OPS METRICS ARE UNDER DEVELOPMENT)....... 10
4.3 SECURITY (UNDER DEVELOPMENT, CLARIFICATION AND ROLES TBD).......... 11
5.0 END USER EXPERIENCE................................................... 13
5.1 PRIMARY PHONE NUMBERS.............................................. 13
5.2 SECONDARY PHONE NUMBERS............................................ 13
5.3 NUMBER TRANSFERABILITY (NTA) (TO BE CONFIRMED ONCE TELCO PARTNER
RELATIONSHIPS ARE ESTABLISHED):.................................... 14
6.0 STATIC E911........................................................... 16
7.0 MINIMUM SYSTEM REQUIREMENTS........................................... 17
7.1 INTERNET ACCESS SPEED.............................................. 17
7.2 HOME NETWORK REQUIREMENTS.......................................... 17
8.0 WEB APPLICATION - TBD................................................. 18
8.1 REGISTRATION PROCESS / ORDERING PROCESS - (ROLES TO BE CONFIRMED).. 18
8.2 CLASSES OF SERVICE (COS) (TO BE CONFIRMED DUE TO IT IMPACTS -
FURTHER DEFINITION OF END USER EXPERIENCE IN THIS AREA REQUIRED)... 20
9.0 SERVICE PROVISIONING AND FULFILLMENT (TO BE CONFIRMED)................ 21
9.1 DIGITAL VOICE SERVICE END USER KITS (EXAMPLE ONLY - CW TO DEFINE).. 21
9.2 KIT PREPARATION.................................................... 21
9.3 PROCESS FULFILLMENT FLOW CHART..................................... 21
10.0 BILLING.............................................................. 22
10.1 CHARGEABLE ITEMS (TO BE DEFINED)................................... 22
10.2 BILL COMPONENTS - TO BE MADE AVAILABLE TO CLEARWIRE FOR BILLING
PRESENTMENT........................................................ 22
10.3 PROVISIONING AND BILLING (NEEDS TO BE REVISTED BASED ON CW MODEL).. 23
10.4 BILLING START DATE................................................. 23
10.5 CONTRACTS - RULES AND PENALTY FEE (TBD BY CLEARWIRE)............... 24
10.6 NORTH AMERICA LONG DISTANCE REGION DEFINITION...................... 24
10.7 END USER CARE (VIEWING BILLS AND ADJUSTMENTS)...................... 24
11.0 SUPPORT.............................................................. 25
11.1 HOURS OF OPERATION................................................. 25
11.2 TECHNICAL SUPPORT: PROPOSED MODEL ABOVE WEB PORTAL (END USER
SERVICE LEVEL)..................................................... 25
</TABLE>
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<TABLE>
<S> <C> <C>
12.0 TRACKING & REPORTING:................................................ 28
</Table>
2
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REVISION HISTORY
<Table>
<Caption>
DATE VERSION AUTHOR DESCRIPTION
--------------- ------- ------------ -----------
<S> <C> <C> <C>
Jan. 26th, 2005 1.0 Brad Fisher Initial CW Draft based on revisions to BCE
Nexxia specific Service Description.
Feb. 3rd, 2005 1.1 Julie Daoust Revisions to Technology-specific sections
Feb. 8th, 2005 IT Konst Liris Revisions to overall document
Feb. 9th, 2005 1.2 Julie Daoust Revisions to overall TD
Feb. 11th, 2005 1.3 Julie Daoust Overall Revisions with Product Input
and ALL
Feb. 13th, 2005 1.4 Julie Daoust Overall Revisions to final draft
Feb. 14th, 2005 1.5 Julie Daoust Revisions from various team members re
network and portal piece
Feb. 15th, 2005 1.6 Julie Daoust Sean O'Leary revisions
Added network diagram
Feb. 15th, 2005 1.7 Brad Fisher Further revisions to improve clarity and
context, as well as consistency of
document conventions
Feb. 15th, 2005 1.7B Sean O'Leary Clarity and grammatical edits only;
version initially forward to Clearwire
for review.
Feb. 17th, 2005 1.8 William Crago Revisions to home networking diagrams,
addition of reports details, change in
the operational support model
Feb. 18th, 2005 1.9 Clearwire CW revisions
Team
Feb. 23, 2005 2.0 Julie Daoust Added revisions from IT and TD teams
Feb. 24, 2005 2.1 Technology Added provisioning server interactions
Development diagram, removed Bell Canada logo, replaced
Team, Yves Bell Canada with BCE Nexxia, addition of
Caron, Sean details on service assurance model
O'Leary,
</Table>
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1.0 DOCUMENT OBJECTIVES
The objective of this document is to provide a detailed description of the Voice
over IP service which may be offered via Clearwire in their US consumer
footprint. This description will be used by the service development teams to
communicate the requirements of the project.
-- THE CONTENTS OF THIS DOCUMENT SHOULD BE CONSIDERED DYNAMIC AND WILL BE
UPDATED ACCORDING TO ONGOING CONSULTATION BETWEEN CLEARWIRE AND BCE CONSISTENT
WITH THE PROVISIONS OF THE MASTER SERVICE AGREEMENT.
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2.0 INTRODUCTION
2.1 NOTATION
Voice over Internet Protocol is commonly referred to as VoIP, Voice over
IP, or more generally, Internet Telephony.
An Analog Terminal Adapter (ATA) is at the heart of the VoIP service from
the consumer perspective. For the purpose of this document, the ATA will be
referred to as the "Voice Adapter". Definitions of the ATA will be included
in this document once BCE Nexxia and Clearwire have finalized CPE plans.
An Internet Sharing Device (ISD), Residential Gateway (RG), and Internet
Gateway (IG) all describe a product that can be referred to as a Router.
For clarity and convenience, the term "Router" will be used throughout this
document to identify that hardware device. Finally, for the purpose of this
document, the term modem should be taken to refer to a broadband or
high-speed modem provided for the Clearwire high speed internet service.
For the purposes of this document, we will refer to the Clearwire VoIP
service as "CW Digital Voice" or simply "Digital Voice".
2.2 BACKGROUND
Commercial launch date is targeted for October 2005.
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3.0 PROJECT DESCRIPTION
3.1 REQUIREMENTS
o Use of 2 Ethernet port Sipura Voice Adapter with appropriate
firmware
o Any GUI development, documentation from BCE Nexxia to CW -
both printed and online - would be available in English
exclusively
o BCE Nexxia and CW will collaborate on content and process for
kits and equipment returns/exchanges
o Customers would have one primary Digital Voice Number (from
local service area only) and would have the ability to
purchase additional numbers from other service areas.
o Fax support is not currently part of the service however it is
on the development plan with expected T-38 or G.711
pass-through being considered. Firm date not yet established
o Number Transferability (NTA) Technical and Business process
would be developed with each CLEC (telco) partner but a common
interface would be developed for integration with Clearwire
processes.
o Unrated usage would be electronically available for
presentation on Clearwire portal.
o CDRs would be made available to CW for presentment to end
users via the end user - facing account management web
application. Date and exact method to be confirmed.
o Service would be from the following cities, but not restricted
to, subject to PSTN/regulatory limitations:
[***]
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[***]
3.2 OFFERING:
o One (1) primary Digital Voice number
o Additional phone numbers - charged at pre-determined rate per
month plus one-time activation fee (only one number per city
due to IT limitations)
o Local Number Transferability to / from wireline local service
(where possible - required comprehensively throughout the US)
o Local and long distance calling in the US and Canada,
including Hawaii and Alaska, but excluding other US
territories, Mexico, and the Caribbean.
o International Overseas calling - charged at pre-determined
rates per month by country
o 611 - Direct connection to Digital Voice End User Support
o Static E911 (BCE Nexxia's patent pending solution architecture
to be adapted pending further design study)
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o 411 without call completion - fee based (Details to be
determined once relationship are established with Telco
Partners)
o Voicemail (Parameters to be set by CW/BCE Nexxia)
o Voicemail to Email (via attached audio file playable in
standard PC media players)
o Caller ID with name, number, date, and time (requires
functionality on telephone set)
o Visual Call Waiting (requires functionality on telephone set)
o Call Forwarding
o Call Forwarding Plus (customization based on what calls to
forward, when to forward, and up to 10 numbers to forward to)
o 3-Way Calling
o Meet Me Conferencing (fee-based)
o Call Screening
o Do Not Disturb (schedule to forward incoming calls directly to
Voicemail)
o International Call Block
o Per-Call Caller ID Blocking (*67)
o 'Block the Blocker' capability desired - inclusion pending
confirmation of technology availability
o Application Programming Interfaces (API's) that enable ONLINE
USER SELF-CARE for access to Digital Voice account info, user
profile, service & feature management including:
o missed calls list
o phone usage reporting
o personal profile / account info updates
o problem reporting interface / trouble ticket
tracking by user
o End User support & FAQ content
o personalization of number of rings before
forwarded to voicemail
o personalization of included features listed
above (Call Forward Plus, Call Screening,
e-Mail destination for Voicemail delivery,
Do Not Disturb parameters, etc).
All of the above features subject to confirmation once
Clearwire product definition complete. Understood that above
list has some constraints related to platform and existing BCE
infrastructure.
3.3 OUT OF SCOPE FOR COMMERCIAL LAUNCH
<TABLE>
<CAPTION>
ITEM STATUS
--------------------------------------------------------------------------------
<S> <C>
PIC Long distance Out of Scope
--------------------------------------------------------------------------------
</Table>
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<TABLE>
--------------------------------------------------------------------------------
<S> <C>
10-10 long distance and 900 #'s Out of Scope
--------------------------------------------------------------------------------
Operator Assistance Out of Scope
--------------------------------------------------------------------------------
Multiple phone numbers from one city Out of Scope
--------------------------------------------------------------------------------
Multiple ATA's on a single
residential broadband connection Out of Scope
--------------------------------------------------------------------------------
411 Call Completion Out of Scope
--------------------------------------------------------------------------------
Battery Backup Out of Scope
--------------------------------------------------------------------------------
</Table>
3.4 OVERALL ASSUMPTIONS
o Clearwire will ensure adequate broadband IP connection quality
and sufficient network capacity between the home and the local
Clearwire POP.
CW Digital Voice Service is assumed to be initially based on a
self-install model.
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BCE NEXXIA RESTRICTED
4.0 VOIP NETWORK
4.1 NETWORK ARCHITECTURE
Network diagrams need to be conformed to the agreed upon Clearwire - BCE Nexxia
architectures.
The consumer VoIP application is based on the Nortel MCS 5200/CS2K platform.
There are two types of sites deployed - a "main site" and a "POP". Main sites
(location to be confirmed by BCE Nexxia) have the MCS/CS2K server complex,
several PSTN gateways, multimedia servers to support offerings such as voicemail
and conferencing as well as voice adapter provisioning servers. Main sites are
fully redundant from a network perspective and BCE Nexxia would work to enable
fail-over functionality between the Main Sites (with delivery timeframe updates
to CW). POP sites provide local "dial tone" for incoming and outgoing calls in
various areas through the means of PSTN gateways. For POP sites, redundancy is
only deployed for outgoing calls. (i.e., in the event of a main site failure it
would still be possible to place calls from the area served by a given POP (by
using PSTN failover i.e. calls would be "backhauled" to our Toronto or Montreal
main sites and routed through our network) but incoming calls to primary or
secondary phone numbers in that site would not be possible.)
The Internet is used to interconnect to the main sites. Such sites must be
protected with a firewall. The current plan anticipates that the VoIP service
may share a firewall with other services delivered through the Clearwire POP.)
4.2 SERVICE LEVEL OBJECTIVES (OPS METRICS ARE UNDER DEVELOPMENT)
The following Operational metrics would be measured and averaged over the month
and would exclude end-user devices:
[***]
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[***]
4.3 SECURITY (UNDER DEVELOPMENT, CLARIFICATION AND ROLES TBD)
4.3.1 INTRODUCTION
The service at a minimum secures the transmission of user passwords,
and information that can compromise the availability of the service and
or its functionality. Devices that are subject to abuse, attack or
intrusion would be protected to ensure the quality and availability of
the service. Standard practices and devices would be available and
regularly monitored by BCE Nexxia's network operations group.
4.3.2 WEB SERVICES PLATFORM (PORTAL)
User interactions with the VoIP web services would be accomplished in a
secure manner. All communications to web services would be encrypted.
Also only known trusted clients would be able to access the VoIP web
services. Security architecture and solution would be mutually agreed
where relevant upon once various impacts (costs, end user impact) have
been considered.
The Web Services Platform (this needs to be defined not clear what this
is) itself will be protected by firewalls and Intrusion Detection
Systems as well the platform will be protected by anti-virus software
if the platform is vulnerable to such intrusions.
4.3.3 PROVISIONING
All provisioning interactions between the Web Services Platform/end
user devices and the End User Provision Platform would be secure.
Provision requests once received by the End user provisioning platform,
would be secured and stored securely on the platform.
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Provisioning request should only be accepted from known trusted devices
to the extent that they can be identified, by the provisioning
platform.
(HIGH -LEVEL ATA AND MCS PROVISIONING PROCESS GRAPHIC)
4.3.4 MCS/CS2K COMPLEX
The MCS/CS2K complex would be protected from unwanted traffic and
intrusion that may affect the service quality and integrity.
Unauthorized attempts would be denied and detected; detected
unauthorized attempts would be analyzed for malicious data and dealt
with in an appropriate manner. In the event malicious data is able to
bypass perimeter defences host level intrusion systems would be in
place to assess the level and severity of the intrusion and minimize
the affect. The platform would be protected by anti-virus software if
the platform is vulnerable to such intrusions.
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5.0 END USER EXPERIENCE
One of the key aspects of the CW Digital Voice service is the ability
to map multiple phone numbers to a single end user account. The list of
multiple numbers must include a single "primary phone number" (Digital
Voice Number) and a mutually agreeable limit of additional "secondary
numbers".
The service supports a maximum of one number, primary or secondary,
from any one city. This means it is not possible to have a primary
Digital Voice Number and a secondary Number from the same city or two
secondary numbers from the same city due to systems limitations. I CW
and BCE Nexxia would work to remove this restriction as part of feature
enhancement efforts.
5.1 PRIMARY PHONE NUMBERS
"Primary phone number" is the term used to describe the main number for
the CW Digital Voice service. All outbound calling charges and taxes
are based on the primary number. The primary number is the E911 number
and the associated address must be valid and in the same city as the
primary number for E911 call routing.
5.1.1 IMPLICATIONS OF PRIMARY NUMBER SELECTION
All calls made by the user Would be charged as though they are made
from the location of the primary phone number. Implications of primary
phone number selection include:
o Dial-in number to access Voicemail would have the
same area code as the user's primary number.
o Primary number is always used as either call
origination point or call termination point for usage
tracking and billing
o Meet-Me-Conferencing dial-in number would have the
same area code as the user's primary number.
5.2 SECONDARY PHONE NUMBERS
A "secondary phone" number allows parties in other cities to call CW
Digital Voice end users by dialling local phone numbers within those
cities, even if the Digital Voice end user resides in, and/or has
selected a primary number from a different city.
(Eg. a user with an Anchorage primary phone number who subscribes to a
secondary phone number in St. Cloud can provide parties within the St.
Cloud calling area with a local St Cloud number that rings through to
his/her Anchorage-based Digital Voice line. Secondary numbers have no
effect on outgoing calls made by the user, as all outgoing calls are
treated as if they are made from the location of the primary number).
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<TABLE>
<CAPTION>
Used to place calls Used to receive calls
------------------- ---------------------
<S> <C> <C>
Primary phone number YES YES
Secondary phone number NO YES
</TABLE>
5.3 NUMBER TRANSFERABILITY (NTA) (TO BE CONFIRMED ONCE TELCO PARTNER
RELATIONSHIPS ARE ESTABLISHED):
End users would have the option of migrating their existing local wireline
phone number to their CW Digital Voice service to use that number as their
primary Digital Voice number. Conversely, they may have the option of
migrating their Digital Voice number to their local wireline service. End
users would be able to do the following:
o Transfer local wireline phone number to their new or
existing Digital Voice service
o Transfer Digital Voice number to a local wireline
service
o Transfer CLEC (wireline or VoIP) number to CW Digital
Voice service, (depending on system & process
availability)
o Transfer Digital Voice Number to a CLEC (wireline or
VoIP), (depending on system & process availability)
<TABLE>
<CAPTION>
Request Completed from end user
SLA Target to Complete Request Perspective
<S> <C> <C>
Port In Transactions X% Complete in X Time X% Complete in X Time
Port Out Transaction X% Complete in X Time X% Complete in X Time
</TABLE>
NOTE: It is essential that the Partner Telcos be defined in order to determine
the NTA solution(s). The MapleVoice solution is contingent on Partner Telcos &
their NTA processes.
5.3.1 IMPLICATIONS OF NTA
o Once a Digital Voice primary number is ported to wire line,
the Digital Voice account must have a new primary number
assigned or be terminated.
o Static E911 profile needs to be updated for activation or
deactivation of primary number being ported to either wireline
and Digital Voice service
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o In the event that a new primary number is selected for an
existing Digital Voice account updates may be required for
certain supported features, eg. Dial-in number for access to
Voicemail account, Call Screening list, etc.
5.3.2 OUT OF SCOPE FOR NTA
Porting of numbers that are not supported by wireline is out of scope.
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6.0 STATIC E911
At the time of the creation of this document, the Static E911 end user
experience or architecture has not been finalized for USA market. A BCE Nexxia
patent pending solution has been implemented for BCE Nexxia's service area and
would be leveraged/adapted as appropriate for the CW deployment. As listed in
section 3.1, Static E911 will be part of the initial VOIP offering.
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7.0 MINIMUM SYSTEM REQUIREMENTS
To subscribe to Digital Voice service, end users must meet the following
requirements:
7.1 INTERNET ACCESS SPEED
(*NOTA BENE: the following is based on a pure "over-the-top" implementation and
does NOT yet contemplate the anticipated benefits to VoIP from CW's ability to
prioritize bandwidth for the Digital Voice application vs. browsing/e-mail etc.
This section must be reconciled with CW's Internet access product QoS
implementation
o Minimum: in excess of 64kpbs upstream, and in excess of 128kbps
downstream
o Recommended: in excess of 384kbps upstream, and in excess of l.0Mbps
downstream
o Limitation with CW's low-tier Internet access service:
Current interim 3-Way Calling implementation would NOT offer
acceptable performance (based on current G729 codec working
assumptions). Planned future redesign of this feature would
alleviate the issue with low-tier. Internet access products
such as that which is described as Minimum above.
o Limitation with CW's low-tier Internet access service:
Concurrent use of PC for large file transfer/download and/or
browsing of complex websites may also decrease the sound
quality of a Digital Voice call.
7.2 HOME NETWORK REQUIREMENTS
All Clearwire end users would be provided with a 2 Ethernet LAN port Sipura ATA.
The WAN port on the ATA will connect to the Clearwire CPE and the other will
connect to the end user's computer or home networking equipment.
TYPICAL HOME
(TYPICAL HOME GRAPHIC)
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8.0 WEB APPLICATION - TBD
8.1 REGISTRATION PROCESS / ORDERING PROCESS - (ROLES TO BE CONFIRMED)
8.1.1 NUMBER POOL MANAGEMENT
8.1.1.1 NUMBER STORAGE
Numbers for Voice over IP would be stored and administered
in the VoIP service administration application provided by
BCE Nexxia Numbers for each POP would be loaded by COE
Operations, based on demand. All numbers must be
pre-provisioned in order to be eligible for end user
assignment.
8.1.1.2 NUMBER POOL MANAGEMENT TOOL
The Number Pool Management Tool would support activations
and deactivations as well as suspensions and provisioning.
This tool would have the added capability of dealing with
Number Transferability and other services defined in the
additional features and change.
8.1.1.3 THRESHOLDS
Thresholds would be set for each POP to alert the Number
Admin group when additional numbers are required. Thresholds
would vary by POP and would be adjustable.
8.1.1.4 TAGGING
Numbers would be tagged as follows:
o Activated
o Assigned to an end user but not yet activated
o Available
o Unavailable, and in the process of being aged for 60
days
o Unavailable, suspended and not being aged (end user
requested)
8.1.1.5 NUMBER DE-ACTIVATION (CW TO DEFINE PARAMETERS)
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8.1.1.6 METRICS
Data would be available to the Number Admin group in order
to enable them to manage the number database effectively and
efficiently. Some possible metrics by POP include:
o Total working
o Total available
o Total in the aging pool (perhaps broken down further,
by length of time to indicate date of availability)
o Total suspended and not aging
o Total suspended and aging
o Total assigned but not yet activated
o Churn statistics (For example, outs and ins in a given
period of time)
8.1.2 SERVICE/FEATURE MANAGEMENT
End users would be able to configure features in real-time using a web
application. This functionality would be developed and enabled on a
mutually agreeable timetable via a secure feature management page.
Cancellation of service must be made through a CSR.
SOLUTION IS DEPENDENT ON CW OSS SOLUTION & STRATEGY.
8.1.3 PROFILE MANAGEMENT
BCE Nexxia will provide the ability to manipulate the customers VoIP
service features/profile (preferably via an API). The customer profile
information stored by the VoIP services will be the amount necessary
to ensure the switch is provisioned properly and customer features are
accurate per their requests. Clear Wire is the owner of the customer
data however some duplication will be required to support customer
feature selection.
SOLUTION IS DEPENDENT ON CW OSS SOLUTION & STRATEGY.
8.1.4 ACCOUNT MANAGEMENT
BCE Nexxia would provide VoIP services to manage the end user account.
The account information (can we come up with an example here so this
can be clarified) stored by the VoIP services will be minimal as Clear
Wire is the owner of the end user account.
SOLUTION IS DEPENDENT ON CW OSS SOLUTION & STRATEGY.
8.1.5 BILLING MANAGEMENT
Detailed information on billing processes is outlined in section 10.0.
SOLUTION IS DEPENDENT ON CW OSS SOLUTION & STRATEGY.
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8.1.6 HELP/TROUBLESHOOTING
8.1.7 AUTO-GENERATED EMAILS
There would be several instances where the Clear Wire application
would send auto-generated emails. Details of this area will be
confirmed once Clearwire has completed product definition
documentation. Some of the content of these emails is dynamic for the
purpose of personalizing the email for the end user. The following is
a list of the actions that will result in an auto-generated email:
1. Order confirmation
2. 911 service address registration completed and validated
with verified updates across network elements - end user
will receive confirmation email
8.2 CLASSES OF SERVICE (COS) (TO BE CONFIRMED DUE TO IT IMPACTS -- FURTHER
DEFINITION OF END USER EXPERIENCE IN THIS AREA REQUIRED)
Class of Service is available on the platform, should CW wish to take
advantage of this set of features, parameters would need to be defined.
8.2.1 CLASS OF SERVICE LEVELS - NETWORK SIDE
Processes and business rules need to be defined to establish who has
the authority to apply the above rules.
Network based rules over-ride any functionality that users may be
given to define their own service levels.
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9.0 SERVICE PROVISIONING AND FULFILLMENT (to be confirmed)
Digital Voice service kit would be provisioned, fulfilled, and shipped by
utilizing the CW preferred shipping vendor. Both parties will collaborate
to develop as appropriate. A detailed statement of work document that
describes the exact accountabilities, deliverables, processes, fees, and
timeframes between Digital Voice Web application, and CW's preferred
shipping vendor is to be developed in a separate document.
9.1 DIGITAL VOICE SERVICE END USER KITS (EXAMPLE ONLY - CW TO DEFINE)
Digital Voice service installation kit could have the following contents:
o Welcome Letter
o Quick Set-up Guide
o Voice Adapter (Sipura)
o Ethernet Cable
o Power Supply
o Phone Cable
9.2 KIT PREPARATION
Data file exchange to be defined by CW
9.3 PROCESS FULFILLMENT FLOW CHART
TBD (CW and Preferred Shipping Vendor)
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10.0 BILLING
PLEASE NOTE: ALL BILLING ITEMS ARE TO BE FINALIZED PENDING CW OSS SOLUTION.
10.1 CHARGEABLE ITEMS (TO BE DEFINED)
The Digital Voice service charges would be available for the following
items:
o Base package that the end user has registered for - monthly charge
(The number of packages and other details - TBD)
o Service activation charge (can be visible or not visible on bill, may
be waived)
o Change of Digital Voice (primary) number (can be visible or not
visible on bill, may be waived)
o Activation of Additional Numbers (can be visible or not visible on
bill, may be waived)
o Change of Additional Number(s)
o Recurring monthly charges for Additional Number(s) (can be visible or
not visible on bill, may be waived)
o Recurring monthly charge for a la carte features (such as Meet Me
Calling) (can be visible or not visible on bill, may be waived)
o North American outbound non toll free minutes
o Non-free-calling-area usage (which includes Alaska and Hawaii)
o Tax requirements need to be defined
10.2 BILL COMPONENTS - TO BE MADE AVAILABLE TO CLEARWIRE FOR BILLING PRESENTMENT
BCE Nexxia would provide unrated voice usage to Clear Wire in CDR or IPDR format
in a near realtime manner. (date and details to be determined)
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10.3 PROVISIONING AND BILLING (NEEDS TO BE REVISITED BASED ON CW MODEL)
End users are encouraged to order Digital Voice service on CW web-site.
Customers would choose to subscribe to Internet Access Services either with
Digital Voice Service or not. They would also need to identify what a la
carte features or Additional Number(s) they wish to order. The actual
selection and configuration of their features, including the cities in
which their Digital Voice Number (i.e. primary number) and Additional
Numbers, is done on a Web application during the ordering process. The
ordering system would need to advise the Digital Voice Web application
which service, package, etc. the customer has subscribed to. On an ongoing
basis, Digital Voice Web application would have to advise the billing group
when certain events take place that trigger billing (such as changing a
primary number). Similarly, the ordering Web application would have to
advise Digital Voice Web application when changes to their profile have
been made (services added/deleted/changed). This area needs further
clarification between CW and BCE. See diagram below for initial integration
focus areas.
(INITIAL INTEGRATION FOCUS AREAS DIAGRAM)
10.4 BILLING START DATE
For existing Clearwire Internet service subscribers, billing for Digital
Voice service begins the day the order is taken for Digital Voice service.
Billing cycle would be the same as Clearwire Internet service.
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For new Clearwire Internet service subscribers, billing for Digital Voice
service begins when Clearwire Internet service is billed; i.e. at
activation of Clearwire Internet service (connection of modem) or xdays
after ordering of Clearwire Internet service. The above is subject to
change once product definition document is completed.
10.5 CONTRACTS - RULES AND PENALTY FEE (TBD BY CLEARWIRE)
10.6 NORTH AMERICA LONG DISTANCE REGION DEFINITION
Included in North America LD:
o Canada
o Continental U.S., Hawaii, Alaska
Excluded from North America LD:
o Mexico
o Caribbean, including all U.S. territories (San Juan, and U.S.
Virgin Islands)
10.7 END USER CARE (VIEWING BILLS AND ADJUSTMENTS)
Clear Wire's OSS will provide these functions.
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11.0 SUPPORT
The diagram below conforms with Section 11.2 and reflects that CW Tier 2 (NOC)
escalates to BCE Nexxia Tier 2. All end user interaction is between CW and the
end user. BCE Nexxia does not interact with CW end users, all BCE Nexxia -CW
interaction is NOC to NOC.
SERVICE ASSURANCE
GENERIC PROCESS VIEW DRAFT
(GENERIC PROCESS VIEW GRAPHIC)
11.1 HOURS OF OPERATION
1. Business Office: Consistent with Clearwire business office hours
2. COE 7x24
3. iTECH 7x24
4. Vendor - varies, but typically 8:00am to 5:00pm Monday to Friday,
off hours duty manager
11.2 TECHNICAL SUPPORT: PROPOSED MODEL ABOVE WEB PORTAL (END USER SERVICE LEVEL)
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DEFINITIONS:
o Starting point is the CW HD -They would contact the
appropriate BCE Nexxia entities to get issues resolved.
Escalated calls to BCE Nexxia should predominately be
network issues in general not end user specific tickets
Accountabilities include:
o Open tickets unless we can share ticket systems somehow
- would be more efficient
o Perform high level testing, including physical customer
infrastructure testing
o Problem resolution
o Manage ticket and determine next course of action
o Sympatico Member Services (referred to as SMS HD) will act
as "passthru" only if the trouble ticketing tools solution
between BCE Nexxia and CW can not align to bypass this step.
o Level 2 support (L2 support) is defined as the BCE Nexxia
Centre of Excellence (COE). The COE is a "front door" team
who is responsible for all VoIP market segments support.
They interface with the BCE Nexxia downstream operational
teams if/when required. L2 support accountabilities:
o Second line of support
o Determine/fix issues with translations, higher level
MCS complex related troubleshooting
o Manage ticket within internal downstream operations
teams (including Adaptative infrastructure for Portal
and code issues)
o Provisioning server issues - front door to apps
management
o Level 3 support (L3 support) is defined as the BCE Nexxia
iTECH centre. The iTECH centre is responsible for resolving
complex issues as well as testing and validating fixes. L3
accountabilities are:
o Complex troubleshooting on the MCS complex, voice
network and DMS
o Level 4 support (L4 support) is defined as vendor support.
L4 support accountabilities:
o Final point of support for highly complex problems
11.2.1 EXISTING PORTAL INTERNAL INTERFACE (TBD)
11.2.1.1 PASSWORD RESET
o Ability for Helpdesk agents to reset end user passwords -
needs to CW tier 1 function
o Ability for Management level access to reset Agent level
access passwords - CW tier 2 function
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o Ability for Administrator level access to reset Management
level access passwords- CW tier 2 function
o Ability for Administrator level access to reset Management
level access passwords - duplicate of above
o Password support aligned with BCE Nexxia.ca single sign-on
method - pending confirmation that CW is adopting this
platform
o Ability for helpdesk agents to reset Voicemail passwords -
needs to be CW Tier 1 function
11.2.1.2 END USER REPORT PROBLEM
The agents would use the CW trouble reporting system (Level 1).
System would auto-populate end user information based available
data. The CW trouble reporting system will interface with the
MVCOM trouble management system (for Level 3?)-WILL GO THRU 2 -3
LEVELS AT CW BEFORE ISSUE GETS TO BCE NEXXIA
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12.0 TRACKING & REPORTING:
CW would have access to the following (but not limited to) reports:
Service quality metric reports based on Section 4.2 parameters are yet to be
defined.
All reports listed in the following table are parameterized reports that can be
viewed in HTML or exported to excel. Figure 1 is an example of the interface to
specify report parameters.
(DASHBOARD REPORT GRAPHIC)
FIGURE 1
<TABLE>
<CAPTION>
REPORT NAME DESCRIPTION FIELDS
----------- ----------- ------
<S> <C> <C>
VOIP LD USAGE-OUTSIDE LCA The VoIP LD usage report would o Customer ID
contain the total volume of o First Name
calls by minutes outside the o Last Name
local calling area but within o Number of Calls, Total
Canada. This would be used to Minutes
determine long distance calls o Off-Peak, Full Rate
within Canada. The report would Average Call Length
be generated based on a Number of Days on Service
selected time frame. o Average Minutes per Days on Service
VOIP INTRA USAGE All calls that are initiated in o Customer ID
either Quebec or Ontario and o First Name
the destination is also either o Last Name
Quebec or Ontario is defined as o Number of Calls
an "Intra" call. This can be
</TABLE>
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<TABLE>
<S> <C> <C>
determined by checking the o Total Minutes
originating and destination area o Off Peak
codes against a look up table. The o Full Rate
report would be generated based on o Average Call Length
a specified time frame. Totals o Number of Days on Service
would be required for each o Average Minutes per Days on Service
grouping. The report should be
sorted by 'Total Calls' in
descending order
VOIP Inter Usage All calls that are initiated in o Customer ID
Quebec or Ontario with a o First Name
destination outside Quebec and o Last Name
Ontario but within Canada are o Number of Calls
defined as an "Inter" call. The o Total Minutes
report would be generated based on o Off-Peak
a specified time frame. Totals o Full Rate
would be required for each o Average Call Length
grouping. Inter calls can be o Number of Days on Service
determined by checking the o Average Minutes per Days on Service
originating and destination area
codes against a look up table. The
report should be sorted by 'Total
Calls' in descending order.
VOIP US Usage All calls that have a destination o Customer ID
that is within the continental o First Name
United States would be displayed in o Last Name
this report. The report would be o Number of Calls
generated based on a specified time o Total Minutes
frame. US calls can be determined o Off-Peak
by checking against the provided o Full Rate
look up table. Totals would be o Average Call Length
required for each grouping. The o Number of Days on Service
report should be sorted by 'Total o Average Minutes per Days on Service
Calls' in descending order.
VOIP OverSeas Usage All calls that have a destination o Customer ID
that is not within the continental o First Name
United States or Canada. The report o Last Name
would be generated based on a o Number of Calls
specified time frame. Totals would o Total Minutes
be required for each grouping. The o Off-Peak
report should be sorted by 'Total o Full Rate
Calls' in descending order. o Average Call Length
Overseas calls can be determined by o Number of Days on Service
checking against the provided o Average Minutes per Days on Service
lookup table.
Feature penetration There are six different features o Customer ID
that would be offered through VoIP. o First Name
The report would detail the o Last Name
features a customer has activated. o Voice Mail
It would also total the number of o VM to Email
end user using each feature. o Call Forwarding
o Call Waiting
o Caller Screening
Long Distance Replacement Long distance replacement reporting o Customer ID
Report tracks the usage of long distance. o First Name
</TABLE>
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<TABLE>
<S> <C> <C>
Calls that appear to be local over o Last Name
VoIP telephony but are actually o # of Off Peak INTRA Mins
long distance calls when placed o # of Full Rate INTRA Mins
over the PSTN network. Off-peak o # of Off-Peak INTER Mins
minutes include times between 18:01 o # of Full Rate INTER Mins
and 07:59 Monday to Friday plus all
day weekends. The full rate minutes
are between 0:800 and 18:00 Monday
to Friday. All calls that are
initiated either in Quebec or
Ontario and their destination is
also either in Quebec or Ontario
are INTRA calls. INTER calls are
those that are initiated in Quebec
or Ontario with a destination
outside of Quebec and Ontario.
VOIP to VOIP Usage All calls that start from a Voip o Customer ID
subscriber to another Voip user. o First Name
This can be determined using the o Last Name
call connection type table. o Number of Calls
o Total Minutes
o Off Peak
o Full Rate
o Average Call Length
o Number of Days on Service
o Average Minutes per Days on Service
VOIP Incoming Usage All incoming calls to Voip users o Customer ID
would be recorded in this report. o First Name
These calls can be determined in o Last Name
the T_Usage Details table under o Number of Calls
the call direction field. o Total Minutes
o Off-Peak
o Full Rate
o Average Call Length
o Number of Days on Service
o Average Minutes per Days on Service
VOIP Overall Usage The VoIP overall usage report would o Customer ID
display all usage for each o First Name
customer. The usage can be derived o Last Name
from the T_Usage Details table. o Number of Calls
o Total Minutes
o Off-Peak
o Full Rate
o Average Call Length
o Number of Days on Service
o Average Minutes per Days on Service
Primary/Secondary Numbers The total primary and secondary o POP
by Pop numbers by pop would be captured by o Total Primary Numbers
</TABLE>
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<TABLE>
<S> <C> <C>
this report. The report generated o Total Secondary Numbers
would have a filter for each
region, so that only a specific
region can be viewed as well as all
regions. The report would be
generated based on a specified time
frame
Directory assistance Usage The Directory Assistance usage o Customer ID
Report report would contain the total o First Name
directory assistance usage broken o Last Name
down by customer. A directory o Number of Calls
assistance call is defined when the o Total Minutes
destination of the call is 411 or o Average Call Length
(NPA) 555 - 1212. The report would
be generated based on a selected
time frame
Telephone number The telephone number utilization o POP (NPA - City)
utilization report report would determine the o Switch Name
utilization of numbers allocated to o Assigned TN Ranges
the VoIP Maple Voice number pool. o Available TN Ranges
o Aging TN Ranges
o Total TN
</TABLE>
31
SCHEDULE 2
ACCEPTABLE USE POLICY
CLEARWIRE ACCEPTABLE USE POLICY
EFFECTIVE [INSERT EFFECTIVE DATE]
THIS ACCEPTABLE USE POLICY IS A MATERIAL PART OF ANY AGREEMENT WITH CLEARWIRE
FOR PROVISION OF ITS SERVICES TO BUSINESS AND CONSUMER CUSTOMERS. PLEASE READ
AND FOLLOW THIS ACCEPTABLE USE POLICY CAREFULLY. THIS ACCEPTABLE USE POLICY MAY
BE REVISED FROM TIME TO TIME BY CLEARWIRE AS SET FORTH BELOW.
Clearwire LLC and its affiliates (collectively "Clearwire") have designed this
Acceptable Use Policy ("AUP") with a view towards enhancing the use of
Clearwire's fixed wireless broadband and other communication services and
equipment (each separately and collectively, the "Service" or "Services") by our
subscribers and their end users (collectively, "you") by designating standards
for acceptable use and standards for prohibiting unacceptable use. This AUP
forms part of the agreement between Clearwire and you and is incorporated by
reference into Clearwire's Terms and Conditions (the "Terms and Conditions")
found at www.clearwire.com; terms used in this AUP are used as defined in the
Terms and Conditions. All subscribers of the Service (anyone who uses or
accesses the Service) must comply with, and shall be bound by the terms of, this
AUP.
PROHIBITED ACTIVITIES. For the benefit of all of Clearwire's subscribers, as a
condition of the Service, Clearwire prohibits the following activities:
1. UNLAWFUL OR IMPROPER USE OF THE SERVICE. You may not use the Service in a
manner prohibited by any applicable laws or regulations. Without limiting the
foregoing, you may not use the Service for any unlawful or abusive purpose, in
any way that could damage, disable, overburden, or impair any Clearwire
property, or in any way that directly or indirectly interferes with or disrupts
our network or adversely affects another's use or enjoyment of any Service,
including other Clearwire subscribers. You may not use or attempt to use the
Service in any manner such as to avoid incurring charges for or otherwise being
required to pay for such usage. You may not circumvent or attempt to circumvent
user authentication or security of any host, network, network element, or
account (also known as "cracking" or "hacking"). This includes, but is not
limited to, accessing data not intended for you, logging into a server or
account that you are not expressly authorized to access, or probing the security
of other networks. You may not interfere or attempt to interfere with any
services to any user, host, or network ("denial of service attacks"). This
includes, but is not limited to, "flooding" of networks, deliberate attempts to
overload a service, and attempts to "crash" a host. You may not use any kind of
program/script/command, or send messages of any kind, designed to interfere with
(or which does interfere with) any server or a user's session, by any means,
locally or via the Internet. The Service is intended for periodic, active use.
You may not use the Services on a standby or inactive basis in order to maintain
a connection. Pinging is prohibited.
65
2. EXCESS UTILIZATION OF NETWORK RESOURCES. The excessive use or abuse of
Clearwire's network resources by one subscriber may have a negative impact on
all other subscribers. Accordingly, you may not use the Service or take any
action, directly or indirectly, that will result in excessive consumption or
utilization of the system or network resources, or which may weaken network
performance, as determined in Clearwire's sole discretion. Such prohibited
actions include, but are not limited to: using the Service to host a web server
site which attracts excessive traffic at your location, continuously uploading
or downloading streaming video or audio, usenet hosting, or continuous FTP
uploading or downloading.
3. INTELLECTUAL PROPERTY INFRINGEMENT. You may not use the Service to store,
transmit or receive any material that infringes on any patent, trademark, trade
secret, copyright, or other proprietary or intellectual right of any party,
including, but not limited to, the unauthorized copying of copyrighted material,
the digitization and distribution of photographs from magazines, books, or other
copyrighted sources, or the unauthorized transmittal of copyrighted software.
4. OBJECTIONABLE MATERIAL. You may not use the Service to store, post, transmit,
or disseminate material or information that is unlawful, harmful, threatening,
abusive, harassing, libelous or defamatory, hateful, obscene, indecent, or
otherwise objectionable or which encourages or participates in conduct that
would constitute a criminal offense, gives rise to a civil liability, or
otherwise violates any local, state, national, or international law, order,
rule, or regulation.
5. JUNK E-MAIL. You may not use the Service to transmit or facilitate any
unsolicited or unauthorized advertising, telemarketing, promotional materials,
"junk mail", unsolicited bulk e-mail, unsolicited duplicative e-mail,
unsolicited commercial e-mail, fax broadcasting, or fax blasting (collectively,
"Spam"). Clearwire considers any unsolicited commercial mail to be Spam,
regardless of the amount of mail sent, unless the recipient has specifically
requested the information. An e-mail may be "unsolicited" for purposes of this
AUP if (1) the recipients' e-mail addresses were not obtained through a personal
or customer relationship between recipient and sender, (2) recipients did not
affirmatively consent to receive communications from the sender, or (3)
recipients have opted out of receiving communications from sender when given the
opportunity to do so.
6. FRAUDULENT ACTIVITY. You may not use the Service to make fraudulent offers to
sell or buy products, items, or services or to advance any type of financial
scam such as "pyramid schemes", "Ponzi schemes", or "chain letters." You may not
use techniques to hide or obscure the source of any e-mail or other
communication.
7. IMPERSONATION. You may not use the Service to impersonate any person or
entity, or falsely state or otherwise misrepresent your affiliation with any
person or entity, or to create a false identity for the purpose of misleading
others. Without limiting the foregoing, you may not use invalid or forged
headers, invalid or non-existent domain names or other means of deceptive
addressing.
8. SOFTWARE VIRUSES. You may not use the Service to upload files or transmit any
material that contains viruses, worms, Trojan Horses time bombs, cancelbots,
corrupted files, or other code that manifests contaminating or destructive
properties.
BCE NEXXIA/CLEARWIRE MASTER SUPPLY AGREEMENT
66
9. COLLECTING INFORMATION. You may not use the Service to store or collect, or
attempt to store or collect, personal information about third parties without
their prior knowledge and consent.
10. NEWSGROUPS. You should use your best judgment when posting to any newsgroup.
Many groups have charters, published guidelines, FAQS, or "community standards"
describing what is and is not considered appropriate. You must abide by such
guidelines. You may not post or list articles which are off-topic according to
the description of the group or send unsolicited mass e-mailings to ten or more
people if such e-mail could reasonably be expected to provoke complaints from
its recipients. Without limiting any other rights or remedies that Clearwire may
have under this AUP, the Terms and Conditions or applicable law, Clearwire may
cancel any postings that violate this AUP as determined by Clearwire in its sole
discretion.
11. USE OF YOUR ACCOUNT BY OTHERS. You may not, through action or inaction,
allow others to use the Service for illegal or improper activities or for any
purpose or in any manner prohibited by this AUP. You may not permit your
network, through action or inaction, to be configured in such a way that gives a
third party the capability to use the Service in an illegal or improper manner
or for any purpose or in any manner prohibited by this AUP.
12. RESELLING. You may not directly or indirectly reproduce, duplicate, copy,
sell, provision, resell, rent, lend, pledge, transfer, distribute or exploit any
portion of the Service without Clearwire's prior written consent.
13. SECURITY PRECAUTIONS. You are solely responsible for implementing sufficient
procedures and checkpoints to satisfy your particular requirements for accuracy
of data input and output, and for maintaining a means external to the Service
for the reconstruction of any lost data.
14. ILLEGAL AND FRAUDULENT ACTIVITY. You acknowledge and agree that Clearwire
may cooperate fully with investigations of possible illegal activity or
violations of systems or network security at other sites, including cooperating
with law enforcement authorities in the investigation of suspected criminal
violations. Subscribers who violate systems or network security may incur
criminal and/or civil liability. Clearwire may immediately suspend or terminate
Your Service if Clearwire suspects abuse or fraudulent use of the Service,
interference with our network, or violation of the AUP or Terms and Conditions,
and may notify the appropriate authorities if it reasonably believes that such
abuse or fraudulent use is in violation of applicable law. You must cooperate
with Clearwire in any fraud investigation and use any fraud prevention measures
that Clearwire prescribes. Your failure to provide reasonable cooperation may
result in your liability for all fraudulent usage.
15. VIOLATIONS OF AUP. In the event that you violate this AUP, Clearwire may,
without limitation, restrict your access to Clearwire's network, increase the
fees associated with your Service, including upgrading you to a higher class of
Service, or immediately suspend or terminate your Service. In the event of
termination of your Service, all applicable termination charges will apply.
Except as expressly provided herein, the rights and remedies of Clearwire are
cumulative and not exclusive of any rights or remedies that Clearwire may
otherwise have at law or in equity. Waiver of any violation of this AUP by
Clearwire shall not act as a waiver of any subsequent violation, nor shall it be
deemed to be a waiver of the underlying obligation or term. No failure or delay
by Clearwire in exercising any right or remedy hereunder will operate as a
BCE NEXXIA/CLEARWIRE MASTER SUPPLY AGREEMENT
67
waiver thereof, nor will any single or partial exercise of any right or remedy
preclude any other or further exercise thereof or the exercise of any other
right or remedy. You should read this AUP in conjunction with our Terms and
Conditions and our other Policies which are set forth on our website. Clearwire
has the right but not the obligation to monitor or restrict any uses of the
Service that Clearwire believes in its sole discretion violates this AUP, any
part of the Terms and Conditions, or applicable law. You are solely responsible
for all content that you transmit or receive utilizing the Service, and are
responsible for abuse of your account by others.
16. PRIVACY; MONITORING THE SERVICE, POLICY MANAGEMENT. Clearwire is under no
obligation to monitor the Service, but Clearwire may do so from time to time in
its discretion. Without limiting any other right of Clearwire under this AUP or
the Terms and Conditions, Clearwire may disclose any information regarding you
or your use of the Service for any reason and at its sole discretion in order to
satisfy applicable laws, regulations, orders, or governmental requests, or in
order to operate and deliver the Service in an efficient manner, or to otherwise
protect Clearwire's property or legal interests and those of its subscribers. To
protect its customers and its network Clearwire may, without limitation, block
and allow traffic types as we see fit at any time.
17. PERSONAL WEBSITES. Clearwire offers subscribers a certain amount of disk
space for hosting website(s) ("Web Space"), depending on the Service level
selected. Web Space is defined as a file system allocation on one or more of
Clearwire's publicly available web servers that is used for the sole purpose of
displaying or providing information to the public Internet community. You are
solely responsible for all information, data, text, software, music, sound,
photographs, graphics, video, messages, or other materials (the "Content")
contained within your Web Space, and are further responsible for obtaining any
third-party consent or permission required for the use thereof. Clearwire does
not inspect or otherwise participate in the posting of Content to its
subscribers' Web Space and, as such, does not guarantee the accuracy, integrity,
security, or quality of such Content. Clearwire disclaims any liability for the
security of any Content posted on the Web Space; all such Content is stored at
your risk. Such Web Space is available freely to anyone using the Internet.
Clearwire reserves the right at any time, and periodically, to modify or
discontinue, temporarily or permanently, your Web Space, with or without notice.
Clearwire may, in its sole discretion, terminate your Web Space, and remove any
Content contained on your Web Space for any reason, including, without
limitation, lack of use, or the reasonable belief that you have violated this
AUP. You acknowledge that Clearwire will not be liable to you or to any third
party for any modification, suspension, or discontinuance of your Web Space.
18. REPORTING VIOLATIONS. Clearwire requests that any person who becomes aware
of a violation of this AUP report the information to Clearwire at
ABUSE@CLEARWIRE.COM. If available, please provide the IP address used to commit
the alleged violation and the date and time of the alleged violation. Clearwire
may take any appropriate action as it deems fit in its sole discretion,
including, but not limited to, one or more of the following actions in response
to a report: issue a warning; suspend the subscriber's newsgroup posting
privileges; suspend the subscriber's account; terminate the subscriber's
account; bill the subscriber for administrative costs and/or reactivation
charges; bring appropriate legal action to enjoin violations and/or to collect
damages, if any, caused by violations; or take no action.
BCE NEXXIA/CLEARWIRE MASTER SUPPLY AGREEMENT
68
19. NOTICES AND PROCEDURE FOR MAKING CLAIMS OF COPYRIGHT INFRINGEMENT. Pursuant
to Title 17, United States Code, Section 512(c)(2) (as amended), notifications
of claimed copyright infringement should be sent to Service Provider's
Designated Agent. Note that inquiries relevant to the following procedure only
will receive a response.
20. REVISIONS; RESERVATION OF RIGHTS. CLEARWIRE reserves all rights including
the right to revise, amend, or modify this AUP or any other Policy at any time,
and any such revisions will be effective ten (10) days after posting on
Clearwire's website. You agree that your continued use of the Service after the
effective date of any such revision, amendment or modification will constitute
your acceptance thereof and you shall thereafter be bound by the terms of this
AUP, as revised, modified or amended. IT IS YOUR RESPONSIBILITY TO CHECK
CLEARWIRE'S WEBSITE REGULARLY, AS ALL OR ANY PART OF THIS AUP MAY CHANGE WITHOUT
NOTICE.
BCE NEXXIA/CLEARWIRE MASTER SUPPLY AGREEMENT
69
SCHEDULE 3
TERM SHEET - FINANCING
<TABLE>
<S> <C>
Lender: Bell Canada or an Affiliate thereof ("Bell")
Borrower: Clearwire Corporation ("Clearwire")
Amount of Credit: US$10,000,000
Loan Purpose: The extension of credit is to fund capital expenses and
start-up costs associated with the deployment of VoIP
Services in the Territory.
Loan Structure: Bell will advance funds to Clearwire as requested, in an
amount not to exceed US$10,000,000.
Principal and interest shall be payable on the third
anniversary of the Effective Date.
Interest: Interest will be charged on the outstanding amount of the
loan at an interest rate of 7% per annum net of any and
all withholding taxes than may be exigible with respect
thereto (provided however that Bell will use commercially
reasonable efforts to offset such withholding taxes
against Canadian tax Bell has to pay and if Bell is
successful in doing so there will be a reduction of the
gross up for withholding taxes)
Prepayments: No prepayment penalties. Prepayments applied in inverse
order of loan payments.
Certain Covenants: The loan agreement will have customary terms, conditions
and covenants associated with a credit facility of the
type provided by BCE Nexxia to Clearwire. No disbursements
of loan proceeds shall be made until such time as a
definite loan agreement has been negotiated and entered
into by Clearwire and Bell
Security: Bell shall have a security interest in each item of
tangible personal property purchased by Clearwire and
located on a Canadian premise owned or controlled by Bell
or any of its Affiliates.
</TABLE>
BCE NEXXIA/CLEARWIRE MASTER SUPPLY AGREEMENT
70
SCHEDULE 4
APPOINTMENTS
The initial appointees to the Executive Operating Committee are:
For BCE Nexxia: o Trevor Anderson
o Sal Iacono
For Clearwire: o Rob Mechaley
John Saw
The initial appointees to the Project Management Office are:
For BCE Nexxia: o Lee Carlson
For Clearwire: o Katherine Beal
BCE NEXXIA/CLEARWIRE MASTER SUPPLY AGREEMENT
71
SCHEDULE 5
TAKE BACK SERVICE ELEMENTS
Take Back Service Elements relates to the right of Clearwire to assume
responsibility and accountability with respect to Service Elements which are
provided on a Dedicated basis, and as more particularly set forth below.
o POP Site hardware and software including:
o Session Boarder Controllers / RTPs,
o Firewall equipment,
o Media Gateways,
o Switching, cabling and related patch panels.
o Tier II / Tier III Support related to US POP hardware and software and /
or Main Site (Toronto/Montreal) network hardware and software
o US PSTN connectivity ordering and vendor management, including local
connectivity, long distance connectivity, 911 and LNP related services.
o US PSTN vendor selection for new market turn-up after PSTN connectivity
vendor management take back.
o Commissioning of US POP equipment with support from BCE Nexxia in the
scenario where BCE Nexxia continues to support MCS complex facilities
(servers or application servers) located in Canada.
o Main Site network hardware and software including:
o MCS complex facilities including CS2K and dedicated firewall, RTP,
Switching and Routing equipment, cabling and patch panels, as well
as Long Distance Media Gateways
o All related software licenses and RTUs (right to use) purchased
and dedicated to the Clearwire solution
o Main Site OSS / IT Systems;
o All computer hardware (i.e. servers) purchased on a Dedicated
basis to support the delivery of VOIP Services (i.e. 911 and
number portability)
o All custom developed software (specifically custom API software)
purchased or developed on a Dedicated basis to support the
delivery of Clearwire VoIP Services.
o All third party software purchased on a Dedicated basis that is
required to support delivery of VoIP Services
o With respect to the transfer or assignment of accountability and
responsibility to Clearwire, as it relates to the Take Back Service
Elements set forth in this Schedule 5, BCE Nexxia shall deliver to
Clearwire relevant support documentation, including without limitation,
the following documentation:
BCE NEXXIA/CLEARWIRE MASTER SUPPLY AGREEMENT
72
o All as-built documents and diagrams
o Operations training material for the POPs, main sites and dedicated
operational support systems.
o Configuration files for network elements as well as usernames and
passwords, installation, commissioning and maintenance guidelines.
o Network operations reports for performance monitoring, availability,
trouble tickets and capacity utilization.
o All development, test and implementation project plans related to take
back elements.
o Current and detailed billing and payment status for all Take Bake
Service Elements.
o All warranties for Take Service Elements provided on a Dedicated Basis.
o All licenses software and/or equipment being part of Take Back Service
Elements.
BCE NEXXIA/CLEARWIRE MASTER SUPPLY AGREEMENT
73
SCHEDULE 6
FUTURE SERVICES
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
o [***]
[*** Confidential Treatment Requested]
BCENEXXIA/CLEARWIRE MASTER SUPPLY AGREEMENT
EXHIBIT 10.31
SIDE AGREEMENT
This Side Agreement ("Agreement") is made as of the 16th day of March,
2005 by and among Clearwire Corporation, a Delaware corporation (the "Company"),
Eagle River Holdings, LLC, a Washington limited liability company ("ERH"), and
Bell Canada, a Canadian corporation incorporated under the Canada Business
Corporations Act ("Bell"). The Company, ERH and Bell are hereinafter
collectively referred to as the "Parties".
In consideration for the purchase by Bell of shares of Class A Common
Stock ("Class A Common") of the Company pursuant to a Subscription Agreement
dated as of March 8, 2005 (the "Subscription Agreement"), the Parties agree to
the terms and obligations of this Agreement.
The Company is entering into this Agreement on its own behalf and not on
behalf of its Affiliates (the "Company Affiliates"), but any breach by any of
the Company Affiliates of any of its obligations under this Agreement will be
deemed a breach by the Company under this Agreement. Bell is entering into this
Agreement on its own behalf and not on behalf of its Affiliates (the "Bell
Affiliates"), but any breach by any of the Bell Affiliates of any of its
obligations under this Agreement will be deemed a breach by Bell under this
Agreement. ERH is entering into this Agreement on its own behalf and not on
behalf of the other McCaw Entities, but any breach by any of the McCaw Entities
of any of its obligations under this Agreement will be deemed a breach by ERH
under this Agreement. The Company Affiliates, the Bell Affiliates and the McCaw
Entities are collectively referred to herein as the "Parties Affiliates".
Capitalized terms used herein that are not otherwise defined herein shall have
the meanings assigned to them in the Stockholders Agreement (as defined below).
1. Confidentiality.
1.1 Disclosure of Terms. The Parties acknowledge that the terms and
conditions (collectively, the Transaction Terms") of this Agreement, the
Amended and Restated Stockholders Agreement dated as of March 16, 2004 (the
"Stockholders Agreement"), the Joinder to the Stockholders Agreement dated as
of the date of this Agreement, the Registration Rights Agreement dated as of
March 16, 2004 (the "Registration Rights Agreement"), the Joinder to the
Registration Rights Agreement dated as of the date of this Agreement, the
Subscription Agreement and the Master Supply Agreement, dated as of the date
of this Agreement, by and between the Company, Bell and BCE Nexxia
Corporation (the "Master Supply Agreement") and all exhibits, restatements
and amendments thereto (collectively, the "Transaction Agreements"),
including their existence, shall be considered Confidential Information (as
that term is defined below) and shall not be disclosed by the Parties or the
Parties Affiliates to any third party except in accordance with the
provisions set forth below.
1.2 Definition of Confidential Information. For the purposes of this
Agreement, "Confidential Information" means (i) any proprietary or
confidential information, including without limitation the Transaction Terms,
whether in written, oral, electronic or other tangible or intangible form,
which prior to the date hereof has been, or after the date hereof may be,
furnished by or on behalf of a Party or a Parties Affiliate (as applicable,
the "Disclosing Party") to another Party or a Parties Affiliate (as
applicable, the "Receiving Party") or its Representatives (as defined below),
relating to the business of the Disclosing Party, the investment in the
Company by Bell or the commercial relationship established under the Master
Supply Agreement, together with notes, work papers or other documents
prepared by the Receiving Party or its Representatives which contain, reflect
or are based upon such information, and (ii) the fact that such information
has been made available to the Receiving Party. Notwithstanding the
foregoing, the following will not constitute "Confidential Information" for
purposes of this Agreement:
(a) information that the Receiving Party can show by documented and
cogent evidence was known to the Receiving Party prior to the
disclosure thereof under this Agreement or the Confidentiality
Agreement (as defined below);
(b) information that is or becomes generally available to the public
other than as a result of a disclosure by the Receiving Party in
breach of this Agreement or the Confidentiality Agreement;
(c) information that is or becomes available to the Receiving Party on a
non-confidential basis from a source other than the Disclosing
Party, provided that such source is not known by the Receiving
Party, after reasonable inquiry, to be prohibited from transmitting
the Confidential Information by a contractual, legal or fiduciary
obligation to the Disclosing Party or any other person; and
(d) information that is independently acquired or developed by the
Receiving Party without reference to the Confidential Information.
1.3 Confidentiality and Restricted Use. Subject to Sections 1.4, 1.5
and 1.6, a Receiving Party agrees that:
(a) it shall not, directly or indirectly, use the Confidential
Information furnished to it by or on behalf of the Disclosing Party,
for any purpose other than in connection with the investment by Bell
in the Company or the commercial relationship established under the
Master Supply Agreement;
(b) the Confidential Information shall be kept confidential;
(c) it shall not, in any manner whatsoever, disclose or disseminate the
Confidential Information (in whole or in part) furnished to it
hereunder to any person, provided that, subject to the terms and
conditions of this Agreement, any disclosure of the Confidential
Information may be made to:
(i) any Affiliate, officer, director, employee, accountant,
auditor or attorney of the Receiving Party (collectively,
"Representatives") who needs to know such Confidential
Information in connection with the investment by Bell in the
Company, the commercial relationship established under the
Master Supply Agreement, the performance of services for the
Receiving Party or the business operations of the Receiving
Party and who has agreed or is otherwise obligated to abide by
the terms of this Section 1; and
(ii) any other person upon the prior written consent of the
Disclosing Party.
1.4 Press Releases. The Company and Bell agree that they may,
individually or collectively, and from time to time, wish to issue press
releases or make other forms of public disclosure regarding the investment by
Bell in the Company or the commercial relationship established under the
Master Supply Agreement. Subject to the following, the Company and Bell agree
that the content of any such press release or public disclosure will require
the consent of both the Company and Bell prior to any issuance or disclosure,
provided, however, that such consent will not be required if such issuance or
disclosure: (i) is required under applicable U.S. or Canadian securities laws
and stock exchange or stock market rules and regulations (provided that the
Company or Bell, as applicable, will be afforded a reasonable opportunity to
comment), (ii) is substantially the same as disclosure already approved by
each of the Company and Bell under this Section 1.4, or (iii) only discloses
(a) the fact that Bell has invested the subscribed amount in the Company, (b)
Bell's percentage ownership in the Company, and/or (c) the fact that Bell is
the Company's exclusive strategic partner in its Voice over Internet Protocol
("VoIP") service offering in the United States and its preferred VoIP
2
partner internationally, and that Bell and the Company will jointly explore
other areas of collaboration particularly in the area of value added
services, both in the U.S. and internationally. No other announcement
regarding the Parties or the Parties Affiliates in a press release,
conference, advertisement, announcement, professional or trade publication,
mass marketing materials or otherwise to the general public may be made
without each of the Company's and Bell's prior written consent.
1.5 Permitted Disclosures. Notwithstanding any of the foregoing, (a)
the Company may disclose any of the Transaction Terms to (i) its current or
bona fide prospective investors, (ii) bona fide prospective acquirers of the
Company or any of its assets, (iii) prospective recipients of the Company's
securities in current or future acquisitions by the Company, (iv) bona fide
prospective lenders, and (v) any of its employees, investment bankers,
lenders, accountants, auditors, attorneys and other advisors in connection
with any such transactions or any of the transactions described in the
Transaction Agreements, in each case only where such persons or entities are
under reasonable nondisclosure obligations; (b) Bell may disclose any of the
Transaction Terms to bona fide prospective acquirers of all or a part of
Bell's Shares who at the time of such disclosure would be permitted to
acquire such Shares in a Transfer made in accordance with the Stockholders
Agreement or this Agreement, with any required consent of the Company
obtained prior to such disclosure, and any of its employees, investment
bankers, lenders, accountants, auditors, attorneys and other advisors in
connection with any such transaction or any of the transactions described in
the Transaction Agreements, in each case only where such persons or entities
are under reasonable nondisclosure obligations; (c) the Company and Bell may
disclose (other than in a press releases or other public announcements
described in Section 1.4 above) only (i) the fact that Bell has invested the
subscribed amount in the Company, (ii) Bell's percentage ownership in the
Company, and/or (iii) the fact that Bell is the Company's exclusive strategic
partner in its VoIP service offering in the United States and its preferred
VoIP partner internationally, and that Bell and the Company will jointly
explore other areas of collaboration particularly in the area of value added
services, both in the U.S. and internationally; and (d) the Company and Bell
shall have the right to disclose to third parties any information regarding
the Transaction Terms disclosed in a press release or other public
announcement made in compliance with Section 1.4. Notwithstanding anything
else in this Agreement, including the immediately preceding sentence, none of
the terms and conditions of the Master Supply Agreement, the commercial
relationship established thereunder and any Confidential Information relating
thereto can be disclosed without Bell's prior written consent; provided,
that, the redacted version of the Master Supply Agreement attached hereto as
Schedule 1.5 (the "Redacted MSA") may be disclosed by the Company to any of
the persons or entities set forth in clause (a) of the preceding sentence, in
each case only where such persons or entities are under reasonable
nondisclosure obligations; provided further, that if the Redacted MSA fails
to contain terms of the Master Supply Agreement that the Company, in the
reasonable opinion of the Company's legal counsel, is required to disclose to
such persons or entities under applicable law, the Company may disclose such
terms with the prior written consent of Bell, acting reasonably, to such
persons or entities that are under reasonable nondisclosure obligations after
having provided Bell with reasonable advance notice (and reasonable
opportunity to comment) setting forth in sufficient detail the nature of the
requirement under applicable law and a copy of the document containing such
terms; provided further, that the Company may incorporate, to the extent
reasonable and necessary, the economic terms of the Master Supply Agreement
into financial models prepared by the Company for such persons or entities
and deliver such financial models to such persons or entities that are under
reasonable nondisclosure obligations.
1.6 Compelled Disclosure. In the event that (i) any action, suit,
proceeding or claim is brought or asserted against the Receiving Party or any
of its Representatives seeking to compel the disclosure of any of the
Confidential Information, or (ii) the Receiving Party otherwise becomes
legally compelled (including, without limitation, pursuant to U.S. federal
and state and Canadian securities laws and/or other applicable regulatory
laws) or compelled
3
pursuant to the rules of any stock exchange or market on which the Company's
or Bell's securities are listed, in the reasonable opinion of the Receiving
Party's legal counsel, to disclose any of the Confidential Information, the
Receiving Party shall provide, to the extent legally permitted to do so, the
Disclosing Party with prompt written notice of such action, suit, proceeding,
claim or other event of legal compulsion so that the Disclosing Party may
seek a protective order or seek confidential treatment of such Confidential
Information. In the event that such protective order or confidential
treatment is not obtained by the Disclosing Party for any reason, the
Receiving Party agrees to furnish only that portion of the Confidential
Information which, in the reasonable opinion of the Receiving Party's legal
counsel, is required. To the extent legally permitted to do so, the Receiving
Party will permit the Disclosing Party a reasonable opportunity to review and
comment on the form and content of any Confidential Information that will be
disclosed pursuant to this Section; provided, that, the Receiving Party shall
not be required to make any changes to the form and content of any
Confidential Information that will be disclosed pursuant to this Section
requested by the Disclosing Party based on such review or comments. In any
event, the Receiving Party will not oppose action by the Disclosing Party to
obtain an appropriate protective order or other reliable assurance that
confidential treatment will be accorded to the Confidential Information.
Notwithstanding the foregoing, to the extent required to be disclosed by the
Company under 47 CFR 1.2112(a), the number of shares held by Bell and the
percentage interest of Bell in the Company may be disclosed by the Company
without the requirement for the consent of Bell or procedures set forth in
this Section 1.6.
1.7 Other Confidentiality Agreements. With respect to any
information exchanged between the Parties and/or the Parties Affiliates that
is Confidential Information under this Section 1, this Section 1 shall
supersede and replace that certain Confidentiality Agreement, dated November
29, 2004 (the "Confidentiality Agreement") executed among the Company, NR
Communications, LLC and Bell. Additionally, the Company and ERH agree that
neither of them shall enforce, and hereby expressly waive, the
confidentiality terms set forth in Section 13.15 of the Stockholders
Agreement nor any similar confidentiality obligation or restriction contained
in any of the Transaction Agreements (except for this Agreement), against
Bell. Notwithstanding the foregoing, the confidentiality provisions set forth
in the Master Supply Agreement shall be in addition to, and shall not be
limited or modified in any way by, the terms of this Agreement; provided,
that, nothing in the Master Supply Agreement shall have the effect of
preventing or otherwise limiting the disclosures of Confidential Information
permitted under Sections 1.4, 1.5 and 1.6 of this Agreement.
2. Right to Board Seat
2.1 Nomination of Bell Director. In connection with each election of
directors of the Company, unless Bell otherwise instructs the Company in
writing, the Company shall nominate the then Chief Executive Officer ("CEO")
of BCE Inc. ("Bell Director") to serve as a director of the Company,
provided, however, that if the directors of the Company reasonably determine
that (a) compliance with the terms of this Section 2.1 is prohibited in the
exercise of their fiduciary duties, or (b) the Company reasonably determines
that compliance with the terms of this Section 2.1 is prohibited under (i)
applicable securities laws, (ii) stock exchange or stock market rules and
regulations or (iii) Delaware law, then the Company will so notify Bell and,
if so requested by Bell, following a determination under (b) above only, will
provide an opinion from the Company's legal counsel confirming that they or
it are so prohibited and the Company will, for and only for the duration of
such prohibition, be excused from complying with the terms of this Section
2.1.
2.2 Election of Director. In any election of directors of the
Company, each McCaw Entity (including without limitation ERH) shall vote all
of its Shares in favor of the election of the Bell Director, it being
understood that the initial Bell Director, to be elected immediately
following the execution and delivery of this Agreement, shall be Michael J.
Sabia, provided, however, that if the Company reasonably determines that
compliance with the terms of this
4
Section 2.2 is prohibited under (i) applicable securities laws or (ii) stock
exchange or stock market rules and regulations, then the Company will so
notify Bell and, if so requested by Bell, will provide an opinion from the
Company's legal counsel confirming that they or it are so prohibited and the
McCaw Entities will, for and only for the duration of such prohibition, be
excused from complying with the terms of this Section 2.2.
2.3 Removal and Replacement of Bell Director. Each McCaw Entity
(including without limitation ERH) agrees not to vote to remove the Bell
Director unless he or she ceases to be the CEO of BCE Inc. In the event that
the Bell Director ceases to serve as a member of the Board of Directors of
the Company ("Board") during his or her term in office as a result of he or
she ceasing to be the CEO of BCE Inc., and for so long as Bell has the right
to nominate the Bell Director pursuant to Sections 2.1 or 2.2, the resulting
vacancy on the Board shall be filled by the new CEO of BCE Inc. as the Bell
Director, upon notice of Bell to the Company to that effect. Each McCaw
Entity (including without limitation ERH) agrees to use commercially
reasonable efforts and take all action within its power, including, but not
limited to, the voting of Voting Shares, to cause the removal of the Bell
Director as provided above, and to cause the election of the new CEO of BCE
Inc. as the Bell Director as soon as possible after receipt of notice of Bell
to the Company to that effect. If there is a vacancy in the Bell Director
seat for any reason and Bell does not notify the Company as provided above
that such vacancy is to be filled by the CEO of BCE Inc. on or before the
date which is 90 days after the date such seat first becomes vacant, the
rights and obligations of the Company, Bell and the McCaw Entities (including
without limitation ERH) under this Section 2 shall terminate and be of no
further force or effect.
2.4 Termination of Right to Board Seat. The effectiveness of this
Section 2 shall be terminated upon the earliest to occur of (i) the date that
Bell and the Bell Affiliates cease to own, either directly or indirectly, in
the aggregate, Shares representing at least 5% of the Voting Shares of the
Company, (ii) the date that Bell and the Bell Affiliates cease to own, either
directly or indirectly, in the aggregate, Shares representing at least 50% of
the Shares of the Company purchased under the Subscription Agreement (as
adjusted for any Recapitalization Event (as defined below)), or (iii) the
date upon which any competitor of the Company or the Company Affiliates
acquires control of Bell or BCE Inc. For greater certainty, the effectiveness
of this Section 2 shall not terminate upon the closing of the Company's IPO.
3. Observation Rights.
***
5
***
4. Disclaimer of Corporate Opportunity Doctrine. The Company acknowledges
that Bell and the Bell Affiliates will likely have, from time to time,
information that may be of interest to the Company ("Business Information")
regarding a wide variety of matters. The Company, as a material part of the
consideration for this Agreement agrees that Bell, the Bell Affiliates and the
Observers shall have no duty to disclose any Business Information to the Company
or permit the Company to participate in any projects, business or investments
based on any Business Information, or to otherwise take advantage of any
opportunity that may be of interest to the Company if it were aware of such
Business Information, and hereby waives, to the extent permitted by law, any
claim based on the corporate opportunity doctrine or otherwise that could limit
Bell's or Bell Affiliates' ability to pursue opportunities based on such
Business Information or that would require Bell, the Bell Affiliates or the
Observers to disclose any such Business Information to the Company or offer any
opportunity relating thereto to the Company. The Company agrees that the Bell
Director shall have no obligations to the Company, including obligations or
duties to disclose any Business Information, other than the obligations and
duties imposed on the Bell Director as a director of the Company under Delaware
law.
5. Restrictions on Exercise of Drag Along Right Against Bell.
5.1 Notwithstanding Section 6 of the Stockholders Agreement, the
Company and the McCaw Entities (including without limitation ERH) agree and
acknowledge that Bell shall have no obligation to take any action specified
under Section 6 of the Stockholders Agreement in connection with the exercise
of the Drag Along Right or any event giving rise to a Drag Along Right unless
each of the following conditions is satisfied:
(i) The Selling McCaw Entity shall be required to commit to a Transfer
in a bona fide arm's length transaction with a Person that is not an
Affiliate of the McCaw Entities (including without limitation ERH).
(ii) The only representations, warranties or covenants that Bell shall be
required to make in connection with a Transfer giving rise to a Drag
Along Right (such Transfer, a "Company Sale") are representations
and warranties with respect to its own ownership of the Company's
securities to be sold by it and its ability to convey title thereto
free and clear of liens, encumbrances or adverse claims and
reasonable covenants regarding confidentiality, publicity and
similar matters.
(iii) The liability of Bell with respect to any representation and
warranty or covenant made by the Company in connection with a
Company Sale shall be several and not joint with any other person.
Such liability shall be limited to Bell's pro rata share of the
aggregate consideration payable to all stockholders of the Company
in the Company Sale, which may be held in escrow for a period not to
exceed 12 months from the closing date of the Company Sale.
6
(iv) Bell shall not be required to amend, extend or terminate any
contractual or other relationship with the Company, the acquirer or
their respective Affiliates.
(v) Bell shall not be required to agree to any covenant not to compete
or covenant not to solicit customers, employees or suppliers of any
party to the Company Sale; provided, that, for the avoidance of
doubt, any such obligations under the Master Supply Agreement shall
survive the Company Sale, unless the Master Supply Agreement is
terminated according to its terms.
5.2 Bell will not be bound by the Drag Along Right following any
assignment of the Drag Along Right (by operation of law or otherwise) by any
McCaw Entity (including without limitation ERH) unless the Person to whom
such right is assigned shall have executed a written agreement, substantially
in the form of this Agreement, pursuant to which such Person becomes a party
to this Agreement and agrees to be bound by all the provisions hereof.
5.3 Bell will not be bound by the Drag Along Right if any McCaw
Entity (including without limitation ERH) takes or consents to any action
that results in the ability of any Person not a party to this Agreement to
exercise the Drag Along Right against Bell, unless such Person shall have
executed a written agreement, substantially in the form of this Agreement,
pursuant to which such Person becomes a party to this Agreement and agrees to
be bound by all the provisions hereof.
6. Representations, Warranties and Covenants.
6.1 Representations and Warranties of the Company and ERH. Each of
the Company and ERH represent and warrant, severally but not jointly, as
follows:
(a) Such entity is duly organized and existing under the laws of the
jurisdiction under which such entity is organized and is in good
standing under such laws. Such entity has requisite power and
authority to own and operate its properties and assets, and to carry
on its business as presently conducted and as proposed to be
conducted.
(b) Such entity has all requisite power and authority to execute and
deliver this Agreement and to carry out and perform its obligations
under the terms of this Agreement.
(c) All action on the part of such entity (and its officers, directors,
stockholders, managers or members, as applicable) necessary for the
authorization, execution, delivery and performance by such entity,
respectively, of this Agreement have been taken on or prior to the
date hereof. This Agreement, when executed and delivered by such
entity shall constitute the valid and binding obligations of such
entity, enforceable in accordance with its terms, subject to laws of
general application relating to bankruptcy, insolvency and the
relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies.
6.2 Additional Representation and Warranty of ERH. ERH represents
and warrants that, as of the date hereof, ERH owns the number of shares of
the Company listed on Schedule 6.2 attached hereto, free and clear of liens
or encumbrances, and has not, prior to or on the date of this Agreement,
executed or delivered any proxy or entered into any other voting agreement or
similar arrangement other than the Stockholders Agreement and this Agreement.
As of the date hereof, no other McCaw Entity owns any voting or economic
interest in the Company.
6.3 Transaction Documents. For so long as the Stockholders Agreement
remains in effect, in addition to, and not in substitution for, any
information or related rights granted in the Transaction Documents or
otherwise, the Company agrees to provide Bell with copies of
7
current versions of the Transaction Documents (fully executed) and the
Company's Certificate of Incorporation (file-stamped), in each case,
reflecting all amendments and restatements thereto through such date of
request, promptly following a request by Bell, if any of such Transaction
Documents or Certificate of Incorporation have been amended since the Company
last provided copies thereof.
8
***
9
***
8. Prohibitions and Restrictions on Certain Sales of Company Securities.
8.1 Prohibition on Certain Sales of Company Securities to McCaw
Entities. Notwithstanding anything to the contrary in the Stockholders
Agreement the Company shall not issue or sell any Shares of any class of
capital stock of the Company or any other equity securities of the Company,
or any securities or instruments convertible into or exchangeable or
exercisable for, directly or indirectly, any Shares or any other equity
securities of the Company (collectively, "Company Securities"), to any McCaw
Entity (including without limitation ERH) for a price per share (calculated
on an as-if converted into or exercised or exchanged for Class A Shares of
the Company basis) less than the Original Issue Price (as proportionately
adjusted for any Recapitalization Event), except pursuant to (i) exercises by
the McCaw Entities of their preemptive rights pursuant to Section 1 of the
Stockholders Agreement in circumstances where Bell is also entitled to
exercise those rights, and exercises by ERH or any other McCaw Entities of
its preemptive rights pursuant to Section 11 of this Agreement in
circumstances where Bell is also entitled to exercise those rights, and (ii)
any exercises or conversion by any McCaw Entities of any Options or
Convertible Securities held by the McCaw Entities as of the date hereof.
8.2 Prohibition on Certain Sales of Company Securities to
Competitors of Bell. Notwithstanding anything to the contrary in the
Stockholders Agreement, the Company shall not issue, sell, assign, dispose
of, pledge or otherwise Transfer any Company Securities or any debt of the
Company to any Canadian competitor of Bell set forth on Schedule 8.2 attached
hereto or any Affiliate, assignee or successor of any Canadian competitor of
Bell set forth on Schedule 8.2 (each a "Bell Competitor*), as such Schedule
may be updated from time to time upon mutual agreement of the Parties.
Additionally, the Company shall not borrow any capital from any Bell
Competitor. Notwithstanding the foregoing, the Company may sell any of its
securities to a Bell Competitor in a public offering registered under the
Act, provided that the Company cannot solicit any Bell Competitor. The
effectiveness of this Section 8.2 shall be terminated upon the date that Bell
and the Bell Affiliates cease to own, either directly or indirectly, in the
aggregate, Shares representing at least 50% of the Shares of the Company
purchased under the Subscription Agreement (as adjusted for any
Recapitalization Event (as defined below)).
10
8.3 Right of First Refusal with Respect to Sales of Company
Securities by any McCaw Entity to Bell Competitors. Notwithstanding anything
to the contrary in the Stockholders Agreement, with respect to any Transfer
by any McCaw Entity (including without limitation ERH) of any of its Company
Securities, or securities of ERH (or any other McCaw Entities that owns,
directly or indirectly, more than five percent (5%) of the outstanding
Company Securities or, if less than five percent (5%), represents its primary
asset) ("McCaw Securities"), to a Bell Competitor, Bell shall have, and the
McCaw Entities hereby irrevocably grant to Bell, the rights (the "Competitor
Right of First Refusal") described in this Section 8.3.
(a) Any McCaw Entity (the "Selling McCaw Entity") that desires to
Transfer any of its Company Securities or McCaw Securities in
compliance with this Section 8.3 must first receive a bona fide,
written offer ("Competitor Offer") from the applicable Bell
Competitor for the acquisition of any or all of the Selling McCaw
Entity's Company Securities or McCaw Securities. Upon receipt and
acceptance of a Competitor Offer that the McCaw Entity intends to
accept, the Selling McCaw Entity shall give written notice (the
"Competitor ROFR Notice") to Bell stating that the Selling McCaw
Entity intends to Transfer Company Securities or McCaw Securities to
a Bell Competitor. The Competitor ROFR Notice shall identify the
Bell Competitor, specify the type and number of Company Securities
or McCaw Securities to be Transferred to the Bell Competitor (the
"Competitor ROFR Securities"), specify the aggregate and per share
price (in cash or other consideration) (the "Competitor Sale Price")
that the Bell Competitor has agreed to pay for the Competitor ROFR
Securities, and enclose an accurate summary of all other material
terms and conditions of the proposed Transfer.
(b) The Competitor ROFR Notice shall constitute the Selling McCaw
Entity's binding offer to sell the Competitor ROFR Securities to
Bell on the terms set forth in the Competitor ROFR Notice and this
Agreement. Bell shall have 10 business days after delivery of the
Competitor ROFR Notice (the "Competitor ROFR Exercise Period") to
exercise its right to purchase all, but not less than all of, the
Competitor ROFR Securities at the Competitor Sale Price and upon the
other terms and conditions set forth in the Competitor ROFR Notice
by written notice to the Selling McCaw Entity within the Competitor
ROFR Exercise Period, provided that such written notice may provide
that the exercise of the Competitor Right of First Refusal by Bell
is subject to obtaining the required regulatory approvals, for which
Bell is using commercially reasonable efforts to satisfy the
requirements as soon as reasonably practicable.
(c) Failure to deliver such notice within the Competitor ROFR Exercise
Period shall constitute a waiver of the Competitor Right of First
Refusal with respect to the Competitor ROFR Securities, and the
Selling McCaw Entity shall have ninety (90) business days thereafter
to complete the Transfer of the Competitor ROFR Securities to the
Bell Competitor on substantially the same terms set forth in the
Competitor Offer; otherwise, the Competitor ROFR Securities
thereupon be again subject to the right of first refusal described
in this Section 8.3 before any Transfer can be made.
(d) Delivery of a notice exercising the Competitor Right of First
Refusal shall create a binding contract between the Selling McCaw
Entity and Bell for the purchase and sale of the Competitor ROFR
Securities at the Competitor Sale Price and on the terms and
conditions in the Competitor Offer, as described in the summary
provided in the Competitor ROFR Notice, and this Section 8.3. In
that event, Bell shall deliver the Competitor Sale Price for the
Competitor ROFR Securities, in immediately available funds, to the
Selling McCaw Entity to effectuate the Transfer of the Competitor
ROFR Securities within five business days after the end of the
Competitor ROFR Exercise Period or the satisfaction of the
conditions to closing contained in the Competitor ROFR Notice;
provided that Bell is using commercially
11
reasonable efforts to cause such condition to be satisfied as soon
as reasonably practicable. The Selling McCaw Entity shall effectuate
the Transfer of the Competitor ROFR Securities by promptly
delivering to Bell (and/or the applicable Affiliate of Bell) one or
more certificates, properly endorsed for transfer, that represent
the Competitor ROFR Securities, together with stock powers and such
other closing documentation that Bell (and/or the applicable
Affiliate of Bell) may reasonably request. The Company and the McCaw
Entities (including without limitation ERH) agree to consent as
required under the Stockholders Agreement to any Transfer by a McCaw
Entity to Bell or its Affiliates under this Section 8.3.
9. Change of Control Not a Repurchase Event. The Company and the McCaw
Entities (including without limitation ERH) agree to consent under Section 7 of
the Stockholders Agreement to a Change of Control of BCE Inc. or Bell so that it
does not constitute a Repurchase Event with respect to any Stock held by Bell or
the Bell Affiliates.
10. Permitted Transfers. The Company and the McCaw Entities (including without
limitation ERH) agree to consent to any Transfers of any or all of Bell's and
the Bell Affiliates' Company Securities between or among Bell and/or the Bell
Affiliates who qualify as Qualified Transferees and who agree in writing to be
bound by the terms of the Stockholders Agreement and this Agreement, so that
such Transfers qualify as Permitted Transfers; provided, that the maximum number
of transferees permitted under this Section 10 shall not exceed five (5).
11. ***
12
***
***
13. Definition of Transfer. Notwithstanding anything to the contrary in this
Agreement or the Stockholders Agreement, the definition of Transfer for all
purposes of this Agreement shall be the definition of Transfer set forth in
Section 4.01 of the Stockholders Agreement without regard to Section 4.03 of the
Stockholders Agreement.
14. Termination of Restrictions on Transfer in Stockholders Agreement.
14.1 Company Default under Master Supply Agreement. Notwithstanding
anything to the contrary in the Stockholders Agreement, if the Company
terminates the Master Supply Agreement for any reason (other than due to a
breach of or default under the Master Supply Agreement by Bell) or breaches
or is in default under the Master Supply Agreement and such breach or default
(i) is not curable or, if curable, is not cured in compliance with and within
the time period applicable under the Master Supply Agreement and (ii) would
give Bell a basis for terminating the Master Supply Agreement (a "Company
Breach"), none of the Company, the Company Affiliates and the McCaw Entities
(including without limitation ERH) will enforce the provisions of Sections 4
and 5 of the Stockholders Agreement with respect to any Transfer of Company
Securities by Bell and the Bell Affiliates, and hereby expressly consent
thereto, except as otherwise provided in Section 14.3 below; provided, that
(a) the transferee agree to become bound by the terms of the Stockholders
Agreement prior to such Transfer and (b) for any Transfer to which this
Section 14.1 applies as the result of a Company Breach, Bell or the Bell
Affiliate making such Transfer, provides (x) prior written notice to the
Company of the existence of a Company Breach, including the grounds upon
which such claim of a Company Breach is based, (y) if curable under the
Master Supply Agreement, an opportunity to cure such Company Breach as
provided in the Master Supply Agreement, and (z) prior written notice of the
intent to Transfer Shares if such Company Breach is not cure during the cure
period, if any.
13
14.2 Sale to VoIP Service Provider. Notwithstanding anything to the
contrary in the Stockholders Agreement, if any Person that as a material part
of its activities in the United States markets, provides or supports Voice
over Internet Protocol services, and/or any Affiliate(s) of such a Person,
acquires or holds a majority of the outstanding voting power of the Company
or ERH, none of the Company, the Company Affiliates and the McCaw Entities
(including without limitation ERH) will enforce the provisions of Sections 4
and 5 of the Stockholders Agreement with respect to any Transfer of Company
Securities by Bell and the Bell Affiliates, and hereby expressly consent
thereto, except as otherwise provided in Section 14.3 below; provided, that
the transferee agree to become bound by the terms of the Stockholders
Agreement prior to such Transfer.
14.3 Sales by Bell to Company Competitors. Notwithstanding Sections
14.1 or 14.2 of this Agreement, if Bell and/or the Bell Affiliates desire to
Transfer all or any part of their Company Securities to any person or entity
a significant portion of its business consists (or is expected to consist) of
the provision of fixed wireless broadband services or equipment of the type
delivered by the Company in the United States, then Section 5.01 of the
Stockholders Agreement shall apply to such Transfer.
15. Notice of Certain Potential Transactions. So long as Bell and the Bell
Affiliates own, in the aggregate, directly or indirectly, Company Securities
representing at least 5% of the Voting Shares of the Company, (A) the McCaw
Entities shall provide prompt written notice to Bell each time any of the
following occurs: (i) any of the McCaw Entities receives an offer from, or
enters into material or substantive discussions with, any entity regarding a
possible transaction that, if consummated, would permit such McCaw Entity to
exercise its Drag Along Right on Bell's Shares, but with respect to offers, only
if and at such time as such McCaw Entity enters into material or substantive
discussions with the entity, (ii) the CEO or President of any one of the McCaw
Entities authorizes or intends to seek authority from the board of directors of
any McCaw Entity to authorize any of the McCaw Entities to enter into a sale
process for the purposes of completing a transaction that, if consummated, would
permit any such McCaw Entity to exercise its Drag Along Right on Bell's Shares,
and (B) the Company shall provide prompt written notice to Bell each time any of
the following occurs: (i) the Company receives an offer from, or enters into
material or substantive discussions with, any entity regarding a possible
transaction that, if consummated, would either result in a Change of Control of
the Company or permit any one of the McCaw Entities to exercise its Drag Along
Right on Bell's Shares, but with respect to offers, only if and at such time as
the Company enters into material or substantive discussions with the entity,
(ii) the CEO or President of the Company authorizes or intends to seek authority
from the Board to authorize the Company to enter into a sale process for the
purposes of completing a transaction that, if consummated, would either result
in a Change of Control of the Company or permit any of the McCaw Entities to
exercise its Drag Along Right on Bell's Shares. Following any of notifications
as provided above, subject to the limitations under any confidentiality
agreements entered into with third parties, the Company and/or the McCaw
Entities, as applicable, will provide Bell with a reasonable opportunity to
engage in the process, at Bell's option; provided, that, the foregoing shall not
require the Company and/or the McCaw Entities to delay the acceptance of any
offer beyond any deadline associated with such offer or to otherwise take any
action that would materially prejudice the ability of the Company and/or the
McCaw Entities to enter into the transaction that is the subject of a
notification under this Section 15..
16. Limitations with Respect to McCaw Entities. Commencing on the date of this
Agreement and continuing thereafter for so long as the McCaw Entities hold a
majority of the voting power of the Company, no McCaw Entity (including without
limitation ERH and Craig O. McCaw, but excluding ICO Global Communications and
the Company) will acquire more than a ten percent (10%) passive equity interest
in any company (excluding ICO Global Communications and the Company) for whom a
significant portion of its business consists (or is expected to consist) of the
provision of fixed wireless broadband services or equipment of the type
delivered by the Company in the United States, unless the applicable McCaw
Entity has first made the opportunity
14
available to the Company and the Company's independent directors have decided to
direct the Company not to pursue the opportunity.
17. Miscellaneous.
17.1 Term and Termination. The term of this Agreement shall begin on
the date of this Agreement and shall terminate on the latest to occur of the
following: (i) the Master Supply Agreement terminates, or (ii) Bell and the
Bell Affiliates own no Shares of the Company.
17.2 Successors and Assignees. Except as otherwise provided in this
Agreement, the terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
Parties (including any Permitted Transferees of all or substantially all of
Bell's or ERH's Shares). As a closing condition to any Transfer of Shares by
any Party to this Agreement (including, without limitation, any McCaw
Entity), the transferee of such Shares shall agree in writing to be bound by
this Agreement and the Stockholders Agreement. In addition, the Company and
ERH agree that as a condition precedent of any McCaw Entity becoming the
holder of any Share, it will obtain that such McCaw Entity agrees to be bound
by this Agreement and the Stockholders Agreement, and Bell agrees that as a
condition precedent of any Bell Affiliate becoming the holder of any Share,
it will obtain that such Bell Affiliate agrees to be bound by this Agreement
and the Stockholders Agreement.
17.3 Notices. All notices, requests, demands, instructions, documents
and other communications to be given under this Agreement to any party shall
be in writing and sent to the address/fax number set forth on the signature
page below (provided that any party may at any time change its address for
notice or other such information by giving written notice thereof in writing
to the other parties hereto).
17.4 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
17.5 Amendment and Waiver. This Agreement may not be amended or
modified without the written consent of the Parties. No waiver of any
provision of this Agreement shall be binding unless and until set forth
expressly in writing and signed by the waiving party. The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any preceding or succeeding breach of the same or
any other term or provision, or a waiver of any contemporaneous breach of any
other term or provision, or a continuing waiver of the same or any other term
or provision. Notwithstanding anything to the contrary in this Agreement or
the Stockholders Agreement, the Stockholders Agreement shall not be amended
or modified without the prior written consent of Bell and no waiver of any
term or provision of the Stockholders Agreement shall be effective against
Bell without the prior written consent of Bell.
17.6 Specific Performance. The Parties acknowledge that it will be
impossible to measure in money the damage to them caused by any failure to
comply with the covenants set forth in this Agreement, that each such
covenant is material, and that in the event of any such failure, the injured
party will not have an adequate remedy at law or in damages. Therefore, the
Parties consent to the issuance of an injunction or the enforcement of other
equitable remedies against them at the suit of the other, without bond or
other security, to compel performance of all of the terms of this Agreement,
and waive the defense of the availability of relief in damages.
17.7 Severability. If any provision of this Agreement shall be declared
void or unenforceable by any judicial or administrative authority, the
validity of any other provision and of the entire Agreement shall not be
affected thereby.
15
17.8 Enforceability; Conflicts. In all events, the terms and provisions
of this Agreement shall be enforceable notwithstanding any conflicting term
or provision set forth in any of the other Transaction Agreements. In the
event of any conflict between any term or provision of this Agreement and any
term or provision set forth in any of the other Transaction Agreements, such
term or provision of this Agreement shall prevail over such term or provision
set forth in any of the other Transaction Agreements.
17.9 No Impairment. Each of the Parties hereto agree not to, by
amendment of the Company's Certificate of Incorporation or Bylaws or through
any reorganization, recapitalization, transfer of assets, consolidation,
merger, dissolution, issue, sale or transfer of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms of this Agreement, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights granted herein
against impairment.
17.10 Further Assurances. Each of the Parties hereto shall execute and
deliver all additional documents and instruments and shall do any and all
acts and things reasonably requested in connection with the performance of
the obligations undertaken in the Agreement or otherwise to effectuate in
good faith the intent of the Parties.
17.11 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
17.12 Entire Agreement. This Agreement, the Transaction Agreements and
the documents referred to herein and therein constitute the entire agreement
among the Parties with respect to the subject matter hereof and thereof and
no Party shall be liable or bound to any other Party in any manner by any
warranties, representations, covenants or agreements except as specifically
set forth herein or therein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
16
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
CLEARWIRE CORPORATION Address:
By: /s/ Ben Wolff 5808 Lake Washington Boulevard NE, Suite
----------------------------- 300
Name: Ben Wolff Kirkland, WA 98033
Title: Executive Vice President Attention: Vice President of Legal Affairs
EAGLE RIVER HOLDINGS, LLC Address:
(f/k/a COM Holdings, LLC)
By: Eagle River, Inc., a Washington
Corporation, its Manager
By: /s/ Ben Wolff
----------------------------
Name: Ben Wolff
Title: President
Agreed and Accepted:
BELL CANADA Address:
1000, De La Gauchetiere Street West,
By: /s/ J. Trevor Anderson Suite 3700
----------------------------- Montreal, Quebec
Name: J. Trevor Anderson H3B4Y7
Title: SVP Technology Attention: Chief Legal Officer, Bell Canada
With copy by e-mail to:
scott.thomson@bell.ca and
michel.lalande@bell.ca
SIGNATURE PAGE TO
SIDE AGREEMENT BETWEEN
BELL CANADA, CLEARWIRE CORPORATION,
AND EAGLE RIVER HOLDINGS, LLC
EXHIBIT 10.39
VENDOR AGREEMENT
Effective Date: September 27, 2005.
THIS VENDOR AGREEMENT (the "Agreement") is made and entered into by and between
Best Buy Purchasing LLC, a Minnesota corporation ("Best Buy"), having its
principal office at 7601 Penn Avenue South, Richfield, Minnesota, 55423, U.S.A.,
and Clearwire LLC, a Nevada limited liability company ("Vendor"), having its
principal office at 5808 Lake Washington Blvd. NE #300, Kirkland, WA 98033.
WHEREAS, This Agreement is intended to set forth the terms and conditions
applicable to the order, shipment and delivery of certain equipment by Vendor to
Best Buy and distribution of such equipment by Best Buy and its designated
affiliates. The parties agree that certain terms of this Agreement are only
applicable to the purchase of goods from Vendor and the marketing and resale of
such goods by Best Buy should the parties at some point agree to such purchase
and resale relationship.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereby agree as follows:
1. LICENSE TO DISTRIBUTE EQUIPMENT
1.1 Appointment of Authorized Dealer. Vendor appoints Best Buy and each of its
affiliates designated to Vendor in writing (collectively, "Dealer") as an
authorized dealer to provide for the Marketing and sale of Vendor Services and
the sale or lease of Equipment through Dealer's Sales Channels in accordance
with the terms and conditions set forth in the Subscription Service Addendum
attached hereto and incorporated herein by this reference (the "SSA").
Capitalized terms not otherwise defined in this Agreement shall have the meaning
ascribed to such terms in the SSA. To the extent of any inconsistency between
the terms of this Agreement and those in the SSA related to the marketing and
sale of Vendor Services, the terms of the SSA shall control. The designated
affiliates will include Best Buy Stores, L.P., and BestBuy.com, Inc., or as
updated from time to time upon notice to and consent of Vendor ("Affiliates").
1.2 Territory. Vendor grants Dealer a non-exclusive license to distribute the
Services and Equipment (collectively "Products"), to Members in the United
States (and its territories) or other geographic areas as mutually agreed in a
writing signed by Vendor and Dealer from time to time through Dealer's Sales
Channels and Selected Dealer Stores all in accordance with the SSA.
2. PRICING AND TAXES
2.1 Prices. Vendor will sell the Products to Dealer at the prices then in effect
on its current price list, as may be changed from time to time, or as otherwise
agreed between the parties. [***] Vendor's prices do not include sales, use,
excise, or similar taxes.
2.2 Taxes. The amount of any valid present or future sales, use, excise, or
other similar tax that is attributable to purchase or delivery of the Products
will be paid by Dealer; or in lieu thereof, Dealer will provide Vendor with a
tax exemption certificate acceptable to the taxing authorities.
2.3 No Minimum Purchase Requirement. Dealer shall have no obligation or
liability to purchase or distribute all or any particular volume of any type of
Products or parts from the Vendor; and (ii) Dealer does not guarantee, and is
not obligated to issue, any particular number or type of purchase orders with
the Vendor. Dealer shall not be liable to the Vendor for loss of business or
revenues, or excess inventory, if Dealer's distribution of the Products does not
meet the Vendor's expectations.
3. PURCHASE ORDERS
Orders for Vendor's Products will be initiated by Dealer no later than ten (10)
days before the shipment date by electronic purchase orders submitted by Dealer
and will govern the shipment and delivery of Products upon acceptance by Vendor,
provided that Dealer reserves the right to cancel a purchase order at any time
prior to the shipment date. Vendor will be deemed to have accepted a purchase
order if Vendor fails to reject the purchase order by notifying Dealer within
forty-eight (48) hours of its receipt thereof, not including weekends and
nationally recognized holidays. Dealer will use commercially reasonable efforts
to provide Vendor with periodic forecasts of Dealer's anticipated inventory
requirements for Product.
4. PAYMENT
4.1 Invoices. All Vendor invoices or other evidence of Dealer's orders will be
sent via Electronic Data Interchange (EDI) to Dealer no earlier than the Product
shipment date in connection with each accepted and fulfilled purchase order.
Dealer will pay amounts due in each such invoice pursuant to the credit terms
established by the parties, which will be set forth in the SSA attached as an
addendum hereto, as further described in Section 10. The designated credit term
will commence on the later of (a) the date Dealer receives Products at the FOB
point specified in Section 5, or (b) the date Dealer is authorized to resell the
applicable Products, i.e. the "street date." Payment will not be considered late
by Vendor for purposes of calculating early payment discounts if payment is sent
by Dealer within one (1) week of the due
[*** Confidential Treatment Requested]
date or if payment is delayed because of an EDI communication failure or due to
an indebtedness of Vendor to Dealer. No interest or other charges will be
payable by Dealer upon this Agreement, or any resulting invoice, whether claimed
by reason of late payment or otherwise. All transactions will be valued and paid
in United States currency.
4.2 [***]
4.3 Statement of Account. From time to time upon request by Dealer, Vendor will
provide a complete statement of account that will include but not be limited to
unpaid invoices and disputed deductions. Such statement of account will also
disclose all credit memos issued and outstanding. The statement of account will
be forwarded by electronic mail in spreadsheet format or by regular mail per
Dealer's instructions. Statements for merchandising/inventory accounts will be
separate from any statement of account for parts purchased by Dealer for Product
service and out-of-warranty repairs.
4.4 Debit Balances. If Vendor is indebted to Dealer but there is no outstanding
balance due to Vendor, Vendor will pay the amount due to Dealer via check or
wire transfer in full within thirty (30) days of receipt of notification thereof
from Dealer. Dealer reserves the right to charge Vendor interest at the rate of
1.5% per month for any debit balance not paid within such time. If the amount in
question is disputed, the parties agree to work in good faith to reconcile the
matter so that payment to Dealer of any undisputed amount will be made within
sixty (60) days of Dealer's original notice to Vendor. In no event will Dealer
be obligated to take a credit against future purchases.
5. SHIPPING
5.1 Shipping Terms: The parties hereby agree to the ground shipment terms
selected below:
[X] FOB Destination, Freight Prepaid by Vendor. Vendor will be responsible for
carrier selection and routing instructions. Vendor will pay all costs and
expenses incurred prior to the FOB point, including without limitation,
insurance, freight, and any notification, sort and segregation charges.
Unless otherwise agreed, title remains with Vendor and Title risk of loss
passes to Dealer upon delivery at the destination specified by Dealer,
which may include but is not limited to its stores, distribution centers,
and third-party fulfillment providers. Vendor is encouraged to utilize
Dealer's preferred carriers to improve on-time performance, minimize
transit times and reduce the need for expedited shipments.
[ ] FOB Origin, Freight Collect and Allowed. Dealer will be responsible for
carrier selection, routing instructions and pick-up appointments at
Vendor's domestic origin facility. In addition, Dealer is responsible for
carrier freight payments, submitting freight claims for loss and damage,
scheduling appointments at destination, and tracking and tracing freight
in transit. Title and risk of loss passes upon delivery at Vendor's
domestic origin shipping dock. Vendor agrees to have Products in
ship-ready condition on the ship date specified in the applicable purchase
order and provide forty-eight (48) hour notice of pick-up request to
Dealer. The attached Collaborative Transportation Agreement, as amended
from time to time by the parties, if applicable, contains additional terms
that define the parties' responsibilities under this shipping arrangement.
5.2 Time is of the Essence. TIME IS OF THE ESSENCE OF THIS AGREEMENT WITH
RESPECT TO THE SPECIFIED DATES FOR SHIPMENT OF PRODUCT.
5.3 Expedited Shipments. Vendor will pay any additional freight expenses
incurred in connection with an expedited shipment arising from a shipment delay
or other cause attributable to Vendor.
5.4 Other Charges. Any charges related to special requests of Vendor to carrier,
including loading assistance, detention, or any other instructions, prior to
title passage, will be the responsibility of the Vendor.
5.5 Direct Import Addendum. Terms relating to Products that are imported by
Dealer, if applicable, are set forth in the attached Direct Import Addendum,
which is incorporated herein by reference.
6. PRICE PROTECTION; NOTICE OF PRICE INCREASES. The parties agree and
acknowledge that this Section 6 is applicable only to Products purchased by
Dealer from Vendor.
6.1 Price Protection. [***] Dealer will submit a cost adjustment claim to Vendor
that is supported by documentation that reflects Dealer's inventory records of
Product subject to price protection credit.
[*** Confidential Treatment Requested]
6.2 Notice of Price Increases. Except as otherwise agreed, Vendor will give
Dealer ninety (90) days prior written notice to Dealer of the effective date of
any price increases. A price increase will not affect Dealer's cost on a
purchase order accepted by Vendor prior to the effective date of such price
increase.
7. RETURNS
7.1 Return Rights. Dealer will have the right to return for full credit or
refund of Dealer's cost any Products (a) against which an allegation is made
that the use of such Products infringes on any patent, trademark, trade secret,
copyright, right of privacy or publicity, or any other tangible or intangible
proprietary or intellectual property right; (b) that are not manufactured,
packaged, or labeled in accordance with industry standards and/or all applicable
laws, ordinances, rules, and regulations; (c) that are shipped in error or in
non-conformance with Dealer's purchase order; (d) that have caused injury to
person or property; and (e) that are damaged or Defective. Returned Products
will be shipped FOB Origin, Freight Collect from Dealer's product return center,
distribution center or stores, as the case may be.
7.2 Defective Products. For purposes of this Agreement, a "Defective" Product
means any Product that is visually or operationally defective and Product that
has been returned by a customer in accordance with Dealer's end-user return
policy. Dealer's end-user return policy allows for the return of most Products
with or without cause for a specified period after purchase, regardless of
whether the Product packaging has been opened or whether the Product is actually
defective. Dealer will promptly notify Vendor upon Dealer's discovery of any
Defective Product.
7.3 Return Procedures. If a Vendor Return Authorization is first required by
either party prior to Dealer's return of Product to Vendor, Vendor agrees to
provide a unique Return Authorization number to Dealer within forty-eight (48)
hours of Dealer's request. Vendor will allow delivery of return Product as of
the day the Return Authorization is issued to Dealer. If Vendor requires that
Dealer make an appointment to deliver returned Product, such appointment will be
provided by Vendor within three (3) days of the carrier's expected arrival time.
Upon shipment of the return Product to Vendor, Dealer will send a Return Goods
Memo (debit memo) to Vendor that references the corresponding Return
Authorization number, if any, along with quantity and dollar amounts on a per
unit basis. Dealer may thereafter deduct the total dollar amount of the return
Product from Vendor's invoice. Vendor agrees to send a credit memo to Dealer for
the amount specified in the Return Goods Memo within ninety (90) days of the
date of Dealer's deduction. Such credit memo will reference either Dealer's
Return Goods Memo number or the Return Authorization number. Product returned to
Vendor will be delivered in their original, undamaged containers, provided that
Vendor will not consider a container with a removed UPC to be damaged for
purposes of calculating the return credit if such UPC was removed by an end-user
in connection with a Vendor-sponsored rebate offer. In the event Dealer
rightfully requests a return of Products under this Agreement and Vendor fails
to timely provide a Return Authorization or accept delivery thereof, Dealer may
take any action in its sole and reasonable discretion at Vendor's expense, which
may include but is not limited to storage, liquidation or destruction of the
Products. If Vendor receives Product from Dealer that Vendor believes is
non-returnable, Vendor will return such Product to Dealer's originating Product
returns location within ninety (90) days of Vendor's determination and the
shipment cartons will reference the original return shipment's Return
Authorization number or Return Goods Memo number.
7.4 Additional Return Rights. Additional or different return rights may be
specified in a Vendor Program Agreement (e.g., stock-balancing, defective
allowances) as further described in Section 10. If the parties agree to a
defective allowance, such allowance will replace Dealer's right to return
Defective Products as provided herein, except that if the actual defective rate
for a particular Product exceeds the applicable allowance, Dealer may either
adjust the allowance accordingly or return the excess Defective Product to
Vendor for full credit or refund. A defective allowance will have no effect upon
Dealer's return rights as otherwise provided in this Agreement.
7.5 Warranty Returns; Appointment of Authorized Return Center. Vendor appoints
Dealer as an "Authorized Return Center" for the return by end-users of those
Products under a manufacturer's warranty. Except as may otherwise be agreed in a
comprehensive Product Service Agreement, which will be an addendum hereto as
further described in Section 11, Dealer will (a) receive the in-warranty Product
from the end-user, (b) provide the end-user with an in-store credit ("In-Store
Credit"), and (c) send the end-user's defective Product to Vendor after
receiving Vendor's return authorization, if required. The appointment of Dealer
as an Authorized Return Center is non-exclusive and will include all present and
future Dealer locations which Dealer designates to accept the Product returns.
This appointment of Dealer as an Authorized Return Center will survive the
expiration or termination of this Agreement to the extent necessary to satisfy
end-user warranty requests.
8. DISCONTINUED PRODUCT. The parties agree and acknowledge that this Section 8
is applicable only to Products purchased by Dealer from Vendor.
A "Discontinued Product" means any Product that Vendor has stopped manufacturing
or any Product that undergoes a material change in appearance or packaging.
Vendor agrees to provide Dealer with at least ninety (90) days advance written
notice of the occurrence of a Discontinued Product, or as soon as possible in
the event that the discontinuance is caused by actions taken by a component part
supplier of Vendor. Upon notice of such Discontinued Product, Dealer may,
without penalty or liability, cancel any outstanding purchase orders pertaining
to the Discontinued Product. With respect to Dealer's existing inventory of
Discontinued Product, Dealer may, in its sole discretion, either return such
Discontinued Product at any time to Vendor for full credit or refund, or Vendor
and Dealer will negotiate a cost markdown of such existing inventory.
9. VENDOR PERFORMANCE AND OPERATIONS STANDARDS
Other terms that are relevant to doing business with a particular operating
division of Dealer or Affiliate may be found in the Vendor Performance and
Operations Standards, which is a part of this Agreement and incorporated herein
by reference. The Vendor Performance and Operations Standards may be accessed at
Dealer's Vendor Extranet web site, www.extendingthereach.com The Vendor
Performance and Operations Standards may include but is not limited to
information concerning Electronic Data Interchange (EDI), Returns Procedures,
Routing and Shipping Guides and the Shipping Performance Management Program, all
of which may be updated from time to time by Dealer upon notice to Vendor. The
terms and conditions of this Agreement shall govern in the event of any
inconsistency.
10. VENDOR PROGRAM AGREEMENT
Dealer and Vendor may agree upon certain terms from time to time concerning
matters such as Products, pricing, market development/cooperative
advertising/merchandising funds, invoice credit terms, stock rotation, volume
rebates, new store allowances, and the like. Such terms will be contained in the
SSA, which will be considered an addendum hereto, as amended from time to time
by the parties. In the event of conflict between business terms of the SSA, as
it may be amended from time to time and this Agreement, the business terms
contained in the SSA will control.
11. PRODUCT SERVICE AND WARRANTY REPAIRS
Dealer is committed to meeting its customers' high expectations concerning
post-sale service and warranty repairs. A comprehensive Product Service
Agreement between the parties may be necessary to ensure customer satisfaction.
If applicable, the attached Product Service Agreement controls the servicing and
warranty repairs of the Products and will be executed by both parties prior to
or simultaneous with the execution of this Agreement.
12. RESERVED
13. CONFIDENTIALITY
This Agreement and any information marked as confidential or, regardless of form
(written/electronic/oral) or marking, is of the nature that a reasonable person
would understand its owner would not want it disclosed to the public will be
considered to be Confidential Information and shall be governed by the terms of
the non-disclosure and confidentiality agreement executed by the parties, dated
August 30, 2005, a copy of which is attached hereto and incorporated herein by
this reference.
14. ADDITIONAL OBLIGATIONS OF VENDOR
14.1 Product Materials. Vendor will provide to Dealer, at no charge, Product
samples, adequate copies of any marketing and technical information, service
manuals, detailed Product specifications, end-user warranties and other Product
data and materials.
14.2 Training. Vendor will assist with the training of Dealer personnel on
Dealer's premises as reasonably necessary to ensure that Dealer's sales and
service personnel will be adequately knowledgeable with respect to the Products.
14.3 Compliance with Laws. Vendor will notify Dealer within ten (10) days
regarding the existence and nature of Vendor's knowledge of any possible
material non-compliance with applicable laws, or its notice of a claim from a
consumer (which, individually or in the aggregate, may reasonably be expected to
result in material liability to Vendor and/or Dealer) that a Product is
defective or does not comply with all applicable laws.
15. REPRESENTATIONS AND WARRANTIES
15.1 Vendor's Representations and Warranties. Vendor represents and warrants to
Dealer that (a) it has the authority to enter into this Agreement and to make
the Products available to Dealer for distribution in accordance with the SSA and
Equipment Agreement, free and clear of all liens, charges, encumbrances, or
other restrictions, and that the persons signing this Agreement on behalf of
Vendor are authorized to sign; (b) it will comply with all applicable federal,
state, and local laws and regulations in performing its obligations under this
Agreement, including but not limited to laws and regulations pertaining to
product design, manufacture, packaging and labeling and, if applicable,
importation and the Foreign Corrupt Practices Act; and (c) the Products are not
produced, manufactured, assembled or packaged by the use of forced labor, prison
labor or forced or illegal child labor and that the Products were not
trans-shipped for the purpose of mislabeling, evading quota or country of origin
restrictions or for the purpose of avoiding compliance with forced labor, prison
labor or child labor laws.
15.2 Dealer's Representations and Warranties. Dealer represents and warrants to
Vendor that (a) it has the authority to enter into this Agreement, and that the
persons signing this Agreement on behalf of Dealer are authorized to sign; (b)
it will comply with all applicable federal, state, and local laws; and (c) it
will exert commercially reasonable efforts to promote and distribute the
Products consistent with Dealer's obligations under the SSA and Equipment
Agreement.
16. TERM AND TERMINATION
16.1 Term. This Agreement will commence on the Effective Date and will continue
until expiration or termination of the SSA and will automatically renew on the
same terms applicable to the SSA.
16.2 Events on Termination.
(a) [***]
(b) For Cause. Upon termination of this Agreement for cause, the parties
will agree to either (i) completion by Dealer of sell-through of the remaining
Product inventory; or (ii) return of the remaining Product inventory to Vendor
at the breaching party's expense, and Dealer will receive a refund of any
purchase price at Dealer's cost for all returned Products.
17. INDEMNIFICATION
Vendor will indemnify, defend, and hold Dealer, its parent, affiliates, agents
and employees, harmless from and against any and all claims, actions,
liabilities, losses, costs and expenses arising from or in connection with [***]
Vendor agrees to pay all costs of liability, settlement and defense, including
attorney fees and costs.
Dealer will indemnify, defend, and hold Vendor, its parent, affiliates, agents
and employees, harmless from and against any and all claims, actions,
liabilities, losses, costs and expenses arising from or in connection with [***]
Vendor agrees to give Dealer prompt written notice of any claims, to tender the
defense to Dealer, and to grant Dealer the right to control settlement and
resolution. Dealer agrees to pay all costs of liability, settlement and defense,
including attorney fees and costs.
18. INSURANCE
18.1 Comprehensive / Commercial General Liability. Vendor will procure and
maintain throughout the term of this Agreement a policy of comprehensive general
or commercial general liability insurance with a combined single limit of not
less than one million dollars ($1,000,000) for each occurrence.
18.2 Workers Compensation; Automobile Liability. If Vendor's agents will be
entering Dealer's premises, Vendor will procure and maintain throughout the term
of this Agreement: (a) Workers Compensation insurance in an amount not less than
the statutory limits and (b) automobile liability insurance with a combined
single limit of not less than one million dollars ($1,000,000) for each
occurrence for personal injury, including death, and property damage.
18.3 Umbrella Coverage. Vendor will procure and maintain throughout the term of
this Agreement Umbrella coverage of not less than ten million dollars
($10,000,000).
18.4 Requirements. Vendor will supply Dealer with a Certificate of Insurance
with respect to each of the foregoing policies, except Workers Compensation,
that names BEST BUY CO., INC., ITS SUBSIDIARIES & AFFILIATES as an Additional
Insured, and which also provides that such insurance will not be canceled or
changed unless at least thirty (30) days prior written notice has been given to
Dealer. The insurance required hereunder will be issued by an insurance company
or companies authorized to do business in the United States. Vendor's insurance
will be primary and required to respond to and pay claims prior to other
coverage.
19. ASSIGNMENT
19.1 Assignment. This Agreement may not be assigned by either party without
first obtaining the other party's express written consent, which consent will
not be unreasonably withheld except in conjunction with a permitted assignment
of the SSA and Equipment Agreement.
[*** Confidential Treatment Requested]
19.2 Assignment of Accounts Receivable. If Vendor assigns payments to an
assignee/factor, Vendor understands and agrees that Vendor and the
assignee/factor will be required to sign Dealer's standard acknowledgment form
to assure Dealer that the assignee/factor understands the rights and obligations
being assigned, including the right of Dealer to make offsets.
20. AUDIT RIGHTS; CLAIMS
20.1 Audit Rights. Upon reasonable prior written notice and at reasonable times
during regular business hours, each party will have the right to audit the other
party's books and records to assure compliance with the terms and conditions of
this Agreement. If the audit reveals that a party is not performing in material
compliance with the terms of this Agreement, then, in addition to any other
legal and equitable rights and remedies available, the party not in compliance
will reimburse the other for the reasonable costs of the audit.
20.2 Claims. Except as otherwise provided in this Agreement, claims by either
party, however asserted, will be commenced within two (2) years from the date
the cause of action accrues.
21. CONFLICT OF INTEREST AND CODE OF CONDUCT POLICIES
Vendor agrees to respect and abide by Dealer's conflict of interest and code of
conduct policies, which are available at www.extendingthereach.com and may be
amended from time to time by Dealer. Vendor should contact Dealer's email
hotline at vendor.relations@bestbuy.com for information concerning Dealer's
policies and to discuss any ethical or conduct concerns that they may have as a
result of their contact with Dealer personnel. Vendor understands and
acknowledges that Dealer's conflict of interest and code of conduct policies
address Vendor-paid travel, gifts and gratuities, offering and accepting bribes,
family members and close personal relationships involving employees of both
parties, personal investments in the other party, Vendor-sponsored charitable
and other events, Vendor product samples, Vendor promotional copies, direct
personal purchases from Vendors by Dealer employees, and awards, incentives and
other spiffs from vendors. Vendor agrees to avoid conflict of interest
situations with Dealer and to deal at arms length with Dealer. Dealer similarly
agrees to abide by Vendor's policies concerning these subject matters.
22. FORCE MAJEURE
Neither party will be in breach of this Agreement solely due to causes beyond
the control and without the fault or negligence of such party. Such causes may
include, but are not restricted to, acts of God or of a public enemy, acts of
the government in either its sovereign or contractual capacity, fires, floods,
epidemics, quarantine restrictions, strikes, freight embargoes, power failure,
or failure of the U.S. postal system, but in every case the failure to perform
will be beyond the control and without fault or negligence of the party failing
to perform. Each party will inform the other of any Force Majeure event within
five (5) business days of its occurrence.
23. NOTICES
All notices, requests, demands and other communications that are required or may
be given under this Agreement will be in writing and will be deemed to have been
duly given if hand-delivered or mailed by either registered or certified mail,
return receipt requested, or by a nationally recognized overnight courier
service, receipt confirmed. In the case of notices via first-class mail or
courier service, notices will be deemed effective upon the date of receipt.
Notices will be addressed to the parties as set forth below, unless either party
notifies the other of a change of address, in which case the latest noticed
address will be used:
<TABLE>
<CAPTION>
Notices To Vendor: Notices To Dealer:
------------------ ------------------
<S> <C>
Clearwire LLC Best Buy Purchasing LLC
5808 Lake Washington Blvd., Suite 300 7601 Penn Avenue South
Kirkland, WA 98033 Richfield, MN 55423-3645
Attn: Chief Operations Officer Attn: Senior Vice President, Merchandising
Copy to: Legal Department Copy To: Manager, Vendor Relations
Copy To: General Counsel, Legal Department
</TABLE>
24. GENERAL
24.1 Relationship of the Parties. The relationship between the parties will be
that of independent contractor. Nothing herein will be construed as creating or
constituting the relationship of employer/employee, franchiser/franchisee,
principal/agent, partnership, or joint venture between the parties.
24.2 Governing Law; Jurisdiction. This Agreement will be governed by and
interpreted under the laws of the State of New York.
24.3 Enforceability. If any provision of this Agreement is held to be
unenforceable by a court of competent jurisdiction, such provision will be more
narrowly and equitably construed so that it becomes legal and enforceable, and
the entire Agreement will not fail on account thereof and the balance of the
Agreement will continue in full force and effect.
24.4 No Waiver. Any of the provisions of this Agreement may be waived by the
party entitled to the benefit thereof. Neither party will be deemed, by any act
or omission, to have waived any of its right or remedies hereunder unless such
waiver is in writing and signed by the waiving party, and then only to the
extent specifically set forth in such writing. A waiver with reference to one
event will not be construed as continuing or as a bar to or waiver of any other
right or remedy, or as to a subsequent event.
24.5 Counterparts and Electronics Signature. This Agreement may be executed in
one or more counterparts, each of which will be deemed an original but all of
which together will constitute one and the same instrument. This Agreement may
be executed by facsimile or other "electronic signature" (as defined in the
Electronic Signatures in Global and National Commerce Act of 2000) in a manner
agreed upon by the parties hereto.
24.6 Entire Agreement; Amendments. This Agreement, including any addenda or
exhibits attached hereto, contains the entire Agreement between the parties with
respect to the subject matter hereof, supersedes all prior agreements,
negotiations and oral understandings, if any, and may not be amended,
supplemented, or modified in any way, except by an amendment in writing and
signed by authorized representatives of the parties hereto. No amendment will be
effected by the acknowledgement or acceptance of a purchase order, invoice, or
other forms stipulating additional or different terms. This Agreement will inure
to the benefit of and be binding upon each of the parties and their respective
successors, assigns, heirs, executors, administrators, trustees and legal
representatives.
24.7 Reservation of Rights. Duties and obligations imposed by this Agreement and
rights and remedies available hereunder will be in addition to and not a
limitation of duties, obligations, rights and remedies otherwise imposed or
available by law except as otherwise provided herein. When Dealer has exercised
the right to reject a nonconforming shipment or elected to return Product to
Vendor as provided herein, Vendor will not have the right to cure improper
tender which might otherwise be available under law.
24.8 Headings. Headings used in this Agreement are for the purposes of
convenience only and will not affect the legal interpretation of this Agreement.
24.9 Draftsmanship. Each of the parties hereto has been represented by its own
counsel. In the event of a dispute, no provision of this Agreement will be
construed in favor of one party and against the other by reason of the
draftsmanship of this Agreement.
24.10 Survival. The expiration or termination of this Agreement will not
terminate vested rights of either party from any liabilities or obligations
incurred under this Agreement prior to or which by their nature are intended to
survive expiration or termination, including but not limited to provisions
relating to confidentiality, warranties, indemnification, returns, and
proprietary rights.
ADDENDA (CHECK IF APPLICABLE)
Each checked Addendum is hereby incorporated into and made a part of this
Agreement:
[ ] Vendor Program Agreement [ ] Configure to Order Agreement
[X] Subscription Service Addendum [X] Equipment Agreement
[X] Certificate of Insurance [ ] Collaborative Transportation
Agreement
[X] Vendor Performance and Operations [ ] Direct Import Addendum
Standards (available at
www.extendingthereach.com)
IN WITNESS WHEREOF, this Agreement is made effective as of the date first
written above.
BEST BUY PURCHASING LLC VENDOR: Clearwire LLC
(on behalf of its Affiliates)
Authorized Officer: /s/ Daniel Moe Authorized Officer: /s/ Ben Wolff
------------------ ----------------
(Signature) (Signature)
Name: Daniel Moe Name: BEN WOLFF
(Please Print) (Please Print)
Title: VP. Vendor Mgmt Title: Executive Vice President
Date: 10.5.05 Date: 10-3-05
EXHIBIT 10.40
SUBSCRIPTION SERVICE ADDENDUM
THIS SUBSCRIPTION SERVICE ADDENDUM ("Addendum") TO THE VENDOR AGREEMENT,
dated 9-27-05 ("VA") is made effective as of 9-27-05 2005, by and between BEST
BUY STORES, L.P., a Virginia limited partnership, with offices at 7601 Penn
Avenue South, Richfield, Minnesota 55423 ("Dealer") and CLEARWIRE LLC, a Nevada
limited liability company, with offices at 5808 Lake Washington Blvd. NE, Suite
300, Kirkland, Washington 98033 ("Vendor"). Dealer and Vendor may each be
referred to herein as "Party" or together may be referred to as "Parties", as
appropriate.
RECITALS:
WHEREAS, Vendor is a provider of wireless broadband service and is duly
authorized by all applicable regulatory agencies to provide such services in its
service areas; and
WHEREAS, Dealer is a nationwide specialty retailer of various products,
including without limitation consumer electronics, personal computers,
entertainment software, appliances, and internet connectivity and content
products and services; and
WHEREAS, Vendor and Dealer each wish to enter into this Addendum to the
Agreement to provide for the Marketing and sale of Vendor Services through
Dealer's Sales Channels.
NOW, THEREFORE, in consideration of the mutual promises contained herein
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Parties agree as follows.
1. DEFINITIONS:
1.1 ACTIVATION OR ACTIVATED: Means Vendor's initiation of Services in
Equipment that is owned or leased by a Member.
1.2 ACTIVATION COMMISSION: Activation Commission shall have the meaning
described in Exhibit C.
1.3 AFFILIATE: Affiliate of a Party shall mean an entity that directly or
indirectly controls, is controlled by, or is under common control
with such Party.
1.4 ADDENDUM: Addendum shall mean this Subscription Service Addendum,
including the Exhibits attached hereto and any amendment, addendum,
Exhibit or schedule later executed by authorized representatives of the
Parties.
1.5 COMPETITORS: Competitors, with respect to Dealer's competitors, shall mean
any physical or on-line retailer selling Vendor services similar to those
offered through the Sales Channels, including Vendor and its Affiliates.
1.6 CONFIDENTIAL INFORMATION: Confidential Information shall have the meaning
described in Section 13 of the VA.
1.7 CURRENT SERVICES: Current Services shall mean those broadband wireless
services provided by Vendor to its customers that Dealer may Market
through the Sales Channels, with mutually agreed upon Activation
Commissions or other compensation arrangements, as set forth in Exhibit C.
1.8 CUSTOMER DATA: Customer Data shall have the meaning described in Section
10.
1.9 DEALER MARKS: Dealer Marks shall mean trademarks, service marks, trade
names, logos and other brand marks and names used by Dealer for purposes
of identifying itself.
1.10 EQUIPMENT: Means the Vendor-approved communications equipment needed by a
Member to use the Services.
1.11 FUTURE SERVICES: Future Services shall mean services offered by Vendor,
either now or in the future, other than those Current Services identified
in Exhibit C.
1.12 MARKET: Market (and all other forms of the word, such as "Marketing")
shall mean promoting the sale of the Services through efforts within the
Sales Channels, and marketing efforts through advertising and other means,
in an effort to sell the Services.
1.13 MARKS: Marks shall mean collectively the Vendor Marks and the Dealer
Marks.
1.14 MEMBER: Member shall mean those consumers who initiate a transaction and
subscribe as a customer of Vendor for a Current Service through a Sales
Channel in accordance with the Vendor requirements described on Exhibit F.
A Member shall continue to be a Member for so long as the Member continues
to subscribe to the
Subscription Service Addendum Final 100305
Page 1 of 19
Service. Any Current Service reinstated by a former Member within thirty
(30) days after interruption in such Current Service, which is reinstated
either through a Sales Channel or a sales channel internal to Vendor,
shall result in such person continuing to be a Member.
1.15 PUBLISHED RATES: The rates that Vendor publishes in its rate plan
brochures, or other Vendor documentation, as revised from time to time.
1.16 SALES CHANNELS: Sales Channels shall mean Selected Dealer Stores and other
channels through which the Parties agree to Market and sell the Current
Services, including (a) the Selected Dealer Stores, (b) BestBuy.com and
other Dealer Affiliates, and (c) a "1-800" number to be designated by the
Parties for Members and potential Members. The Parties do not intend to
use the channels described in clauses (b) and (c) of this Section 1.16
until they execute a separate agreement with respect to those channels.
1.17 SELECTED DEALER STORES: Selected Dealer Stores are the retail stores of
Dealer listed on Exhibit A.
1.18 SERVICES: Services shall mean the Current Services and Value Added
Enhancements.
1.19 TERM: Term shall have the meaning described in Section 6.1.
1.20 VALUE ADDED ENHANCEMENTS: Value Added Enhancements shall mean those
enhancements to Current Services mutually agreed upon by the Parties and
developed by Vendor.
1.21 VENDOR MARKS: Vendor Marks shall mean any and all trademarks, service
marks, trade names, designs, logos and other brand marks, names and
insignia owned or used by Vendor or its Affiliates in connection with
identifying themselves, their products, their business units or otherwise.
2. CHANNEL CONTROL; CUSTOMER PROTECTION.
2.1 NO INDUCEMENT TO CANCEL. In consideration and recognition of (1) Vendor's
grant to Dealer of the right to use the Vendor Marks on the terms stated in this
Addendum and the great value of the goodwill associated with Dealer's ability to
use the Marks, which rights and value are not available to distributors
generally, (2) the right of Dealer to advertise affiliation with Vendor as an
authorized representative of Vendor, (3) the value of specialized, technical
knowledge of the broadband wireless industry, and of the Equipment and the
Services, imparted by Vendor to Dealer from time to time, and (4) Dealer's
access to Vendor's Confidential Information and trade secret information on the
terms stated in this Addendum, Dealer will not (and Dealer will not permit its
officers, directors, key employees, principals, any Sub-Representative, any
Affiliate of Dealer or any Person owning a controlling interest in Dealer or an
Affiliate of Dealer to), during the Term of this Addendum, and for a period of
two years thereafter, produce, publish, or make available, advertising or
marketing materials specifically targeting Members suggesting or inducing them
to cancel their Service and purchase wireless broadband services from a provider
other than Vendor. Notwithstanding the foregoing, nothing contained herein is
intended to limit or restrict Dealer's general marketing and advertising.
2.2 NO OTHER USE OF VENDOR TECHNOLOGY. During the Term of this Addendum, Dealer
will not, through any Sales Channel (including, but not limited to, Selected
Dealer Stores, as updated from time to time), sell any wireless broadband
services or equipment that include, incorporate or rely upon any Vendor
Equipment, Marks, intellectual property or Services, except for sales of the
Services to Members in accordance with the terms of this Addendum.
3. NO MINIMUM COMMITMENT. Despite anything to the contrary contained in this
Addendum, nothing in this Addendum shall be construed to provide that any
minimum amount of the Current Services, Future Services, Value Added
Enhancements, or Welcome Kits shall be Marketed or sold through the Sales
Channels.
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4. DUTIES AND RESPONSIBILITIES OF PARTIES.
4.1 Marketing, Pricing and Sale of the Current Services.
4.1.1 MARKETING. Dealer shall offer and Market the Services in the Sales
Channels pursuant to the terms of this Addendum, and Vendor shall
provide the Services as set forth in this Addendum. Dealer will use
commercially reasonable efforts to promote and sell the Services
consistent with Dealer's internal sales, marketing and merchandising
plans as may be amended from time to time, and consistent with the
requirements of Section 9.1. Dealer has the right to establish and
customize, at its discretion, Marketing efforts related to the Services,
provided that Dealer complies with its obligations under this Addendum.
4.1.2 MARKET MAKER CAMPAIGN. Dealer will use its commercially reasonable
efforts (consistent with the requirements of Section 9.1) during the
Term of this Addendum to initiate, promote and manage the "Dealer Market
Maker Campaign" more specifically described on the attached Exhibit B
and incorporated herein by this reference. The fees or payments related
to the Dealer Market Maker Campaign are described in Exhibit C attached
hereto.
4.1.3 Reserved.
4.1.4 CUSTOMER SERVICES. Dealer will direct all Members who request
troubleshooting assistance, or assistance with Activation or warranty
issues, or who have problems with the Equipment, to make contact with
Vendor's customer service department either through appropriate links at
www.clearwire.com or by calling Vendor at its toll-free number.
4.1.5 COMPLIANCE WITH POLICIES; ACCESS. Dealer agrees to maintain operations
and follow procedures that are in substantial compliance with the
policies and requirements specified on Exhibit F. Subject to a separate
written agreement and associated processes and guidelines, Dealer will
allow Vendor reasonable access to Selected Dealer Stores.
4.1.6 Reserved.
4.1.7 Reserved.
4.1.8 Reserved.
4.1.9 Reserved.
4.1.10 DEALER CODES. Dealer agrees that it will not allow any other Person to
use its Dealer code(s) or other identifying numbers provided by Vendor.
4.1.11 STANDARD OF CONDUCT. Dealer will conduct any and all activities in
connection with this Addendum in compliance with all applicable laws and
regulations, consistent with the highest standards of fair trade, fair
competition and business ethics. Further, Dealer will represent the
Services fairly and make no false or misleading representations
regarding the Services, and will not engage in any illegal, deceptive,
misleading, unethical or improper acts in performing its duties under
the Agreement.
4.1.12 NOTICE OF EVENTS. Dealer will notify Vendor in writing immediately upon
the occurrence of any of the following events that arise in connection
with or related to Vendor, the Services or the Equipment:
(1) suit or proceeding initiated against Dealer;
(2) written claim or demand; and
(3) any investigation of Dealer by any governmental authority.
4.1.13 USE OF VENDOR MARKS. Dealer will use Vendor's Marks in accordance with
the terms, conditions and guidelines set forth on Exhibit D attached
hereto.
4.1.14 VENDOR PROMOTION. Vendor may (i) promote Dealer's Marketing of the
Current Services and the sale of the Current Services and the Equipment
and Value Added Enhancements, and (ii) support Dealer's branding efforts
via Vendor's agreed upon marketing channels.
4.1.15 PRICING FOR SERVICES. Prices paid by Members for the Services shall not
be greater than the prices paid by subscribers to the Current Services
through any Dealer Competitor, other than prices paid by employees
Subscription Service Addendum Final 100305
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of Vendor or its Affiliates or employees of Vendor's marketing or
distribution partners. The parties acknowledge that Service pricing may
vary geographically and that the foregoing parity language is not
intended to reflect or require a national standard. Vendor shall use
commercially reasonable efforts to notify Dealer of any changes in
prices at least sixty (60) days prior to the effective date of the
change; provided however that failure to provide such notice despite
reasonable efforts shall not constitute a breach of this Addendum. In no
event, however, will such notice be less than the notice provided by
Vendor to any Dealer Competitor. Notwithstanding the above, the Parties
agree that Vendor sets the prices for Services in its sole and absolute
discretion. Dealer shall not vary the Published Rates or any terms of
the Services.
4.1.16 SERVICE AVAILABILITY DATABASE. Vendor will provide access to Vendor's
service availability database to assist Dealer with the registration of
Members. The sale of the Current Service will occur through Vendor and
be finalized by Vendor. Vendor shall have the sole right in its
discretion to reject the enrollment of any customer submitted by Dealer
to Vendor for the Current Services. No contract between Vendor and a
customer shall exist until the customer is accepted and approved by
Vendor, and a Current Service is Activated.
4.1.17 INVENTORY. Dealer will make commercially reasonable efforts to maintain
an inventory of Equipment sufficient to meet reasonable, anticipated
demand from Members.
4.1.18 FUTURE SERVICES. The Parties anticipate that Future Services may become
available for Marketing after the date of this Addendum and that such
Future Services, and the compensation related to those Future Services,
may become part of this Addendum. Vendor will notify Dealer of any
changes in such prices at least sixty (60) days prior to the commercial
launch of such Future Service provided however that failure to provide
such notice despite reasonable efforts shall not constitute a breach of
this Addendum. Exhibit C shall be amended from time to time to include
any Future Service that is re-designated as a Current Service under this
Addendum and the agreed upon compensation arrangements related thereto.
4.1.19 BILLING, INSTALLATION, SERVICE AND SUPPORT. Vendor will be responsible
for billing Members for the Services and collecting payment for the
Services from the Members as it determines in its sole discretion.
Dealer will refer billing and service questions regarding the Current
Services to Vendor. Dealer shall have no right or obligation to bill or
collect from a Member any money or charges for Services, unless
otherwise agreed to in writing by the Parties. Vendor shall also be
responsible for providing the installation, service and support of the
Services. Upon Activation of a particular Member in accordance with
Vendor's Activation procedures, such Member will become a customer of
Vendor and Dealer shall have no responsibility with respect to billing
or provision of Service.
4.1.20 VALUE ADDED ENHANCEMENTS. From time-to-time, Vendor and Dealer shall
discuss and may mutually agree upon Value Added Enhancements to be
bundled with the Current Services or offered separately by Dealer
through the Sales Channels.
4.1.21 SERVICE INFORMATION AND TRAINING. Vendor shall provide to Dealer
information that is accurate and updated in a timely manner about
Services' features, functionality, and offers and promotions including
accurate descriptions of the Current Service price plan options and the
benefits of such offers, plans or promotions, for Dealer to use as it
Markets the Services to interested customers. In addition, Vendor shall
provide Dealer with prior written notice at least *** before there are
any changes in Service features, pricing, promotions, offers, service
and support packages or technology and such notice shall describe the
changes, provided however that failure to provide such notice despite
reasonable efforts shall not constitute a breach of this Addendum.
Vendor will also provide Dealer, at no charge, with an adequate number
of copies of any necessary training and product information brochures
and will assist with the training of Dealer personnel on Dealer's
premises, at no charge, as mutually agreed, in order that Dealer's sales
force will be adequately knowledgeable about the Services.
4.1.22 VENDOR GUIDELINES. Vendor will use commercially reasonable efforts to
comply, to the extent permitted under applicable regulatory
requirements, with Dealer's vendor, reporting and information system
requirements, specification and guidelines in accordance with the
provisions of Exhibits F and G.
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5. COMPENSATION
5.1 PAYMENT. Vendor agrees to pay Dealer the Activation Commissions in the
amounts and at the times described in Exhibit C.
5.2 OTHER DISTRIBUTORS. Dealer acknowledges that the compensation paid by
Vendor and other terms and conditions applicable to adding Members to
Vendor's Services may vary among representatives and other distributors of
Vendor's Services in Vendor's sole discretion. Dealer agrees that it will
have no claim against Vendor as a result of any such variation.
5.3 LATE FEES; OFFSETS. If Vendor fails to make any required payment within
thirty days following the due date, except to the extent such payment is
disputed by Vendor in good faith, with written notice of the dispute to
Dealer, it will pay to Dealer a late fee equal to the lesser of *** of the
amount of the delinquent payment (including unpaid late fees), or the
highest amount allowed by law, for each month such payment is not made.
The Parties further agree that, regardless of whether this Addendum is in
effect or not, any past due monies owed by one Parry to the other under
this Addendum, may be offset against other amounts due to the paying
Party.
6. TERM, TERMINATION AND DEFAULT.
6.1 TERM. This Addendum shall commence on the date hereof and shall continue
for *** ("Initial Term"). After the Initial Term, this Addendum shall
automatically renew for up to *** terms ("Renewal Term"), unless
terminated by either Party upon written notice provided at least *** days
prior to the expiration of the Initial Term or any Renewal Term. The
Initial Term and Renewal Term(s) may be collectively referred to herein as
the "Term." Vendor's obligations to make Activation Commission and
Residual Payments (as described in Exhibit C) to Dealer shall survive any
expiration or termination of this Addendum only as provided in Exhibit C.
Notwithstanding the foregoing, termination of the Vendor Agreement between
the parties shall constitute termination of this Addendum.
6.2 EVENT OF DEFAULT. In the event that any of the following (hereinafter
referred to as an "Event of Default") occurs:
6.2.1 either Party, at any time, fails to perform any of their respective
"material obligations" set forth in this Addendum; or
6.2.2 a receiver of any property of either Party shall be appointed in any
action, suit or proceeding by or against such Party;
then upon the occurrence of such Event of Default the non-defaulting Party may
give written notice of such Event of Default to the Defaulting Party who shall
have thirty (30) days to cure such Event of Default. If such breach is not cured
within 30 days of the Defaulting Party's receipt of written notice adequately
describing such breach, then the non-defaulting Party may immediately terminate
this Addendum upon notice but without further obligation and without incurring
any liability for such termination. For purposes of this Section 6.2, and for
purposes of clarification and not of limitation, Dealer's obligation set forth
in Sections 4.1.1 and 4.1.2 shall be considered "material obligations."
7. SURVIVAL. The provisions of Sections 1, 2, 4, 5, 6, 7, 8, 9, 10, 11, 12, 18,
Exhibit C, and those other provisions that by their nature are intended to
survive, shall survive any termination or expiration of this Addendum.
8. PROPRIETARY RIGHTS.
8.1 OWNERSHIP. All rights, title and interests in the Vendor Marks and other
intellectual property rights of Vendor are and shall remain the property
of Vendor. All rights, title and interests in the Dealer Marks and other
intellectual property rights of Dealer are and shall remain the property
of Dealer.
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8.2 LICENSE FOR VENDOR MARKS. Vendor grants Dealer a non-exclusive, royalty
free, revocable license to use, copy, affix, reproduce and display, during
the Term of this Addendum, only those Vendor Marks identified in writing
by Vendor to Dealer for use in connection with the performance of Dealer's
obligations under this Addendum; provided, however, that such use is
subject to written approval by Vendor and in compliance with Vendor's
rules and procedures relating to the Vendor Marks as described and
attached as Exhibit D. In the event Vendor's rules and procedures are
changed and Dealer has existing Marketing ads and other such collateral in
use, Vendor will use commercially reasonable efforts to provide Dealer
with ninety (90) days notice of such changes. Vendor will provide Dealer
with an account manager that will serve as Dealer's single point of
contact for all questions regarding the use of Vendor's Marks. In no event
will Dealer be required to obtain written approval for advertising
materials.
8.3 LICENSE FOR DEALER MARKS. Dealer grants Vendor a non-exclusive, royalty
free, revocable license to use, copy, affix, reproduce and display, during
the Term of this Addendum, any and all of the Dealer Marks in connection
with the performance of Vendor's obligations under this Addendum;
provided, however, that such use is in compliance with Dealer's rules and
procedures relating to the Dealer Marks as outlined on Dealer's extranet
site www.extendingtbereach.com.
8.4 CHALLENGES. Dealer will not challenge the title or any rights of Vendor
(or other owners of the Marks) in and to the Marks either during the Term
of this Addendum or thereafter.
8.5 PROTECTION OF MARKS. Dealer agrees to assist Vendor at Vendor's request,
and Vendor agrees to reimburse Dealer for all associated reasonable and
necessary costs incurred by Dealer at Vendor's request in connection with
this Addendum, to protect Vendor's rights to the Marks. Vendor, if it so
desires, may commence or prosecute any claims or suits in its own name or
in the name of Dealer or join Dealer as a party to this Addendum for such
purposes. When known by Dealer, Dealer will promptly notify Vendor in
writing of any infringements or imitations by others of the Marks. Vendor
will have the sole right to determine whether any action will be taken on
account of any such infringements or imitations. Dealer will not institute
any suit or take any action on account of any such infringements or
imitations without first obtaining the written consent of Vendor.
9. MUTUAL OBLIGATIONS.
9.1 STANDARD OF CARE. In connection with the performance by the Parties of their
respective obligations under this Addendum, each Party shall employ a standard
of care, skill, and diligence consistent with the highest professional standards
practiced in the Parties' respective industries. Each Party's personnel shall
adhere to the highest standards of honesty, integrity, fair dealing and ethical
conduct in all dealings under this Addendum or related to the Marketing, sale,
service and support of the Current Services program provided hereunder. Each
Party's personnel, delegates and subcontractors shall be courteous, respectful,
and professional with customers, employees, and suppliers.
9.2 LICENSES AND PERMITS. Each Party shall, at its sole cost and expense, have
the sole responsibility to (i) obtain all applicable licenses, permits and other
authorizations necessary to perform its obligations under this Addendum and (ii)
ensure that all aspects of the Services provided by either Party to Dealer's
customers or to Members under this Addendum, and the obligations of each Party
under this Addendum, are performed in compliance with all applicable laws,
ordinances, rules and regulations.
9.3 RIGHT TO AN AUDIT. Either Party shall, within *** of the written request of
the other Party, provide to the requesting Party an accounting of sales of
Current Services to Members during the Term of this Addendum. Throughout the
Term of this Addendum and for a period of two years following its termination,
each Party shall also have the right to inspect, audit and copy the other
Party's books and records directly relating to the sale of the Current Services
to Members upon thirty (30) days prior written notice at the sole cost of the
party conducting or representing the audit and not more than twice in any 12
month period. The audited Party will use commercially reasonable efforts to
cooperate with the auditing party or their representatives performing such audit
and shall give them full access to all of their books and records directly
related to sale of the Services to Members. In the event that such Audit reveals
Subscription Service Addendum Final 100305
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an underpayment greater than 5% the underpaying party agrees to pay for the
reasonable costs of the audit in addition to making appropriate payment to
address the underpayment.
9.4 RECONCILIATION: Dealer and Vendor agree that it is to the best interest of
both Parties to follow a timely and periodic reconciliation process to determine
any compensation disputes and secure resolution. Vendor agrees to respond to
Dealer compensation disputes within 30 days, including the result and Vendor's
reasons. Should Vendor be unable to comply with the 30-day response period, it
will inform Dealer as to the reasons and also a revised date upon which the
results can be expected. This Section 9.4 is not intended to supersede any other
post audit rights currently in existence.
10. CUSTOMER DATA.
10.1 DEFINITION OF "CUSTOMER DATA". ***
10.3 SHARING OF CUSTOMER DATA. Subject to applicable law, each Party agrees to
provide the other with Customer Data obtained from or about Members as may be
reasonably requested from time to time by a Party solely for purposes of
confirming compliance with a Party's obligations described this Addendum.
11. REPRESENTATIONS AND WARRANTIES.
11.1 REPRESENTATIONS AND WARRANTIES OF VENDOR. Vendor represents, warrants and
covenants to Dealer as follows:
11.1.1 Vendor, through itself or its Affiliates, has the authority to enter
into and perform its obligations under this Addendum and the person(s)
signing this Addendum on behalf of it are authorized to execute this
Addendum and bind Vendor.
11.1.2 Vendor, through itself or its Affiliates, is the sole owner of or has
the authority to use, license and sub-license all proprietary rights in
and relating to the Vendor Marks, including all copyright, trademark,
service mark, trade secret and other intellectual property rights, and
the use by Dealer of the Vendor Marks in compliance with this Addendum
will not infringe on or otherwise interfere with the rights of any third
party.
11.1.3 Vendor, through itself or its Affiliates, has all applicable licenses,
permits and other authorizations necessary to perform its obligations
under this Addendum and sell the Services and its performance of its
obligations under this Addendum (whether through itself, its employees,
representatives, designees, agents or any other person or entity
performing Vendor's obligations) shall at all times be in compliance
with all applicable laws, ordinances, rules and regulations and shall
not infringe on any right of any third party.
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11.2 REPRESENTATIONS AND WARRANTIES OF DEALER. Dealer represents warrants and
covenants to Vendor as follows:
11.2.1. Dealer, through its Affiliates, has the authority to enter into and
perform its obligations under this Addendum and the person(s) signing
this Addendum on behalf of it are authorized to execute this Addendum
and bind Dealer.
11.2.2. Dealer is the sole owner of or has the authority to use, license and
sublicense all proprietary rights in and relating to the Dealer Marks,
including all copyright, trademark, service mark, trade secret and other
intellectual property rights and the use by Vendor of the Dealer Marks
in compliance with this Addendum will not infringe on or otherwise
interfere with the rights of any third party.
11.2.3. Dealer, through its Affiliates, has all applicable licenses, permits and
other authorizations necessary to perform its obligations under this
Addendum and its performance of its obligations under this Addendum
(whether through itself, its employees, representatives, designees,
agents or any other person or entity performing Dealer's obligations)
shall at all times be in compliance with all applicable laws,
ordinances, rules and regulations and shall not infringe on any right of
any third party.
12. INDEMNIFICATION. In addition to the indemnity obligations contained in
the Agreement the Parties agree as follows:
12.1 VENDOR'S INDEMNIFICATION. Vendor shall indemnify, defend and hold harmless,
Dealer, its Affiliates and its and their respective officers, directors,
employees and agents from and against any and all losses, costs, obligations,
liabilities, damages, actions, suits, causes of action, claims, subpoenas
demands, settlements, judgments, and other expenses, (including but not limited
to cost of defense, settlement, and reasonable attorney's fees) of whatever type
or nature, including, but not limited to, damage or destruction to property,
injury (including death) to any person or persons, which are asserted against,
incurred, imposed upon or suffered by Dealer by reason of, or arising from (1)
performance or the failure of Vendor (or any of its officers, directors,
employees, agents, delegates or subcontractors) to perform under the terms of
this Addendum, (2) the breach of this Addendum by Vendor (or any of its
officers, directors, employees, agents, delegates or subcontractors), (3) the
violation of any law, rule, regulation or authority by Vendor (or any of its
officers, directors, employees, agents, delegates and subcontractors), and (4)
the acts or omissions of Vendor (or any of its officers, directors, employees,
agents, delegates and subcontractors) relating to the scope of the Addendum,
including but not limited to claims relating to alleged infringement by Vendor
or its Affiliates of third party patent, copyright, trademark or other
proprietary rights.
12.2 DEALER'S INDEMNIFICATION. Dealer shall indemnify, defend and hold harmless,
Vendor, its Affiliates and their respective officers, directors, managers,
employees and agents from and against any and all losses, costs, obligations,
liabilities, damages, actions, suits, causes of action, claims, subpoenas
demands, settlements, judgments, and other expenses, (including but not limited
to cost of defense, settlement, and reasonable attorney's fees) of whatever type
or nature, including, but not limited to, damage or destruction to property,
injury (including death) to any person or persons, which are asserted against,
incurred, imposed upon or suffered by Vendor by reason of, or arising from (1)
performance or the failure of Dealer (or any of its officers, directors,
employees, agents, delegates or subcontractors) to perform under the terms of
this Addendum, (2) the breach of this Addendum by Dealer (or any of its
officers, directors, employees, agents, delegates or subcontractors), (3) the
violation of any law, rule, regulation or authority by Dealer (or any of its
officers, directors, employees, agents, delegates and subcontractors), and (4)
the acts or omissions of Dealer (or any of its officers, directors, employees,
agents, delegates and subcontractors) relating to the scope of the Addendum,
including but not limited to claims relating to alleged infringement by Dealer
or its Affiliates of third party patent, copyright, trademark or other
proprietary rights.
12.3 WAIVER OF DAMAGES. Dealer and Vendor mutually agree that except in the case
of gross negligence, willful misconduct, breach of confidentiality,
Indemnification, or infringement by one party of the other party's intellectual
property, neither party will have any liability to the other party for any
punitive, special, consequential, incidental, or indirect damages, or lost
profits or revenues arising from or relating to this Addendum, the Services, or
the Equipment, even if advised of the possibility of such damages.
13. WAIVER OF LIENS. The Parties hereby waive and relinquish any and all
materialman's, mechanics, workman's and other liens, statutory or
otherwise, upon the property of the other Party's customer.
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14. PRESS RELEASES. Either Party may, in its sole discretion, issue an
initial separate or joint press release relating to this Addendum,
provided that the releasing Party must obtain the prior written approval
of the non-releasing Party. Either Party may use the name of such other
Party in a press release or public announcement(s) relating to the
rights and obligations set forth in this Addendum and/or the
relationship established by this Addendum; provided that neither Party
shall issue any such press release or make any such public
announcement(s), except for general statements in a Party's marketing
material identifying that a Vendor/Dealer relationship exists between
the Parties, without the express prior written consent of the other
Party.
15. RELATIONSHIP OF PARTIES. The Parties to this Addendum are independent
contractors and neither Party shall be deemed an agent, representative,
or partner of the other Party. This Addendum shall not be interpreted or
construed to create an association, agency, joint venture or
partnership, employment, franchise or agency relationship between the
Parties nor shall it be interpreted or construed to impose any liability
attributable to such a relationship upon either Party. Neither Party
shall have any right, power or authority to enter into any Addendum of
or on behalf of, or incur any obligation or liability of, or to
otherwise bind, the other Party. Dealer acknowledges that this is a
non-exclusive agreement with respect to Vendor. Vendor expressly
reserves the right, without obligation or liability to Dealer, to market
and sell the Services, the Equipment, and any other products and
services in the same area served by Dealer, whether through Vendor's own
stores or representatives or through others, including, but not limited
to, other authorized representatives, dealers, resellers, distributors,
and retailers.
16. DISCLAIMER.
16.1 NO MINIMUM REFERRALS. VENDOR ACKNOWLEDGES THAT DEALER DOES NOT GUARANTEE
ANY MINIMUM NUMBER OF REFERRALS OF CUSTOMERS FOR THE SERVICES AND DOES NOT
GUARANTEE ANY MINIMUM AMOUNT OF REVENUES TO VENDOR UNDER THIS ADDENDUM.
SIMILARLY, DEALER ACKNOWLEDGES THAT VENDOR DOES NOT GUARANTEE ANY MINIMUM NUMBER
OF SALES TO MEMBERS FOR WHICH VENDOR WILL PAY COMMISSIONS TO DEALER UNDER THIS
ADDENDUM.
17. MISCELLANEOUS.
17.1 DELEGATION, SUBCONTRACTING. Each Party shall be solely responsible for the
conduct of all its agents, subcontractors and transferees. Any delegation,
subcontracting or transferring of duties, obligations or services shall in no
way modify or affect the duties of Vendor or Dealer under this Addendum. Subject
to the foregoing, this Addendum shall be binding upon and inure to the benefit
of the Parties and their respective successors and assigns.
17.2 ASSIGNMENT. This Addendum may not be assigned by either Party without first
obtaining the other Party's express written consent, which consent shall not be
unreasonably withheld, conditioned or delayed; provided, however, that either
Party may assign this Addendum without obtaining the other Party's express
written consent, but only after written notice to the other Party (i) to a
purchaser of all or substantially all of the Party's assets or a majority or
controlling interest in such Party's voting stock, provided that the purchaser's
net worth at the time of purchase is equal to or greater than that of the Party
that seeks to assign the Addendum, and further provided that the purchaser is
not a competitor of the non-assigning Party; or (ii) to a present or future
Affiliate.
17.3 GOVERNING LAW. This Addendum shall be governed, construed and interpreted
in accordance with the laws of the State of New York. The parties hereby waive
their respective rights to trial by jury.
17.4 Amendments. This Addendum may not be modified except by a writing
referencing this Addendum and signed by the Parties.
17.5 CONSTRUCTION. The headings contained herein are for the convenience of
reference only and are not of substantive effect Whenever necessary or proper
herein, the singular imports the plural or vice versa, and masculine, feminine
and neuter expressions are interchangeable. This Addendum incorporates
provisions, comments and
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suggestions proposed by both Dealer and Vendor. No ambiguity or omission in this
Addendum shall be construed or resolved against either Dealer or Vendor on the
ground that this Addendum, or any of its provisions were drafted or proposed by
Dealer or Vendor.
17.6 SEVERABILITY. If any provision herein shall be deemed or declared
unenforceable, invalid or void by a court of competent jurisdiction, the same
shall not impair any of the other provisions contained herein which shall be
enforced in accordance with their respective terms.
17.7 REMEDIES; WAIVER. No failure or delay by either Party hereto to exercise
any right, power or privilege provided hereunder or under the Addendum or by
applicable law shall operate as a waiver (hereof; nor shall any single or
partial exercise of any such right, power, or privilege preclude any other or
future exercise thereof of the exercise of any other right, power or privilege.
The remedies provided herein shall be cumulative and shall not be exclusive of
any rights or remedies provided by law.
17.8 COUNTERPARTS/FACSIMILE COPIES. THIS Addendum may be executed in one or more
counterparts, each of which shall be deemed an original, but which collectively
will constitute one and the same instrument Facsimile copies of the fully
executed Addendum shall be effective, and the Parties will execute and return
original signature Addendums as soon as reasonably possible.
IN WITNESS WHEREOF, the Parties have executed this Subscription Service Addendum
as of the date first above written.
CLEARWIRE LLC BEST BUY STORES, L.P.
------------------------------------- --------------------------------------
Signed: /s/ Ben Wolff Signed: /s/ Daniel Moc
--------------- -----------------
Print Name: BEN WOLFF Print Name: Daniel Moc
Title: EXECUTIVE VICE PRESIDENT Title: VP. Vendor Mgmt.
Date: 10-3-05 Date: 10-5-05
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EXHIBIT A
SELECTED
DEALER STORES
This Exhibit A sets forth the Selected Dealer Stores in which Dealer is
authorized to Market the Services. Vendor and Dealer agree that this Exhibit A
shall be amended from time to time by the Parties and that Vendor will notify
Dealer when additional Dealer store locations become available for Marketing as
well as when Selected Dealer Stores are no longer available for Marketing due to
changes in the geographic coverage of the Current Services.. Vendor shall give
Dealer at least [***} prior written notice of such changes. If Dealer removes a
store from this Exhibit A for any reason other than a breach of this Addendum by
Vendor, Dealer will immediately pay Vendor *** for each such store that is
removed by Dealer, unless Dealer substitutes for each removed store a reasonably
equivalent store that is approved by Vendor (such approval not to be
unreasonably withheld by Vendor). Dealer shall consult with Vendor prior to any
changes to the list of stores on this Exhibit A. If Vendor deactivates a
particular market, and Dealer removes from this Exhibit A the store or stores in
that market, Dealer will be entitled to retain the *** Store Fee for each such
store that is removed from this Exhibit A.
In addition, Vendor has the option to assort a store outside of the Market Maker
program as mutually agreed in the event that Vendor anticipates a low
performance store based on experience in that market. These will be defined as
non-Market Maker stores and not subject to the Market Maker store fee.
Assortment fee for non-Market Maker stores to be mutually agreed upon by Vendor
and Dealer.
<TABLE>
<CAPTION>
CLEARWIRE MARKET MAKER STORES
REGION DISTRICT STORE NUMBER STORE NAME STATE PROTOTYPE
<S> <C> <C> <C> <C> <C>
1 2 12 ST. CLOUD MN MN 36K C2
1 1 40 EAU CLAIRE Wl Wl 45K C3-2
1 1 43 DULUTH MN MN 45K C3-2
10 41 128 RENO NV NV 45K C4.5
10 40 141 MODESTO CA CA 45K C4.5
3 8 182 KILLEEN TX TX 30K SM
3 8 244 WACO TX TX 30K C5
3 65 280 MIDLAND/ODESSA TX TX 45K C3-1
12 20 350 JACKSONVILLE FL FL 45K C5
10 45 359 BELLINGHAM WA WA 30K SM
10 40 391 TRACY CA CA 30K C5
12 20 429 REGENCY MALL FL FL 45K C4.5
12 20 430 ORANGE PARK FL FL 42K C4.5
12 20 515 DAYTONA BEACH FL FL 58K C3-1
1 2 522 BAXTER MN MN 30K C5
2 57 526 BOISE ID ID 45K C5
10 40 528 STOCKTON CA CA 45K C5
8 33 529 VISALIA CA CA 30K C5
10 46 539 ANCHORAGE AK AK 45K C5
10 46 590 KENNEWICK WA WA 30K SM
10 46 600 SPRINGFIELD OR 45K C5
10 45 798 BURLINGTON WA WA 20K C5
10 40 844 MERCED CA CA 30K C5
10 41 850 CARSON VALLEY NV NV 30K C5
3 65 940 ABILENE TX 20K C5
</TABLE>
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EXHIBIT B
*** EXHIBIT
Capitalized terms not otherwise defined in this Exhibit B shall have the meaning
ascribed to such terms in the SSA., This Exhibit B represents further commitment
to promote the Services as set forth in the SSA.
1. TERM. Status of CLEARWIRE as a featured WIRELESS DATA service provider
shall commence on *** ("Launch"), and continue as provided herein or
until the SSA has expired or is Terminated.
2. RESERVED.
3. ***
3.1 Best Buy will develop and implement each of the following elements of the
Market Maker Plan to promote the Services in Selected Dealer Stores.
3.1.1 ***. Clearwire shall participate in the *** free of additional cost, with
the exception of vendor funded items booth/display, ***, shipping, additional
hotel room beyond sponsorship agreements. In addition, Best Buy will provide
incremental man hours of training and will promote the Services to its employees
using tools such as: ***, Retail Associate Training, and ***, as those
promotions are currently defined by Best Buy internal practices; and.
3.1.2 ***. 1) Best Buy will provide signage for the Services and Equipment. 2)
Clearwire's Equipment and Services shall have placement on the *** or other
similar display. 3) Best Buy will also provide the Services and Equipment with
placement on interactive terminals (where available); and
3.1.3 ***. Best Buy will provide ***. This support will include advertising
within the following major areas, or other advertising of equivalent value:
i) [***] on service availability and version options;
ii) [***]
iii) [***]
3.1.4 Promotions. [***] Clearwire will have input into such promotions, all
fees, expenses and related administrative charges will be included in the Co-Op
Fee, Store Fee and other marketing funds as described in Exhibit C to the SSA.
4. MARKETING AND USE OF *** FEE. Except as expressly stated otherwise in this
Exhibit or the SSA, the Market Maker Fee and resources shall be expended by Best
Buy in its sole discretion in accordance with this Market Maker Campaign.
5. MARKET MAKER EVALUATION.
Best Buy shall develop the *** and provide it to Clearwire for its review and
comment. Clearwire will then have ten (10) business days to review the *** and
provide its comments to Best Buy. Best Buy will consider Clearwire's comments in
good faith and deliver a final *** to Clearwire for its review prior to Launch.
After Launch, the Parties will meet throughout the duration of the *** to
discuss and evaluate the success of the ***. At these meetings, Clearwire may
propose reasonable revisions to the *** and Best Buy will not unreasonably
reject such proposals.
Best Buy will provide Clearwire with *** reports in a form acceptable to the
Clearwire detailing Best Buy's expenditures in fulfillment of Best Buy's
obligations under the ***.
If the *** declines below the original store funding amount, Best Buy will have
the discretion to modify the plan according to the revised budget. These changes
will be reflected within a revision of the [***]. If the store funding ends
after the initial *** month launch period, according to the Subscription
Services Compensation Addendum, the Market Maker plan ends within a commercially
reasonable time frame to decommission current store placement and assort
Clearwire within the traditional assortment of broadband vendors.
Subscription Service Addendum Final 100305
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EXHIBIT C
SERVICE DEFINITIONS AND COMPENSATION
1. CURRENT SERVICES SOLD THROUGH DEALER SALES CHANNELS: Vendor Services that
have been mutually agreed upon by the Parties to be Current Services include:
Wireless Broadband Internet Access service.
2. COMPENSATION. Vendor will compensate Dealer in accordance with the following
procedures.
2.1 ACTIVATION COMMISSIONS
Vendor will pay Dealer a one-time commission equal to *** (the "Activation
Commission") for each Member Activated by Dealer on a one (1) or two (2) year
(as required by the applicable rate plan) Member contract for any Authorized
Service rate plan made available by Vendor to its Members in the same market
area, provided such Member continuously subscribes to the Services during ***
consecutive day period beginning on the date of Activation (the "Chargeback
Period"). Notwithstanding the foregoing, should a Member's service be suspended,
but restored, the period of active service before and after the suspension will
count toward satisfaction of the Chargeback Period, but the period of the
suspension will not be included. In the event a Member's service is suspended
and terminated prior to being restored, the number of days for purposes of
computing the length of the Chargeback Period that was satisfied will not
include the period of the suspension and the Member will be deemed to have
terminated service on the date the suspension period began. Vendor will pay
Dealer all Activation Commissions owing Dealer within thirty (30) calendar days
from the end of the calendar month in which the Member Activations occur. Dealer
acknowledges and agrees that from time to time, Vendor may have rate plans which
Dealer is not authorized to offer hereunder. No Activation Commissions will be
paid for demonstration activations or Dealer employees who activate special
accommodation plans.
The Activation Commission will be subject to Vendor's right to recover or
"Chargeback" the Activation Commission if the applicable Member fails to satisfy
the Chargeback Period for reasons which include, but are not limited to: Service
cancellation, the Member moves out of the area, lack of coverage, suspension or
interruption for any reason (including nonpayment) during the Chargeback Period.
Dealer further understand and agrees that at Vendor's sole discretion,
charge-backs and debits may be offset against any Commissions, bonuses, or other
amounts owed to Dealer by Vendor. If a Member continuously subscribes to
Vendor's broadband wireless service for less than the full Chargeback Period,
Vendor will chargeback 100% of the Activation Commission. In no event will
Vendor charge-back Activation Commissions on more than *** of the total number
of Members Activated by Dealer during the Term of this Addendum. All Chargebacks
must be raised within *** days of Activation or such Chargebacks are waived.
2.2 RESIDUAL
Vendor will pay to Dealer a monthly recurring residual fee (the "Residual")
equal to *** of the gross revenue received by Vendor for the monthly service fee
for the Services (and excluding any modem rental charges of up to *** per month,
and excluding any taxes, governmental surcharges, and other similar charges)
from each Member during the first *** months of such Member's agreement to
purchase Clearwire Authorized Services. Payment of the Residual will be made
within thirty (30) calendar days from the end of the calendar month in which the
Member Activations occur. Vendor's obligation to pay such Residuals survives the
expiration or termination of this Agreement, unless termination results from
Dealer's breach of this Agreement.
2.3 MARKETING FEES
Co-Op Fee: Vendor will pay to Dealer, within thirty (30) calendar days from the
end of the calendar month in which the Member Activations occur, a one-time fee
equal to *** per Activated
Subscription Service Addendum Final 100305
Page 13 of 19
Member to a marketing co-op fund. Such fund shall be allocated and used in
accordance with Vendor's Co-Op Program or as otherwise agreed by Vendor and
Dealer in writing. This Co-Op Fee is not subject to chargeback by Vendor.
Store Fee: Vender will pay to Dealer a fee equal to *** for each Selected Dealer
Store (" Store Fee") that activates and implements the "dealer Market Maker
Campaign" identified on Exhibit B attached hereto, which includes premiere
product/service positioning, advertising, and sales training related to selling
Vendor service. The Store Fee will be payable within *** days of such Selected
Dealer Store being activated and selling Services as provided herein.
If the average annual gross Activations per store per week, as measured on
*** for the immediately preceding ***, is below *** then all future annual
store payments will change according to the following schedule:
<TABLE>
<CAPTION>
Ads/Store/week New annual store fee
------------------ ---------------------
<S> <C>
*** ***
</TABLE>
Only the gross add data for stores open more than *** will be included in
the average calculation. In addition, the average calculation will exclude
any day in which Vendor's order entry and billing system is available to
Activate Members for less than *** store hours. "Store hours", means the
*** period during which a Selected Dealer Store is open for business to
the general public. The gross add data will be included regardless of
excluded days caused by system unavailability.
Infrastructure Fee: Vendor will pay to Dealer the total amount of *** to be used
solely in connection with fulfillment of Dealer's obligations under this
Addendum the Infrastructure Fee will be paid in three (3) equal payments. The
first payment will be made within thirty (30) days of mutual execution of this
Addendum; the second payment will be made on *** and the third payment will be
made on *** Vendor's obligation to make either of the second or third payments
will be conditioned on the continuing effectiveness of this Addendum.
2.4 ADDITIONAL COMPENSATION OPPORTUNITIES
The parties will use commercially reasonable efforts to identify and implement
additional commission, bonus and related compensation opportunities for Dealer
with the intent to reward top performing Selected Dealer Stores and make
available additional marketing funds in connection with this Addendum. Special
marketing programs and special compensation arrangements must be agreed to in
writing and signed by authorized representatives of both parties.
Preferred method of payment is via wire sent to the bank account below:
Name on Bank Account = Best Buy Co., Inc.
US Bank
101 E. Fifth Street
St. Paul, MN. 55101
Best Buy Co., Inc.
Acct# ***
ABA# ***
Subscription Service Addendum Final 100305
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EXHIBIT D
VENDOR BRAND GUIDELINES
(SEE ATTACHED)
Subscription Service Addendum Final 100305
Page l5 of l9
CLEARWIRE(R)
wireless broadband
EXHIBIT D
SUBSCRIPTION SERVICE ADDENDUM
VENDOR BRAND GUIDELINES
Proprietary and confidential information of Clearwire. Not for use by any third
party, or disclosure to any third party, other than Clearwire and its
affiliates, and Clearwire's Authorized Representatives, except with Clearwire's
written approval.
1
ADVERTISING AND MARKETING REQUIREMENTS
For all advertising and marketing Dealer will comply with Clearwire's
requirements and the terms, conditions and Standards set forth in this Exhibit.
Notwithstanding anything to the contrary herein, Dealer will be responsible for
ensuring that its advertising and marketing complies with all applicable laws,
rules and regulations.
- All claims in any advertising or marketing regarding Clearwire's products
and/or Services must be truthful, in good taste and consistent with Clearwire's
brand, as determined by Clearwire. Any false or misleading advertising or
advertising that is not in good taste or is inconsistent with the Clearwire
brand, as determined by Clearwire, may be reported to Clearwire's legal
department for possible action.
- Advertising that contains any claims (express or implied) must have supporting
documentation that substantiates such claims, THESE INCLUDE CLAIMS SUCH AS
CLAIMS ABOUT THE PRODUCT, CLEARWIRE, OR THE RETAILER.
- Advertised rate plans must be Clearwire's approved, current retail pricing.
Special rate plans, other rate plans and/or promotional pricing plans are NOT to
be quoted or referenced in any advertisement under any circumstances unless the
advertising is placed in a business specific circular and is approved by
Clearwire in writing and in advance. Each price listed must include disclaimers
or explanations that clearly and conspicuously state what the price represents,
such as invoice price, rebate, final price, etc.
- All advertising must clearly and conspicuously state that "certain other
restrictions apply."
CLEARWIRE DOES NOT PROVIDE LEGAL ADVICE ABOUT ADVERTISING REQUIREMENTS.
REPRESENTATIVE SHOULD CONSULT ITS OWN LEGAL COUNSEL REGARDING COMPLIANCE WITH
THESE GUIDELINES AND APPLICABLE LAW.
IF ANY FINES OR PENALTIES ARE IMPOSED ON CLEARWIRE DUE TO REPRESENTATIVE'S
FAILURE TO ABIDE BY APPLICABLE LAW, REPRESENTATIVE SHALL IMMEDIATELY PAY TO
CLEARWIRE THE AMOUNT OF THE FINE(S) OR PENALTIES AND ALL REASONABLE ATTORNEYS'
FEES AND COSTS INCURRED BY CLEARWIRE IN CONNECTION WITH SUCH FINE(S) OR
PENALTIES. IF REPRESENTATIVE FAILS TO REIMBURSE CLEARWIRE THE AMOUNT OF SUCH
FINE(S) OR PENALTIES AND ALL REASONABLE ATTORNEYS' FEES AND COSTS INCURRED BY
CLEARWIRE IN CONNECTION WITH SUCH FINE(S) OR PENALTIES, CLEARWIRE SHALL HAVE THE
RIGHT TO DEDUCT SUCH AMOUNT FROM ANY OTHER PAYMENT DUE REPRESENTATIVE UNDER THE
AUTHORIZED REPRESENTATIVE AGREEMENT, THESE GUIDELINES OR OTHERWISE.
Proprietary and confidential information of Clearwire. Not for use by any third
party, or disclosure to any third party, other than Clearwire and its
affiliates, and Clearwire's Authorized Representatives, except with Clearwire's
written approval.
2
CLEARWIRE NATIONAL BRAND STANDARDS
All advertising and marketing incorporating the Clearwire brand name and/or
Clearwire Marks (as defined in Subscription Service Agreement), or other
representative indicator must be submitted to Clearwire for written approval
prior to being produced, published or aired, regardless of whether such
advertising or marketing is eligible for any other Clearwire-sponsored program.
This includes, for example, business cards, stationery, and location signs. All
use of Marks must comply with these Standards, including the requirements as
described under Logo Standards below. Representative must use camera-ready
artwork, as provided by Clearwire.
USE OF THE CLEARWIRE MARKS
The following guidelines explain how Dealer will use the Clearwire Marks in
their marketing and promotional materials. All usage of the Clearwire signature
(logo, logo-type, broadband wireless services) must be authorized by Clearwire
prior to any use at all times and must comply with all of the Clearwire graphic
standards and give Clearwire control over all uses of its name and Marks.
Clearwire names and Marks must be used by Representative only in conjunction
with the sale of authorized Clearwire Services. Clearwire at all times reserves
the unilateral right to modify or alter the Marks or establish and enforce such
quality standards and additional terms and conditions concerning the use of the
Marks as it deems necessary.
The CAR Logo is a graphical element and can be used in either a horizontal or a
vertical format.
See examples below.
Typeface for "Authorized Representative" is Gotham.
CLEAR SPACE REQUIREMENTS
Dealer will make commercially reasonable efforts to incorporate the minimum
clear space (i.e., the clear area around the logo) is equal to the height of the
letter "1" in the Clearwire Logo.
SIZE REQUIREMENTS
a. Vertical Logo ***
b. Horizontal Logo ***
Proprietary and confidential information of Clearwire. Not for use by any third
party, or disclosure to any third party, other than Clearwire and its
affiliates, and Clearwire's Authorized Representatives, except with Clearwire's
written approval.
3
APPROVED COLOR PALETTE FOR AUTHORIZED REPRESENTATIVE LOGO
The color palette is consistent with the Clearwire color palette.
The CAR Logo can be printed in color or reversed out of a colored background
(only the specific color palette blocks). The preferred standard is placement of
the logo on a white background, using the standard logo color palette.
CLEARWIRE GREEN
***(printed on coated stock)
***(printed on uncoated stock)
CLEARWIRE BLUE
*** (printed on coated stock)
*** (printed on uncoated stock)
CLEARWIRE GRAY
(This color should only be used when silver is not available.)
*** (printed on coated stock)
*** (printed on uncoated stock)
PRIMARY (AND PREFERRED) COLOR USAGE:
Clearwire green, Clearwire blue and Clearwire gray
Use this application when the logo appears against white.
SECONDARY COLOR USAGE:
Black (screens of)
Use this application if you are printing in black and white (no color).
COLORED BACKGROUND USAGE:
There are four colored background options on which to use the Logo. The Logo
color compliments the specific color background and is reversed out of the
background.
The Clearwire Logo should ONLY appear in the approved Logo colors.
Proprietary and confidential information of Clearwire. Not for use by any third
party, or disclosure to any third party, other than Clearwire and its
affiliates, and Clearwire's Authorized Representatives, except with Clearwire's
written approval.
4
EXAMPLES OF CLEARWIRE AUTHORIZED REPRESENTATIVE LOGO AND PROPER USAGE:
CLEARWIRE AUTHORIZED
REPRESENTATIVE LOGO.
[CLEARWIRE LOGO]
Full Color
[CLEARWIRE LOGO]
Black & White
Proprietary and confidential information of Clearwire. Not for use by any third
party, or disclosure to any third party, other than Clearwire and its
affiliates, and Clearwire's Authorized Representatives, except with Clearwire's
written approval.
5
CLEARWIRE AUTHORIZED
REPRESENTATIVE LOGO.
Minimum size for printing
[CLEARWIRE LOGO]
Vertical Signature
[CLEARWIRE LOGO]
Horizontal Signature
Proprietary and confidential information of Clearwire. Not for use by any third
party, or disclosure to any third party, other than Clearwire and its
affiliates, and Clearwire's Authorized Representatives, except with Clearwire's
written approval.
[*** Confidential Treatment Requested]
6
CLEARWIRE AUTHORIZED
REPRESENTATIVE LOGO
MINIMUM AREA. CLEARSPACE.
The minimum clear area around the logo is equal to the height of the letter "I"
in the Clearwire logo.
[CLEARWIRE LOGO]
Vertical Signature
[CLEARWIRE LOGO]
Horizontal Signature
Proprietary and confidential information of Clearwire. Not for use by any third
party, or disclosure to any third party, other than Clearwire and its
affiliates, and Clearwire's Authorized Representatives, except with Clearwire's
written approval.
7
CLEARWIRE LOGO AND TAGLINE.
[CLEARWIRE LOGO]
Color
[CLEARWIRE LOGO]
Black & White
Proprietary and confidential information of Clearwire. Not for use by any third
party, or disclosure to any third party, other than Clearwire and its
affiliates, and Clearwire's Authorized Representatives, except with Clearwire's
written approval.
8
CLEARWIRE COLOR PALETTE.
<TABLE>
<CAPTION>
Coated Uncoated CMYK RGB
------ -------- ----- -----
<S> <C> <C> <C> <C>
clearwire green *** *** *** ***
clearwire blue *** *** *** ***
clearwire gray *** *** *** ***
</TABLE>
Coated and Uncoated refers to the printing paper surface. CMYK is typically used
when creating color with 4-color process ink. RGB refers to color builds for
monitor-viewing only.
Proprietary and confidential information of Clearwire. Not for use by any third
party, or disclosure to any third party, other than Clearwire and its
affiliates, and Clearwire's Authorized Representatives, except with Clearwire's
written approval.
9
CLEARWIRE
WIRELESS BROADBAND
WEB-SAFE IDENTITY COLORS
PMS WEB
*** ***
PMS WEB
*** ***
PMS WEB
*** ***
Proprietary and confidential information of Clearwire. Not for use by any third
party, or disclosure to any third party, other than Clearwire and its
affiliates, and Clearwire's Authorized Representatives, except with Clearwire's
written approval.
10
CLEARWIRE AUTHORIZED
REPRESENTATIVE LOGO.
Logo reversed out of a color
[CLEARWIRE LOGO]
Proprietary and confidential information of Clearwire. Not for use by any third
party, or disclosure to any third party, other than Clearwire and its
affiliates, and Clearwire's Authorized Representatives, except with Clearwire's
written approval.
11
CLEARWIRE BRAND STANDARDS
A. CLEARWIRE BRAND LOGO
The Clearwire Brand logo ("Logo") is a graphical element and must be used with
the tagline. The Logo may be produced in full color or in black and white. The
name "clearwire" is always written as one word and lower case, non-italicized,
and accompanied by its copyright registration symbol ((R)). See samples in Logo
Standards section.
B. LOGO TAGLINE USAGE
The Clearwire Brand logo and tagline are considered a single graphical element
The following tagline should always be used with the Logo.
WIRELESS BROADBAND
Typefaces: Gotham Clearwire Medium and Gotham Clearwire Bold
SIZE REQUIREMENTS
a. Vertical Logo ***
b. Horizontal Logo ***
CLEAR SPACE REQUIREMENTS
Dealer will make commercially reasonable efforts to incorporate the minimum
clear space (i.e., the clear area around the logo) is equal to the height of the
letter "I" in the Clearwire Logo.
Proprietary and confidential information of Clearwire. Not for use by any third
party, or disclosure to any third party, other than Clearwire and its
affiliates, and Clearwire's Authorized Representatives, except with Clearwire's
written approval.
12
CLEARWIRE LOGO AND TAGLINE.
[CLEARWIRE LOGO]
Color
[CLEARWIRE LOGO]
Black & White
Proprietary and confidential information of Clearwire. Not for use by any third
party, or disclosure to any third party, other than Clearwire and its
affiliates, and Clearwire's Authorized Representatives, except with Clearwire's
written approval.
13
EXHIBIT E
DEALER MARKETING GUIDELINES
See Dealer Extranet Site www.extendingthereach.com
Subscription Service Addendum Final 100305
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EXHIBIT F
VENDOR SET-UP AND REPORTING PROCESSES
VENDOR SET-UP AND PROCESSING:
Dealer has instituted certain interface requirements between itself and its
vendor partners to more effectively manage the process of doing business
together.
NEW VENDOR SET-UP GUIDE: Vendor and Dealer have developed mutually agreed
processes and requirements for the sign-up and fulfillment of new customers, as
more fully described in attached Schedule 1 and as may be updated and modified
by written agreement of the Parties from time to time.
BACK-END/FRONT-END SYSTEMS: Vendor will, within *** days of the effective date
of this Addendum, integrate its automated order entry and fulfillment software
and other systems related to the Activation of the Services ("Vendor OSS
System") into Dealer's existing back-end and front-end systems as necessary to
the efficient performance of the Parties under this Addendum. This will include
but not be limited to providing electronic files to transfer details about
Dealer's customers in accordance with the Dealer's system specifications. Member
activation, installation, and cancellation files will be sent on a daily basis
and payment files in conjunction with issuance of monthly payment.
REPORTING:
1) RECORDS. Vendor shall on a [***] provide to Dealer and its designee an
electronic accounting and reconciliation of all Activations and other
reports or information regarding the Services as may be reasonably
requested by Dealer.
2) REPORTS TO BE JOINTLY DEVELOPED. The Parties shall work together to program
and exchange the following information:
a) Intent to Activate -- This will contain all of the Member Activations
from all Selected Dealer Stores for a particular date. This file will
be sent nightly.
b) Activations -- This file lists all Members that have Activated a
Service with Vendor in a given day. This file is sent from Vendor once
a day.
c) Cancellations -- This file contains a list of all Members who
terminated Service by calling or otherwise contacting the Vendor. This
will be sent nightly from Vendor to Dealer.
d) If requested by Vendor, Dealer has the ability to capture signatures
and send that data as part of the sales record collected at the front
lanes.
3) Vendor will provide a status for all Activations to Dealer (via ESC File
transfer) within *** of the order being installed or
cancelled.
4) Orders status responses shall follow the below example:
<TABLE>
<CAPTION>
% "Statuses" after 30 days % "Statused" after 60 days % "Statused" after 90 days
-------------------------- -------------------------- --------------------------
<S> <C> <C>
60% 85% 100%
</TABLE>
PAYMENT FILE
The payment file is what Dealer uses to reconcile the scheduled accounts. This
payment file should match the physical payment amount sent to Dealer from
Vendor. The file will contain the detailed account information (including the
unique identifier) so matching can take place in the ESC system.
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Monthly payment files are acceptable and details of when during the month the
payment file is sent are determined between Dealer and Vendor.
CHARGEBACK FILE
The chargeback file is only used if Vendor has paid Dealer for a Member where a
chargeback is due under the terms of the Agreement. The chargeback file is used
to recover payment from Dealer to Vendor for those Members.
This file is seldom used, however where it is applicable, a monthly file
transfer is acceptable.
The specific details of these files are presented in the New Vendor Setup Guide
and Dealer's IT and Accounting staff will work with Vendor's IT and Accounting
staff for specific formats and content. In all files, Member account level
content is required. This level of content helps Dealer and Vendor accurately
track the proper receivables scheduled for each Member.
Subscription Service Addendum Final 100305
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SCHEDULE 1
TO
EXHIBIT F
***
***
***
***
***
***
***
EXHIBIT G
SERVICE LEVEL AGREEMENTS (SLA's)
1. ACCURACY OF QUALIFICATION DATA -Vendor's loop qualification tool will be
as accurate for Dealer as it is for any Dealer Competitor. Vendor will
make commercially reasonable efforts to minimize the number of false
positives and negatives reported via the loop qualification tool.
2. VENDOR SYSTEM UPTIME -Vendor will make commercially reasonable efforts to
ensure the OSS System will be online and available to the Selected Dealer
Stores at a level equal to that of any Dealer Competitor.
3. VENDOR, OR THIRD PARTY INSTALLATION VENDOR, WILL SETUP AND ENABLE DELIVERY
OF THE SERVICES to Members on the same or similar time intervals as that
provided to similarly situated customers from any Dealer Competitor.
SLAs
1. DEALER SERVICE LEVEL REQUIREMENTS
a. OSS System production environment available *** of retail hours
(7 am - 12 am for each time zone of represented Selected Dealer
Stores), 7 days/week 52 weeks/year
b. OSS System response times of *** or less for *** of the OSS System
requests.
2. VENDOR SYSTEM MAINTENANCE
a. Vendor will provide specific maintenance windows that align with
retail hours of Selected Dealer Stores (M-F 12 am - 5 am CST/CDT)
b. Vendor will provide 60 days advance notice for non critical
maintenance or OSS System changes that Vendor could reasonably
anticipate to result in OSS System downtime. This includes changes
that would affect Dealer partner such as G2B or GetConnected
("Dealer's Partners").
c. Vendor will not release any updates or changes to its OSS System
production environment as it affects Best Buy web service and Dealer
Partners during the Dealer Holiday Retail Freeze (11/1-1/18)
3. VENDOR PRODUCTION PROBLEMS
a. Vendor will promptly notify Dealer with any reportable OSS System
downtime information including ETS for resolution.
b. Vendor will resolve all critical OSS System production problems
within *** of Vendor's discovery of such problem during retail
business hours or within *** during non-retail hours.
c. Vendor will provide a single point of contact and an escalation path
for all OSS System production issues.
4. TESTING AND QUALITY ASSURANCE
a. Vendor agrees to provide a workable, consistently available,
production simulated environment in which Dealer or Dealer's
Partners can test against. This QA environment should be available
*** of the time during Vendor's normal business hours.
b. Vendor will provide Dealer with a full set of valid test data (e.g.
address, phone numbers, credit card numbers) that can be used in the
simulated environment to perform system and quality assurance
testing prior to OSS System production launches. Sufficient data is
necessary to support all potential production scenarios.
5. CONTENT MANAGEMENT
a. Vendor will provide updates to existing marketing plans or
promotions to Dealer 30 day's prior written notice to being
implemented.
b. Vendor will provide all plan and promotional data presented to
Members through a Dealer Partner service Vendor website or sales
tool.
Subscription Service Addendum Final 100305
Page 19 of 19
Exhibit 10.41
CO-MARKETING AGREEMENT
THIS AGREEMENT ("Agreement") is made this 14th day of September, 2006 (the
"Effective Date") by and between CIRCUIT CITY STORES, INC. ("Circuit City") a
Virginia corporation, with a principal place of business at 9950 Mayland Drive,
Richmond, Virginia 23233, and CLEARWIRE, US, LLC, ("Clearwire") a Nevada limited
liability company. Clearwire and Circuit City are hereinafter referred to as
"Party" or "Parties" as the context may require.
RECITALS
WHEREAS, Clearwire is an Internet services provider;
WHEREAS, Circuit City, either directly or through its Affiliates, operates
retail stores and the Circuit City Website which offer, among other things,
computer, electronics, communication and data products and services to the
general public; and
WHEREAS, Circuit City and Clearwire desire for Circuit City to market, promote,
sell and solicit orders for Clearwire Internet and Internet-based services
through the Stores mutually selected by Circuit City and Clearwire and via the
Circuit City Website, subject to the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth
below, the receipt and sufficiency of which is hereby acknowledged, the Parties
hereto agree as follows:
1. DEFINITIONS.
1.1 "Affiliate(s)" means an entity that is directly or indirectly owned or
controlled, is under the common ownership or control with, or is owned
or controlled by the entity with which it is affiliated.
1.2 "Agreement" means this Agreement, and its Attachments and Exhibits,
which are attached hereto and incorporated fully herein.
1.3 "Bounty" means the amount that Clearwire shall pay Circuit City for
each Qualified Subscriber generated by Circuit City's promotional
efforts hereunder as specifically set forth in Exhibit B attached
hereto.
1.4 "Circuit City Website" means www.circuitcity.com.
1.5 "Intellectual Property" shall mean all intellectual property rights
world wide, including copyrights, patents, trademarks, service marks,
trade names, and trade secrets, and rights of personality and
likeness, and all similar rights whether arising by operation of law,
contract, license or otherwise.
1.6 "Marks" means all domain names, trademarks, trade names, service
marks, logos and slogans associated with a Party's or that Party's
third party licensors' products or services in Exhibit C for Clearwire
and Exhibit D for Circuit City.
1.7 "Promotional Materials" means advertising and other promotional
communications, in any media, directed at potential Subscribers, which
describes the Services.
1.8 "Promotional Offer" means a special offer to potential Subscribers in
terms of pricing or free service for a specified period of time.
Clearwire/Circuit City Confidential Information
Not to be disclosed without written permission of Clearwire and Circuit City
Page l
1.9 "Qualified Subscriber" means a Subscriber who, as a result of Circuit
City's efforts satisfies the Clearwire pre-qualification process,
subscribes to the Services, and makes the initial monthly payment for
such Service and remains paying for [***] days, excluding promotions.
1.10 "Services" means the wireless broadband and related Internet access
and services where Clearwire has contractual arrangements for
provisioning.
1.11 "Stores" means Circuit City's retail "super stores" located within the
United States.
1.12 "Subscriber" shall mean an individual or entity that orders any
offered Service by means of Circuit City under this Agreement.
1.13 "Subscriber Information" means personally identifying information
about Subscribers or potential Subscribers, such as the names,
addresses, usernames, passwords, e-mail addresses of and financial
information related to any Subscribers.
2. OBLIGATIONS OF THE PARTIES.
2.1 The obligations and duties of Clearwire and Circuit City with respect
to the establishment and administration of the various obligations,
respectively, are stated in this Agreement
2.2 Each Party shall assign an account manager to coordinate the
promotional programs with the other Party. If a Party changes the
person assigned as the account manager, such Party shall notify the
other Party in writing of the name and contact information of such new
account manager.
2.3 Subject to the terms and restrictions set forth in this Agreement,
Clearwire hereby grants Circuit City limited rights to market and
promote the Services described in the manner set forth herein. Circuit
City hereby accepts the foregoing and agrees to market and promote the
Services in the manner set forth herein.
2.4 Clearwire shall be solely responsible for providing Circuit City with
information relating to the Services and any Promotional Offers,
including the content of Promotional Materials. Circuit City agrees to
use such information solely in connection with its obligations under
this Agreement.
2.5 Clearwire shall at all times be solely responsible for providing and
maintaining the Services including, but not limited to, billing and
customer service. The Services promoted hereunder shall be comparable
in features, functionality and pricing to the Services offered
directly by Clearwire through its own sales channel or other
retailers. Clearwire, in its sole discretion, reserves the right to
accept, or reject, any potential Subscriber. Additionally, Clearwire
and each Subscriber shall have the right, at any time, to terminate
the Service provided to a Subscriber in accordance with the terms and
conditions of the then current Clearwire Internet Services Agreement
and related policies.
2.6 Circuit City may not make any representations or warranties with
respect to the Services other than those authorized in writing by
Clearwire.
3. TERM AND TERMINATION.
3.1 Term. The term of this Agreement shall run from the Effective Date for
a term of two (2) years (the "Initial Term"), unless otherwise
terminated in accordance with Section 3.2 (Termination) below.
Clearwire/Circuit City Confidential Information
Not to be disclosed without written permission of Clearwire and Circuit City
[*** Confidential Treatment Requested]
Page 2
3.2 Termination.
3.2.1 During the Term, either Party may terminate this Agreement: (a)
immediately upon written notice to the other Party if the other
Party files a petition for bankruptcy or insolvency or has such a
petition filed against it that is not dismissed within ninety
(90) days, makes a general assignment for the benefit of
creditors, becomes generally unable to pay its debts as they
become due, suffers or permits the appointment of a receiver,
trustee, or custodian for its business or any substantial part of
its assets, or becomes subject to any proceeding under any
statute of any governing authority relating to insolvency or the
protection of rights of creditors, and is thereby rendered
substantially unable to perform its material obligations
hereunder; or (b) in the event the other Party is in material
breach, or otherwise is materially in default of any other term,
condition or provision of this Agreement, and such breach or
default continues for thirty (30) days after the non-breaching
Party gives written notice to the breaching Party thereof and
such party fails to cure such breach or default, then, in
addition to all other rights and remedies provided hereunder or
at law or equity, the non-breaching party shall have the right to
terminate this Agreement in whole or in part without any
liability to the breaching party whatsoever, other than monies
not otherwise in dispute and owed to the breaching party for
services rendered during and under the Term of this Agreement.
Upon termination of this Agreement for any reason Circuit City
shall return all Cleanwire devices provided pursuant to this
Agreement within ninety (90) days of the end of the Term.
3.2.2 Notwithstanding anything to the contrary contained herein, after
the first year of the Initial Term either Party shall have the
right to terminate this Agreement at any time without cause, upon
ninety (90) days' prior written notice.
3.2.3 Upon the expiration or termination of this Agreement for any
reason (a) all licenses granted under this Agreement shall
immediately terminate; (b) Circuit City shall cease marketing the
Services and shall cease distributing Promotional Materials; (c)
the Parties shall promptly cease all use of each other's Marks
that were licensed by this Agreement (as opposed to Marks that
were licensed pursuant to another agreement); (d) all payments
that have accrued prior to the termination or expiration shall be
payable in full on the later of (i) ninety (90) days following
the termination or expiration, or (ii) the date on which the
payment would be otherwise due; and (f) all rights herein granted
shall revert to the granting Party. Except for materials kept for
archival purposes, each Party shall promptly return to the other
Party any and all documents or other media embodying any use of
the other Parry's Intellectual Property (including specifically,
but not limited to, any copies of Promotional Materials that have
not been distributed at the time of expiration or termination);
provided, that if this Agreement is terminated because of an
event set forth in 3.2.1 above, the Party responsible for the
event (e.g., the breaching Party) shall bear all costs associated
with the return of the Parties' respective Intellectual Property.
Materials retained for archival purposes may not be used for any
commercial purpose or distributed and shall be treated as
Confidential Information. Clearwire shall have payment
obligations (as set forth herein) in connection with Subscribers
who sign up for the Service prior to or on the date of
termination or expiration of this Agreement.
3.2.4 All obligations of the Parties under this Agreement which, by
their nature, would continue beyond termination, cancellation or
expiration of this Agreement, including by way of illustration
and not limitation those clauses relating to the obligations of
Parties under Sections 1, 2.5, 3, 10, 11, 13 and 15 through 25
shall survive such termination, cancellation or expiration.
Clearwire/Circuit City Confidential Information
Not to be disclosed without written permission of Clearwire and Circuit City
Page 3
4. INTELLECTUAL PROPERTY RIGHTS.
4.1 Each Party acknowledges that the other Party owns and retains all
rights to Intellectual Property associated with such other Party's
products and services ("Intellectual Property Rights") and agrees that
it will not at any time during or after the Term of this Agreement
assert or claim any interest in or do anything that may adversely
affect the validity of any Intellectual Property Rights of the other
Party (including without limitation any act or assistance to any act
which may infringe or lead to the infringement of any Intellectual
Property Rights of the other Party). Each Party agrees (i) not to
knowingly remove or destroy any proprietary markings of the other
Party contained in product, service, marketing or sales materials
produced pursuant to this Agreement and (ii) to include such
proprietary markings where appropriate when referring to the other
Party's products or services in product, service, marketing or sales
materials produced pursuant to this Agreement
4.2 Clearwire Licensed Marks.
4.2.1 Subject to the terms and conditions specified in this Agreement,
Clearwire hereby grants to Circuit City (and Circuit City's
Affiliates), for the term of this Agreement, a non-exclusive,
non-transferable license to use the Clearwire licensed marks set
forth in EXHIBIT C ("the Clearwire Licensed Marks") exactly as
depicted in the graphic configuration or as subsequently modified
by Clearwire. Clearwire may, in its sole discretion, at any time
add to or delete from the Clearwire Licensed Marks and change the
graphic configuration of the Clearwire Licensed Marks.
4.2.2 Circuit City agrees that the style of use of the Clearwire
Licensed Marks shall be in the form and style conforming to the
trademark usage guidelines as provided to Circuit City in
writing. Circuit City shall not use any of the Clearwire Licensed
Marks as part of its corporate name, trade name, business name or
Internet domain name.
4.2.3 Circuit City shall submit to Clearwire for review and approval,
at least ten (10) business days prior to proposed use, any web
pages or other Internet locations, and all marketing,
advertising, press releases or other Promotional Materials in
which the Clearwire Licensed Marks are used. Clearwire shall
approve or disapprove such materials at least five (5) business
days after its receipt of such materials; Clearwire will not
unreasonably withhold or delay the granting of its approval
thereof. Circuit City shall not publish, distribute or use any
such web pages or other Internet locations, or any such
marketing, advertising, press releases or other Promotional
Materials in which the Clearwire Licensed Marks are used, without
the prior written approval of Clearwire.
4.2.4 Notwithstanding the foregoing, Circuit City may designate at the
time of submission that the requested approval is for
multiple/repetitive, identical uses on the same medium. Circuit
City may request approval for such multiple/repetitive, identical
use through the end of the Initial Term or any Renewal Term of
this Agreement, or six (6) months, whichever is less. Such
multiple/repetitive, identical use shall be in accordance with
this Agreement and shall be subject to revocation by Clearwire
upon written notice to Circuit City.
4.2.5 Circuit City further acknowledges and agrees that all use of the
Clearwire Licensed Marks by Circuit City and all goodwill
developed therefrom shall inure to the benefit of and be on
behalf of Clearwire except for the goodwill associated or derived
from the Circuit City Licensed Marks.
42.6 Circuit City agrees that nothing in this Agreement shall give
Circuit City any right, title or interest in or to the Clearwire
Licensed Marks other than the right to use the Clearwire Licensed
Marks in the manner contemplated by this Agreement, and only for
so long a
Clearwire/Circuit City Confidential Information
Not to be disclosed without written permission of Clearwire and Circuit City
Page 4
this Agreement is in force or as otherwise permitted under this
Agreement (unless such Clearwire Licensed Marks are licensed
pursuant to a separate agreement).
4.2.7 Infringement.
4.2.7.1 Circuit City agrees to use commercially reasonable
efforts to notify Clearwire promptly of any unauthorized use
of the Clearwire Licensed Marks by others, to the extent
Circuit City has actual notice of such use. Clearwire and
its parent and affiliated companies shall have the sole
right to engage in infringement or unfair competition
proceedings involving the Clearwire Licensed Marks.
4.2.7.2 Any recovery obtained in connection with or as a result
of any infringement action contemplated under this section,
whether by settlement or otherwise, shall be retained by
Clearwire.
4.3 Circuit City Licensed Marks.
4.3.1 Subject to the terms and conditions specified in this Agreement,
Circuit City hereby grants to Clearwire (and Clearwire's
Affiliates), for the terra of this Agreement, a non-exclusive,
non-transferable license to use the Circuit City licensed marks
set forth in EXHIBIT D ("the Circuit City Licensed Marks")
exactly as depicted in the graphic configuration or as
subsequently modified by Circuit City. Circuit City may in its
sole discretion at any time add to or delete from the Circuit
City Licensed Marks and change the graphic configuration of the
Circuit City Licensed Marks.
4.3.2 Clearwire agrees that the style of use of the Circuit City
Licensed Marks shall be in the form and style conforming to the
trademark usage guidelines and brand identity standards, as
provided to Clearwire in writing. Clearwire shall not use any of
the Circuit City Licensed Marks as part of its corporate name,
trade name, business name or Internet domain name.
4.3.3 Clearwire shall submit to Circuit City for review and approval,
at least ten (10) business days prior to proposed use, any web
pages or other Internet locations, and all marketing,
advertising, press releases or other Promotional Materials in
which the Circuit City Licensed Marks are used. Circuit City
shall approve or disapprove such materials at least five (5)
business days after its receipt of such materials; Circuit City
will not unreasonably withhold or delay the granting of its
approval thereof. Clearwire shall not publish, distribute or use
any such web pages or other Internet locations, or any such
marketing, advertising, press releases or other Promotional
Materials in which the Circuit City Licensed Marks are used,
without the prior written approval of Circuit City.
4.3.4 Notwithstanding the foregoing, Clearwire may designate at the
time of submission that the requested approval is for
multiple/repetitive, identical uses on the same medium. Clearwire
may request approval for such multiple/repetitive, identical use
through the end of the Initial Term or any Renewal Term of this
Agreement, or six (6) months, whichever is less. Such
multiple/repetitive, identical use shall be in accordance with
this Agreement and shall be subject to revocation by Circuit City
upon written notice to Clearwire.
4.3.5 Clearwire further acknowledges and agrees that all use of the
Circuit City Licensed Marks by Clearwire and all goodwill
developed therefrom shall inure to the benefit of and be on
behalf of CC West Coast, except for goodwill associated or
derived from the Clearwire Licensed Marks.
Clearwire/Circuit City Confidential Information
Not to be disclosed without written permission of Clearwire and Circuit City
Page 5
4.3.6 Clearwire agrees that nothing in this Agreement shall give
Clearwire any right, title or interest in or to the Circuit City
Licensed Marks other than the right to use the Circuit City
Licensed Marks in the manner contemplated by this Agreement, and
only for so long as this Agreement is in force or as otherwise
permitted under this Agreement (unless such Circuit City Licensed
Marks are licensed pursuant to a separate agreement).
4.3.7 Infringement.
4.3.7.1 Clearwire agrees to use commercially reasonable efforts
to notify Circuit City promptly of any unauthorized use of
the Circuit City Licensed Marks by others, to the extent
Clearwire has actual notice of such use. Circuit City and
its parent and affiliated companies shall have the sole
right to engage in infringement or unfair competition
proceedings involving the Circuit City Licensed Marks.
4.3.7.2 Any recovery obtained in connection with or as a result
of any infringement action contemplated under this section,
whether by settlement or otherwise, shall be retained by
Circuit City.
5. JOINT MARKETING PROGRAMS. Upon execution of this Agreement, the Parties
will develop and implement the Joint Marketing Program set forth on EXHIBIT
A. All aspects of the Joint Marketing Program will be approved by the
Parties in writing as required by this Agreement Clearwire and Circuit City
may work together in good faith to develop additional joint marketing
programs.
6. COMPENSATION. In consideration of the services to be rendered by Circuit
City, Clearwire shall pay Circuit City the Bounty as described in EXHIBIT B
for all Subscribers. Bounties shall be paid to Circuit City within [***]
calendar days following the end of the month in which the Subscriber signed
up for the Services. For each Subscriber that becomes a Qualified
Subscriber, the corresponding Bounty shall become vested in Circuit City
[***] days from Subscriber Activation. For each Subscriber that fails to
become a Qualified Subscriber and for which Clearwire has already made the
corresponding Bounty payments, Clearwire shall be entitled to deduct the
prior Bounty and payments from future payments ("Deduction(s)") as more
fully set forth on EXHIBIT B.
7. REPORTS.
7.1 Clearwire shall provide Circuit City with a monthly written report
setting forth the monthly number of new Subscribers and the monthly
number of Deductions, if any, thirty (30) calendar days following the
end of each calendar month. Notwithstanding the foregoing, no report
shall be issued when there is no underlying activity to report.
7.2 Clearwire and Circuit City shall also use the Reconciliation Document,
attached hereto as EXHIBIT E, for purposes of defining the interface
requirements and expected results for transaction processing of
activity, invoicing and payments between the Parties.
8. PUBLICITY. Neither Party shall issue a press release or similar public
announcement of any kind regarding the Parties' relationship established
hereunder without the prior written approval of the other Party. Other than
expressly set forth herein, neither Party shall use publicly the other
Party's name or refer to the other Party in any way in or with the media,
including, but not limited to, in advertising, without the other Party's
prior written consent as required herein; provided, however, that either
Party may make disclosures or filings required to comply with applicable
laws, including filings with regulatory agencies, such as the United States
Securities and Exchange Commission, or disclosures or filings required to
comply with the rules of a national securities exchange or automated
quotations systems such as the National Association of Securities Dealer's
Automated Quotations. A VIOLATION OF THIS PROVISION SHALL CONSTITUTE A
MATERIAL BREACH OF THIS AGREEMENT.
Clearwire/Circuit City Confidential Information
Not to be disclosed without written permission of Clearwire and Circuit City
[*** Confidential Treatment Requested]
Page 6
9. REPRESENTATIONS AND WARRANTIES.
9.1 Circuit City represents and warrants that (a) it has the right, power
and authority to enter into this Agreement and fully perform its
obligations hereunder; (b) this Agreement does not and will not
conflict with any agreement between it and any other party; (c) it has
all necessary federal, state and local authorizations, to operate and
otherwise perform its obligations under this Agreement and will be in
compliance with all applicable laws and regulations governing such
performance; and (d) Circuit City has the full and exclusive right to
grant or otherwise permit Clearwire to use the Circuit City Marks in
accordance with the terms of this Agreement.
9.2 Clearwire represents and warrants that (a) it has the right, power and
authority to enter into this Agreement and fully perform its
obligations hereunder; (b) this Agreement does not and will not
conflict with any agreement between it and any other party; (c) it has
all necessary federal, state and local authorizations, including
intellectual property rights in and to the Services and to operate and
otherwise perform its obligations under this Agreement and will be in
compliance with all applicable laws and regulations governing such
performance; and (d) Clearwire has the full and exclusive right to
grant or otherwise permit Circuit City to use the Clearwire Marks.
10. LIMITATION OF LIABILITY.
10.1 EXCEPT AS EXPRESSLY SET FORTH IN THE AGREEMENT, NEITHER PARTY MAKES,
AND EACH PARTY HEREBY SPECIFICALLY DISCLAIMS, ANY REPRESENTATIONS OR
WARRANTIES RELATING TO THIS AGREEMENT OR THE PARTIES' RESPECTIVE
SERVICES HEREUNDER, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE AND IMPLIED WARRANTIES ARISING
FROM COURSE OF DEALING OR COURSE OF PERFORMANCE.
10.2 EXCEPT FOR A PARTY'S INDEMNIFICATION OBLIGATIONS SET FORTH IN SECTION
11 AND CONFIDENTIALITY OBLIGATIONS SET FORTH IN SECTION 13, BELOW,
NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY, IN WHOLE OR IN PART,
FOR LOSS OF REVENUES, LOSS OF PROFITS, LOSS OF TIME, INCONVENIENCE,
LOSS OF USE, OR ANY OTHER INCIDENTAL, SPECIAL, INDIRECT, PUNITIVE, OR
CONSEQUENTIAL LOSS OR DAMAGE ARISING OUT OF THIS AGREEMENT, OR THE USE
OR PERFORMANCE OF THE SERVICES, IN WHOLE OR IN PART, EVEN IF ADVISED
OF THE POSSIBILITY THEREOF, OR IF REASONABLY FORESEEABLE, WHETHER IN
AN ACTION FOR OR ARISING OUT OF ALLEGED BREACH OF WARRANTY, ALLEGED
BREACH OF CONTRACT, DELAY, NEGLIGENCE, STRICT TORT LIABILITY OR
OTHERWISE. THE LIMITATIONS SET FORTH IN THIS SECTION 10 SHALL NOT
AFFECT EITHER PARTY'S RIGHT TO SEEK INJUNCTIVE RELIEF.
11. INDEMNIFICATION.
11.1 In connection with Clearwire's performance under this Agreement,
Clearwire agrees to indemnify, defend and hold harmless Circuit City,
its Affiliates, and their respective representatives, employees,
directors, officers, and assigns against any losses, liabilities,
lawsuits, penalties, claims or demands (including all costs, expenses,
and reasonable attorneys' fees on account thereof) arising out of or
in connection with (a) any third party claims for actual or alleged
direct infringement of a third party's intellectual property rights
with respect to the hardware leased or provided by Clearwire under
this Agreement where such infringement of the claim arises from the
hardware operating alone and not in combination with any other
hardware or software not licensed, sold or provided by Clearwire, (b)
any third party claim arising out of the sale, resale, use or failure
of the Services, including, but not limited to claims for injuries
(including death) to persons or damage to real or tangible property
that results from Clearwire's negligent or willful
Clearwire/Circuit City Confidential Information
Not to be disclosed without written permission of Clearwire and Circuit City
Page 7
acts or omissions or those of persons furnished by Clearwire, (c) any
employee or former employee of Clearwire or any of its sublicensees or
subcontractors for which Clearwire's or its sublicensee's or
subcontractor's liability to such employee or former employee would
otherwise be subject to payments under the state Worker's Compensation
or similar laws, (d) Clearwire's actual or alleged breach of any
applicable law, statute, order, decree or regulation in performance of
its obligations, or (e) any third party claim based upon any marketing
material provided by Circuit City which Clearwire materially alters
and uses without Circuit City's prior consent in accordance with
Section 4.3 above. Circuit City agrees to promptly notify Clearwire of
written claims or demands made against Circuit City, which Circuit
City has received written notice of, for which Clearwire is
responsible hereunder. Circuit City further agrees to assist Clearwire
in its defense of such claim, at reasonable cost to Clearwire.
Clearwire shall bear full responsibility for the defense (including
any settlements) of any such claim; provided however, that (i)
Clearwire shall not have any right, without Circuit City's written
consent, to settle any such claim if such settlement arises from or is
part of any criminal action, suit or proceeding or contains a
stipulation to or admission or acknowledgment of, any liability or
wrongdoing (whether in contract, tort or otherwise) on the part of
Circuit City, or provides for less than a full release of Circuit
City. Circuit City shall be entitled to participate in the action with
counsel of its choice at its own expense. Clearwire shall not be
responsible for any claims arising under (a) and/or (e) where Circuit
City was informed of a claim or notice of infringement and failed to
promptly remove or cease in the distribution of the infringing
materials.
11.2 In connection with Circuit City's performance under this Agreement,
Circuit City agrees to indemnify, defend and hold harmless Clearwire,
its Affiliates, and their respective representatives, employees,
directors, officers, and assigns against any losses, liabilities,
lawsuits, penalties, claims or demands (including all costs, expenses,
and reasonable attorneys' fees on account thereof) arising out of or
in connection with (a) any third party claims for actual or alleged
infringement of a third party's intellectual property rights, (b) any
employee or former employee of Circuit City or any of its sublicensees
or subcontractors for which Circuit City's or its sublicensee's or
subcontractor's liability to such employee or former employee would
otherwise be subject to payments under the state Worker's Compensation
or similar laws, (c) Circuit City's actual or alleged breach of any
applicable law, statute, order, decree or regulation in performance of
its obligations, or (d) any third party claim based upon any marketing
material provided by Clearwire which Circuit City materially alters
and uses without Clearwire's prior consent in accordance with Section
4.2 above. Clearwire agrees to promptly notify Circuit City of written
claims or demands made against Clearwire, which Clearwire has received
written notice of, for which Circuit City is responsible hereunder.
Clearwire further agrees to assist Circuit City in its defense of such
claim, at reasonable cost to Circuit City. Circuit City shall bear
full responsibility for the defense (including any settlements) of any
such claim; provided however, that (i) Circuit City shall keep
Clearwire informed of, and consult with Clearwire in connection with
the progress of such litigation or settlement; and (ii) Circuit City
shall not have any right, without Clearwire's written consent, to
settle any such claim if such settlement arises from or is part of any
criminal action, suit or proceeding or contains a stipulation to or
admission or acknowledgment of, any liability or wrongdoing (whether
in contract, tort or otherwise) on the part of Clearwire or any
Clearwire Affiliate, or provides for less than a full release of
Clearwire. Clearwire shall be entitled to participate in the action
with counsel of its choice at its own expense. Circuit City shall not
be responsible for any claims arising under (d) where Clearwire was
informed of a claim or notice of infringement and failed to promptly
remove or cease in the distribution of the infringing materials
12. INSURANCE.
12.1 Clearwire shall maintain, during the term hereof, all insurance
required by law and the insurance listed below. Clearwire agrees that
Clearwire, Clearwire's insurer(s) and anyone claiming by, through,
under or on behalf of Clearwire shall have no claim, right of action
or right of subrogation against Circuit City or Circuit City's
customers based on any loss or liability insurable under the foregoing
insurance, except to the extent Circuit City has an indemnification
obligation under Section 11.2 for
Clearwire/Circuit City Confidential Information
Not to be disclosed without written permission of Clearwire and Circuit City
Page 8
such claim, right of action or subrogation. Certificates furnished by
Clearwire or its subcontractors shall contain a clause stating,
"Circuit City Stores, Inc. shall be notified in writing at least
thirty (30) days prior to cancellation of the policy."
12.2 Clearwire shall maintain, during the Term hereof, all insurance and/or
bonds required by law, including but not limited to:
12.2.1 Workers Compensation insurance as required by the State(s) in
which this Agreement is to be performed.
12.2.2 Comprehensive or Commercial General Liability Insurance, on an
Occurrence Basis, including by not limited to
premises-operations, broad form property damage, contractual
liability, independent contractors, and personal injury with
limits of at least $2,000,000 combined single limit for each
occurrence.
12.2.3 Automobile Liability, Comprehensive Form with limits of at
least $2,000,000 combined single limit for each occurrence.
12.3 Circuit City and its subsidiaries shall be named as an additional
insured to the liability insurance policies required under this
Agreement and this shall be so evidenced upon the Certificate(s) of
Insurance. Clearwire shall maintain insurance, as required by this
Agreement, through insurance carriers which have and maintain an A.M.
Best rating of A-VII or greater. The fulfillment of the insurance
obligations hereunder shall not otherwise relieve Clearwire of any
liability assumed by Clearwire hereunder or in any way modify
Clearwire's obligations to indemnify Circuit City.
12.4 Clearwire shall furnish, within ten (10) days of the Effective Date of
this Agreement, certificates or adequate proof of the foregoing
insurance.
13. CONFIDENTIAL INFORMATION
13.1 "Confidential Information" means any and all business, technical,
customer or third party information (including but not limited to,
trade secrets, marketing plans, financial data, specifications,
drawings, sketches, models, samples, computer programs and
documentation) provided, disclosed or made accessible by one Party
(the "Disclosing Party") to the other (the "Receiving Party") under
this Agreement, that is either identified as or would be reasonably
understood to be confidential and/or proprietary. Confidential
Information also includes (a) any Information that a Party receives,
collects, learns of, or develops in the course of performing its
obligations under this Agreement, including but not limited to
prospective and actual customer's names, addresses, telephone numbers,
email addresses, financial data, including credit card or banking
information, and other customer information; and (b) the terms and
conditions of this Agreement. Confidential Information does not
include information that the Receiving Party can clearly establish by
written evidence: (a) is or becomes known to the Receiving Party from
a third party without an obligation to maintain its confidentiality;
(b) is or becomes generally known to the public through no act or
omission of the Receiving Party; or (c) is independently developed by
the Receiving Party without the use of Confidential Information of the
Disclosing Party. Clearwire will be the owner of any Subscriber
Information generated by Clearwire in connection with a Subscriber's
order for Services and such information will be deemed Clearwire
Confidential Information for purposes of this Agreement. Circuit City
will be the owner of any Confidential Information generated by Circuit
City in connection with a Subscriber's order for Circuit City goods or
services or otherwise in connection with Circuit City's performance of
its duties and obligations hereunder and such information will be
deemed Circuit City's Confidential Information. Any information
obtained by both Parties shall be owned by each Party.
13.2 Confidential Information will be deemed the exclusive property of the
Disclosing Party. The Receiving Party will not: (a) use Confidential
Information of the Disclosing Party for any purpose
Clearwire/Circuit City Confidential Information
Not to be disclosed without written permission of Clearwire and Circuit City
Page 9
other than the fulfillment of its obligations under this Agreement;
(b) disclose Confidential Information of the Disclosing Party to any
third party, without the prior written consent of the Disclosing
Party; (c) make any copies or modifications of Confidential
Information of the Disclosing Party without the Disclosing Party's
prior written consent, and provided that any authorized copies or
modifications will contain the same confidential or proprietary
notices or legends, if any, which appear on the original; and (d)
reveal, divulge, make known, sell, exchange, lease or in any other way
transfer any Confidential Information to any third party.
13.3 The Receiving Party will: (a) protect and treat all Confidential
Information of the Disclosing Party with the same degree of care as it
uses to protect its own Confidential Information of like importance,
but in no event with less than reasonable care; and (b) only disclose
Confidential Information of the Disclosing Party to its employees
and/or agents who have a "need to know" for purposes of this
Agreement, provided that the Receiving Party will notify and inform
such employees and/or agents of the Receiving Party's obligations
under this Agreement, and the Receiving Party will be responsible for
any breach of this Agreement by its employees and/or agents.
13.4 In the event that the Receiving Party is required to disclose
Confidential Information of the Disclosing Party pursuant to law, the
Receiving Party will notify the Disclosing Party of the required
disclosure with sufficient time for the Disclosing Party to seek
relief, will cooperate with the Disclosing Party in taking appropriate
protective measures, and will make such disclosure in a fashion that
maximizes protection of the Confidential Information from further
disclosure.
13.5 Upon expiration or termination of this Agreement, the Receiving Party
will promptly turn over to the Disclosing Party or, at the Disclosing
Party's direction, destroy all Confidential Information of the
Disclosing Party, in whole or in part, in whatever format, including
any copies.
13.6 Each Party agrees that monetary damages for breach of its obligations
under this Section may not be adequate and that the non-breaching
Party will be entitled to injunctive relief with respect thereto.
14. ASSIGNMENT. Neither party may assign or otherwise transfer any of its
rights or obligations hereunder without the prior written consent of the
other, which shall not be unreasonably withheld; provided, however, that
nothing herein shall prevent either party from assigning its rights and
obligation under this Agreement to an Affiliate, or to an entity that
acquires all or substantially all of the assets of such party through a
merger, consolidation, or sale, provided further that the assigning party
provides notice of such permitted assignment as soon as commercially
reasonable.
15. RELATIONSHIP BETWEEN THE PARTIES. The Parties to this Agreement are
independent Parties and nothing herein shall be construed as creating an
employment relationship between the Parties. Neither Party is an agent,
representative, joint venturer nor partner of the other Party and neither
Party shall have any right, power or authority to enter into any agreement
for or on behalf of, or incur any obligation or liability, or to otherwise
bind, the other Party. The Agreement shall not be interpreted or construed
to create an association, agency, joint venture or partnership between the
Parties or to impose any liability attributable to such a relationship upon
either Party.
16. FORCE MAJEURE. Neither Party shall be in default or otherwise liable for
any delay in or failure of its performance under this Agreement if such
delay or failure arises by any reason beyond its reasonable control,
including any act of God, any acts of the common enemy, the elements,
earthquakes, floods, fires, epidemics, riots, failures or delay in
transportation, electricity or communications, or any act or failure to act
by the other Party or such other Party's employees, agents or contractors;
provided, however, that lack of funds shall not be deemed to be a reason
beyond a Party's reasonable control. The Parties will promptly inform and
consult with each other as to any of the above causes which in their
judgment may or could be the cause of a delay in the performance of this
Agreement.
Clearwire/Circuit City Confidential Information
Not to be disclosed without written permission of Clearwire and Circuit City
Page 10
17. THIRD PARTY BENEFICIARIES. The provisions of this Agreement are for the
sole benefit of the parties hereto and this Agreement confers no rights,
benefits or claims upon any person or entity not a party hereto. Third
party beneficiaries do not include Clearwire Affiliates.
18. CHOICE OF LAW. The Parties agree that the substantive laws of the State of
New York, without reference to its principles of conflicts of laws, will be
applied to govern, construe and enforce all of the rights and duties of the
Parties arising from or relating in any way to the subject matter of this
Agreement. THE PARTIES KNOWINGLY AND VOLUNTARILY WAIVE ANY RIGHT TO TRIAL
BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING ANY MATTER ARISING OUT OF, OR
RELATED TO, THIS AGREEMENT.
19. AUDIT RIGHTS. During the term of this Agreement and for a period of two (2)
years following the expiration or termination of this Agreement, both
Parties shall create and maintain sufficient books, records and accounts
related to this Agreement according to generally accepted accounting
practices. Each Party shall have the right, at its own expense, to inspect
or direct an independent certified public accountant to inspect and audit
those books and records of the other Party that are relevant to the
determination of compensation payable hereunder, provided, however, that
such audits will be conducted no more than once in any calendar year, upon
not less than thirty (30) days' notice, during regular business hours, at
mutually agreeable dates and times (not to be unreasonably withheld or
delayed), and provided further that such accountant, if any, executes a
confidentiality agreement reasonably satisfactory to the Party being
audited, to protect the confidentiality of any records so audited. If the
audit discloses a payment discrepancy or error, the Party responsible for
correcting such error shall make any undisputed payment or remittance
within thirty (30) business days of the generation of the audit report. In
the event an audit discloses a payment discrepancy or error of more than
five (5) percent of the correct amount, the Party owing such payment or
remittance shall bear the cost of the audit.
20. NOTICES. All notices, authorizations, and requests required or desired to
be given or made in connection with this Agreement will be in writing,
given by certified or registered mail (return receipt requested), or by
nationally recognized overnight courier (charges prepaid), and addressed as
follows (or to such other address as the Party to receive the notice or
request so designates by notice to the other):
To Clearwire: Clearwire, US LLC.
5808 Lake Washington Blvd.
Suite 300
Kirkland, Wa, 98033
To Circuit City: Circuit City Stores, Inc.
9950 Mayland Drive
Richmond, Virginia 23221
Attn: Internet Services Buyer
With copies to:
Circuit City Stores, Inc.
9950 Mayland Drive
Richmond, Virginia 23221
Attn: Legal Department
Notice shall be deemed effective upon actual delivery.
21. SEVERABILITY. In the event that one or more of the provisions contained
herein shall, for any reason, be held unenforceable in any respect, such
unenforceability shall not affect any other provision of this Agreement,
and this Agreement shall then be construed as if such unenforceable
provision(s) did not exist.
Clearwire/Circuit City Confidential Information
Not to be disclosed without written permission of Clearwire and Circuit City
Page 11
22. WAIVER. Failure by either Party to enforce any provision of this Agreement
shall not be deemed a waiver of future enforcement of that or any other
provision. The waiver by a Party of any default hereunder shall not be
deemed to be a waiver of subsequent defaults of the same or different kind.
23. INTERPRETATION. This Agreement shall be fairly interpreted in accordance
with its terms and without any construction in favor of or against either
Party. The headings and captions are included for reference purposes only
and do not affect the interpretation of the provisions hereof. The captions
in this Agreement are for convenience of reference only and shall not limit
or otherwise affect any of the terms or provisions hereof. Use of the words
"herein", "hereof", "hereto" and the like in this Agreement refer to this
Agreement as a whole and not to any particular Article, Section or
provision of this Agreement, unless otherwise noted. When the context
requires, the number of all words includes the singular and plural.
24. COUNTERPARTS. This Agreement may be executed in counterparts, each of which
shall be deemed an original and which together shall constitute one
instrument. This Agreement may be executed by facsimile, and each facsimile
signature shall be deemed to constitute a valid and binding signature of
the executing party.
25. ENTIRE AGREEMENT. This Agreement and its Attachments and Exhibits shall
constitute the entire agreement between the Parties hereto with respect to
the subject matter hereof and all previous agreements relating thereto
shall be null and void unless specifically incorporated herein. This
Agreement may not be amended, modified or rescinded except by a writing
executed by both Parties hereto.
IN WITNESS WHEREOF, the Parties have executed this Agreement, by their
authorized representatives, as of the date written above.
CLEARWIRE, U.S., L.L.C CIRCUIT CITY STORES, INC.
/s/ JAMES RYDER /s/ Phil Schoonover
------------------------------------- ----------------------------------------
Signature Signature
JAMES RYDER Phil Schoonover
Name Name
Sr VP CEO
Title Title
Clearwire/Circuit City Confidential Information
Not to be disclosed without written permission of Clearwire and Circuit City
Page 12
EXHIBIT A
[***]
Clearwire/Circuit City Confidential Information
Not to be disclosed without written permission of Clearwire and Circuit City
[*** Confidential Treatment Requested]
Page 13
EXHIBIT B
BOUNTY PAYMENT TERMS
I. Bounty Payments
A. Bounty Payments. Provided Circuit City is not in breach of its
obligations as set forth in this Agreement, Clearwire will pay Circuit
City a one-time Bounty payment of [***] for each Qualified Subscriber
who subscribes to the Services in accordance with the payment
provisions set forth in Section 6.
II. Deductions
Circuit City's monthly compensation may be subject to Deductions by
Clearwire for Bounties already paid to Circuit City for which the
corresponding Subscriber does not become a Qualified Subscriber. If such
amount cannot be deducted, Circuit City shall pay such Deduction amount in
the form of a charge-back or refund within thirty (30) days of the date
that Clearwire notifies Circuit City in writing that such Subscriber failed
to become a Qualified Subscriber.
Clearwire/Circuit City Confidential Information
Not to be disclosed without written permission of Clearwire and Circuit City
[*** Confidential Treatment Requested]
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EXHIBIT C
CLEARWIRE MARKS
Instructions for use of the Clearwire Marks can be found at
www.clearpartner.com.
Clearwire/Circuit City Confidential Information
Not to be disclosed without written permission of Clearwire and Circuit City
[*** Confidential Treatment Requested]
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EXHIBIT D
CIRCUIT CITY LICENSED MARKS
(CIRCUIT CITY LOGO) (CIRCUIT CITY(R) LOGO)
JUST WHAT I NEEDED(R) SM
(CIRCUIT CITY LOGO) (CIRCUIT CITY(R) LOGO)
Clearwire/Circuit City Confidential Information
Not to be disclosed without written permission of Clearwire and Circuit City
Page 16
EXHIBIT E
[***]
Clearwire/Circuit City Confidential Information
Not to be disclosed without written permission of Clearwire and Circuit City
[*** Confidential Treatment Requested]
Page 17
EXHIBIT F
EQUIPMENT AGREEMENT
THIS EQUIPMENT AGREEMENT ("Agreement") is made a part of and is hereby
incorporated into the Co-Marketing Agreement (the "Co-Marketing Agreement")
between Circuit City Stores, Inc. and its affiliates, having its principal place
of business at 9950 Mayland Drive, Richmond, Virginia, USA, 23221("Circuit
City") and Clearwire LLC having its principal place of business at 5808 Lake
Washington Blvd. NE, Suite 300, Kirkland, WA 98033 ("Clearwire"), which became
effective on Sept. 6, 2006. This Agreement is intended to set forth the terms
and conditions under which Clearwire will provide certain equipment (set forth
on Attachment 1, as may be amended from time to time) (the "Equipment") to
Circuit City; Circuit City will then provide the Equipment to Subscribers, which
the Subscribers lease directly from Clearwire. Terms used in this Agreement, but
not defined in this Agreement, have the meaning given in the Co-Marketing
Agreement
With respect to Equipment, the following terms shall supplement the terms of the
Co-Marketing Agreement
1. RESERVATION OF RIGHTS AND TITLE. Title to the Equipment is at all times
reserved to Clearwire. Circuit City agrees to cooperate with Clearwire in
effecting the protections afforded under Sections 9-103(d), 9-109 (a)(4) and 9-
319 of the Uniform Commercial Code as adopted and in effect (or parallel
protections, if the Uniform Commercial Code is not in effect) in each state in
which such a filing is necessary to effect such protections, to the extent
applicable under this Agreement; provided, however, Circuit City makes no
representation or warranty that Clearwire's interests in the Equipment will be
"perfected" as that term is defined in Article 9 of the Uniform Commercial Code,
however Circuit City shall not encumber such equipment nor interfere with such
perfected interest. Circuit City agrees to execute UCC-1 financing statements or
such other form as may be appropriate for the relevant state, provided that
Clearwire shall be responsible for preparation of such financing statements and
for the filing of such financing statements and payment of all applicable filing
and preparation costs. The parties acknowledge that the transaction described in
this Agreement is not a "consignment" within the meaning of the Uniform
Commercial Code. Circuit City shall take delivery of the Equipment from
Clearwire from time to time in accordance with this Agreement. Circuit City may
only distribute Equipment to Subscribers in a Clearwire service area (which
shall be subject to a sale or lease arrangement directly between Clearwire and
the Subscriber). The price for the Equipment shall be determined by Clearwire
and shall be stated in the equipment lease agreement between Clearwire and the
Subscriber (the "Equipment Lease Agreement"). Circuit City may not sell the
Equipment
2. LEASE OF EQUIPMENT. In accordance with the terms of the Co-Marketing
Agreement, Circuit City will register Subscribers for the Services. As part of
the registration process, each Subscriber will enter into an Equipment Lease
Agreement between the Subscriber and Clearwire. The lease price of the Equipment
shall be determined by Clearwire, in its sole discretion. Upon completion of the
registration process, Circuit City will give the leased equipment to the
Subscriber. In order to track Equipment in Circuit City's possession, Circuit
City will assign a stock-keeping unit to the Equipment. The Equipment will show
a price tag of [***] but will net to [***] upon a Subscriber's registration for
the Services; the [***] "price" will not be charged to Subscribers and is caused
by a point of sale systems limitation that prohibits the processing of free
tickets.
3. INVOICES; PAYMENT; ALLOWANCES. All transactions (e.g., purchase orders and
invoices) shall be conducted via Electronic Data Interchange (EDI). At
appropriate intervals, as determined by Circuit City, Circuit City will issue a
purchase order to Clearwire requesting additional Equipment. Upon receipt of a
purchase order, Clearwire will ship the requested Equipment pursuant to the
Circuit City Vendor Supply Chain Agreement dated June 9, 2006 and submit a
corresponding invoice to Circuit City that contains quantity and stock-keeping
unit information. Notwithstanding the terms on any purchase order or any
invoice, Circuit City and Clearwire agree that the Equipment will be provided at
no cost to Circuit City, and at all times thereafter, Clearwire shall continue
to retain title to the Equipment. Notwithstanding any term in any agreement
entered into between Circuit City and Clearwire in the event of a recall of
Equipment Clearwire will use commercially reasonable efforts to satisfy any
purchase
Clearwire/Circuit City Confidential Information
Not to be disclosed without written permission of Clearwire and Circuit City
[*** Confidential Treatment Requested]
Page 18
order issued by Circuit City, however Circuit City acknowledges and agrees that
complete fulfillment may not be possible and that in such instance Clearwire
shall not be in breach of any agreement for failure to completely satisfy any
purchase due to such circumstances. Circuit City shall ensure that its
merchandise receipt system automatically matches each invoice to the
corresponding Equipment delivery and purchase order issued by Circuit City. Any
discrepancies (e.g., shortages) identified by Circuit City will be reconciled
with Clearwire each month to assure that the parties agree to the correct
inventory of Equipment held by Circuit City. The parties will at this time make
any necessary corrections to their records concerning invoices and quantities.
4. INVENTORY AUDITS. Clearwire may audit Circuit City's distribution centers
pertaining solely to the subject matter of this Agreement no more than 1 times
per calendar quarter, provided that Circuit City shall be given seven (7) days
written notice, and further provided that the audit shall take place at Circuit
City's facilities during normal business hours. Costs of the audit shall be
borne by Clearwire, provided that if a five percent (5%) or greater discrepancy
is found in either amounts owed or Equipment inventory, Circuit City will
reimburse the reasonable and documented costs of such audit in addition to any
moneys owed.
5. TAXES. Because the Equipment is not being sold by Circuit City to the
Subscribers, Circuit City will NOT be responsible for the collection and
remittance of sales, use, or lease taxes to the proper taxing authorities;
Clearwire shall be solely responsible for any such collection and remittance of
sales, use or lease taxes to the proper taxing authorities. Clearwire will be
responsible for paying any personal property taxes relating to the Equipment in
Circuit City's possession; provided that the parties will cooperate to minimize
the amount of such personal property taxes. Furthermore, Clearwire agrees to
indemnify, defend and hold harmless Circuit City and its affiliates, and each of
their officers and directors against any penalty, additional tax or interest
that may be assessed or levied as a result of the failure to timely collect or
pay any tax, or to file any return, form or information statement that may be
required by any governmental agency. Provided, however, that Clearwire shall not
be obligated to indemnify Circuit City in the event that (i) Clearwire was not
timely notified of the claim or potential claim, and/or (ii) such claim arises
out Circuit City's process or procedures relating to the sale or accounting of
Equipment as set forth in Section 2. Circuit City shall not report the Equipment
as property of Circuit City. Each party shall be responsible for reporting its
own income derived from this Agreement and for payment of its own income taxes.
6. SHIPMENTS. Clearwire will ship the Equipment to Circuit City's designated
shipping address (e.g., distribution centers and/or stores) at Clearwire's risk
and expense. Clearwire shall be responsible for making shipping arrangements,
scheduling, tracking, proof of delivery, tracing, and obtaining insurance for
loss or damage while Equipment is in transit, and filing freight claims for loss
and/or damage. If expedited shipment becomes necessary, in the reasonable
opinion of both parties, due to the fault or delay of Clearwire, then Clearwire
shall pay the costs of such expedited shipments to either Circuit City's
distribution centers or via drop ships to Circuit City's stores, as requested by
Circuit City. If expedited shipment becomes necessary, in the reasonable opinion
of both parties, due to the fault or delay of Circuit City, then Clearwire
agrees to ship product, freight collect, to either Circuit City's distribution
centers, or stores via drop ship, as requested by Circuit City; Circuit City
shall then chargeback Clearwire the difference between the standard ground
shipping costs and the expedited shipping costs. The carrier (not Clearwire)
shall invoice Circuit City in this latter freight collect situation. Clearwire
agrees not to include freight charges on any invoices under any circumstances.
7. RETURN OF GOODS. [***] Except as otherwise expressly set forth in this
Agreement, Circuit City agrees to arrange and pay for return shipments.
Notwithstanding the foregoing, Circuit City reserves the right to return, at
Clearwire's expense, any Equipment for which a claim is made that alleges that
the Equipment (1) infringes any alleged patent, design, trade name, trademark,
copyright, right of privacy, or any other tangible or intangible property
rights, or (2) is not manufactured, packaged and labeled in accordance with
industry standards and/or all applicable laws, ordinances, rules and regulations
by governmental departments, bodies and agencies governing and/or restricting
the receipt and sale of Equipment by the undersigned Circuit City, or (3) has
caused injury to person or property. In addition, Clearwire agrees to pay the
cost of return shipments of substantially defective product. Equipment that is
defective (which includes but is not limited to Equipment that is returned
without the box, with an opened box, or with a damaged box) shall be the
responsibility of Clearwire, and may be returned to
Clearwire/Circuit City Confidential Information
Not to be disclosed without written permission of Clearwire and Circuit City
[*** Confidential Treatment Requested]
Page 19
Clearwire unless otherwise mutually agreed. In all cases, Clearwire agrees to
provide a return authorization ("RA") within 48 hours of request submitted to
Clearwire in accordance with Clearwire's procedures.
8. FURTHER OBLIGATIONS OF CIRCUIT CITY.
a. Circuit City will pay Clearwire [***](the "Agreed Cost') for each unit
of Equipment of the type listed on Attachment 1 that is lost, stolen or damaged
while in Circuit City's possession, less any applicable discounts, allowances or
other valid off set amounts. Notwithstanding the foregoing, Circuit City agrees
to use commercially reasonable efforts to protect and preserve the Equipment
that is in its care, custody or control, wherever located. Circuit City further
agrees to maintain all-risk property insurance in an amount adequate to fully
insure all Equipment in its care, custody or control, wherever located, in an
amount not less than $5 Million, and will name Clearwire.
b. Circuit City agrees to deliver to Subscribers, in accordance with
Clearwire's instructions and activation procedures, Equipment to be used by
Subscribers for their use of the Services. Circuit City may only offer Equipment
that is approved by Clearwire. Circuit City agrees to cooperate with Clearwire
in order to maintain a mutually agreed upon inventory of Equipment that is
sufficient, in, to meet reasonably anticipated demand by Subscribers that
Circuit City enrolls for the Services. From the time of delivery of the
Equipment to Circuit City's location until delivery to a Subscriber in
accordance with this Agreement, Circuit City will store all Equipment delivered
to Circuit City in a safe and secure location, all at Circuit City's expense.
Prior to delivery to a Subscriber in accordance with mutually agreed
authorization procedures, the Equipment may upon mutual agreement be upgraded or
otherwise modified by Clearwire. Upon Clearwire's reasonable demand, Circuit
City will ship all or any portion of the Equipment to Clearwire, at Clearwire's
expense; provided, however, Clearwire shall not pull any Equipment from Circuit
City for the purpose of supplying Equipment to another Clearwire reseller or
representative. Clearwire will have the right, from time to time, to sell,
lease, or otherwise dispose of, all or any potion of the Equipment to a third
party, at prices and on terms established by Clearwire in its sole discretion,
and Clearwire will have no obligation to share any proceeds from such sale with
Circuit City.
9. TERM; TERMINATION. The term of this Agreement shall commence on the Effective
Date, and shall continue until expiration or termination of the Co-Marketing
Agreement, and shall automatically renew on the same terms applicable to the
Co-Marketing Agreement. Termination shall not affect the parties' respective
outstanding obligations.
Clearwire/Circuit City Confidential Information
Not to be disclosed without written permission of Clearwire and Circuit City
[*** Confidential Treatment Requested]
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ATTACHMENT-1 TO EQUIPMENT AGREEMENT
(Equipment to be leased to Members)
<TABLE>
<CAPTION>
DESCRIPTION OF EQUIPMENT AGREED COST
------------------------ -----------
<S> <C>
SKU # RSU 2570-FV (LX Model) [***]
Product Description:
</TABLE>
Clearwire/Circuit City Confidential Information
Not to be disclosed without written permission of Clearwire and Circuit City
[*** Confidential Treatment Requested]
Page 21
EXHIBIT G
CLEARWIRE STORES
This Exhibit G sets forth the definition and management of Circuit City Stores
in which Circuit City is authorized and shall Market and sell the Services (the
"Selected Circuit City Stores"). Any Circuit City store located in a Clearwire
coverage area will become a Selected Circuit City Store. Initial launch will
include a minimum of 36 stores. Future Clearwire markets and subsequent new
Selected Circuit City Stores will be identified through a shared "Master Store
List" posted on a secure site accessible by both parties. Clearwire shall give
Circuit City at least sixty (60) days prior written notice of new market
availability and Circuit City shall market and sell the Services in such
markets.
Clearwire/Circuit City Confidential Information
Not to be disclosed without written permission of Clearwire and Circuit City
Page 22
EXHIBIT 10.42
EXECUTION COPY
PURCHASE AND SALE AGREEMENT
by and between
NEXTEL SPECTRUM ACQUISITION CORP.
and
CLEARWIRE SPECTRUM HOLDINGS LLC
Dated October 24, 2005
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE 1 DEFINITIONS........................................................ 1
Section 1.1 Definitions................................................. 1
Section 1.2 Other Terms................................................. 4
ARTICLE 2 PURCHASE AND SALE OF ASSETS........................................ 5
Section 2.1 Purchase and Sale........................................... 5
Section 2.2 Excluded Assets............................................. 5
Section 2.3 Liabilities................................................. 6
ARTICLE 3 PURCHASE PRICE; CLOSING; ALLOCATIONS............................... 6
Section 3.1 Purchase Price.............................................. 6
Section 3.2 Closing and Supplemental Closings........................... 6
Section 3.3 Closing Deliveries by Seller................................ 7
Section 3.4 Closing Deliveries by Buyer................................. 8
Section 3.5 Allocation of Expenses; Closing Statement................... 8
Section 3.6 Allocation of Purchase Price................................ 10
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER........................... 10
Section 4.1 Authorization............................................... 10
Section 4.2 Enforceability.............................................. 10
Section 4.3 No Conflicts or Consents.................................... 10
Section 4.4 FCC Licenses................................................ 11
Section 4.5 Spectrum Leases............................................. 12
Section 4.6 Litigation.................................................. 12
Section 4.7 Broker...................................................... 13
Section 4.8 Taxes....................................................... 13
Section 4.9 Seller Adjacent Interleaved Channels........................ 13
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BUYER............................ 13
Section 5.1 Authorization............................................... 13
Section 5.2 Enforceability.............................................. 13
Section 5.3 No Conflicts or Consents.................................... 13
Section 5.4 Litigation.................................................. 13
Section 5.5 Broker...................................................... 14
Section 5.6 Funds Available............................................. 14
ARTICLE 6 COVENANTS AND OTHER AGREEMENTS..................................... 14
Section 6.1 Consummation of Transactions................................ 14
Section 6.2 Certain Notices............................................. 14
Section 6.3 Confidentiality............................................. 15
Section 6.4 Further Assurances.......................................... 16
Section 6.5 [***] Repurchase Right...................................... 16
Section 6.6 FCC qualifications.......................................... 18
</TABLE>
-i-
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 6.7 Consents.................................................... 18
Section 6.8 Interference Consents....................................... 18
Section 6.9 Certain Affirmative Covenants............................... 19
Section 6.10 Certain Negative Covenants................................. 19
Section 6.11 Access..................................................... 19
Section 6.12 Publicity.................................................. 19
Section 6.13 Transfer Taxes; FCC Filing Fees............................ 19
Section 6.14 Non-Solicitation of Lessors................................ 19
ARTICLE 7 CONDITIONS TO CLOSING.............................................. 20
Section 7.1 Conditions to the Obligations of Both Parties............... 20
Section 7.2 Conditions to the Obligations of Seller..................... 20
Section 7.3 Conditions to the Obligations of Buyer...................... 21
ARTICLE 8 TERMINATION....................................................... 22
Section 8.1 Termination................................................. 22
Section 8.2 Effect of Termination....................................... 23
ARTICLE 9 SURVIVAL AND REMEDIES.............................................. 23
Section 9.1 Survival.................................................... 23
Section 9.2 Seller Indemnification...................................... 23
Section 9.3 Buyer Indemnification....................................... 24
Section 9.4 Third Party Claims.......................................... 24
Section 9.5 Other Claims................................................ 26
Section 9.6 Calculation of Losses; Limitation of Liability; Remedies.... 26
ARTICLE 10 MISCELLANEOUS..................................................... 27
Section 10.1 Entire Agreement........................................... 27
Section 10.2 No Other Representations or Warranties..................... 27
Section 10.3 Amendments and Waivers..................................... 27
Section 10.4 Assignment................................................. 27
Section 10.5 Notices.................................................... 27
Section 10.6 Governing Law.............................................. 28
Section 10.7 Attorney's Fees............................................ 29
Section 10.8 Expenses................................................... 29
Section 10.9 Invalidity................................................. 29
Section 10.10 Force Majeure............................................. 29
Section 10.11 Counterparts.............................................. 29
Section 10.12 Headings.................................................. 29
</TABLE>
-ii-
SCHEDULES AND EXHIBITS
Schedule 1 FCC Licenses
Schedule 2 Spectrum Leases
Schedule 3 Purchase Price Allocation
Schedule 4 [***] Option Channels
Schedule 5 Seller Adjacent Channels
Exhibit A Form of Instrument of Assignment for Licenses
Exhibit B Form of Assignment and Assumption for Spectrum Leases
Exhibit C Form of Bill of Sale
Exhibit D Form of Officer's Certificate
Exhibit E Form of Secretary's Certificate
Exhibit F Form of Consent to Assignment
Exhibit G Form of Letter of No Objection
PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT, dated October 24, 2005 (the "Effective
Date"), is entered into by and between Nextel Spectrum Acquisition Corp., a
Delaware corporation ("Seller") and Clearwire Spectrum Holdings LLC, a Nevada
limited liability company ("Buyer"). Seller and Buyer may be referred to herein
collectively as the "Parties" or individually as a "Party."
RECITALS
A. Seller holds the Federal Communications Commission ("FCC") licenses for
the operation of the Broadband Radio Service (formerly known as MMDS) ("BRS")
channels identified on Schedule 1 (the "FCC Licenses"), and the lease agreements
pursuant to which Seller leases the excess capacity on the BRS and Educational
Broadband Service (formerly known as Instructional Television Fixed Service)
("EBS") channels identified on Schedule 2 (the "Spectrum Leases").
B. Seller desires to sell and assign to Buyer, and Buyer desires to
purchase and assume, the FCC Licenses and Spectrum Leases, all on the terms and
subject to the conditions set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, conditions and agreements hereinafter
set forth, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the following terms
shall have the meanings set forth or referenced below (applicable to both the
singular and plural forms of the terms defined):
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, alone or through one or more intermediaries, controls,
is controlled by or is under common control with that Person. For purposes of
this definition, "control" (including the terms "controlling" and "controlled")
means the power to direct or cause the direction of the management and policies
of a Person, directly or indirectly, whether through the ownership of securities
or partnership or other ownership interests, or by contract or otherwise.
"Agreement" means this Purchase and Sale Agreement and all Exhibits and
Schedules hereto, as amended, supplemented or otherwise modified from time to
time in accordance with the terms hereof.
"Allocation Schedule" is defined in Section 3.6.
"Assets" is defined in Section 2.1.
"Assumed Liabilities" is defined in Section 2.3.
"Available [***] Option Channels" is defined in Section 6.5.
"BRS" is defined in Recital A.
"Business Day" means any day, other than a Saturday or Sunday, on which
commercial banks and foreign exchange markets are open for business in New York,
New York.
"Business Partner" is defined in Section 6.3(b).
"Business Partner NDA" is defined in Section 6.3(b).
"Buyer" is defined in the preamble.
"Claim" means any claim asserted by any Person (including any Party)
against a Party in respect of which payment may be sought from the other Party
under Section 9.2 or Section 9.3 hereof.
"Closing" is defined in Section 3.2(a).
"Closing Conditions" is defined in Section 3.2(a).
"Closing Date" is defined in Section 3.2(a).
"Code" means the Internal Revenue Code of 1986, as amended, and the
corresponding provisions of any future internal revenue law.
"Consents" means all consents and approvals of Governmental Authorities or
other Person (other than a Party) necessary to authorize, approve or permit the
Parties hereto to consummate the Transactions, including, without limitation,
the consents (if any) of the lessors under the Spectrum Leases, if required to
assign such Leases in accordance with the terms of this Agreement.
"Damages" means any and all losses, claims, demands, liabilities,
obligations, actions, suits, orders, statutory or regulatory compliance
requirements, or proceedings asserted by any Person, and all damages, costs,
expenses, assessments, judgments, recoveries and deficiencies, including
interest, penalties, investigatory expenses, consultants' fees, and reasonable
attorneys' fees and costs, of every kind and description, contingent or
otherwise.
"Damages Dispute" is defined in Section 9.4(c).
"EBS" is defined in Recital A.
"Effective Date" is defined in the preamble.
"Excluded Assets" is defined in Section 2.2.
"Excluded Liabilities" is defined in Section 2.3.
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"FCC" is defined in Recital A.
"FCC Licenses" is defined in Recital A.
"FCC Rules" means Title 47 of the Code of Federal Regulations, as amended
at any time and from time to time, and FCC published decisions issued pursuant
to such regulations.
"Final Order" means an action by the FCC (i) which action has not been
reversed, stayed enjoined, set aside, annulled or suspended, (ii) in relation to
which no request for stay, motion or petition for reconsideration or rehearing,
application or request for review, or notice of appeal or other administrative
or judicial petition for review (collectively, an "Appeal") is pending, and
(iii) as to which the prescribed time for filing an Appeal, and for the entry of
orders staying, reconsidering, or reviewing on the FCC's or such other
regulatory authority's own motion has expired.
"Governmental Authority" means a Federal, state or local court,
legislature, governmental agency (including the United States Department of
Justice), commission or regulatory or administrative authority or
instrumentality.
"Law" means applicable common law and any statute, ordinance, code or
other law, rule, permit, permit condition, regulation, order, decree, technical
or other standard, requirement or procedure enacted, adopted, promulgated,
applied or followed by any Governmental Authority.
"Lien" means any mortgage, lien, pledge, charge, security interest, right
of first refusal or right of others therein, restrictions, options, claims or
encumbrance of any nature whatsoever, except for liens for taxes not yet due and
payable.
"May 18, 2004 NDA" is defined in Section 6.3.
"Parties" or "Party" is defined in the preamble.
"Person" means any general partnership, limited partnership, limited
liability company, corporation, joint venture, trust, business trust,
Governmental Authority, cooperative, association, other entity, or individual,
and the heirs, executors, administrators, legal representatives, successors, and
assigns of such person (by merger or otherwise) as the context may require.
"Property Taxes" means ad valorem or real or personal property taxes,
assessments, and similar charges payable to a Governmental Authority with
respect to the Assets, including any penalties, additions, fines or interest
thereon and any liability to another Person for such charges by reason of
contract or as a successor or transferee.
"Prorated Expense Items" is defined in Section 3.5(a).
"Purchase Price" is defined in Section 3.1.
"Remaining Assets" is defined in Section 3.2(b).
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"Selected [***] Option Channels" is defined in Section 6.5.
"Seller" is defined in the preamble.
"Seller Adjacent Channels" is defined in Section 6.8(a).
"Spectrum Leases" is defined in Recital A.
"Sprint Nextel" is defined in Section 6.5(a).
"Supplemental Closing" is defined in Section 3.2(b).
"Supplemental Closing Date" is defined in Section 3.2(c).
"Tax" or "Taxes" means any taxes, assessment, duties, fees, levies,
imposts, deductions, or withholdings, including income, gross receipts, ad
valorem, value added, excise, real or personal property, asset, sales, use,
license, payroll, transaction, capital, net worth and franchise taxes, estimated
taxes, withholding, employment, social security, workers compensation, utility,
severance, production, unemployment compensation, occupation, premium, windfall
profits, transfer and gains taxes, or other governmental charges of any nature
whatsoever, imposed by any Governmental Authority, and any liabilities with
respect thereto, including any penalties, additions to tax, fines or interest
thereon and includes any liability for Taxes of another Person by contract, as a
transferee or successor, or by reason of Treasury Regulations Section 1.1502-6.
["***"] is defined in Section 6.5(a).
["***] Availability Notice" is defined in Section 6.5.
["***] Option" is defined in Section 6.5.
["***] Option Channels" is defined in Section 6.5.
["***] Option Notice" is defined in Section 6.5.
["***] Plan" is defined in Section 6.5(a).
["***] Purchase Price" is defined in Section 6.5.
"Transactions" means the transactions contemplated by this Agreement.
"Transition" means the transition of the 2.5-2.7 GHz band channels to a
new spectrum plan pursuant to Sections 27.1230 through 27.1235 of the FCC Rules.
"Transfer Taxes" means sales, use, stamp, recording, transaction-related
excise, or similar transfer taxes, fees and charges. For the avoidance of doubt,
Transfer Taxes do not include any Tax measured by net income, profit, or gain of
any Person.
Section 1.2 Other Terms. Other capitalized terms may be defined elsewhere
in this Agreement and, unless otherwise indicated, shall have such meaning
throughout this Agreement.
Page 4
All references to "$" and dollars shall be deemed to refer to United States
currency unless otherwise specifically provided herein. All references to "true
and complete" copies of specified documents, means true and complete copies of
such documents, together with all material notices, waivers, amendments,
modifications and supplements thereto.
ARTICLE 2
PURCHASE AND SALE OF ASSETS
Section 2.1 Purchase and Sale. On the terms and subject to the conditions
of this Agreement, at the Closing (or, as applicable, Supplemental Closing),
Seller shall sell, assign, transfer, convey and deliver to Buyer or Buyer's
designee(s), and Buyer shall purchase from Seller all of Seller's right, title
and interest as of the Closing Date (or, as applicable, Supplemental Closing
Date) in and to the following assets (collectively the "Assets") free and clear
of all Liens:
(a) The FCC Licenses;
(b) The Spectrum Leases;
(c) Subject to Section 3.5, all credits, prepaid expenses, advance
payments, security deposits and other prepaid items that relate to any of
the Assets set forth in subsections (a), (b), (d) or (e) of this Section
2.1 as of the Closing (or, as applicable, Supplemental Closing);
(d) All rights, claims, causes of action, rights to payment or to
enforce payment and credits to the extent relating to any of the Assets
set forth in subsections (a), (b), (c) or (e) of this Section 2.1 or
anything that would have been a part of such Assets, but for any
destruction of such assets, including any such items arising under
insurance policies (or, if not assignable or transferable, all of the
Seller and its Affiliate's rights under such insurance policies with
respect to such assets) and all guarantees, warranties, indemnities and
similar rights in favor of Seller or its Affiliates in respect of the
Assets, but not to the extent relating to any Excluded Assets or Excluded
Liabilities; and
(e) Copies of the FCC Licenses, Spectrum Leases, and other records,
files and documents of Seller and in Seller's possession relating to any
of the Assets set forth in subsections (a), (b), (c) or (d) of this
Section 2.1 , including all material correspondence with the lessors under
the Spectrum Leases (in all cases, in any form or medium).
Section 2.2 Excluded Assets. The Assets shall not include the Excluded
Assets. As used herein, the term "Excluded Assets" means all the properties,
assets, goodwill and rights of Seller or its Affiliates of whatever kind and
nature, real or personal, tangible or intangible, that are owned, leased,
licensed or otherwise held or controlled by Seller or its Affiliates on the
Closing Date (or, as applicable, Supplemental Closing Date) that are not
specifically identified in Section 2.1. For the avoidance of doubt, the
following shall be Excluded Assets: (a) all cash or cash equivalents of Seller
or its Affiliates; (b) all rights of Seller under this Agreement and the other
agreements and instruments executed and delivered in connection with the
Transactions; and (c) the name "Sprint Nextel" or any variation thereof, and any
trademarks, trade names, logos or symbols related thereto.
Page 5
Section 2.3 Liabilities. On the terms and subject to the conditions of
this Agreement, Buyer shall assume, effective as of the Closing (or, as
applicable, Supplemental Closing), all liabilities of Seller or its Affiliates
under the Assets that arise, are incurred, or are required to be performed from
and after the Closing (or, as applicable, Supplemental Closing) (the "Assumed
Liabilities"), and from and after the Closing (or, as applicable, Supplemental
Closing) with respect to the Assets being sold as of said Closing or
Supplemental Closing, Buyer shall pay, perform and discharge when due the
Assumed Liabilities. Except for the Assumed Liabilities, Buyer shall not assume,
or be obligated or liable for, any liabilities of Seller, or any of its
Affiliates, predecessors, assignors, or transferors, including without
limitation any liabilities under the Assets incurred, accrued and/or to be
performed under the terms thereof on or before the Closing Date (or, as
applicable, Supplemental Closing Date) (the "Excluded Liabilities"), whether in
connection with the Transactions, or otherwise, all of which shall be retained
and paid, performed and discharged when due by Seller or one of Seller's
Affiliates.
ARTICLE 3
PURCHASE PRICE; CLOSING; ALLOCATIONS
Section 3.1 Purchase Price. Subject to Sections 3.2 and 3.5, the purchase
price for the Assets (the "Purchase Price ") shall be the aggregate amount
of [***]
Section 3.2 Closing and Supplemental Closings.
(a) Closing. The closing (the "Closing") shall occur within five (5)
Business Days (or at such other time as the Parties may mutually agree or
as required under FCC Rules) following the date that the applicable
conditions to closing set forth under Article 8 (the "Closing Conditions")
have been satisfied or waived by the appropriate Party with respect to at
least [***] of the FCC Licenses and Spectrum Leases, as determined, in
each case, by reference to the values assigned to such assets in Schedule
3. The Parties shall promptly notify each other in writing of the
satisfaction or waiver of the Closing Conditions required for the Closing
as described in this Section 3.2(a). The date on which the Closing occurs
is referred to herein as the "Closing Date."
(b) Effect of Partial Closing. If, at the time of the Closing, the
Closing Conditions have not been satisfied with respect to all of the
Assets, then: (i) subject to Section 3.2(d) the Parties shall consummate
the Closing with respect to the Assets for which the Closing Conditions
have been satisfied, (ii) the Parties shall continue to seek to satisfy
the Closing Conditions with respect to all remaining Assets (the
"Remaining Assets"); (iii) for purposes of the Closing, the Purchase Price
shall be reduced by the amount allocated to all Remaining Assets on
Schedule 3; and (iv) the Parties shall effect one or more supplemental
closings (each a "Supplemental Closing") for the Remaining Assets in
accordance with Section 3.2(c).
(c) Supplemental Closings. As and when the Closing Conditions are
satisfied or waived by the appropriate Party after the Closing with
respect to any Remaining Asset, then, on the last Business Day of each
calendar quarter (or such other date as may be mutually agreed by the
Parties): (i) Seller shall sell, assign, transfer, convey and deliver
Page 6
to Buyer such Remaining Assets for which the Closing Conditions have been
satisfied or waived; and (ii) Buyer shall pay to Seller the amounts set
forth in Schedule 3 with respect to the Remaining Assets conveyed to Buyer
at such Supplemental Closing. The date on which any Supplemental Closing
occurs is referred to herein as a "Supplemental Closing Date."
(d) Related Assets. Notwithstanding anything to the contrary in this
Agreement, if any Asset (other than any FCC License or Spectrum Lease) is
used in relation to any Remaining Asset that is not assigned to Buyer at
the Closing, then such Asset shall not be transferred at the Closing and
shall instead be assigned, transferred and delivered to Buyer together
with the related FCC License or Spectrum Lease that is a Remaining Asset
at the applicable Supplemental Closing.
(e) Final Supplemental Closing Date. Notwithstanding the foregoing
or anything to the contrary in this Agreement, no Party shall have any
obligation to satisfy any Closing Conditions or effect any Supplemental
Closing with respect to any Remaining Asset after [***]
Section 3.3 Closing Deliveries by Seller. At the Closing and, as
applicable, at each Supplemental Closing Seller shall deliver to Buyer:
(a) A duly executed Instrument of Assignment for FCC Licenses
substantially in the form attached hereto as Exhibit A for the FCC
Licenses to be assigned at such Closing or Supplemental Closing, as
applicable;
(b) A duly executed Assignment and Assumption for Spectrum Leases,
substantially in the form attached hereto as Exhibit B for the Spectrum
Leases to be assigned at such Closing or Supplemental Closing, as
applicable;
(c) A duly executed Bill of Sale substantially in the form attached
hereto as Exhibit C for the Assets (other than FCC Licenses and Spectrum
Leases) to be transferred at such Closing or Supplemental Closing, as
applicable;
(d) The Officer's Certificate required to be delivered pursuant to
Sections 7.3(a) and (b) substantially in the form attached hereto as
Exhibit D;
(e) A Secretary's Certificate substantially in the form attached
hereto as Exhibit E;
(f) The Consents of the lessors under the Spectrum Leases that will
be assigned to Buyer at the Closing (or, as applicable, the Supplemental
Closing) and are required to effectuate such assignment under the terms of
such Spectrum Leases, which Consents shall be substantially in the form
attached hereto as Exhibit F; and
(g) Such other documents and instruments of transfer, in form and
substance reasonably acceptable to the Parties and their counsel, as may
be necessary to effect the Transactions.
Page 7
Section 3.4 Closing Deliveries by Buyer. At the Closing and, as
applicable, at each Supplemental Closing Buyer shall deliver to Seller:
(a) The Purchase Price, as adjusted in accordance with Sections 3.2
and 3.5 (or, in the case of a Supplemental Closing, the payment required
by Section 3.2(c) as adjusted in accordance with Section 3.5), payable in
immediately available funds via wire transfer to an account designated by
Seller;
(b) A duly executed Instrument of Assignment for FCC Licenses
substantially in the form attached hereto as Exhibit A for the FCC
Licenses to be assigned at such Closing or Supplemental Closing, as
applicable;
(c) A duly executed Assignment and Assumption for Spectrum Leases,
substantially in the form attached hereto as Exhibit B for the Spectrum
Leases to be assigned at such Closing or Supplemental Closing, as
applicable;
(d) The Officer's Certificate required to be delivered pursuant to
Sections 7.2(a) and (b), substantially in the form attached hereto as
Exhibit D;
(e) A Secretary's Certificate substantially in the form attached
hereto as Exhibit E; and
(f) Such other documents and instruments of transfer, in form and
substance reasonably acceptable to the Parties and their counsel, as may
be necessary to effect the Transactions.
Section 3.5 Allocation of Expenses; Closing Statement.
(a) Subject to Section 3.5(c), on the Closing Date (or, as
applicable, Supplement Closing Date), those items of expenses and accounts
payable specifically referred to in Section 3.5(b) in relation to the
Assumed Liabilities and are paid or payable before and after the Closing
Date (or, as applicable, Supplement Closing Date) on an annual, quarterly,
monthly or other regular periodic basis ("Prorated Expense Items") shall
be prorated as of the Closing Date (or, as applicable, Supplement Closing
Date) with respect to the particular Assets being sold as of the Closing
Date (or as applicable, Supplemental Closing Date) and apportioned, such
that (i) Buyer will receive the economic benefit or burden, as applicable,
of all such items after the Closing Date (or, as applicable, Supplement
Closing Date), and (ii) Seller shall receive the economic benefit or
burden, as applicable, of all such items for the period prior to, and
including, the Closing Date (or, as applicable, Supplement Closing Date).
After the Closing Date (or, as applicable, Supplement Closing Date), (x)
if Buyer should receive any bills or accounts or any reimbursement in
relation to Prorated Expense Items that are attributable in whole to the
period prior to, and including, the Closing Date (or, as applicable,
Supplement Closing Date), then Buyer shall promptly forward the same to
Seller (for payment, in the case of any such bills or accounts), (y) if
Seller should receive any bills or accounts or any reimbursement in
relation to the Prorated Expense Items that are attributable in whole to
the period after the Closing Date (or, as applicable, Supplement Closing
Date), then Seller shall promptly forward the same to Buyer (for payment,
in the
Page 8
case of any such bills or accounts) and (z) if any Party should receive
any bills or accounts or any reimbursements in relation to the Prorated
Expense Items that are attributable in part to the period prior to, and
including, the Closing Date (or, as applicable, Supplement Closing Date),
and in part to the period after the Closing Date, the amount thereof shall
be apportioned between Seller, on the one hand, and Buyer, on the other
hand, as of the Closing Date (or, as applicable, Supplement Closing Date),
based on the number of days in such period falling prior to and including
the Closing Date (or, as applicable, Supplement Closing Date), on the one
hand, and after the Closing Date (or, as applicable, Supplement Closing
Date), on the other hand. In the case of bills or accounts referred to in
clause (z), the party receiving the same shall be required to pay only
such portion of such bill or account for which it is responsible in
accordance with this Section 3.5(a).
(b) The following expense items shall be prorated in the manner
contemplated by Section 3.5(a): (i) regular periodic rent or lease
payments (including prepaid rent and rent payable in arrears) payable
under the Spectrum Leases; (ii) annual FCC regulatory fees in relation to
the FCC Licenses; and (iii) Property Taxes (if any).
(c) Not less than ten (10) Business Days prior to the Closing Date
(or, as applicable, Supplement Closing Date), Seller and Buyer will
jointly prepare a preliminary closing statement containing their good
faith calculation of the prorations provided for in Section 3.5(a). If
final bills or accounts in relation to any Prorated Expense Items or rent
receivable referred to in Section 3.5(a) are not available or have not
been issued prior to that date for any Prorated Expense Item, or rent
receivable that is required to be prorated as contemplated in Section
3.5(a), then Seller shall estimate the amount of each such item in good
faith, and such estimate shall be reflected in the preliminary closing
statement. The amount payable by Buyer at the Closing (or, as applicable,
Supplemental Closing) shall be increased or decreased to reflect the net
amount owing between the Parties as shown on such preliminary closing
statement, using such estimates where necessary. Final adjustment between
the Parties as to any estimated item used in the preparation of the
preliminary closing statements shall be made as soon as reasonably
practicable after the Closing (or, as applicable, Supplement Closing)
after such item becomes final. Payments in connection with such final
adjustment or otherwise necessary to reconcile amounts between the parties
in accordance with Section 3.5(a) will be due within thirty (30) days of
written notice from the Party entitled to payment.
Section 3.6 Allocation of Purchase Price. Within thirty (30) days after
the Closing Date or Supplemental Closing Date (as applicable), Buyer shall
deliver to Seller a schedule allocating the Purchase Price as adjusted in
accordance with Sections 3.2 and 3.5 (or, in the case of a Supplemental Closing,
the payment required by Section 3.2(c) as adjusted in accordance with Section
3.5), and reflecting the Assumed Liabilities, among the Assets acquired at the
Closing or Supplemental Closing (as applicable) in accordance with the
principles of Section 1060 of the Code and the regulations promulgated
thereunder (each an "Allocation Schedule"). Seller shall have fifteen (15) days
from its receipt of the Allocation Schedule to notify Buyer, in writing, that
Seller disputes one or more items reflected on the Allocation Schedule, which
notice shall include a detailed explanation of the basis for the dispute. If
Seller does not provide such notice of objection, Seller shall be deemed to
accept the Allocation Schedule as submitted by
Page 9
Buyer. If Seller does provide such notice of objection, the Parties shall
negotiate in good faith to resolve such dispute. If the Parties fail to resolve
all such disputes within thirty (30) days following Buyer's receipt of such
notice of objection, the Parties shall engage a nationally-recognized,
independent accounting firm (whose fees shall be shared equally by the two
Parties) with respect to the disputed items on the Allocation Schedule. The
determination of such independent accounting firm on the disputed items shall be
final and binding on the Parties (and any of their Affiliates). The Parties
shall prepare and file all applicable tax forms and returns, including if
necessary Internal Revenue Service Form 8594, consistent with the finalized
Allocation Schedules. Each Party shall timely and properly prepare, execute,
file and deliver all such documents, forms and other information as the other
Party may reasonably request to prepare or evaluate the Allocation Schedules.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
Section 4.1 Authorization. Seller is lawfully existing and in good
standing under the laws of the State of Delaware, and has all requisite power
and authority to enter into this Agreement and to perform the obligations to be
performed by it under this Agreement. The execution and delivery of this
Agreement and each other agreement, document, instrument or certificate
contemplated by this Agreement, and the performance by Seller of its obligations
hereunder, have been duly authorized by all necessary action on the part of
Seller.
Section 4.2 Enforceability. This Agreement and each other agreement,
document or instrument or certificate contemplated by this Agreement has been
duly executed and delivered by Seller and is a legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar Laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
Section 4.3 No Conflicts or Consents. Neither the execution, delivery and
performance by Seller of this Agreement, nor the consummation of the
Transactions by Seller, will (i) constitute, with or without the giving of
notice or passage of time or both, a breach, violation or default by Seller or
any of its Affiliates, create a Lien, or give rise to any right of termination,
modification, cancellation, prepayment or acceleration with respect to the
Assets, under (x) any Law or FCC License (subject to receipt of Consent of the
FCC) or (y) any note, bond, mortgage, indenture, lease, agreement or other
instrument, in each case which is applicable to any of the Assets; (ii) require
any Consent, other than the Consent of the FCC and the applicable lessors under
the Spectrum Leases as set forth on Schedule 2; or (iii) violate any Law,
judgment, order or decree by which Seller is bound, except, in each case, for
any conflicts, Consents or violations that, individually or in the aggregate,
will not have a material adverse effect on any of the Assets or Seller's ability
to consummate the transactions.
Section 4.4 FCC Licenses.
Page 10
(a) Schedule 1 sets forth for each FCC License the true and correct
(i) name of the licensee; (ii) FCC call sign, (iii) authorized channels,
(iv) expiration date, and (v) market where the facilities are authorized.
True and complete copies of the FCC Licenses have been delivered to Buyer.
To the knowledge of Seller, there is no condition outside of the ordinary
course imposed on any of the FCC Licenses by the FCC except those that are
either set forth on the face of the FCC Licenses, as issued by the FCC, or
are contained in applicable FCC Rules. The FCC Licenses are free and clear
of all Liens and are unimpaired by any acts or omissions of Seller, its
Affiliates and their respective officers, directors, agents, assignees and
licensees. The FCC Licenses have been granted to Seller by Final Order and
are in full force and effect.
(b) There is not pending or, to the knowledge of Seller, threatened
against Seller with respect to the FCC Licenses any application, action,
petition, objection or other pleading, or any proceeding with the FCC or
any other Governmental Authority, which (i) questions or contests the
validity of, or seeks the revocation, forfeiture, non-renewal or
suspension of, any of the FCC Licenses, (ii) seeks the imposition of any
modification or amendment with respect to any of the FCC Licenses, (iii)
would adversely affect the ability of Seller to consummate the
Transactions or (iv) seeks the payment of a fine, sanction, penalty,
damages or contribution in connection with the use of any of the FCC
Licenses. To the knowledge of Seller, there are no facts or circumstances
existing that would give rise to any such application, action, petition,
objection or other pleading, or proceeding with the FCC or any other
Governmental Authority. There is no unsatisfied adverse FCC order or
ruling outstanding against Seller with respect to any of the FCC Licenses.
(c) Seller has not agreed to accept or allow any electromagnetic
interference from any other FCC licensees, permittees or applicants with
respect to any of the FCC Licenses, and no such licensees, permittees or
applicants have agreed to accept electromagnetic interference from Seller
or with respect to its facilities.
(d) Seller is in compliance with all applicable Laws except for any
non- compliance that, individually or in the aggregate, will not have a
material adverse effect on the FCC Licenses, or on Seller's ability to
consummate the Transactions. Since acquisition by Seller of the FCC
Licenses, Seller has complied in all material respects with FCC Laws
applicable to the FCC Licenses, including without limitation the
Communication Act of 1934, as amended, and with all of the terms and
conditions of the FCC Licenses. All material documents required to be
filed at any time by Seller with the FCC with respect to the FCC Licenses,
as applicable, have been timely filed or the time period for such filing
has not lapsed. All such documents filed since the date that the FCC
Licenses were acquired by Seller are correct in all material respects. All
amounts owed to the FCC in connection with the FCC Licenses since the date
that the FCC Licenses were acquired by Seller have been timely paid.
(e) Since the date that the FCC Licenses were assumed by Seller, the
facilities subject to the FCC Licenses for which certification or
modification of completion of construction has been filed with the FCC are
operating and have been operating, in material compliance with the FCC
Licenses and FCC Rules.
Page 11
Section 4.5 Spectrum Leases. Schedule 2 sets forth the true and correct:
(i) expiration date for each Spectrum Lease, (ii) name of the lessor or other
counterpart for each Spectrum Lease, (iii) FCC call sign covered each Spectrum
Lease; (iv) authorized channels and market for each Spectrum Lease, (v) the
expiration date of the FCC license covered by each Spectrum Lease, and (vi) the
monthly, quarterly or annual rent, as applicable, payable, as of the Effective
Date of this Agreement, under each Spectrum Lease. True and complete copies of
all Spectrum Leases have been delivered or made available to Buyer. Each of the
Spectrum Leases is in full force and effect and enforceable by Seller in
accordance with its terms. Seller has valid and marketable leasehold interest in
each of the Spectrum Leases, free and clear of all Liens. Seller has not
assigned, pledged, transferred, or otherwise disposed of or granted any Lien on
its rights, titles and interests under any of the Spectrum Leases to any other
Person, nor, to the knowledge of Seller, has any other party to the Spectrum
Leases so assigned, pledged, transferred, granted any Lien on, or otherwise
disposed of any of its rights, title and interests thereunder. Neither Seller
nor, to the knowledge of Seller, any other party to any of the Spectrum Leases
is in material breach or material default thereunder. To the knowledge of
Seller, no condition exists or event has occurred, since entering into or
assuming the Spectrum Leases, as applicable, and is continuing as of the
Effective Date of this Agreement which, with or without the lapse of time or the
giving of notice, or both, would constitute a material default by Seller under
any Spectrum Leases or give rise to any Lien or right of termination,
modification, cancellation, prepayment, suspension, limitation, revocation or
acceleration against Seller under any such Spectrum Leases. Seller has not
received any notice of termination, or intent to terminate, with respect to any
Spectrum Leases.
Section 4.6 Litigation. There is no legal proceeding now in progress or
pending or, to the knowledge of the Seller, threatened against Seller with
respect to any of the Assets, nor to the knowledge of Seller does there exist
any basis therefor. Seller is not subject to any order, writ, injunction or
decree of any court or any federal, state, municipal or other domestic or
foreign Governmental Authority which would affect the Assets, any rights of
Seller in and to the Assets or Seller's ability to consummate the Transactions.
Section 4.7 Broker. Neither Seller nor any of its Affiliates has employed
any broker or finder or incurred any liability for any brokerage or finding fees
or commissions in connection with the Transactions.
Section 4.8 Taxes, (i) None of the Assets are subject to any material
Liens for Taxes; (ii) no material claims have been asserted in writing for any
Taxes in respect of any Seller Asset that have not been paid in full; (iii) none
of the Assets secure any indebtedness, the interest on which is tax-exempt under
Section 103 (a) of the Code; and (iv) none of the Assets is a "tax- exempt use
property" within the meaning of Section 168(h) of the Code.
Section 4.9 Seller Adjacent Interleaved Channels. Schedule 5 sets forth a
true and complete list of the channels owned or leased by Seller or its
Affiliates as of the Effective Date that are adjacent to and interleaved with
any of the channels under the FCC Licenses or Spectrum Leases.
Page 12
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
Section 5.1 Authorization. Buyer is lawfully existing and in good standing
under the Laws of the State of Nevada, and has all requisite power and authority
to enter into this Agreement and to perform the obligations to be performed by
it under this Agreement. The execution and delivery of this Agreement and each
other agreement, document, instrument or certificate contemplated by this
Agreement, and the performance by Buyer of its obligations hereunder, have been
duly authorized by all necessary action on the part of Buyer.
Section 5.2 Enforceability. This Agreement and each other agreement,
document or instrument or certificate contemplated by this Agreement to which
they are a party has been duly executed and delivered by Buyer, and is a legal,
valid and binding obligation of Buyer, enforceable against Buyer, as applicable
in accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar Laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
Section 5.3 No Conflicts or Consents. Neither the execution, delivery and
performance by Buyer of this Agreement, nor the consummation of the Transactions
by Buyer, will (i) require any Consent, other than the Consent of the FCC; or
(ii) violate any Law, judgment, order or decree by which Buyer is bound, except,
in each case, for any conflicts, Consents or violations that, individually or in
the aggregate, will not have a material adverse effect on Buyer's ability to
consummate the transactions.
Section 5.4 Litigation. Buyer is not subject to any order, writ,
injunction or decree of any court or any federal, state, municipal or other
domestic or foreign Governmental Authority which would affect the Buyer's
ability to consummate the Transactions.
Section 5.5 Broker. Buyer nor any of its respective Affiliates has
employed any broker or finder or incurred any liability for any brokerage or
finding fees or commissions in connection with the Transactions.
Section 5.6 Funds Available. Buyer has available to it as of the date
hereof and will have available to it as of the Closing and each Supplemental
Closing immediately available funds necessary to consummate the transactions
contemplated hereby and to pay all expenses of Buyer in connection therewith.
Buyer has delivered to Seller evidence, reasonably satisfactory to Seller, that
demonstrates Buyer's ability to consummate the Transaction.
ARTICLE 6
COVENANTS AND OTHER AGREEMENTS
Section 6.1 Consummation of Transactions. From and after the Effective
Date, each Party shall use its reasonable best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things necessary and
consistent with applicable Law to perform its obligations under this Agreement
and to consummate the Transactions as soon as reasonably practicable. Each Party
shall use commercially reasonable efforts to prevent or promptly remedy
Page 13
any breach of any of its representation, warranties, covenants or agreements
contained in this Agreement.
Section 6.2 Certain Notices. Each Party shall promptly notify the other
Parties in reasonable detail in writing:
(a) upon the satisfaction or waiver of the Closing Conditions
required for the Closing as described in Section 3.2(a);
(b) to the knowledge of the notifying Party, upon the commencement
of, or the impending or threatened commencement of, or upon obtaining
knowledge of any facts that would give rise to, any claim, action or
proceeding brought to enjoin the consummation of the Transactions, or
against or relating to (i) the notifying Party or its properties or
assets, which could materially adversely affect the Transactions or its
ability to perform its obligations hereunder, or (ii) their respective
Assets or their use;
(c) to the knowledge of the notifying Party, upon the occurrence of,
or the impending or threatened occurrence of, or upon obtaining knowledge
of any facts that would give rise to, any event which could cause or
constitute a material breach of any of its representations, warranties,
covenants or agreements contained in this Agreement; and
(d) upon the occurrence or existence of any event, condition,
circumstance or state of facts known to the notifying Party, which has had
or could have a material adverse effect on the Transactions or its ability
to perform its obligations hereunder, or could materially adversely affect
their respective Assets or their use.
Section 6.3 Confidentiality.
(a) May 18, 2004 NDA. This Agreement and any information or
documents provided by any Party to this Agreement to any other Party, or
developed by the Parties in the course of completing the actions
contemplated by this Agreement shall be treated as confidential and
proprietary and shall be subject to the confidentiality and nondisclosure
letter agreement dated May 18, 2004, by and between Nextel Communications,
Inc. and Clearwire Corporation and its successors and subsidiaries (as
amended, the "May 18, 2004 NDA"). Each of the Parties hereto agrees that
the Parties (on behalf of themselves and their respective successors and
subsidiaries) shall be bound by and enjoy all of the benefits of the May
18, 2004 NDA as if original parties thereto. Notwithstanding anything to
the contrary in the May 18, 2004 NDA, for purposes of this Agreement only,
the May 18, 2004 NDA shall be deemed to survive (1) with respect to all
Information (as defined in the May 18, 2004 NDA) relating to the
transactions contemplated by Section 6.5, until such transactions have
been consummated or the rights described in Section 6.5 have expired or
been terminated in accordance with this Agreement and (2) with respect to
all other Information relating to this Agreement, for a period of two
years from the date hereof.
(b) Limited Disclosure to Business Partners. Notwithstanding Section
6.3(a) or the May 18, 2004 NDA, each Party may disclose this Agreement to
its actual and prospective investors, lenders, acquirers, merger partners
or other business partners (each
Page 14
a "Business Partner") if: (1) the Business Partner reasonably needs to
know such information to pursue a business relationship that the
disclosing Party considers material consistent with such Party's business
practices (including, without limitation, for the purposes of due
diligence on the disclosing Party); and (2) prior to disclosing this
Agreement, the disclosing Party: (i) causes the Business Partner to
execute and deliver to the disclosing Party a nondisclosure agreement (the
"Business Partner NDA") that (a) requires the Business Partner to maintain
the confidentiality of the terms of this Agreement on terms at least as
restrictive as those set forth in Sections 1, 3 and 4 of the May 18, 2004
NDA and (b) explicitly designates the non-disclosing Party as an intended
third-party beneficiary with the right to enforce the Business Partner NDA
(including, without limitation, the right to seek any equitable remedy to
enjoin the improper disclosure of any confidential information); and (ii)
provides written notice to the non-disclosing Party that the disclosing
Party has disclosed this Agreement to a Business Partner (without
disclosing the identity of the Business Partner) in accordance with the
terms of this Section 6.3(b); provided, however, that (except as otherwise
provided in the May 18, 2004 NDA) under no circumstances shall any Party
disclose to any Person Schedule 3 or the allocations set forth therein.
Notwithstanding the foregoing, the Parties acknowledge that the May 18,
2004 NDA provides that nothing in such agreement "preclude[s] disclosures
necessary to comply with accounting standards and applicable securities
and other laws and regulations of the Securities and Exchange Commission
("SEC") or with the regulations of any applicable securities exchange" and
that the Parties and/or their Affiliates may be required to disclose the
financial terms of this Agreement in such Party's or its Affiliates'
consolidated financial statements or in the footnotes thereof.
Notwithstanding the foregoing, neither Party shall be required to enter
into a Business Partner NDA with a Business Partner provided that such
Party has, prior to the Effective Date and consistent with such Party's
normal business practices, entered into a non-disclosure agreement with
that Business Partner, which non-disclosure agreement will (i) at least
require the Business Partner to maintain the confidential information
received by such Party in confidence and to protect against the
unauthorized disclosure of the confidential information disclosed to such
Business Partner on terms consistent with the disclosing Party's normal
business practices and (ii) not include any provision which expressly
excludes third party beneficiaries. Such non-disclosure agreements will be
considered a Business Partner NDA for the purposes of this Section 6.3.
(c) Duty to Enforce Business Partner NDAs. If any Party discloses
any confidential information to any Business Partner in accordance with
Section 6.3(b), such disclosing Party shall ensure that all of its
Business Partners maintain the confidentiality of such information in
accordance with the terms of this Section 6.3 and the Business Partner
NDA. If any Party, in good faith and based on facts known to it,
determines that a Business Partner has, or may have, disclosed any
information in breach of any Business Partner NDA or in violation of this
Section 6.3, then such Party shall deliver written notice of such breach
to the other Party, which notice will include specific information with
respect to the breach and any information the notifying Party has with
respect to the identity of the Person making the unauthorized disclosure.
Upon receiving the such notice from the notifying Party: (1) the Parties
shall immediately cooperate to mutually identify the Business Partner, if
any, responsible for the unauthorized disclosure based on
Page 15
reasonable evidence available to the Parties; (2) the disclosing Party
shall provide to the notifying Party a true and complete copy of the
Business Partner NDA between the breaching Business Partner and the
disclosing Party immediately after the applicable Business Party is
identified, if at all, by the Parties; and (3) the disclosing Party shall
use commercially reasonable and diligent efforts to prevent further
unauthorized disclosures by the breaching Business Partner.
Section 6.4 Further Assurances. The Parties shall cooperate in good faith
and exercise their reasonable best efforts to obtain all required Consents and
to finalize and execute any and all other documents or agreements necessary to
complete the Transactions on or prior to the Closing Date (or, as applicable,
Supplemental Closing Date). Each Party shall, upon request, execute and deliver
such documents and take such actions as may reasonably be requested by the other
Party in order to effectuate the purposes of this Agreement.
Section 6.5 [***] Repurchase Right.
(a) [***] Option Subject to Section 6.5(b), Seller shall have the
option (the "[***] Option") to repurchase from Buyer (and Buyer hereby
agrees to sell) certain of the FCC Licenses and/or Spectrum Leases listed
on Schedule 4 (the "[***] Option Channels") if, within the [***] following
the Effective Date, Sprint Nextel Corporation, or its successor, assign or
Affiliate (together "Sprint Nextel"), has: (1) purchased, or irrevocably
committed to purchase, equipment in an aggregate amount equal to or
greater than [***] to implement a [***] wireless broadband system
utilizing the EBS and BRS spectrum (the [***] Plan"); and (2) begun to
implement the [***] Plan by commercially deploying such system [***]
(b) Limitation of [***] Option. Notwithstanding Section 6.5(a),
Seller shall not have the right to repurchase any of the [***] Option
Channels that: (1) Buyer or any of its successors, assigns or Affiliates
have transferred, leased or subleased (or have entered into a written
agreement or letter of intent to transfer, lease or sublease such [***]
Option Channels) to an unaffiliated third party; (2) are being used by
Buyer or any of its successors, assigns or Affiliates for services in
their respective businesses; or (3) have been identified in writing by
Buyer or any of its successors, assigns or Affiliates (whether in a
deployment plan, engineering plan or other operational document used in
such business) to be deployed for services in their respective businesses
at any time within the [***] following the date of the [***] Option
Notice.
(c) Exercise of [***] Option. To exercise the [***] Option, on or
prior to [***] following the Effective Date Sprint Nextel shall provide
written notice (the "[***] Option Notice") to Buyer of Seller's election
to repurchase some or all of the [***] Option Channels, which notice shall
(a) specify the [***] Option Channels Seller desires to repurchase and (b)
certify to Buyer that the conditions to the [***] Option set forth in
Section 6.5(a) have been satisfied and that the [***] Plan is continuing.
Within thirty (30) days after receiving the [***] Option Notice, Buyer
shall provide written notice (the "[***] Availability Notice") to Sprint
Nextel of those [***]
Page 16
Option Channels identified in the [***] Option Notice which satisfy the
conditions specified in Section 6.5(b) above and are available for
repurchase by Seller in accordance with this Section 6.5 (the "Available
[***] Option Channels"). Seller shall have thirty (30) days following the
receipt of the [***] Availability Notice to select and notify Buyer, in
writing of which Available [***] Option Channels Seller wishes to acquire
(the "Selected [***] Option Channels"). Buyer shall sell, subject to the
approval by the FCC and/or the applicable lessors under the Spectrum
Leases, the Selected [***] Option Channels to Sprint Nextel at a purchase
price (the "[***] Purchase Price") equal to [***]. The Parties will
implement the [***] Option purchase through a purchase agreement with
customary terms, and the closing of the purchase of the [***] Option
Channels shall occur as soon as practicable after the Parties have
received the required Consents from the FCC or any lessor under the
Spectrum Leases. At such closing, (i) Seller shall pay the [***] Purchase
Price to Buyer in immediately available funds via wire transfer to an
account designated by Buyer and (ii) Buyer shall execute and deliver to
Sprint Nextel customary transfer documents. Notwithstanding anything
herein to the contrary, including the [***] Option, Buyer shall have the
right to transfer, lease, sublease or otherwise dispose of, or enter into
an agreement to do any of the foregoing, any of the [***] Option Channels
prior to the Seller's delivery [***] Option Notice with respect to such
[***] Option Channels pursuant to this Section 6.5 and in such event
Seller's option to repurchase shall not apply to the applicable [***]
Option Channels.
Section 6.6 FCC Qualifications. Seller hereby covenants and agrees that
prior to and through the Closing (or, as applicable, the final Supplemental
Closing) it shall maintain all necessary qualifications to hold and to renew, as
necessary, the FCC Licenses.
Section 6.7 Consents. The Parties shall use commercially reasonable
efforts and shall cooperate to prepare and promptly file with Governmental
Authorities and other Persons all applications, notices, petitions and other
documentation necessary to obtain the Consents. The Parties agree to cooperate
to consolidate and file all applications, notices and petitions to be filed with
the FCC in as few applications reasonably as possible. Each Party shall furnish
to the other Party all information concerning such Party and its Affiliates
reasonably required for inclusion in any application to be made in connection
with the Transactions or to determine compliance with FCC Rules. Subject to
Section 3.2(e), from the Effective Date and through the Closing (or, as
applicable, the final Supplemental Closing), each Party shall use its best
efforts to obtain Consents to assignment to the other Party of all of the Assets
requiring Consent (including, without limitation, the Consents required to
assign the Spectrum Leases as identified on Schedule 2).
Section 6.8 [***]
Page 17
* * *
(b) For purposes of this Section 6.8, "Seller Adjacent Channels"
means the channels identified on Schedule 5 and the channels under the FCC
licenses and spectrum leases actually transferred to Seller pursuant to
the Purchase and Sale Agreement, dated as of the date hereof, by and
between Seller and Fixed Wireless Holdings, LLC.
(c) If required by FCC Rules in connection with the transactions
contemplated by Section 6.8(a), Seller will, file, or consent Buyer
filing, such letter of no objection with the FCC in support of a request
for Special Temporary Authority or other application requesting
operational authority from the FCC.
(d) The Parties will cooperate to negotiate a mutually agreeable
separate expanded interference agreement as soon as practicable after the
Effective Date.
Section 6.9 Certain Affirmative Covenants. From the Effective Date and
through the Closing (or, as applicable, the final Supplemental Closing), Seller
shall (a) carry on its business with respect to the Assets as currently
conducted and only in the ordinary course of business; (b) preserve the Assets
in good standing and in full force and effect; (c) comply with all Laws
applicable to the Assets; and (d) maintain in full force and effect the Assets,
in each case, to the extent necessary to Seller's ability to consummate the
Transactions.
Section 6.10 Certain Negative Covenants. From the Effective Date and
through the Closing (or, as applicable, the final Supplemental Closing), Seller
shall not enter into any agreement, arrangement or understanding to, or
otherwise, negotiate, offer or commit to: (a) sell, transfer, assign, lease or
dispose of the Assets or of the spectrum subject to the FCC Licenses and
Spectrum Leases or any interests therein or portion thereof; (b) create, incur
or suffer to exist any Lien or other liability on the Assets or the spectrum
subject to the FCC Licenses and Spectrum Leases or any interest therein; or (c)
amend any Spectrum Lease without the prior written consent of Buyer.
Section 6.11 Access. From the Effective Date to the Closing (or, as
applicable, the final Supplemental Closing), Buyer, its representatives and
advisors shall, during normal business hours have the right of reasonable access
to and inspection of the books, records, and other documents specifically
related to the Assets, as may be reasonably requested of and upon reasonable
notice to Seller.
Section 6.12 Publicity. Subject to the terms of the May 18, 2004 NDA, no
Party shall issue any press release or public announcement concerning this
Agreement or the Transactions
Page 18
without obtaining the prior written approval of the other Party hereto, which
approval will not be unreasonably withheld or delayed.
Section 6.13 Transfer Taxes; FCC Filing Fees. Buyer shall pay in a timely
manner all Transfer Taxes and FCC filing fees resulting from or payable in
connection with the assignment and transfer of the Assets to Buyer pursuant to
this Agreement, in each case regardless of the Person on whom such Transfer
Taxes and/or FCC filing fees are imposed by Law. The Parties shall reasonably
cooperate in providing information and executing and delivering documents
necessary to reduce or eliminate such Transfer Taxes. Where Seller is required
by law to remit the Transfer Taxes to the applicable Government Authority, Buyer
shall promptly pay over the Transfer Taxes due and payable to Seller for timely
remittance to the Government Authority. Where the relevant Law imposes a
Transfer Tax on Seller but permits payment by Buyer, Buyer shall pay the
Transfer Taxes to the applicable Government Authority and promptly provide a
receipt, or other documentary evidence of payment as reasonably requested by
Seller, to Seller.
Section 6.14 Non-Solicitation of Lessors.
(a) Seller Non-Solicitation Obligations. For so long as required
pursuant to Section 6.14(c) and except as provided in Section 6.14(b),
Seller and its Affiliates (i) shall immediately cease all direct and
indirect communications with the lessors under the Spectrum Leases and
(ii) shall not encourage or incite (by promising any financial
consideration, promising any business relationship or otherwise) any third
party to have any direct or indirect communications with the lessors under
the Spectrum Leases.
(b) Permitted Communications. Notwithstanding Section 6.14(a),
Seller and its Affiliates may communicate with any lessor (i) for the
purposes of obtaining the Consent of such lessor, (ii) as required in the
ordinary course of carrying on its obligations under such Spectrum Leases,
or (iii) to the extent that such communications do not relate to the
Spectrum Leases.
(c) Non-Solicitation Period. Seller's (and its Affiliate's)
obligations under this Section 6.14 shall commence upon the Effective Date
and continue until the earlier of (i) the date that this Agreement is
terminated in accordance with Article 9, (ii) nine (9) months after the
Closing or the Supplemental Closing at which the applicable Spectrum Lease
is conveyed to the other Party, and (iii) September 30, 2007, with respect
to any Spectrum Lease not conveyed at a Closing or Supplemental Closing on
or before such date.
ARTICLE 7
CONDITIONS TO CLOSING
Section 7.1 Conditions to the Obligations of Both Parties. Each Party's
obligation to consummate the Transactions is subject to the satisfaction or
waiver, on or prior to Closing Date (or, as applicable, any Supplemental Closing
Date), of each of the following conditions, as applicable to the Party
specified:
(a) The FCC shall have approved the application for consent to the
assignment of the FCC Licenses and Spectrum Leases to the applicable Party
(or its
Page 19
designee) without conditions adverse to such Party, such approval shall
have become a Final Order, and such Final Order shall be in full force and
effect without modifications.
(b) All other notices, filings and Consents required to be made or
obtained prior to the Closing (or, as applicable, Supplemental Closing) by
either Party or any of its respective Affiliates with any Governmental
Authority in connection with the execution and delivery of this Agreement
and the consummation of the Transactions shall have been made or obtained.
(c) No preliminary or permanent injunction or other order, decree or
ruling issued by a Governmental Authority, nor any Law promulgated or
enacted by any Governmental Authority, shall be in effect that would
impose material limitations on the ability of either Party to consummate
the Transactions.
Section 7.2 Conditions to the Obligations of Seller. Seller's obligation
to consummate the Transactions contemplated by this Agreement are subject to the
satisfaction or waiver, on or prior to the Closing Date (or, as applicable,
Supplemental Closing Date), of each of the following conditions:
(a) The representations and warranties of Buyer contained herein
shall be true and correct in all material respects (except for
representations and warranties that are qualified as to materiality, which
shall be true and correct) as of the Closing (or, as applicable,
Supplemental Closing) as if made on and as of the Closing Date (or, as
applicable, Supplemental Closing Date) (except that representations and
warranties that are made as of a specific date need be so true and correct
only as of such date), and Seller shall have received a certificate to
such effect dated the Closing Date (or, as applicable, Supplemental
Closing Date) and executed by a duly authorized officer of Buyer.
(b) The covenants and agreements of Buyer to be performed under this
Agreement on or prior to the Closing (or, as applicable, Supplemental
Closing) shall have been duly performed in all material respects, and
Seller shall have received a certificate to such effect dated the Closing
Date (or, as applicable, Supplemental Closing Date) and executed by a duly
authorized officer of Buyer.
(c) Buyer having delivered to Seller all of the certificates,
documents, instruments and other items required to be delivered to Seller
pursuant to Section 3.4, including, without limitation, Buyer's delivery
to Seller of the Purchase Price.
Section 7.3 Conditions to the Obligations of Buyer. Buyer's obligation to
consummate the Transactions contemplated by this Agreement are subject to the
satisfaction or waiver, on or prior to the Closing Date (or, as applicable,
Supplemental Closing Date), of each of the following conditions:
(a) The representations and warranties of Seller contained herein
shall be true and correct in all material respects (except for
representations and warranties that are qualified as to materiality, which
shall be true and correct) as of the Closing (or, as applicable,
Supplemental Closing) as if made on and as of the Closing Date (or, as
applicable, Supplemental Closing Date) (except that representations and
warranties that
Page 20
are made as of a specific date need be so true and correct only as of such
date), and Buyer shall have received a certificate to such effect dated
the Closing Date (or, as applicable, Supplemental Closing Date) and
executed by a duly authorized officer of Seller; provided, however, that,
with respect to the representations and warranties set forth in Sections
4.4 and 4.5, such representations and warranties and the certificates
relating thereto as required under this section shall only apply with
respect to the Assets subject to the Closing (or, as applicable,
Supplemental Closing).
(b) The covenants and agreements of Seller to be performed under
this Agreement on or prior to the Closing (or, as applicable, Supplemental
Closing) shall have been duly performed in all material respects, and
Buyer shall have received a certificate to such effect dated the Closing
Date (or, as applicable, Supplemental Closing Date) and executed by a duly
authorized officer of Seller; provided, however, that, with respect to the
covenants and/or agreements relating to specific Assets, such covenants
and agreements and any certificates relating thereto shall only apply with
respect to the Assets subject to the Closing (or, as applicable,
Supplemental Closing).
(c) Seller having delivered to Buyer, as applicable, all of the
certificates, documents, instruments and other items required to be
delivered to Buyer pursuant to Section 3.3.
ARTICLE 8
TERMINATION
Section 8.1 Termination. This Agreement may be terminated and the
Transactions thereby abandoned at any time prior to the Closing:
(a) by mutual written consent of Buyer and Seller;
(b) by any Party if the Closing shall not have occurred on or before
September 30, 2006;
(c) by any Party if there shall be any Law, regulation or FCC Rule
that makes consummation of the Transactions illegal or otherwise
prohibited;
(d) by any Party if any of the conditions to the obligations for the
Parties set forth in Section 7.1 shall have become incapable of
fulfillment other than as a result of a breach by the terminating Party of
any covenant or agreement contained in this Agreement;
(e) by Seller if any of the conditions to the obligations of Seller
set forth in Section 7.2 shall have become incapable of fulfillment other
than as a result of a breach by Seller of any covenant or agreement
contained in this Agreement;
(f) by Buyer if any of the conditions to the obligations of Buyer
set forth in Section 7.3 shall have become incapable of fulfillment other
than as a result of a breach by Buyer of any covenant or agreement
contained in this Agreement;
Page 21
(g) by any Party upon the material breach of a representation,
warranty or covenant in this Agreement by the other party if such breach
is not cured within thirty (30) days following written notice by the
non-breaching party which notice shall describe the breach; provided,
however, that termination by a non-breaching Party for the breach of a
material representation and warranty as to a specific FCC License,
Spectrum Lease or Asset shall only serve to terminate the Agreement with
respect to such FCC License, Spectrum Lease or Asset and shall not serve
to terminate the entire Agreement; and
(h) by any Party, if the Transaction Agreement, dated as of the date
hereof, by and among Seller, Buyer and Fixed Wireless Holdings LLC shall
have been terminated in accordance with its terms other than as a result
of a breach by terminating Party (or its Affiliates) of any covenant or
agreement contained in such Transaction Agreement.
A Party desiring to terminate this Agreement pursuant to this Section 8.1 shall
give written notice thereof to the other Party specifying the provision hereof
pursuant to which the Agreement is terminated.
Section 8.2 Effect of Termination. In the event of a valid termination of
this Agreement on our before the Closing, the Agreement shall become null and
void and of no further force and effect and neither Party shall have any
liability or further obligation to the other, except that:
(a) nothing herein will relieve a Party from liability for any
breach by such Party of this Agreement; provided, however, that, with
respect to any breach by Seller of a representation and warranty as to a
specific FCC License, Spectrum Lease or Asset, if such representation and
warranty became untrue after the Effective Date through no fault of the
Seller (or any of such Party's Affiliates, or any of their respective
officers, directors, employees, agents, or representatives), then the sole
remedy of the Buyer shall be to (1) terminate this Agreement solely with
respect to such FCC License, Spectrum Lease or Asset or (2) adjust the
Purchase Price in accordance with Section 3.2(b) based on the amount
allocated to such FCC License, Spectrum Lease or Asset as set forth in
Schedule 3; and
(b) the provisions of Sections 4.7, 5.5, 6.3 and 6.12 and Articles
8, 9 and 10 shall survive the termination of this Agreement.
For the avoidance of doubt, the May 18, 2004 NDA shall survive any termination
of this Agreement.
ARTICLE 9
SURVIVAL AND REMEDIES
Section 9.1 Survival. The representations and warranties and covenants and
other agreements contained in this Agreement shall survive the Closing (or, as
applicable, the Supplemental Closing) until [***] after the Closing Date (or, as
applicable, the Supplemental Closing Date) and shall expire at such time;
provided, however, that the covenants and other agreements set forth in Section
6.5 shall survive until [***] after the earlier of the date that the
transactions contemplated thereby have been consummated or the rights
Page 22
described therein have expired; provided, further, that the covenants and other
agreements set forth in Sections 6.3 and 6.12 and Articles 8, 9 and 10 shall
survive [***] Notwithstanding the foregoing, such representations and warranties
and covenants and other agreements shall not terminate with respect to any item
as to which the Party to be indemnified shall have, before the expiration of the
applicable survival period, previously made a bona fide claim by delivering
proper notice of such claim in accordance with Section 9.4 or Section 9.5.
Section 9.2 Seller Indemnification. Seller shall indemnify and hold
harmless Buyer, Buyer, their respective agents, successors and assigns from and
against any and all Damages based upon, attributable to or resulting from:
(a) except as otherwise provided herein, the failure of any
representation or warranty of Seller as set forth in this Agreement to be
true and correct as of the dates made;
(b) the breach of any covenant or other agreement on the part of
Seller under this Agreement;
(c) the ownership and operation of the Assets prior to the Closing
Date (or, as applicable, the Supplemental Closing Date);
(d) any Excluded Assets or Excluded Liabilities.
Section 9.3 Buyer Indemnification. Buyer shall indemnify and hold harmless
Seller and its agents, successors and assigns from and against any and all
Damages based upon, attributable to or resulting from:
(a) except as provided otherwise herein, the failure of any
representation or warranty of Buyer set forth in this Agreement to be true
and correct as of the dates made;
(b) the breach of any covenant or other agreement on the part of
Buyer under this Agreement;
(c) the ownership and operation of the Assets following the Closing
(or, as applicable, the Supplemental Closing) provided, however [***] the
indemnification obligation pursuant to this subsection (e) shall include
the [***] for the time period between Closing (or, as applicable,
Supplemental Closing) and the closing of [***] by Seller only; and
(d) any Assumed Liabilities.
Section 9.4 Third Party Claims.
(a) In the event that any Claim by any third Person, the indemnified
Party shall reasonably and promptly cause written notice of the assertion
of any Claim of which it has knowledge which is covered by this indemnity
to be forwarded to the indemnifying
Page 23
Party. The indemnifying Party shall have the right, at its sole option and
expense, to be represented by counsel of its choice, which must be
reasonably satisfactory to the indemnified Party, and to defend against,
negotiate, settle or otherwise deal with any Claim which relates to any
Damages indemnified against hereunder; provided, however, that the
indemnifying Party shall not, without the consent of the indemnified
Party, enter into any settlement, compromise or discharge of a Claim that
by its terms (i) includes injunctive or other non-monetary relief that
adversely affects the indemnified Party in any material respect; (ii) does
not release the indemnified Party completely in connection with such
Claim, or (iii) would otherwise adversely affect the indemnified Party in
any material respect. If the indemnifying Party elects to defend against,
negotiate, settle or otherwise deal with any Claim which relates to any
Damages indemnified against hereunder, it shall within fifteen (15) days
(or sooner, if the nature of the Claim so requires) notify the indemnified
Party of its intent to do so. If the indemnifying Party shall assume the
defense of any Claim, the indemnified Party may participate, at its own
expense, in the defense of such Claim; provided, however, that such
indemnified Party shall be entitled to participate in any such defense
with separate counsel at the expense of the indemnifying Party if (i) so
requested by the indemnifying Party to participate or (ii) in the
reasonable opinion of counsel to the indemnified Party, a conflict or
potential conflict exists between the indemnified Party and the
indemnifying Party that would make such separate representation advisable;
and provided, further, that the indemnifying Party shall not be required
to pay for more than one such counsel for all indemnified Parties in
connection with any Claim.
(b) If the indemnifying Party elects not to defend against,
negotiate, settle or otherwise deal with any Claim which relates to any
Damages indemnified against hereunder, fails to notify the indemnified
party of its election as herein provided or disputes its obligation to
indemnify the indemnified Party for such Damages under this Agreement, the
indemnified Party may defend against, negotiate, settle or otherwise deal
with such Claim; provided, however, that the indemnified Party shall not,
without the consent of the indemnifying Party, enter into any settlement,
compromise or discharge of a Claim that by its terms includes injunctive
or other non-monetary relief that adversely affects the indemnifying Party
in any material respect. If the indemnified Party defends any Claim, then
the indemnifying Party shall reimburse the indemnified Party for the
Damages, including without limitation, the reasonable expenses incurred by
the indemnified Party in defending such Claim upon submission of periodic
bills, subject to the dispute of such Damage amounts as provided in
Section 9.4(c).
(c) If the indemnifying Party disputes the amount of any Damages
("Damages Dispute") payable by the indemnifying party pursuant to Section
9.4(b), the indemnifying Party shall notify the indemnified Party of such
disagreement within fifteen (15) days of the receipt of the Claim.
Thereupon, the indemnified Party and the indemnifying Party will negotiate
in good faith and use reasonable efforts to resolve their differences with
respect to the Damages presented in such Claim during the thirty (30) days
following the indemnifying Party's notice of disagreement to the
indemnified Party. In the event such dispute is not resolved upon the
expiration of the thirty (30) day period following the indemnifying
Party's notice of disagreement to the indemnified Party, either Party
shall be entitled to immediately proceed to file an action in any
appropriate court to seek such
Page 24
relief that is appropriate and reasonably necessary to protect that
Party's rights. If final adjudication of the Damages Dispute results in a
decision in favor of the indemnifying Party, the indemnified Party shall
not be entitled to reimbursement for any expense that may be incurred in
defending such Damages Dispute.
(d) The Parties agree to cooperate fully with each other in
connection with the defense, negotiation, or settlement of any Claim by a
third Person.
(e) After any final judgment or award shall have been rendered by a
court, arbitration board or administrative agency of competent
jurisdiction and the expiration of the time in which to appeal therefrom,
or a settlement shall have been consummated, or the indemnified Party and
the indemnifying Party shall have arrived at a mutually binding agreement
with respect to a Claim hereunder, the indemnified Party shall forward to
the indemnifying Party notice of any sums due and owing by the
indemnifying Party pursuant to this Agreement with respect to such matter.
(f) The failure of the indemnified Party to give reasonably prompt
notice of any Claim shall not release, waive or otherwise affect the
indemnifying Party's obligations with respect thereto except to the extent
that the indemnifying Party can demonstrate actual loss and prejudice as a
result of such failure.
Section 9.5 Other Claims. Any indemnifiable Claim hereunder that is not a
Claim by a third Person shall be asserted by the indemnified Party by promptly
delivering written notice thereof (including the basis of the Claim and the
amount thereof, if known and quantifiable) to the indemnifying Party. The
failure of the indemnified Party to give reasonably prompt notice of any Claim
shall not release, waive or otherwise affect the indemnifying Party's
obligations with respect thereto except to the extent that the indemnifying
Party can demonstrate actual loss and prejudice as a result of such failure. If
the indemnifying Party does not respond to such notice within sixty (60) days
after its receipt, it shall have no further right to contest the validity of
such claim.
Section 9.6 Calculation of Losses; Limitation of Liability; Remedies.
(a) The amount of any Damages for which indemnification is provided
under this Article 9 shall be (i) net of any amounts actually recovered by
the indemnified Party under such Party's insurance policies with respect
to such Damages, (ii) net of any amounts actually recovered from any third
Person (by contribution, indemnification or otherwise) with respect to
such Damages, and (iii) adjusted for Taxes so as to put the indemnified
Party in the same pre-tax financial position as it would have been had the
other Party's representations and warranties hereunder been true and
correct in all respects, the other Party's covenants and agreements been
performed in full, and any other event giving rise to Damages had not
occurred. Any indemnification payment made pursuant to this Article 9
shall be treated as an adjustment to the Purchase Price for U.S. Federal
income tax purposes.
(b) Subject to Section 9.6(e), the aggregate indemnification
obligations of Seller pursuant to Sections 9.2(a) and (b) shall not exceed
the lesser of [***]
Page 25
[***] or the Purchase Price actually received by Seller in accordance with
Section 3.4(a) (as and when received), and the aggregate indemnification
obligations of Buyer pursuant to Sections 9.3(a) and (b) shall not exceed
[***] No Party shall be liable to the other Parties pursuant to Section
9.2 or Section 9.3, as applicable, unless and only to the extent that the
aggregate Damages suffered by the indemnified Party, collectively, exceeds
[***]
(c) Subject to Section 9.6(e), the Parties acknowledge that their
sole and exclusive remedy for monetary damages after the Closing with
respect to any and all claims under this Agreement (other than claims of,
or causes of action arising from, actual fraud) shall be pursuant to the
indemnification provisions set forth in this Article 9.
(d) SUBJECT TO SECTION 9.6(E), IN NO EVENT SHALL ANY PARTY BE LIABLE
FOR INDIRECT, SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING OUT OF A
BREACH OF THIS AGREEMENT, EVEN IF ADVISED AT THE TIME OF BREACH OF THE
POSSIBILITY OF SUCH DAMAGES.
(e) Notwithstanding anything to the contrary in this Agreement, the
provisions of Sections 9.6(b), (c), and (d) will not apply to, or in any
way limit or restrict, any Claim by either Party for the other Party's
breach of its obligations under Section 6.3.
ARTICLE 10
MISCELLANEOUS
Section 10.1 Entire Agreement. Except for the May 18, 2004 NDA, this
Agreement constitutes the entire agreement between the Parties pertaining to the
subject matter hereof and supersedes all prior and contemporaneous agreements,
understandings, negotiations and discussions, whether oral or written, of the
Parties with respect to the subject matter hereof.
Section 10.2 No Other Representations or Warranties. Except for the
representations and warranties set forth in Articles 4 and 5, no Party is making
any representations or warranties, written or oral, statutory, express Or
implied, in relation to the Assets, the Assumed Liabilities or the Transactions.
Section 10.3 Amendments and Waivers. Any provision of this Agreement may
be amended or waived if, and only if, such amendment or waiver is in writing and
signed (in the case of an amendment) by Seller and Buyer or (in the case of a
waiver) by the Party against whom the waiver is to be effective. No failure or
delay by any Party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
Section 10.4 Assignment. This Agreement shall be binding upon and shall
inure to the benefit of the Parties and their respective successors and
permitted assigns. This Agreement may not be assigned by either Party without
the prior written consent of the other Party, which shall not be unreasonably
withheld, conditioned or delayed, except that either Party may assign its
Page 26
rights under this Agreement to any direct or indirect subsidiary or affiliate
and any entity that acquires or otherwise merges or consolidates with the
assigning Party, upon delivery of written notice to the other Party.
Section 10.5 Notices. All notices or other communications hereunder shall
be in writing and shall be deemed to have been duly given or made (i) upon
delivery if delivered personally (by courier service or otherwise), as evidenced
by written receipt or other written proof of delivery (which may be a printout
of the tracking information of a courier service that made such delivery), (ii)
upon confirmation of dispatch if sent by facsimile transmission (which
confirmation shall be sufficient if shown by evidence produced by the facsimile
machine used for such transmission), in each case to the applicable addresses
set forth below (or such other address which either Party may from time to time
specify); or (iii) the next business day if sent by overnight delivery via a
reliable express delivery service:
If to Seller:
[***]
With a Copy to:
[***]
If to Buyer:
Clearwire Spectrum Holdings LLC
5808 Lake Washington Blvd. N.E.
Suite 300
Kirkland, WA 98033
Attention: Benjamin G. Wolff
Phone: 425-828-8600
Facsimile: (425) 828-8061
With a copy to:
Davis Wright Tremaine LLP
Page 27
2600 Century Square
1501 Fourth Avenue
Seattle, WA 98112
Attention: Julie Weston, Esq.
Phone: 206-903-3918
Facsimile: 206-628-7699
Section 10.6 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal Laws of New York, without reference
to the choice of law principles thereof.
Section 10.7 Attorney's Fees. In any legal proceeding by a Party to
enforce its rights under this Agreement against the other Party, the Party
prevailing in such proceeding will be entitled to recover its reasonable
attorney's fees and costs from the other Party.
Section 10.8 Expenses. Except as otherwise expressly provided in this
Agreement, whether or not the Transactions are consummated, the Parties shall
bear their respective expenses (including, but not limited to, all compensation
and expenses of counsel, financial advisors, consultants, actuaries and
independent accountants) incurred in connection with this Agreement and the
Transactions.
Section 10.9 Invalidity. In the event that any of the provisions contained
in this Agreement or in any other instrument referred to herein, shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement or such other instrument and such provision will be
ineffective only to the extent of such invalidity, illegality or
unenforceability, unless the consummation of the Transactions is impaired
thereby.
Section 10.10 Force Majeure. No Party will be liable for any
nonperformance under this Agreement due to causes beyond its reasonable control
that could not have been reasonably anticipated by the non-performing Party and
that cannot be reasonably avoided or overcome; provided that the non-performing
party gives the other Party prompt written notice of such cause, and in any
event, within fifteen (15) calendar days of its discovery.
Section 10.11 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
Section 10.12 Headings. The headings of the Articles and Sections herein
are inserted for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.
[SIGNATURE PAGE FOLLOWS]
Page 28
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of
the date first above written.
NEXTEL SPECTRUM ACQUISITION CORP.
By: [***]
-------------------------------------
Name: [***]
Title: Senior Vice President
CLEARWIRE SPECTRUM HOLDINGS LLC
By: /s/ Benjamin G. Wolff
------------------------------------
Name: Benjamin G. Wolff
Title: Executive Vice-President
Page 29
EXHIBIT A
FORM OF INSTRUMENT OF ASSIGNMENT FOR LICENSES
INSTRUMENT OF ASSIGNMENT (the "Instrument of Assignment"), dated as of
_____________________, 200____, by and between Nextel Spectrum Acquisition
Corp., a Delaware Corporation ("Assignor"), and Clearwire Spectrum Holdings LLC,
a Nevada limited liability company ("Assignee"). Capitalized terms used herein
without definition shall have the respective meanings assigned to them in the
Purchase Agreement (as defined below).
WHEREAS, Assignor and Assignee have entered into a Purchase and Sale
Agreement (the "Purchase Agreement"), dated as of___________________________,
2005, pursuant to which, among other things, Assignor agreed to convey to
Assignee, and Assignee agreed to acquire, the FCC licenses set forth on Annex A
hereto (the "Licenses");
WHEREAS, Assignor and Assignee have filed an application with the FCC
requesting the assignment of the Licenses to Assignee; and
WHEREAS, the FCC has granted an application for the assignment of the
Licenses.
NOW, THEREFORE, in consideration of the promises and the mutual
representations, warranties, covenants, conditions, and agreements in the
Purchase Agreement and hereinafter set forth, the Parties agree as follows:
1. Assignment. Subject to the terms and conditions of the Purchase
Agreement, for valuable consideration, receipt of which is hereby
acknowledged, Assignor, intending to be legally bound, does hereby sell,
assign, transfer, convey, and deliver to Assignee, its successors and
assigns forever, all right and interest of Assignor in and to the
Licenses, free and clear of all Liens.
2. Terms of Purchase Agreement Control. Nothing contained in this
Instrument of Assignment shall in any way supersede, modify, replace,
amend, change, rescind, waive, exceed, expand, enlarge, or in any way
affect the provisions of the Purchase Agreement, including the warranties,
covenants, agreements, conditions and representations contained in the
Purchase Agreement and, in general, any of the rights and remedies, and
any of the obligations and indemnifications, of Assignor or Assignee set
forth in the Purchase Agreement.
3. Further Assurances. Assignor and Assignee covenant and agree, in
connection with the Purchase Agreement and this Instrument of Assignment,
to promptly execute and deliver all additional documents and instruments
and perform all additional acts that, in each case, are reasonably
necessary and desirable to effectuate and perform the provisions of this
Instrument of Assignment, including, without limitation, the assignments
provided for in Section 1 hereof.
4. Miscellaneous. This Instrument of Assignment (a) is executed
pursuant to the Purchase Agreement and may be executed in counterparts,
each of which as so executed shall be deemed to be an original, but all of
which together shall constitute one
Exhibit A
instrument, (b) shall be governed by and in accordance with the internal
Laws of the State of New York, without regard to the principles of
conflicts of law thereof and (c) shall be binding upon and inure to the
benefit of the Parties hereto and their respective successors and
permitted assigns.
Exhibit A
Page 2
IN WITNESS WHEREOF, Assignor and Assignee have each caused this Instrument
of Assignment to be duly executed and delivered as of the date first above
written.
NEXTEL SPECTRUM ACQUISITION CORP.
By:
_____________________________________
Name:
___________________________________
Title:
__________________________________
CLEARWIRE SPECTRUM HOLDINGS LLC
By:
_____________________________________
Name: Benjamin G. Wolff
Title: Executive Vice-President
Exhibit A
Page 3
EXHIBIT B
FORM OF ASSIGNMENT AND ASSUMPTION FOR SPECTRUM LEASES
THIS ASSIGNMENT AND ASSUMPTION (this "Assignment and Assumption") is
entered into effective as of the________day of_____________________, 200____, by
and between Nextel Spectrum Acquisition Corp., a Delaware Corporation
("Assignor"), and Clearwire Spectrum Holdings LLC, a Nevada limited liability
company ("Assignee"), pursuant to that certain Purchase and Sale Agreement (the
"Purchase Agreement") dated as of________________________, 2005, by and among
Assignor and Assignee and others, pursuant to which, among other things,
Assignor agreed to assign, and Assignee agreed to assume, certain of Assignor's
liabilities and obligations. Capitalized terms not otherwise defined herein
shall have the respective meanings set forth in the Purchase Agreement.
NOW, THEREFORE, in consideration of the promises and the mutual
representations, warranties, covenants, conditions, and agreements in the
Purchase Agreement and hereinafter set forth, the Parties agree as follows:
1. Assignment. Subject to the terms and conditions of the Purchase
Agreement, for valuable consideration, Assignor does hereby assign, grant,
transfer, convey, and set over unto Assignee all of Assignor's rights,
title and interest in and to the contracts set forth on Annex A hereto
(the "Transferred Contracts"), free and clear of all Liens.
2. Assumption. Subject to the terms of the Purchase Agreement, for
valuable consideration, Assignee hereby undertakes, assumes and agrees to
perform, pay or discharge when and as due all of the Assumed Liabilities
(including, without limitation, all liabilities of Assignor or its
Affiliates under the Transferred Contracts that arise, are incurred, or
are required to be performed from and after the date hereof).
3. Terms of Purchase Agreement Control. Nothing contained in this
Assignment and Assumption shall in any way supersede, modify, replace,
amend, change, rescind, waive, exceed, expand, enlarge, or in any way
affect the provisions of the Purchase Agreement, including the warranties,
covenants, agreements, conditions and representations contained in the
Purchase Agreement and, in general, any of the rights and remedies, and
any of the obligations and indemnifications, of Assignor or Assignee set
forth in the Purchase Agreement.
4. Further Assurances. Assignor and Assignee covenant and agree, in
connection with the Purchase Agreement and this Assignment and Assumption,
to promptly execute and deliver all additional documents and instruments
and perform all additional acts that, in each case, are reasonably
necessary and desirable to effectuate and perform the provisions of this
Assignment and Assumption, including, without limitation, the assignments
provided for in Section 1 hereof and the assumptions provided for in
Section 2 hereof.
5. Miscellaneous. This Assignment and Assumption (a) is executed
pursuant to the Purchase Agreement and may be executed in counterparts,
each of which as so
Exhibit B
executed shall be deemed to be an original, but all of which together
shall constitute one instrument, (b) shall be governed by and in
accordance with the internal Laws of the State of New York, without regard
to the principles of conflicts of law thereof and (c) shall be binding
upon and inure to the benefit of the Parties hereto and their respective
successors and permitted assigns.
Exhibit B
Page 2
IN WITNESS WHEREOF, Assignor and Assignee have each caused this Assignment
and Assumption to be duly executed and delivered as of the date first above
written.
NEXTEL SPECTRUM ACQUISITION CORP.
By:
____________________________________
Name:
__________________________________
Title:
_________________________________
CLEARWIRE SPECTRUM HOLDINGS LLC
By:
____________________________________
Name: Benjamin G. Wolff
Title: Executive Vice-President
Exhibit B
Page 3
EXHIBIT C
FORM OF BILL OF SALE
THIS BILL OF SALE (this "Bill of Sale") is made effective as of
the______day of ____________, 200___, by Nextel Spectrum Acquisition Corp., a
Delaware Corporation ("Grantor"), for the benefit of Clearwire Spectrum Holdings
LLC, a Nevada limited liability company ("Grantee").
WHEREAS, Grantor and Grantee entered into that certain Purchase and Sale
Agreement (the "Purchase Agreement") dated as of_____________, 2005, pursuant to
which Grantor agreed to, among other things, sell, assign, transfer, convey and
deliver to Grantee certain assets. Capitalized terms not otherwise defined
herein shall have the respective meanings set forth in the Purchase Agreement;
WHEREAS, Grantor and Grantee entered into that certain Instrument of
Assignment, dated as of the date hereof, whereby Grantor assigned to Grantee the
FCC licenses designated therein (the "Transferred FCC Licenses");
WHEREAS, Grantor and Grantee entered into that certain Assignment and
Assumption, dated as of the date hereof, whereby Grantor assigned to Grantee the
contracts designated therein (the "Transferred Contracts"); and
WHEREAS, pursuant to the terms of the Purchase Agreement, Grantor desires
to assign to Grantee all of the Assets (other than the FCC Licenses and Spectrum
Leases) that are used in relation to the Transferred FCC Licenses and/or
Transferred Contracts and not used in relation to any Asset to be conveyed to
the Grantee after the date hereof (the "Transferred Related Assets").
NOW, THEREFORE, in consideration of the promises and the mutual
representations, warranties, covenants, conditions, and agreements in the
Purchase Agreement:
1. Sale. For valuable consideration, Grantor hereby sells, assigns,
transfers, conveys and delivers to Grantee all of Grantor's right, title
and interest in, to and under the Transferred Related Assets free and
clear of all Liens.
2. Terms of Purchase Agreement Control. Nothing contained in this
Bill of Sale shall in any way supersede, modify, replace, amend, change,
rescind, waive, exceed, expand, enlarge, or in any way affect the
provisions of the Purchase Agreement, including the warranties, covenants,
agreements, conditions and representations contained in the Purchase
Agreement and, in general, any of the rights and remedies, and any of the
obligations and indemnifications, of Assignor or Assignee set forth in the
Purchase Agreement.
3. Miscellaneous. This Bill of Sale (a) is executed pursuant to the
Purchase Agreement and may be executed in counterparts, each of which as
so executed shall be deemed to be an original, but all of which together
shall constitute one instrument, (b) shall be governed by and in
accordance with the internal Laws of the State of New York, without regard
to the principles of conflicts of law thereof and (c) shall be binding
upon
Exhibit C
the Grantor and inure to the benefit of the Grantee and their respective
successors and permitted assigns.
IN WITNESS WHEREOF, Grantor has caused this Bill of Sale to be duly
executed and delivered as of the date first above written.
NEXTEL SPECTRUM ACQUISITION CORP.
By:_______________________________
Name:_____________________________
Title:____________________________
Exhibit C
Page 2
EXHIBIT D
FORM OF OFFICER'S CERTIFICATE
This OFFICER'S CERTIFICATE (this "Certificate") is made by [Nextel
Spectrum Acquisition Corp., a Delaware corporation ("Seller")][Clearwire
Spectrum Holdings LLC, a Nevada limited liability company ("Buyer")] for the
benefit of [Nextel Spectrum Acquisition Corp., a Delaware corporation
("Seller")] [Clearwire Spectrum Holdings LLC, a Nevada limited liability company
("Buyer")] pursuant to that certain Purchase and Sale Agreement, dated as
of_______________, 2005 (the "Purchase Agreement"), by and among Seller and
Buyer. Capitalized terms not otherwise defined herein shall have the respective
meanings set forth in the Purchase Agreement.
Pursuant to Sections [7.2(a) and 7.2(b)] [7.3(a) and 7.3(b)] of the
Purchase Agreement, [Seller] [Buyer] does hereby certify that:
1. The representations and warranties of [Seller] [Buyer] (except those
with respect to [FCC Licenses or Spectrum Leases] that are no longer legally
available to transfer through no fault of [Seller] [Buyer]) contained in the
Purchase Agreement are true and correct in all material respects (except for
representations and warranties that are qualified as to materiality, which are
true and correct) as of the date hereof (except for those representations and
warranties that were made as of a specific date need be so true and correct only
as of such date)[; [provided, however, that, with respect to the representations
and warranties set forth in Sections 4.4 and 4.5, this certificate shall only
apply with respect to the Assets subject to the [Closing] [Supplemental Closing]
that occurred on the date hereof(1)].
2. The covenants and agreements of [Seller] [Buyer] (except those with
respect to [FCC Licenses or Spectrum Leases] that are no longer legally
available to transfer through no fault of [Seller]) to be performed under the
Purchase Agreement on or prior to the date hereof have been duly performed in
all material respects[; provided, however, that, with respect to the covenants
and/or agreements relating to specific Assets, this certificate shall only apply
with respect to the Assets subject to the [Closing] [Supplemental Closing] that
occurred on the date hereof(2)].
IN WITNESS WHEREOF, [Seller] [Buyer] has executed and delivered this
Certificate as of this______day of_____________, 200______
[Seller][Buyer]
By:_______________________________
Name:_____________________________
Title:____________________________
----------
(1) Bracketed proviso applies only the Seller's form of certificate.
(2) Bracketed proviso applies only the Seller's form of certificate.
Exhibit D
EXHIBIT E
FORM OF SECRETARY'S CERTIFICATE
In accordance with [Section 3.3(e)] [Section 3.4(e)] of that certain
Purchase and Sale Agreement, dated as of_________________, 2005 (the "Purchase
Agreement"), by and among Nextel Spectrum Acquisition Corp., a Delaware
corporation ("Seller"), and Clearwire Spectrum Holdings LLC, a Nevada limited
liability company ("Buyer"), the undersigned, on behalf of [Seller] [Buyer],
does hereby certify to [Seller] [Buyer], as of the date hereof, that:
1. Attached hereto as Annex-1 is a true and correct copy of the
[Certificate of Incorporation of Seller] [Certificate of Formation of Buyer] as
filed with the Secretary of State of [Delaware] [Nevada], which has not been
amended, modified, repealed or rescinded and is in full force and effect as of
the date hereof.
2. Attached hereto as Annex-2 is a true and correct copy of the [Bylaws of
Seller, adopted by the Board of Directors of Seller] [Limited Liability Company
Agreement of Buyer, adopted by the Members of Buyer], which ha[s][ve] not been
amended, modified, repealed or rescinded and [is] [are] in full force and effect
as of the date hereof.
3. [Attached hereto as Annex-3 is a true and correct copy of the [written
action] [resolutions] adopted by the board of directors of Clearwire
Corporation, as the sole member of Buyer, which has not been amended, modified,
repealed or rescinded and is in full force and effect as of the date hereof,
authorizing the execution of the Purchase Agreement and the consummation of the
transactions contemplated thereby.](3)
4. The officers of [Seller] [Buyer] whose names and signatures appear on
the Incumbency Schedules attached to this Secretary's Certificate as Annex-4 are
duly elected or appointed, qualified, and acting officers of [Seller] [Buyer],
holding on the date hereof the offices set opposite their respective names, and
the signatures opposite their names are their own genuine signatures.
IN WITNESS WHEREOF, [Seller] [Buyer] has executed and delivered this
Secretary's Certificate as of this______day of___________, 200______.
[Seller][Buyer]
By:_______________________________
Name:_____________________________
Title:____________________________
----------
(3) This transaction will not be approved by Seller's board as it is
within the ordinary course of Seller's business operations.
Exhibit F
EXHIBIT F
FORM OF CONSENT TO ASSIGNMENT
NEXTEL SPECTRUM ACQUISITION CORP.
[_____________, 200_]
[Lessor Name]
[Lessor Address]
___________________________
___________________________
Re: [Lease], dated [__________________, ______], by and between [Lessor]
and [Lessee] (the "Lease")
Ladies and Gentlemen:
Nextel Spectrum Acquisition Corp. ("Assignor") and Clearwire Spectrum
Holdings, LLC ("Assignee") are parties to that certain Purchase and Sale
Agreement, dated [__________________, 2005] (the "Purchase Agreement"), pursuant
to which, among other things, Assignor desires to assign, and Assignee desires
to assume, all of Assignor's right, title and interest in, to and under the
Lease (the "Assignment").
Section [ ] of the Lease requires your consent to the Assignment.
Accordingly, we hereby request your consent to the Assignment pursuant to the
terms and conditions set forth in the Purchase Agreement. By signing below, you
hereby consent to the Assignment and release Assignor from performance of all
obligations of Assignor under the Lease.
This Consent to Assignment is conditioned upon, and shall not be effective
until, the consummation of the Assignment in accordance with the terms of the
Purchase Agreement. This Consent does not constitute a consent to any subsequent
assignment.
Your consideration of this matter is appreciated. Should you have any
questions or comments, please do not hesitate to call [contact] at [phone
number].
Very truly yours,
[Assignor Officer]
ACKNOWLEDGED and AGREED,
this____day of___________, 2005.
[Lessor]
By:_____________________________
Name:___________________________
Title:__________________________
Exhibit F
EXHIBIT G
EXECUTION COPY
FIRST AMENDMENT
This First Amendment (this "First Amendment"), dated as of December 12,
2005, is entered into by and between Nextel Spectrum Acquisition Corp., a
Delaware corporation ("Seller") and Clearwire Spectrum Holdings LLC, a Nevada
limited liability company ("Buyer").
RECITALS
A. This First Amendment amends that certain Purchase and Sale Agreement
(the "Agreement"), dated as of October 24, 2005, by and among Seller and Buyer.
Capitalized terms used, but not defined, in this First Amendment have the
meanings ascribed to such terms in the Agreement.
B. Pursuant to the rules of the Federal Communications Commission ("FCC"),
all site specific BRS licenses that have a [***] prefix (the [***] Licenses")
have been incorporated into their related basic trading area BRS licenses (the
"BTA Licenses"), and, as a result, all [***] Licenses have ceased to separately
exist. Therefore, all the frequencies formerly associated with the [***]
Licenses are now associated with their corresponding BTA Licenses reflected on
the revised schedule 1 to the Agreement attached hereto as Exhibit A.
C. Seller and Buyer desire to amend the Agreement: pursuant to Section
10.3 of the Agreement in order to reflect that, pursuant to FCC Rules, the [***]
Licenses that are listed on Schedule 1 to the Agreement have been incorporated
into their related BTA Licenses.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, Seller and Buyer agree as follows:
ARTICLE I
AMENDMENTS
Section 1.1 FCC Licenses Schedule. Schedule 1 of the Agreement is hereby
amended and restated in its entirety in the form attached hereto as Exhibit A.
Section 1.2 Treatment of [***] Licenses. For all purposes under the
Agreement, all [***] Licenses will be deemed to be incorporated with and into
their related BTA Licenses as indicated by the amended and restated Schedule 1
of the Agreement, which is attached hereto as Exhibit A. In order to calculate
the value allocated to any BTA License (including, without limitation, such
calculations for purposes of determining the satisfaction of the Closing
Conditions set forth in Section 3.2(a) of the Agreement, any adjustments to the
Purchase Price pursuant to Section 3.2(b) of the Agreement, any allocation [***]
of the Purchase Price pursuant to Section 3.6 of the Agreement and the
calculation of the [***] Purchase Price pursuant to Section 6.5(c)), such value
shall include the value of the related [***] Licenses. By way of example and for
purposes of illustration only, the value allocated to the BTA License for
[***] shall equal [***] which is the aggregate of the original value of [***]
attributed to that BTA License and the original values for the related [***]
Licenses of
[***] respectively.
ARTICLE II
MISCELLANEOUS
Section 2.1 Acknowledgment. Buyer and Seller acknowledge and agree that
the merger of the KNS Licenses with and into the related BTA Licenses and the
resulting extinguishment of such KNS Licenses shall not constitute a breach of
any representation, warranty or covenant of Buyer or Seller under the Agreement,
including, without limitation, Sections 4.4,4.9,6.1,6.9,6.10,7.3 and 9.2(a) of
the Agreement.
Section 2.2 Affirmation of Agreement. Except as expressly amended hereby,
all terms, conditions and provisions of the Agreement are hereby reaffirmed and
shall remain in full force and effect.
Section 2.3 Governing Law. This First Amendment shall be governed by, and
construed in accordance with, the internal laws of the State of New York,
without reference to the choice of law principles thereof.
Section 2.4 Headings. The headings contained in this First Amendment are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this First Amendment.
Section 2.5 Counterparts. This First Amendment may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
shall together constitute one and the same agreement, and shall become effective
when one or more such counterparts have been signed by each of the parties and
delivered to the other party.
[Remainder of Page Blank - Signature Page Follows]
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IN WITNESS WHEREOF, Seller and Buyer have duly executed this First
Amendment as of the date first written above
NEXTEL SPECTRUM ACQUISITION CORP.
By: [***]
------------------------------
Name: [***]
Title: VP
CLEARWIRE SPECTRUM HOLDINGS LLC
By: /s/ Ben Wolff
------------------------------
Name: Ben Wolff
Title: Executive Vice President
EXHIBIT 10.45
BUNDLED WIRELESS BROADBAND SERVICES AGREEMENT
THIS BUNDLED WIRELESS BROADBAND SERVICES AGREEMENT (this
"AGREEMENT") is made and entered into effective the 23 day of November,
2005 (the "EFFECTIVE DATE"), by and between America Online, Inc., a
Delaware corporation ("AOL"), and Clearwire LLC, a Nevada limited
liability company ("CLEARWIRE"). Clearwire and AOL may be referred to
herein individually as a "PARTY" and collectively as "PARTIES."
Capitalized terms used but not defined herein shall have the respective
meanings given to them in Exhibit A.
WHEREAS, Clearwire, directly and through its Affiliates, operates
wireless broadband systems and facilities capable of delivering certain
wireless broadband data services to customers, including highspeed
Internet access;
WHEREAS, AOL is an Internet service provider that offers to its
subscribers value-added on-line services including email, chat, message
boards, shopping, instant messaging, internet access and other subscriber
applications, content, and associated services including premium content
and functionality using branding owned or controlled by AOL or an AOL
Affiliate, or using all or a portion of AOL's or an AOL Affiliate's
network or backend systems;
WHEREAS, AOL and Clearwire mutually desire to make available the AOL
Service to End Users in the Initial Markets via the Clearwire Wireless
Broadband Network; and
NOW, THEREFORE, in consideration of the foregoing and the promises
set forth below, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, AOL and
Clearwire agree as follows:
1. MARKETING AND DISTRIBUTION OF THE BUNDLED SERVICE.
1.1 Bundled Service in Initial Markets. From and after the Deployment
Date, and thereafter during the Term, AOL shall promote a product
offering in the Initial Markets, consisting of the AOL Service
bundled with the Clearwire Wireless Broadband Service and marketed
as a single product (the "BUNDLED SERVICE").
1.2 Bundled Service in Additional Markets. From time to time, if AOL and
Clearwire jointly decide to offer the Bundled Services in markets
other than the Initial Markets, they may update the attached Exhibit
F to add such new markets, and the terms of this Agreement shall
apply thereafter to such additional markets, as though they were
Initial Markets, unless the Parties agree otherwise.
1.3 Marketing and Promotion. [***] AOL will be responsible for marketing
and selling the Bundled Service to consumers, which AOL will
characterize as its preferred fixed wireless broadband solution.
1.4 Trademark Licenses. For the sole purpose of the co-branding,
marketing and promoting the Bundled Service, and subject to
Clearwire's prior written approval of each use of Clearwire
trademarks or service marks as to content and context, Clearwire
grants AOL a non-transferable, non-sublicensable, royalty-free
license to reproduce and display the current Clearwire logo and
other Clearwire trademarks and service marks. In connection with the
license granted hereunder, Clearwire shall have the unilateral right
to establish and enforce such quality standards and
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additional terms and conditions concerning the use of its trademarks
as it deems necessary to reasonably protect its trademarks. Such
license shall terminate automatically upon the expiration of the
Term or the earlier termination of this Agreement.
1.5 [***]
1.6 The Clearwire Wireless Broadband Service. The Clearwire Wireless
Broadband Service portion of the Bundled Service shall be a
connectivity-only service that is provided at a bandwidth that is
consistent with the bandwidth advertised by Clearwire for the
Clearwire Wireless Broadband Service. In the Initial Markets, and
during the Term, the Clearwire Wireless Broadband Service, as
bundled as part of the Bundled Service, shall not contain any
promotions, advertisements or references to any other Interactive
Service.
1.7 Launch of the Bundled Service. The Parties shall use commercially
reasonable efforts to launch the Bundled Service in at least one
Initial Market no later than March 31, 2006, with such launch date
referred to as the "DEPLOYMENT DATE." The Parties will work together
to try to launch the Bundled Service in at least one Initial Market
by February 15,2006. Following the Deployment _ Date, the Bundled
Service shall be launched in the remainder of the Initial Markets
during a *** month period commencing on the Deployment Date. Subject
to these parameters, the date for the launch of the Bundled Service
in each Initial Market will be at AOL's discretion.
1.8 Implementation Plan. The Parties shall follow the implementation
plan set forth in Exhibit C ("IMPLEMENTATION PLAN"), attached hereto
and incorporated herein, for the provision of the Bundled Service.
1.9 Testing. The Parties shall cooperate with regard to any testing that
either Party needs to perform prior to the Deployment Date.
1.10 Target Subscriber Levels. During the Operational Period, (a) AOL
shall [***] to sell the Bundled Service to up to [***]of the
Eligible AOL Subscribers in aggregate across all the Initial
Markets, and (b) the Parties will work together to try to cause a
migration to the Bundled Service of at least [***] of such Eligible
AOL Subscribers (the number in clause (b), the "ELIGIBLE AOL
SUBSCRIBER TARGET").
2. NETWORK ARCHITECTURE.
***
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3. ECONOMICS.
3.1 Payment of Wholesale Price. Subject to the last three sentences of this
Section, AOL shall pay Clearwire, within [ * * * ] after the end of
each calendar month during the Term, for each individual who is an End
User during such calendar month, [ * * * ] of the following: (a) the
Average Monthly Service Fee, (b) the average rental fee for the CPE
charged by Clearwire to consumers in the Initial Market in which the
End User is located, and (c) the activation fee charged by Clearwire to
consumers in the Initial Market in which the End User is located
(collectively, the "Wholesale Price"); provided, however, that in no
event shall the Wholesale Price exceed the price set forth in Exhibit E
below for each Retail Pricing Tier in each Initial Market. AOL shall
also pay Clearwire, for each CPE that is delivered to an End User by
Clearwire during such calendar month, a one-time fee equal to [ * * * ]
of Clearwire's cost for the CPE, such amount not to exceed [ * * * ]
(the "CPE Fee"). For purposes of this Section, End Users who are
receiving Bundled Services as part of a Promotional Offer (but only
during the first [ * * * ] of such Promotional Offer) shall be counted
as End Users only to the extent that they are paying for Bundled
Services. All other End Users shall be counted in full, regardless of
whether they are receiving Bundled Services on a paying, promotional or
courtesy basis. As an illustration, if an End User, during the End
User's first month of Bundled Service, is receiving a [ * * * ]
discount under a Promotional Offer, then AOL shall pay Clearwire only [
* * * ] of the Wholesale Price for such End User for such month.
3.2 [ * * * ].
3.3 [ * * * ].
3.4 [ * * * ].
3.5 Retail Price. AOL shall have the right to determine, in its sole
discretion: (a) the pricing of the Bundled Service to End Users, (b)
any Promotional Offers for the Bundled Service, including without
limitation, free trials for or discounts of the Bundled Service, and
(c) the rental price of the CPEs. Clearwire shall give AOL at least
thirty (30) calendar days' advance written notification of any change
in Clearwire's retail pricing for any element of the Clearwire Wireless
Broadband Service in the Initial Markets, including any new Retail
Pricing Tiers that it offers in addition to those listed in Exhibit E.
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3.6 [ * * * ].
3.7 Billing. AOL shall bill End Users for the (a) Bundled Service, (b) the
CPE rental, (c) any charges for AOL Premium Products and other
additional charges associated or in connection with the AOL Service
(e.g., dial roaming), and (d) if applicable, any charges associated
with early termination of the Bundled Service and failure to return the
CPE, as defined in the Bundled Services Agreement. Within ninety (90)
days of charging an End User's payment method for failure to return the
CPE, AOL shall remit directly to Clearwire any payment collected from
such End User who fails to return the CPE in accordance with the terms
of this Agreement and the Bundled Services Agreement.
3.8 Reporting. AOL shall provide to Clearwire, contemporaneously with its
monthly payment to Clearwire of Wholesale Prices and CPE Fees, a report
of the number of End Users of the Bundled Service for the preceding
calendar month, broken down by End Users who are being charged for the
Bundled Service and End Users who are benefiting from a Promotional
Offer. In order to facilitate Clearwire's retrieval of CPEs, AOL's
report shall also specifically identify the End Users who discontinued
their use of Bundled Service during or at the end of such calendar
month. Clearwire shall report to AOL, on a real time or daily basis,
line item data that would allow AOL to reconcile, End User by End User,
the number of provisioned users of the Bundled Service. Clearwire shall
also, on a monthly basis within fifteen (15) days after the last day of
each calendar month, provide AOL with the following two (2) reports:
(a) a report that identifies the End Users to whom CPEs were delivered
during such month, and the End Users from whom returned CPEs were
received during such month, and (b) a report outlining the Network
Availability data, broken down on a daily basis, for the previous
calendar month.
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4. OPERATIONAL TERMS.
4.1 Customer Service. AOL will provide End Users with maintenance and
support of the Bundled Service according to the provisions set forth in
Exhibit B - "Customer Service." In order to facilitate AOL's support of
the Bundled Service, Clearwire will maintain and support the Clearwire
Wireless Broadband Network and, under the escalation circumstances
described in Exhibit B, provide direct support services to End Users to
address "Tier 2" connectivity issues, all as more thoroughly described
in Exhibit B. Both Parties agree to meet [ * * * ] following the launch
of the first Initial Market in order to identify and address any
unexpected operational issues pertaining to Customer Service that arise
after such initial launch. Furthermore, both Parties agree to use
commercially reasonable efforts to resolve specific issues identified
during such meeting to the Parties' mutual satisfaction.
4.2 Delivery of Customer Premises Equipment. Clearwire shall, as and when
directed by AOL, deliver CPE to End Users for use of the Bundled
Service, and provide End Users with instructions for installation of
the CPE. If, following such delivery and installation, a personal visit
to the End User's premises is necessary in order to enable the End User
to use the Bundled Service, then AOL shall pay to Clearwire [ * * * ]
for each such visit, but only to the extent that the End Users who
receive such visits constitute less than [ * * * ] of all End Users to
whom Clearwire has delivered CPE. The Parties anticipate that End Users
will, as a general matter, self-install the CPE. Clearwire may
separately charge an End User for any installation assistance that is
requested by the End User. Clearwire will remain the owner of the CPEs,
will file the requisite property tax returns thereon and pay property
taxes associated therewith in each applicable state and indemnify AOL
for all state property tax liability associated therewith. In addition,
Clearwire may take all depreciation charges for the CPE. Clearwire will
be responsible for the costs of shipping and reclaiming the CPE.
4.3 Deployment of CPE. AOL may, but only in accordance with the terms of
the Implementation Plan, test and approve CPEs prior to delivery of
such CPEs by Clearwire to End Users. For the purposes of this Section
and Exhibit C, "test" shall mean to verify the functionality and the
interoperability of the CPE with the AOL client software. "Approve"
shall mean to authorize the CPE for use with the AOL client software.
4.4 Return of CPE. AOL will be solely responsible for reclaiming the CPE
from persons who are no longer End Users. As part of the Bundled
Services Agreement, AOL will include the requirement that upon AOL's
request, the End User shall return the CPE via pre-paid mailers to be
provided by AOL to Clearwire if and when an End User no longer
subscribes to the Bundled Service. AOL shall use commercially
reasonable efforts to reclaim the CPE, and will reserve the right in
the Bundled Services Agreement to charge End Users for any unreturned
CPE units. Within forty-five (45) days of execution of this Agreement,
the Parties will mutually agree upon a reasonable procedure under which
AOL will send notices to End Users who no longer subscribe to the
Bundled Service requesting the return of CPEs ("Reclamation
Procedure"). The Reclamation Procedure shall be AOL's sole obligation
related to the return of the CPEs. At no time shall Clearwire be
entitled to contact any End User regarding such customer's failure to
return the CPE unit without first obtaining prior written authorization
from AOL.
4.5 Communications with End Users. All types of communications between
Clearwire and the End User shall be subject to AOL's prior approval.
For avoidance of doubt, Clearwire acknowledges that AOL End Users are
customers solely of AOL.
4.6 Network Traffic Requirements. Clearwire shall implement bandwidth
management practices in order to protect the integrity and performance
of the Clearwire Wireless Broadband Network and to ensure the fair use
of network resources by all users of the Clearwire Wireless Broadband
Network. To this end, Clearwire will consult with AOL before and
during, the implementation of such bandwidth management practices to
create an optimal user experience on the Clearwire Wireless Broadband
Network for AOL End Users.
4.7 Network Security. Clearwire shall have sole control over access to and
security of the Clearwire Wireless Broadband Network. To the extent
feasible and permitted by law, and at no cost to Clearwire, Clearwire
will assist AOL in its attempts to identify End Users who violate the
Bundled Services Agreement by providing AOL with data from servers in
the form of log files or other forms to identify users of particular IP
addresses during given time intervals.
4.8 Reports. In order to facilitate the flow of information between the
Parties regarding the relationship and the status of the Bundled
Service, the Parties shall prepare and furnish the periodic reports and
information identified in the Implementation Plan. Such reports shall
include a report from AOL that identifies the number of calls fielded
by AOL for Tier 1 support, and the number of calls forwarded to
Clearwire for Tier 2 support. Furthermore, the report shall include the
status of CPEs both shipped and delivered to End Users. The Parties
agree to work together on an ongoing basis to develop additional
enhanced reporting as required.
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4.9 Network Outage. Clearwire shall give AOL advance notification of its
maintenance periods and expected outages, as described in Section 11 of
Exhibit C. As further defined in Section 11(a) of Exhibit C and subject
to the limitations included therein, in the event of a Network Outage,
Clearwire shall notify AOL's Network Operations Center ("NOC") of such
problem as soon as practicable (including providing the details of such
problem and the anticipated length of the outage), provide the NOC with
regular updates as to the status of the resolution of the problem and
use commercially reasonable efforts to restore the service as soon as
practicable.
4.10 Services Agreement. AOL shall provide each End User with an End User
services agreement between each End User and AOL that governs the End
User's use of the Bundled Service (the "Bundled Services Agreement").
The Bundled Services Agreement will, among other things, require each
End User to assume responsibility for the return of all CPE if and when
the End User is no longer an End User, and shall include an
authorization to charge the End User's payment method up to [ * * * ]
for failure to return the CPE. The Parties shall mutually agree upon
the then-current value of the CPE to be charged to the End User's
payment method. The Bundled Services Agreement shall be developed by
AOL (which AOL may amend from time to time in its sole discretion).
4.11 Software. AOL shall be responsible for all costs associated with the
development of the AOL Software and the media and materials used to
install and enable the AOL Software. Clearwire shall be responsible for
all costs associated with the development of the Clearwire Software.
Each Party shall not reverse engineer, decompile or otherwise attempt
to develop the source code of the any software provided by the other
Party or otherwise make any changes to such software.
4.12 Clearwire Wireless Broadband Network Performance: Clearwire will
provide AOL with Network Availability (uptime) statistics. "Network
Availability" shall mean the total number of hours in a month during
which monitoring device(s) are able to exchange IP packets between the
monitoring device(s) site(s) demarcation points and the wireline
network handoff, divided by the total number of hours in a month. If
the Clearwire Wireless Broadband Network is unavailable due to Force
Majeure Events or routine maintenance, such time periods are not
included in calculating Network Availability, except to the extent that
such routine maintenance constitutes a Network Outage as defined in
Exhibit C. The time periods during which there is a Network Outage
shall be included in calculating Network Availability. With respect to
network uptime, Clearwire shall guarantee an overall monthly Network
Availability of not less than [ * * * ]. Clearwire shall be in breach
of this guarantee if during the Operational Period, the monthly Network
Availability is less than [ * * * ] for any [ * * * ], in which case
AOL shall not be responsible for reaching and maintaining the Eligible
AOL Subscriber Target until Clearwire has achieved the guaranteed
Network Availability of [ * * * ] for [ * * * ]. Furthermore, should
the monthly Network Availability fall to less than [ * * * ] for two [
* * * ] or more times during a rolling [ * * * ] time period, AOL shall
be relieved of the Eligible AOL Subscriber Target for the duration of
the Term. Should the monthly Network Availability fall below [ * * * ],
the remedies described in the previous two sentences and Section 7.6 of
this Agreement shall constitute AOL's sole remedies. Notwithstanding
the foregoing and for avoidance of doubt, nothing contained in this
Section shall relieve Clearwire's indemnification obligations pursuant
to Section 8.2 of Exhibit D, to the extent such obligations are
triggered by an outage of the Clearwire Wireless Broadband Service.
4.13 Order Processing. Clearwire acknowledges that AOL has entered into a
services agreement with [ * * * ] whereby [ * * * ] powers AOL's High
Speed Internet Options ("HSIO") area through one or more websites and a
technology platform provided by [ * * * ] that presents offers, and
transmits orders, for third party high speed Internet access
connectivity services in connection with registration for the AOL
Service. AOL and Clearwire shall cooperate with [ * * * ] to accomplish
this task. Furthermore, AOL and Clearwire will utilize the AOL approved
STAR process for all data transfer files that allow for secure data
transmissions between the Parties, and Clearwire shall enter into the
STAR agreement set forth at Exhibit G.
4.14 Nondiscrimination. Whether or not explicitly set forth in any other
Section of this Agreement, Clearwire shall treat all End Users in a
non-discriminatory manner vis-a-vis Clearwire Customers, and including,
without limitation, with respect to customer service, billing and
collections, installation scheduling services, repair time, provision
of CPE (including return policy), service levels and downtime, quality
of service, and any and all fees/payments.
4.15 Non-Solicitation. Clearwire shall not engage in any marketing or
promotional activity or any other effort that targets End Users of the
Bundled Service in order to encourage or promote said End Users of the
Bundled Service to switch from or terminate the AOL Service, provided
that general marketing of Clearwire's service is permissible so long as
Clearwire does not include in such marketing or promotional materials
any language specifically encouraging customers to switch from or
terminate the AOL Service.
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5. AUDIT RIGHTS. The Parties shall have the right to examine the books and
records of the other with respect to the Bundled Service, during normal
business hours, upon not less than ten (10) business days prior written
notice and not more than once during any twelve (12) month period, to the
extent required to verify compliance with the terms of this Agreement,
including with respect to the payment of fees, non-discrimination, and
Network Availability standard. The Party who initiates the Audit Right
shall bear the expense thereof, unless the audit demonstrates an
underpayment of ten percent (10%) or more for the period audited, in which
event the audited Party shall reimburse the initiator its reasonable costs
and expenses.
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6. CANCELLATION OF SERVICE TO END USERS. AOL shall have the sole right to
suspend, cancel or terminate the AOL Service or the Bundled Service
provided to any End User at any time. Clearwire may request that AOL
suspend, cancel or terminate the Bundled Service to an End User either (a)
in connection with a suspension or termination of this Agreement or the
AOL Service, or (b) if such service is being used for illegal activities.
If an End User contacts Clearwire to cancel the Bundled Service, the
Clearwire Wireless Broadband Service portion of the Bundled Service and/or
the AOL Service portion of the Bundled Service, Clearwire shall inform
such End User that cancellation of the Bundled Service or the AOL Service
must be done through AOL and will then transfer such call to AOL's
customer service line in accordance with the Implementation Plan. Only AOL
shall have the right to suspend or terminate the AOL Service to any End
User for any reason. The Party who is terminating, or requesting the
termination of, services or whose services are being cancelled shall
provide reasonable advance notice to the other Party identifying the End
User whose service is to be cancelled or terminated and specifying the
reasons, subject to the Party's privacy policies. Clearwire shall provide
AOL with a weekly report that identifies each End User it intends to
suspend or terminate (and the reason for such suspension or termination)
in accordance with its rights under this Agreement. AOL and Clearwire
shall implement a system to determine whether any service cancellation
request received from an End User applies to the AOL Service, the
Clearwire Wireless Broadband Service or both.
7. TERM; TERMINATION.
7.1 Term. This Agreement shall commence on the Effective Date and shall
continue in effect until [***] after the Deployment Date (the
"TERM"), unless earlier terminated as provided herein.
7.2 Termination for Breach. Either Party may terminate this Agreement
upon written notice at any time in the event of a material breach by
the other Party which remains uncured after thirty (30) days written
notice thereof. A material breach shall include, without limitation,
the failure of the Clearwire Wireless Broadband Network to maintain
the performance standards set forth in Section 4.12.
7.3 Termination for Bankruptcy. Either Party may terminate this
Agreement upon written notice if the other Party (a) ceases to do
business in the normal course, (b) becomes or is declared insolvent
or bankrupt, (c) is the subject of any proceeding related to its
liquidation or insolvency, whether voluntary or involuntary, which
is not dismissed within ninety (90) calendar days or (iv) makes an
assignment for the benefit of creditors.
7.4 Termination for Change of Control. AOL may terminate this Agreement
upon thirty (30) days prior written notice in the event (a) of a
change in Control of Clearwire where such Control is acquired,
directly or indirectly, in a single transaction or series of related
transactions by a competitive Interactive Service, (b) all or
substantially all of the assets of Clearwire used to provide the
Services are acquired by or transferred to any competitive
Interactive Service, or (c) Clearwire is merged with or into another
entity or entities that provide Interactive Service.
7.5 Other Termination. Either Party may terminate this Agreement upon
thirty (30) days prior written notice if Monthly Churn exceeds [***]
for any [***].
7.6 Early Termination. In the event of an Excessive Outage for any [***]
(as defined in Section 11 (d) of Exhibit C). AOL may terminate this
Agreement without liability by providing written notification to
Clearwire sixty [***] in advance of the effective date of the
termination.
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8. Effect of Termination. If, during the Term, upon ninety (90) days' written
notice, Clearwire elects to no longer operate the Clearwire Wireless
Broadband Service or a comparable service, the Parties shall develop a
migration plan that provides for the migration of End Users from the
Bundled Service to an alternate service selected by AOL, provided that AOL
shall not be liable for payment under Section 3 of this Agreement
following migration from the Clearwire Wireless Broadband Service. Except
in the case where Clearwire elects to no longer operate the Clearwire
Wireless Broadband Service as described in the previous sentence, as of
the date on which this Agreement expires or is terminated ("END DATE"),
there shall be no new orders for the Bundled Service, except with respect
to a three (3) month period after the End Date during which the Parties
agree to honor any existing marketing or promotional campaigns that were
deployed prior to the End Date and to take new orders for the Bundled
Service for End Users responding to such marketing and promotional
campaigns. Furthermore, following the End Date, Clearwire agrees to
provide Tier 2 support and continue to provide connectivity services to
End Users of the Bundled Service for a period of six (6) months.
[END OF PAGE]
Bundled Broadband Service Agreement AOL AND CLEARWIRE CONFIDENTIAL
9
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement effective as
of the Effective Date, pursuant to due authority. Each Party acknowledges that
it has read this Agreement, understands it, and agrees to be bound by its terms.
AMERICA ONLINE, INC., CLEARWIRE CORPORATION,
a Delaware corporation a Delaware corporation
By: /s/ Jeremy Legg By: /s/ R. Gerard Salamme
--------------------- ---------------------------
Name: Jeremy Legg Name: R. GERARD SALAMME
Title: Vice President Title: Ex. V. P.
Bundled Broadband Service Agreement AOL AND CLEARWIRE CONFIDENTIAL
10
EXHIBITS
TO
BUNDLED BROADBAND SERVICES AGREEMENT
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<S> <C>
A DEFINITIONS
B CUSTOMER SERVICE
C IMPLEMENTATION PLAN
D STANDARD LEGAL TERMS AND CONDITIONS
E RETAIL PRICING TIERS
F INITIAL MARKETS
G STAR AGREEMENT
</TABLE>
Bundled Broadband Service Agreement AOL AND CLEARWIRE CONFIDENTIAL
11
EXHIBIT A
DEFINITIONS
"AFFILIATE" means, with respect to a person, any person that directly or
indirectly, through one or more intermediaries, Controls, is Controlled by, or
is under common Control with such person.
[***]
[***]
"AOL Service" means the U.S. version of the America Online(R) brand commercial
online service, including any special versions thereof, including without
limitation, the "AOL Latino" and "AOL for Small Business" brands.
"AVERAGE MONTHLY SERVICE FEE" means the sum of all monthly service fees that
Clearwire charged consumers for service in each Retail Pricing Tier (other than
promotional services) in the Initial Market in which End User is located that is
substantially identical to the Clearwire Wireless Broadband Service, divided by
the total number of consumers purchasing the substantially identical service
(other than promotional services) in that Initial Market during the preceding
six (6) months. For purposes of calculating the Average Monthly Service Fee, the
initial six-month period for each Initial Market shall begin on the launch date
for that particular Initial Market.
"BUNDLED SERVICE" has the meaning set forth in Section 1.1 of the Agreement.
"BUNDLED SERVICES AGREEMENT" has the meaning set forth in Section 4.10 of this
Agreement.
"CLEARWIRE CUSTOMERS" means subscribers to any Clearwire products and services.
[***]
"CLEARWIRE WIRELESS BROADBAND SERVICE" means the wireless high-speed data
transport and Internet connectivity services to be provided by Clearwire
hereunder using the Clearwire Wireless Broadband Network and CPE provided by
Clearwire.
"CONTROL" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such entity, whether
through the ownership of voting securities, by contract, management agreement or
otherwise.
"CUSTOMER PREMISES Equipment" or "CPE" means a stand-alone external device
provided by Clearwire that plugs into a 110 volt and connects to a computer or
router and enables a wireless connection to the Clearwire Wireless Broadband
Network.
"DEPLOYMENT DATE" has the meaning set forth in Section 1.7 of this Agreement.
Bundled Broadband Service Agreement AOL AND CLEARWIRE CONFIDENTIAL
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12
"END USER" means an individual residential customer in the Clearwire Wireless
Broadband Network who subscribes to the Bundled Service, whether on a paying,
promotional or courtesy basis.
[***]
"ELIGIBLE AOL SUBSCRIBER TARGET" has the meaning set forth in Section 1.10 of
this Agreement.
"FORCE MAJEURE EVENTS" means the following: acts of God or other catastrophe,
natural or otherwise; any law, order, regulation, direction, action or request
of the United States government or any other government, including state and
local governments having jurisdiction over the Parties, or any department,
agency, commission, bureau, corporation or other instrumentality of any one or
more said governments, or of any civil or military authority; national
emergency; insurrection; riot; war, strike, acts of terrorism, lock-out; energy
shortage; material shortage; or other cause beyond the Parties' reasonable
control; provided, however, that the non-performing Party is without fault in
causing such default or delay, and such default or delay could not have been
prevented by reasonable precautions and cannot reasonably be circumvented by the
non-performing Party through the use of alternate sources, workaround plans or
other means.
"IMPLEMENTATION PLAN" has the meaning set forth in Section 1.8 of this
Agreement.
"INITIAL MARKETS" means the markets described on the attached Exhibit F.
"INTERACTIVE SERVICE" means one or more of the following Internet or online
services: (a) online or Internet connectivity services (each, an "ISP"); (b) an
interactive site or service featuring a broad selection of aggregated third
party interactive content (or navigation thereto) (e.g., an online service or
search and directory service) and/or marketing a broad selection of products
and/or services across multiple interactive commerce categories; or (c)
communications software capable of serving as the principal means through which
a user creates, sends or receives electronic mail or real time or "instant"
online messages (whether by telephone, computer, wireless or other means).
"MONTHLY CHURN" means the number of End Users (exclusive of the Excluded End
Users) on the last day of the calendar month less the number of End Users
acquired during the month less the number of End Users (exclusive of the
Excluded End Users) on the first day of such calendar month) divided by the
number of End Users on the first day of such calendar month. "EXCLUDED END
USERS" are those that are either (a) denied access to the Clearwire Wireless
Broadband Services due to failure to pay or breach of the Bundled Services
Agreement; or (b) not yet being charged for Bundled Service as of the
commencement of the month in which the Monthly Churn is measured.
"NETWORK ACCESS POINT" means, with respect to either Party, the points at which
such Party connects to the Internet. [***]
Bundled Broadband Service Agreement AOL AND CLEARWIRE CONFIDENTIAL
[*** Confidential Treatment Requested]
13
"NETWORK AVAILABILITY" has the meaning set forth in Section 4.12 of this
Agreement.
"NETWORK OUTAGE" means the Clearwire Wireless Broadband Service becomes
unavailable as a part of the Bundled Service or fails to comply with the
applicable specifications for the Clearwire Wireless Broadband Service.
[***]
"PROMOTIONAL OFFER" means, and is limited to, an offer to an End User to acquire
Bundled Service at a Discounted Rate. For avoidance of doubt, "DISCOUNTED RATE"
shall mean any available offer of the Bundled Service that includes a price
point made available for a limited period of time and is below the average price
available for the comparable service offered by a Party.
"RETAIL PRICING TIER" means the price for each of the following service speed
tiers offered by Clearwire to its retail customers: [***]
"TAXES" include, but are not limited to, any sales or use tax, or any
assessment, levy, or charge in the nature of a tax (other than taxes on either
Party's net income, net worth, capital stock, franchise, property, items of tax
preference or minimum tax, conduct of business or similarly-based taxes) imposed
by a government authority as a result of having provided services pursuant to
the Agreement.
"TERM" has the meaning set forth in Section 7.1 of this Agreement.
Bundled Broadband Service Agreement AOL AND CLEARWIRE CONFIDENTIAL
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14
EXHIBIT B
CUSTOMER SERVICE
***
Bundled Broadband Service Agreement AOL AND CLEARWIRE CONFIDENTIAL
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<TABLE>
<CAPTION>
LEVEL OF CUSTOMER
CARE CLEARWIRE RESPONSIBILITIES AOL RESPONSIBILITIES
------------------ -------------------------- --------------------
<S> <C> <C>
*** *** ***
</TABLE>
Bundled Broadband Service Agreement AOL AND CLEARWIRE CONFIDENTIAL
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<TABLE>
<CAPTION>
LEVEL OF CUSTOMER
CARE CLEARWIRE RESPONSIBILITIES AOL RESPONSIBILITIES
------------------ -------------------------- --------------------
<S> <C> <C>
*** *** ***
</TABLE>
Bundled Broadband Service Agreement AOL AND CLEARWIRE CONFIDENTIAL
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EXHIBIT C
IMPLEMENTATION PLAN
***
Bundled Broadband Service Agreement AOL AND CLEARWIRE CONFIDENTIAL
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***
Bundled Broadband Service Agreement AOL AND CLEARWIRE CONFIDENTIAL
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***
Bundled Broadband Service Agreement AOL AND CLEARWIRE CONFIDENTIAL
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***
Bundled Broadband Service Agreement AOL AND CLEARWIRE CONFIDENTIAL
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***
Bundled Broadband Service Agreement AOL AND CLEARWIRE CONFIDENTIAL
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EXHIBIT D
STANDARD LEGAL TERMS AND CONDITIONS
1. [RESERVED]
2.COMPLIANCE WITH LEGAL REQUIREMENTS. Each Party shall comply with all material
requirements of laws, statutes, treaties, ordinances, regulations, orders,
judgments and decrees ("LEGAL REQUIREMENTS") applicable to its performance under
this Agreement. AOL and Clearwire will cooperate in developing and implementing
procedures for addressing emergencies and complying with any applicable rule,
law or regulation set forth in the Communications Act of 1934, Electronic
Communications Privacy Act, Digital Millennium Copyright Act and any other Legal
Requirements.
3. [RESERVED].
4. CONFIDENTIAL INFORMATION.
4.1 Confidential Information. During the Term, Clearwire and AOL may disclose to
one another Confidential Information. For purposes of this Agreement,
Confidential Information shall include, but is not limited to, the terms of this
Agreement, studies, reports, records, books, contracts, instruments, surveys,
discoveries, ideas, concepts, know-how, techniques, designs, specifications,
drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data,
computer data, disks, diskettes, tapes, computer programs or other software,
business plans, marketing plans, financial data, projections, personnel data,
collection data, price changes, forecasts, network architecture, proprietary
technology, parental controls, and other information supplied by or on behalf of
a Party (whether prepared by such Party, its agents, contractors, advisors or
otherwise) relating to its business (including any of its products), inclusive
of information developed from or based on any of the foregoing, including
reports, information packages, memoranda, and transmittal letters, regardless of
whether such information is in written, oral, electronic or other tangible or
intangible form and any other information that is, or should be reasonably
understood to be, confidential or proprietary to the disclosing Party. All such
Confidential Information shall remain the sole property of the disclosing Party.
The receiving Party agrees that it will use such Confidential Information only
in the performance of its obligations under this Agreement and will take
reasonable steps to prevent disclosure of such Confidential Information, other
than to its employees, contractor and agents who must have access to such
Confidential Information for such receiving Party to perform its obligations
hereunder, and who will each agree to comply with this Section and independent
third party auditors that agree in writing to comply with confidentiality
requirements reasonably comparable to those set forth in this Section. At a
minimum, the receiving Party shall protect the Confidential Information of the
disclosing Party with the same degree of care used to protect its own
confidential information, but in any event no less than a reasonable degree of
care, for a period from the date hereof until three (3) years after the
expiration or termination of this Agreement. Confidential Information shall not
include information which (i) is or becomes generally known to the public other
than through an act or omission of the receiving Party or any of its directors,
officers, employees, agents, accountants, counsel, or other advisors; (ii) was
lawfully in the receiving Party's possession prior to the disclosure hereunder
and not subject to independent confidentiality obligations; (iii) is disclosed
to the receiving Party by a third party who was not violating any obligation of
confidentiality to the disclosing Party; or (iv) was independently developed by
the receiving Party or such Party's directors, officers, employees, agents,
accountants, counsel, or other advisors. Notwithstanding the foregoing, either
Party may make a disclosure containing Confidential Information without the
consent of the other Party, to the extent such disclosure is required by law,
rule, regulation or government or court order. In such event, the disclosing
Party will to the extent possible provide at least five (5) business days prior
written notice of
Bundled Broadband Service Agreement AOL AND CLEARWIRE CONFIDENTIAL
23
such proposed disclosure to the other Party. Further, in the event such
disclosure is required of either Party under applicable laws, rules or
regulations, such Party will (a) redact mutually agreed-upon portions of the
Confidential Information to the fullest extent permitted under applicable laws,
rules and regulations, and (b) submit a request to the applicable governing body
that such Confidential Information be held in the strictest confidence to the
fullest extent permitted under such applicable laws, rules or regulations.
Except as required by law, rule, regulation or government or court order, the
Parties also agree to keep confidential and not disclose the terms and
conditions of this Agreement.
4.2 End User Data; Clearwire Customer Data. The term Confidential Information
shall also include personally identifiable information relating to any End User
or Clearwire Customer. Clearwire shall own all Confidential Information that it
collects from prospective, actual and former Clearwire Customers. AOL shall own
all Confidential Information that it collects from prospective, actual and
former End Users. Where both Parties collect the information from the same
prospective, actual or former customer in a manner not violating this Agreement,
both Parties shall own such information, without any duty to the other Party.
Each Party shall abide by the terms of any applicable Legal Requirement
regarding the privacy rights of End Users. Notwithstanding anything in this
Agreement to the contrary, upon expiration or termination of this Agreement, (i)
Clearwire may use End User Confidential Information for the purpose of
terminating the Clearwire Wireless Broadband Service, retrieving any CPE, and
continuing any collection activities; and (ii) AOL may use End User Confidential
Information to terminate the AOL Service or transition End Users to an
alternative transport provider (including AOL).
4.3 Return of Confidential Information. Following termination or expiration of
this Agreement, each Party receiving Confidential Information pursuant to this
Agreement will, at the disclosing Party's option, return or destroy (and so
certify to the disclosing Party) all tangible material embodying Confidential
Information (in any form or medium and including, without limitation, all
summaries, copies and excerpts of Confidential Information) at any such time as
the disclosing Party may so request.
5. REPRESENTATIONS AND WARRANTIES.
5.1 AOL Representations and Warranties. AOL hereby represents and warrants that
it is a corporation duly organized and validly existing under the laws of
Delaware and has all necessary power and authority to carry on its business as
presently conducted. AOL has all necessary power and authority to enter into
this Agreement and to carry out its obligations hereunder.
5.2 Clearwire Representations and Warranties. Clearwire hereby represents and
warrants to AOL that Clearwire is a corporation duly organized and validly
existing under the laws of Delaware and has all necessary power and authority to
carry on its business as presently conducted. Clearwire has all necessary power
and authority to enter into this Agreement and to carry out its obligations
hereunder.
6. DISCLAIMER OF WARRANTIES. EXCEPT AS EXPRESSLY STATED TO THE CONTRARY HEREIN,
EACH PARTY DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT
LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR OTHERWISE, OTHER THAN THOSE WARRANTIES (IF ANY) WHICH ARE IMPLIED BY
AND INCAPABLE OF EXCLUSION, RESTRICTION, OR MODIFICATION UNDER THE LAWS
APPLICABLE TO THIS AGREEMENT.
7. LIMITATION OF LIABILITY NEITHER PARTY SHALL HAVE ANY LIABILITY WHATSOEVER FOR
ANY INCIDENTAL, CONSEQUENTIAL, PUNITIVE, SPECIAL OR OTHER INDIRECT DAMAGES
SUFFERED BY THE OTHER, EVEN IF INFORMED IN ADVANCE OF THE POSSIBILITY OF SUCH
DAMAGES. NOTWITHSTANDING THE FOREGOING, SUCH LIMITATIONS SHALL NOT
Bundled Broadband Service Agreement AOL AND CLEARWIRE CONFIDENTIAL
24
APPLY WITH RESPECT TO (i) DAMAGES WITH RESPECT TO CLAIMS THAT ARE THE SUBJECT OF
INDEMNIFICATION PURSUANT TO SECTION 8 OF THIS EXHIBIT D, AND (ii) DAMAGES CAUSED
BY A PARTY'S BREACH OF ITS CONFIDENTIALITY OBLIGATIONS UNDER SECTION 4.1 OF THIS
AGREEMENT. THE PARTIES ACKNOWLEDGE AND AGREE THAT AMOUNTS PAID TO THIRD PARTIES
BY A PARTY FOR A CLAIM THAT IS THE SUBJECT OF INDEMNIFICATION UNDER SECTION 8 OF
THIS EXHIBIT D SHALL BE DEEMED TO BE DIRECT DAMAGES.
8. INDEMNIFICATION.
[***]
[***]
9. MISCELLANEOUS.
9.1 Independent Contractors. Clearwire and AOL are independent contractors. This
Agreement shall not be interpreted or construed to create an association, joint
venture or partnership between Clearwire and AOL or to impose any liability
attributable to such a relationship upon either such Party.
9.2 Notices. All notices, requests, demands, and determinations under this
Agreement (other than routine operational communications or as otherwise
specifically set forth herein), shall be in writing and shall be deemed duly
given (i) when delivered by hand, (ii) when delivered by e-mail, (iii) one (1)
business day after being given to an express, overnight courier with a reliable
system for tracking delivery, (iv) when sent by confirmed facsimile with a copy
delivered by another means specified in this Section, or (v) four (4) business
days after the day of mailing, when mailed by United States mail, registered or
certified mail, return receipt requested, postage prepaid, and addressed as
follows:
Bundled Broadband Service Agreement AOL AND CLEARWIRE CONFIDENTIAL
[*** Confidential Treatment Requested]
25
If to AOL:
America Online, Inc.
22270 Pacific Boulevard
Dulles, Virginia 20166
Attention: Vice President Business Development Access
Marketing
Fax: (703) 265-1206
with a copy to:
America Online, Inc.
22000 AOL Way
Dulles, Virginia 20166
Attention: Deputy General Counsel
Fax: (703) 265-2208
If to Clearwire:
Clearwire Spectrum Holdings LLC
5808 Lake Washington Boulevard NE, Suite 300
Kirkland, Washington 98033
Attention: Benjamin G. Wolff
Fax: (425) 828-8061
with a copy to:
Davis Wright Tremaine LLP
2600 Century Square
1501 Fourth Avenue
Seattle, Washington 98101
Attention: Julie Weston
Fax: (206) 628-7699
or such other address or facsimile number as such Party hereto may
hereafter specify for such purpose by notice to the other Parties hereto.
9.3 Force Majeure. Neither Party shall be liable to the other for any failure of
performance hereunder due to Acts of God or other catastrophe, natural or
otherwise; any law, order, regulation, direction, action or request of the
United States government or any other government, including state and local
governments having jurisdiction over the Parties, or any department, agency,
commission, bureau, corporation or other instrumentality of any one or more said
governments, or of any civil or military authority; national emergency;
insurrection; riot; war, strike, acts of terrorism, lock-out; energy shortage;
material shortage; or other cause beyond the Parties' reasonable control;
provided, however, that the non-performing Party is without fault in causing
such default or delay, and such default or delay could not have been prevented
by reasonable precautions and cannot reasonably be circumvented by the non-
performing Party through the use of alternate sources, workaround plans or other
means.
9.4 Entire Agreement. This Agreement, along with the Exhibits hereto, represents
the entire understanding between the Parties with respect to the subject matter
hereof, supersedes all prior negotiations and agreements between the Parties,
and can be amended only by an agreement in writing signed by the Parties.
Bundled Broadband Service Agreement AOL AND CLEARWIRE CONFIDENTIAL
26
9.5 Governing Law. Each Party agrees to continue performing its obligations
under this Agreement while any dispute is being resolved. This Agreement will be
governed by and construed in accordance with applicable federal laws and the
laws of the State of New York, without regard to principles of conflicts of
laws.
9.6 Injunctive Relief. It is understood and agreed that, notwithstanding any
other provisions of this Agreement, breach of the provisions of this Agreement
by a Party shall cause irreparable damage to the other Party for which recovery
of money damages would be inadequate and that the other Party may therefore seek
timely injunctive relief to protect such Party's rights under this Agreement in
addition to any and all remedies at law.
9.7 Cumulative Remedies. All remedies provided for in this Agreement shall be
cumulative and in addition to and not in lieu of any other remedies available to
either Party at law, in equity or otherwise.
9.8 Survival. Sections 4, 5, 6, 7, 8 and 9 of the Agreement of this Exhibit D
will survive the completion, expiration, termination or cancellation of the
Agreement. In addition, any obligations Parties under this Agreement that
expressly of by their nature continue beyond the expiration of this Agreement
shall survive any termination or cancellation of this Agreement.
9.9 Assignment. This Agreement shall accrue to the benefit of and be binding
upon the Parties hereto and any purchaser or any successor entity into which a
Party has been merged or consolidated or to which a Party has sold or
transferred all or substantially all of its assets. Except as permitted in this
Section, neither Party may assign this Agreement or assign or delegate its
rights or obligations under this Agreement without the prior written consent of
the other Party, whose consent shall not be unreasonably withheld; except that a
Party may assign or transfer this Agreement to any Affiliate (including to any
entity that it acquires or is acquired by, whether through merger,
reorganization or otherwise) upon notice to the other Party. In addition,
Clearwire may assign this Agreement (i) to any new entity it creates to carry on
the business of providing Clearwire Wireless Broadband Service or (ii) to a
successor in interest, by merger, operation of law, or by assignment, purchase
or otherwise of the business of providing Clearwire Wireless Broadband Service.
9.10 Succession. This Agreement shall be binding upon and inure to the benefit
of the Parties and their respective permitted successors and assigns.
9.11 Severability. If any provision of this Agreement conflicts with the law
under which this Agreement is to be construed or if any such provision is held
invalid by a court with jurisdiction over the Parties, such provision shall be
deemed to be restated to reflect as nearly as possible the original intentions
of the Parties in accordance with applicable law. The remainder of this
Agreement shall remain in full force and effect. In the event any such deemed
restatement of any such provision prevents the accomplishment of a fundamental
purpose of this Agreement, AOL and Clearwire shall immediately commence
negotiations in good faith to provide the Party which has been adversely
affected by such restatement with value (in cash or in kind) equivalent to the
value that such Party would have received had such provision not been restated.
9.12 Waiver. No failure on the part of either Party to exercise, and no delay in
exercising any right or remedy hereunder, shall operate as a waiver thereof, nor
shall any single or partial exercise of any right or remedy hereunder preclude
any other or further exercise thereof or the exercise of any other right or
remedy granted hereby or by law.
Bundled Broadband Service Agreement AOL AND CLEARWIRE CONFIDENTIAL
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9.13 No Third Party Beneficiary; Disclaimer of Agency. This Agreement is for the
sole benefit of the Parties hereto, and nothing herein express or implied shall
create or be construed to create any third-party beneficiary rights hereunder.
Neither Party is an agent, representative or partner of the other Party. Except
for provisions herein expressly authorizing a Party to act for another, nothing
herein shall constitute a Party as a legal representative or agent of the other
Party, nor shall a Party have the right or authority to assume, create, incur
any liability or any obligation of any kind, express or implied, against or in
the name or on behalf of any other Party unless otherwise expressly permitted by
such other Party. Except as otherwise expressly provided in this Agreement, no
Party undertakes to perform any obligation of any other Party, whether
regulatory or contractual, or to assume any responsibility for the management of
such other Party's business.
9.14 Captions; Sections. Captions contained herein are inserted only as a matter
of convenience and in no way define, limit, or extend the scope or intent of any
provision hereof. Use of the term "Section" shall include the entire subject
Section and all its subsection where the context requires.
9.15 Press Releases. Except as required by applicable law, none of the Parties
shall make any public announcement regarding the terms of this Agreement or the
relationship established herein without the prior written consent of the other
Parties.
9.16 Taxes. AOL shall be solely responsible for the collection and remittance of
the Bundled Service Taxes, as well as any sales Taxes attributable to AOL's
payments to Clearwire for products and services, and shall indemnify Clearwire
and its Affiliates from and against any and all liabilities in connection
therewith.
Bundled Broadband Service Agreement AOL AND CLEARWIRE CONFIDENTIAL
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EXHIBIT E
RETAIL PRICING TIERS
***
Bundled Broadband Service Agreement AOL AND CLEARWIRE CONFIDENTIAL
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EXHIBIT F
INITIAL MARKETS
***
Bundled Broadband Service Agreement AOL AND CLEARWIRE CONFIDENTIAL
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EXHIBIT G
STAR AGREEMENT
[AMERICA LOGO]
November 1, 2005
Jeff Pearson
Clearwire
5808 Lake Washington Blvd. NE
Suite 300
Kirkland, WA 98033
(W) 425-216-7827
(F) 425-216-7900
This Letter Agreement confirms the agreement of Clearwire ("Partner") and
America Online, Inc. ("AOL") where AOL is providing AOL Information for use by
Partner solely for the purpose of secure data transmission between the parties
in accordance with the instructions provided by an authorized representative of
AOL.
"AOL Information" shall mean software and associated hardware, currently
known as the STAR System, a secure electronic information delivery and retrieval
system, any documentation for such STAR System as provided by AOL from time to
time, and any other information provided to Partner under this Agreement.
Partner agrees not to decompile, disassemble or otherwise reverse engineer
the AOL Information. Partner agrees to use the same degree of care, but no less
than a reasonable degree of care, to prevent the unauthorized use, dissemination
or publication of the AOL Information as it uses to protect its own confidential
information of a like nature. Partner agrees not to contest that AOL and its
suppliers are the sole and exclusive owners of all rights, title and interest,
including all trademarks, copyrights, patents, trade secrets and other
intellectual property rights to all of the documentation and computer-recorded
data comprising or included in the AOL Information.
The Star System contains encryption functionality which is subject to U.S.
export control laws and regulations and may not be exported or re-exported to
certain countries, for certain prohibited end uses or to persons or entities
named on the U.S. Dept. of Commerce, Bureau of Industry & Security's Denied
Persons List and Entity List, respectively, and on the U.S. Dept. of Treasury,
Office of Foreign Assets Control's Specially Designated Nationals List. Export,
re-export, resale, or transfer of the Star System is prohibited without prior
authorization from AOL and the U.S. Government. In addition, Partner is also
responsible for insuring compliance with
Bundled Broadband Service Agreement AOL AND CLEARWIRE CONFIDENTIAL
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any applicable foreign government regulations, including restrictions on imports
and use of encryption.
Partner will, at AOL's option, return or destroy and so certify to AOL all
tangible material embodying the AOL Information in any form, including without
limitation, all summaries, copies and excerpts of the AOL Information at any
such time as AOL may request.
Partner acknowledges that disclosure or use of AOL Information could cause
irreparable harm to AOL for which monetary damages may be difficult to ascertain
or be an inadequate remedy. Partner therefore agrees that AOL will have the
right, in addition to its other rights and remedies, to seek and obtain
injunctive relief for any violation of this Agreement.
Sincerely,
------------------------------------
Agreed and Accepted:
Clearwire
/s/ Jeff Pearson
--------------------------
Name : Jeff Pearson
Title: Vice President
Date: November 18, 2005
Bundled Broadband Service Agreement AOL AND CLEARWIRE CONFIDENTIAL
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EXHIBIT 10.46
EXECUTION COPY
SUBSCRIPTION AGREEMENT
This Subscription Agreement (this "Agreement") is entered into as of the
30th day of June, 2006, by and between Motorola, Inc., a Delaware corporation
("Investor"), and Clearwire Corporation, a Delaware corporation ("Clearwire" or
the "Company"). The Company and Investor agree as follows:
1. SUBSCRIPTION FOR SHARES. Investor agrees to subscribe for and the
Company agrees to issue to Investor 50,000,000 shares of the Class A Common
Stock, par value $.0001 per share, of Clearwire (the "Purchased Shares"), on the
terms and conditions set forth in this Agreement.
2. SUBSCRIPTION PRICE. The purchase price for the Purchased Shares shall be
$6.00 per share for an aggregate subscription price of U.S. $300,000,000.00 (the
"Purchase Price").
3. PAYMENT OF PURCHASE PRICE. (a) Subject to the provisions of Section 3(b)
below, Investor agrees to pay the aggregate Purchase Price for the Purchased
Shares to Clearwire. The Purchase Price shall be paid in immediately available
funds by wire transfer to the Company in accordance with the wiring instructions
provided by the Company.
(b) At the Closing, Investor shall pay an amount equal to the lesser of (i)
the Purchase Price or (ii) that amount that is 30% of Cash on Hand (as defined
below) immediately following the Closing, but in no event less than $150,000,000
(such amount, the "Closing Date Payment"), and shall receive that number of
Purchased Shares at the Closing that is the same proportionate percentage as the
Closing Date Payment is to the Purchase Price. In the event that the Closing
Date Payment is less than the Purchase Price, and at any time thereafter the
Company receives additional cash from whatever source derived (a "Cash
Infusion"), then, upon not less than three (3) business days' prior written
notice from the Company, Investor shall pay to the Company an amount equal to
the lesser of (a) the sum of the Purchase Price less the Closing Date Payment
and any payments previously made in a Subsequent Closing or (b) the amount equal
to the amount of the Cash Infusion divided by 70% and then multiplied by 30%,
and shall receive in exchange therefor a number of the Purchased Shares equal to
the amount of such payment divided by $6.00 (each such payment, a "Subsequent
Closing"); provided, however, that Investor shall not be obligated to consummate
any Subsequent Closing if such Subsequent Closing would involve an amount less
than the smaller of (X) $50,000,000 and (Y) the total remaining balance of the
Purchase Price to be paid hereunder. Investor's obligation to pay any portion of
the Purchase Price at a Subsequent Closing shall be subject to satisfaction of
the applicable conditions set forth in Section 5 hereof. Notwithstanding
anything contained herein to the contrary, in no event shall Investor be
obligated to pay any amount in excess of the Purchase Price for the Purchased
Shares.
"Cash on Hand" shall mean, as of any date of determination, the aggregate
amount of cash and cash equivalents, short and long term investments, including
any amounts actually
1
NT
received by the Company from the Investor and the Concurrent Investor (as
defined herein), and excluding any and all restricted cash and investments, each
as set forth on the Company's most recent balance sheet prepared in accordance
with GAAP.
4. CLOSING DATE. Subject to the satisfaction or waiver of the conditions
set forth in Section 5 and Section 6 herein, the closing of Investor's purchase
of the Purchased Shares shall take place remotely via the exchange of documents
and signatures, at 10:00 a.m. (Pacific time), as soon as practicable, but in any
event within two (2) business days after the last of the conditions set forth in
Section 5 and Section 6 herein shall have been satisfied or waived, other than
those conditions that by their nature are to be satisfied at the Closing (but
subject to the fulfillment or waiver of those conditions at the Closing), or at
such other time and place as the Company and Investor mutually agree upon,
orally or in writing (which time and place are designated as the "Closing").
5. INVESTOR CLOSING CONDITIONS. The obligation of Investor to purchase the
Purchased Shares at the Closing, and, with respect to subsections (a), (j), (k),
(n) and (o) only, each Subsequent Closing, if any, is subject to the
fulfillment, to Investor's satisfaction, of each of the following conditions:
(a) the Company shall have delivered to Investor a stock certificate
representing the Purchased Shares, free and clear of all liens, registered in
Investor's name;
(b) the Company shall have delivered to Investor certificates of good
standing of Clearwire, in each case dated as of a date not more than five (5)
days prior to the Closing, issued by the Delaware Secretary of State;
(c) the Company shall have delivered to Investor a certificate,
executed by the Secretary of the Company, attaching thereto: (i) the Company's
Certificate of Incorporation and Bylaws in effect on the Closing, and (ii)
resolutions of the Board of Directors of the Company, in form and substance
reasonably satisfactory to Investor, authorizing the Transaction Agreements (as
defined below) and the transactions contemplated thereby. The Secretary's
Certificate shall also contain provisions relating to the incumbency of the
officers of the Company, including the certification of a specimen of their
respective signatures;
(d) the Company shall have delivered to Investor the joinder
agreement, attached as Exhibit A hereto (the "SA Joinder Agreement"), to that
certain Amended and Restated Stockholders Agreement, dated as of March 16, 2004,
between Clearwire and its stockholders (the "Stockholders Agreement"), executed
by Clearwire;
(e) the Company shall have delivered to Investor the Investor Rights
Agreement, attached as Exhibit B hereto (the "Investor Rights Agreement" and
together with this Agreement, the Stockholders Agreement, the SA Joinder
Agreement and the Investor Letter (as defined below), the "Equity Agreements"),
executed by Clearwire;
(f) the Company shall have delivered to Investor the Wireless
Broadband System Services Agreement between the Investor and the Company, the
Wireless Broadband System Infrastructure Agreement between the Investor and
Clearwire US LLC, and the Wireless Broadband CPE Supply Agreement between the
Investor and the Company, attached as Exhibit
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C hereto (collectively, the "Commercial Agreements" and together with the Equity
Agreements, the "Transaction Agreements"):
(g) the Company shall have delivered to Investor a legal opinion of
Davis Wright Tremaine LLP in the form attached hereto as Exhibit D;
(h) the representations and warranties made by the Company in Section
8 of this Agreement shall be true and correct in all material respects at and as
of the Closing as if made at and as of such time (except that the accuracy of
representations and warranties that by their terms speak as of the date of this
Agreement or some other date shall be determined as of such date). For purposes
of determining whether the condition in this Section 5(h) has been satisfied
only, all such representations and warranties (x) shall be read without regard
to any materiality or material adverse effect qualifiers contained therein and
(y) after taking clause (x) into account, shall be deemed to be true, correct
and complete unless breaches or inaccuracies thereof, individually or in the
aggregate, result or would reasonably be expected to result in a material
adverse effect on the business, condition, affairs, operations, properties, or
assets of the Company. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Company prior to the
Closing shall have been performed or complied with, and the Company shall have
obtained any approvals, consents and qualifications necessary to perform its
obligations hereunder;
(i) the Company shall have delivered to Investor at the Closing a
certificate signed on its behalf by an executive officer of the Company
certifying that the conditions specified in Section 5(h) herein have been
fulfilled;
(j) at the Closing, the purchase of the Purchased Shares by Investor
shall be legally permitted by all laws and regulations to which Investor and the
Company are subject;
(k) as of the Closing, all authorizations, approvals or permits of, or
filings with any governmental authority, including state securities or "Blue
Sky" offices, that are required by law in connection with the lawful sale and
issuance of the Purchased Shares to be made prior to the closing shall have been
duly obtained by the Company, and shall be effective as of the Closing;
(l) the Company shall have delivered to Investor a letter in the form
attached hereto as Exhibit E, executed by the Company (the "Investor Letter");
(m) the Acquisition Agreement between Investor and the Company
attached hereto as Exhibit F for the purchase of all of the outstanding shares
of NextNet Wireless, Inc. (the "Acquisition Agreement") shall have been executed
and delivered by each party thereto and the transactions contemplated by the
Acquisition Agreement shall have been consummated;
(n) the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
thereunder (the "HSR Act"), shall have terminated; and
(o) for each Subsequent Closing only, the Closing shall have occurred.
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6. CLEARWIRE CLOSING CONDITIONS. The obligation of Clearwire to deliver the
Purchased Shares to Investor at the Closing, and the Subsequent Closing, if any,
is subject to the fulfillment, to the Company's satisfaction, of each of the
following conditions:
(a) Investor shall have delivered to Clearwire the Purchase Price in
accordance with Section 3 herein;
(b) Investor shall have delivered to Clearwire the Transaction
Agreements to which Investor is a party, each executed by Investor;
(c) the representations and warranties made by Investor in Section 7
of this Agreement shall be true and correct in all material respects at and as
of the Closing as if made at and as of such time (except that the accuracy of
representations and warranties that by their terms speak as of the date of this
Agreement or some other date shall be determined as of such date). For purposes
of determining whether the condition in this Section 6(c) has been satisfied
only, all such representations and warranties (x) shall be read without regard
to any materiality or material adverse effect qualifiers contained therein and
(y) after taking clause (x) into account, shall be deemed to be true, correct
and complete unless breaches or inaccuracies thereof, individually or in the
aggregate, result or would reasonably be expected to result in a material
adverse effect on the ability of the Investor to consummate the transactions
hereunder. All covenants, agreements and conditions contained in this Agreement
to be performed or complied with by Investor prior to the Closing shall have
been performed or complied with, and Investor shall have obtained any approvals,
consents and qualifications necessary to perform its obligations hereunder;
(d) Investor shall have delivered to the Company at the Closing a
certificate signed on its behalf by an executive officer of Investor certifying
that the conditions specified in Section 6(c) herein have been fulfilled;
(e) the Acquisition Agreement shall have been executed and delivered
by each party thereto and the transactions contemplated by such Acquisition
Agreement shall have been consummated;
(f) no litigation, arbitration, action, suit, proceeding, or
investigation (whether conducted by or before any judicial or regulatory body,
arbitrator, or other person) (collectively, "Litigation") questions the validity
of this Agreement or the other Transaction Agreements or the right of Clearwire
to enter into this Agreement or the other Transaction Agreements or to
consummate the transactions contemplated hereby or thereby; and
(g) the applicable waiting period under the HSR Act shall have
terminated.
7. REPRESENTATIONS AND WARRANTIES OF INVESTOR. Investor represents and
warrants to the Company that the following statements are true and correct on
the date of this Agreement:
(a) Investor is an "accredited investor" as that term is defined in
Rule 501 of Regulation D promulgated under the Securities Act of 1933, as
amended (the "Securities Act")
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(b) The Purchased Shares subscribed for (the "Securities") are being
acquired by Investor for investment purposes only, for Investor's own account
and not with the view to any resale or distribution thereof, and Investor is not
participating, directly or indirectly, in an underwriting of such Securities,
and will not take, or cause to be taken, any action that would cause Investor to
be deemed an "underwriter" of such Securities as defined in Section 2(11) of the
Securities Act.
(c) Investor acknowledges that Investor has been offered an
opportunity to ask questions of, and receive answers from, Clearwire concerning
the Company and Investor's proposed purchase of the Securities, and that, to
Investor's knowledge, the Company has fully complied with any request for such
information.
(d) Investor has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Securities, is able to bear such risks, and has obtained, in
Investor's judgment, sufficient information from the Company to evaluate the
merits and risks of an investment in the Securities. Investor has evaluated the
risks of investing in the Company and has determined that the Securities are a
suitable investment for Investor.
(e) Investor has full power and authority to enter into this Agreement
and to perform its obligations hereunder.
(f) To Investor's knowledge, neither the Company nor any person acting
on the Company's behalf has offered, offered to sell, offered for sale or sold
the Purchased Shares to Investor by means of any form of general solicitation or
general advertising.
(g) The execution, delivery and performance by Investor of this
Agreement and the other Transaction Agreements are within Investor's powers,
have been duly authorized, will not constitute or result in a breach or default
under or conflict with any law, judgment, order, ruling or regulation of any
court or other tribunal or of any governmental commission or agency, or any
agreement or other undertaking, to which Investor is a party or by which
Investor is bound, and will not violate any provisions of the incorporation
papers, bylaws, or stockholders agreement, as may be applicable, of Investor.
The signature of Investor on the Transaction Agreements to which Investor is, or
will be, at the time of execution, be, genuine, and the Transaction Agreements
to which Investor is, or will be a party, will when executed by Investor,
constitute legal, valid and binding obligations of Investor, enforceable in
accordance with their respective terms.
(h) Investor is not relying on the Company with respect to tax and
other investment advice in connection with its decision to purchase the
Purchased Shares. Investor acknowledges that Investor has been advised by the
Company to consult with its tax or financial consultants prior to entering into
this Agreement.
None of the representations and warranties contained in this Section
7, nor any other due diligence investigation conducted by Investor or on its
behalf shall in any way affect the right of Investor to rely fully on the
representations and warranties of the Company in this Agreement.
5
8. REPRESENTATIONS AND WARRANTIES OF CLEARWIRE. Clearwire represents and
warrants to Investor that, except as set forth on the Schedules attached to this
Agreement, each of which shall be deemed to be an exception to or exclusion from
only the particular representation and warranty against which it is listed
(unless it is readily apparent from a reading of the disclosure that such
disclosure is applicable to other representations and warranties), whether or
not the listed representation and warranty includes a reference to such
Schedule, and which exceptions (and all other disclosures) set forth in the
Schedules shall be deemed to be representations and warranties of Clearwire, the
following statements are true and correct on the date of this Agreement. Any
reference to the knowledge of any person shall mean the actual knowledge,
information and belief of such person after making reasonable inquiry of such
person's co-Chief Executive Officers, co-Presidents, Chief Operating Officer,
Chief Financial Officer. For each of these executives, reasonable inquiry shall
mean checking with their respective direct reports and other persons whom, by
the nature of the normal duties of their position, would reasonably be expected
to know. In addition, for purposes of these representations and warranties, the
term "the Company" shall include any entity in which Clearwire owns, directly or
indirectly, more than 50% of the outstanding equity interests and which has
assets of $10,000,000 or more, including, without limitation, the following:
Clearwire International LLC, Clearwire US, LLC, Fixed Wireless Holdings, LLC,
and Clearwire Spectrum Holdings LLC (the "Subsidiaries"), but shall specifically
exclude in all instances NextNet Wireless, Inc. The term "Clearwire" shall mean
Clearwire Corporation (excluding its Subsidiaries).
(a) The execution, delivery and performance by Clearwire of this
Agreement, the other Transaction Agreements to which it is a party, are within
Clearwire's powers, have been duly authorized, will not, as applicable, give
rise to any right of termination, cancellation or acceleration, or require any
consent or approval under, or constitute or result in a breach or default of, or
conflict with any law, judgment, order, ruling or regulation of any court or
other tribunal or any governmental commission or agency, or any agreement or
other undertaking to which Clearwire is a party or by which Clearwire is bound,
will not violate or result in a breach of any provision of, constitute a default
under, accelerate or terminate any performance required by, or require a consent
or waiver under, any provisions of the Certificate of Incorporation, Bylaws, or
Stockholders Agreement of Clearwire, and will not result in the creation of any
lien, charge, claim or encumbrance on the Company's assets or property. The
signature of Clearwire and Clearwire US LLC, as applicable, on the Transaction
Agreements is, or will, at the time of execution be, genuine, and the
Transaction Agreements constitute legal, valid and binding obligations of
Clearwire and Clearwire US LLC, as applicable, enforceable in accordance with
their respective terms. The Company is not in violation of any term of its (i)
Certificate of Incorporation or Bylaws or other organizational document or (ii)
of any law, statute, regulation, rule, ordinance, consent decree, settlement
agreement or governmental requirement, except, in the case of clause (ii), to
the extent that any such violation or non-compliance would not, individually or
in the aggregate, have a material adverse effect on Clearwire.
(b) The Company is duly incorporated or organized, as applicable, and
validly existing under the laws of the jurisdiction of its incorporation or
formation, as applicable, and is in good standing under such laws. The Company
is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a material adverse
effect on the Company. The Company has full power and authority:
6
(i) to own its properties and assets;
(ii) to carry on its business as presently conducted; and
(iii) to enter into the Transaction Agreements and to perform its
obligations thereunder, including the issuance, sale and
delivery of the Purchased Shares
(c) Copies of all Board of Directors and stockholder meeting minutes
and consent actions of Clearwire have been made available to Investor. These
copies are true and complete copies of all resolutions evidencing actions taken
by the Board of Directors and stockholders of Clearwire since its date of
incorporation. The stock ledger of Clearwire is true and complete and reflects
all issuances, transfers, repurchases and cancellations of shares of Clearwire's
capital stock. Clearwire has furnished to Investor true and complete copies of
its Certificate of Incorporation and Bylaws, each as amended as of the date
hereof.
(d) Clearwire does not own or control, directly or indirectly, any
Subsidiaries other than those listed in Schedule 8(d) attached hereto, and the
shares of the capital stock or membership interests, as applicable, of the
Subsidiaries owned by Clearwire (which are reflected on Schedule 8(d)) are duly
authorized, validly issued, fully paid, and non-assessable, and free and clear
of all liens, charges, claims and encumbrances imposed by or through such
Subsidiaries, except as otherwise provided in Schedule 8(d). All of the
outstanding shares of the capital stock or membership interests, as applicable,
of the Subsidiaries, were offered, issued and sold in compliance in all material
respects with all applicable federal and state securities laws.
(e) The authorized capital stock of Clearwire and the shares of
capital stock of Clearwire issued and outstanding as of the date of this
Agreement are as set forth on Schedule 8(e) attached hereto. Upon the filing of
the Company's Third Amended and Restated Certificate of Incorporation, the form
of which is attached hereto as Exhibit G (the "Restated Charter"), the
authorized capital stock of Clearwire will be as set forth in the Restated
Charter. All of the outstanding shares of the capital stock of Clearwire are
duly authorized, validly issued, fully paid, and non-assessable, and free and
clear of all liens, charges, claims and encumbrances imposed by or through
Clearwire. The Purchased Shares, when issued, sold and delivered in accordance
with the terms and for the consideration set forth in this Agreement, will be
duly authorized, validly issued, fully paid, and non-assessable, and free and
clear of all liens, charges, claims and encumbrances imposed by or through
Clearwire. Additionally, the Purchased Shares are free of restrictions on
transfer other than restrictions on transfer under this Agreement and the other
Equity Agreements and under applicable state and federal securities laws. The
outstanding securities of Clearwire are owned by the stockholders, optionholders
and securityholders specified in Schedule 8(e) attached hereto in the numbers
specified in Schedule 8(e) attached hereto.
(f) Other than as disclosed in Schedule 8(f) attached hereto, the
Company does not have, is not bound by, and has no obligation to grant or enter
into, any outstanding subscriptions, options, warrants, rights (including
without limitation conversion or pre-emptive rights), calls, commitments, or
agreements of any character calling for it to issue, deliver, or sell, or cause
to be issued, delivered, or sold, any shares or any other equity securities or
equity
7
securities convertible into, exchangeable for, or representing the right to
subscribe for, purchase, or otherwise acquire any shares or any other equity
securities in the capital of the Company. Other than as set forth in Schedule
8(f) attached hereto, the issuance and sale of the Purchased Shares will not
result in the issuance of any additional shares of capital stock of Clearwire or
the triggering of any other anti-dilution or similar rights contained in any
options, warrants, debentures or other securities agreements or commitments of
Clearwire. Other than the Stockholders Agreement and as disclosed in Schedule
8(f) attached hereto, the Company is not a party or subject to any agreement or
understanding, and, to the Company's knowledge, there is no agreement or
understanding between any persons and/or entities, which affects or relates to
the voting or giving of written consents with respect to any security or by a
director of the Company.
(g) Other than as disclosed in Schedule 8(g) attached hereto, the
Company:
(i) has no outstanding obligations, contractual or otherwise, to
repurchase, redeem, or otherwise acquire any shares or other
equity securities in the capital of the Company; and
(ii) is not a party to or bound by any agreement or instrument
under which any person has the right to require it to
effect, or to include any securities held by such person in,
any registration under any securities legislation or to
distribute any such securities to the public.
(h) All of the outstanding shares of capital stock of Clearwire were
offered, issued, and sold in compliance in all material respects with all
applicable federal and state securities laws. Assuming the accuracy of the
representations of Investor in Section 7 herein, upon the closing of the
transactions contemplated hereby, the Purchased Shares will have been offered,
issued and sold in compliance with all applicable federal, state and provincial
securities laws. Neither Clearwire nor any person or entity acting on its behalf
has taken or will take any action that would subject the offering, sale or
issuance of the Purchased Shares to the registration requirements of the
Securities Act.
(i) Except (i) as disclosed in Schedule 8(i) attached hereto, and (ii)
for filings required under the HSR Act, no consent, approval, authorization,
declaration, filing, or registration with any governmental authority, regulatory
authority or other party is required to be made or obtained by Clearwire in
connection with:
(i) the execution and delivery of any of the Transaction
Agreements; or
(ii) the performance by the Company of its obligations under the
Transaction Agreements.
(j) Except as otherwise set forth on Schedule 8(j) attached hereto,
the Company owns its property and assets, including, without limitation, the
property and assets reflected in the audited balance sheet of Clearwire dated
December 31, 2005, free and clear of all mortgages, liens, licenses, security
interests, charges, claims and other encumbrances, except
8
such encumbrances and liens that arise in the ordinary course of business and do
not materially impair the Company's ownership or use of such property or assets.
With respect to the property and assets it leases (including without limitation
BRS and EBS spectrum), the Company is in compliance with such leases and, to its
knowledge, holds a valid leasehold interest free of any liens, charges, claims
or encumbrances other than those of the lessors of such property or assets,
except with respect to leases which the termination of or loss of rights under
would not be material to the Company.
(k) To the Company's knowledge, the Company has timely filed all
returns, declarations, reports, and information statements ("Returns") required
to be filed in respect of any and all material Taxes (as defined below). Such
Returns are true, correct, and complete in all material respects. The Company
has paid all material Taxes due and payable on a timely basis, whether or not
shown on such Returns, except those material Taxes contested by the Company in
good faith that are listed in Schedule 8(k) attached hereto. The provision for
Taxes of the Company as shown in the Financial Statements (as defined below) is
adequate for material Taxes due or accrued as of the date of the Financial
Statements. The Company has not elected pursuant to section 1362(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), to be treated as an S
corporation, and the Company has not made any other elections pursuant to the
Code (other than elections that relate solely to methods of accounting,
depreciation, or amortization) that would have a material effect on the Company,
its financial condition, its business as presently conducted or as proposed to
be conducted, or any of its properties or material assets. None of the Company's
Returns has ever been audited by any applicable governmental authority, and
there is no current audit, action, suit, proceeding, or deficiency proposed or
assessed or, to the Company's knowledge, currently threatened or contemplated
against the Company with respect to material Taxes. The Company has not executed
any waiver of any statute of limitations on the assessment or collection of any
material Taxes. Since the date of the Financial Statements, the Company has not
incurred any material Taxes other than in the ordinary course of business, and
the Company has made adequate provisions on its books of account for all
material Taxes with respect to its business, properties and operations for such
period. There are no liens for material Taxes upon any of the assets of the
Company, except liens for material Taxes not yet due and payable. The Company
has withheld and collected all material Taxes required to be withheld or
collected under the Code or other applicable law, and has paid such material
Taxes to the proper governmental authority, all on a timely basis. For purposes
of this Agreement, the term "Taxes" means all charges, fees, levies, or other
assessments, including, without limitation, all net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, social security, unemployment, excise,
estimated, severance, stamp, occupation, property, or other taxes, together with
all interest and penalties on such taxes.
(l) Except as disclosed in Schedule 8(l) attached hereto, no
Litigation is pending or, to the knowledge of the Company, currently threatened
or contemplated, against the Company. None of such Litigation would, if
determined adversely, reasonably be expected to have a material adverse effect
on the business, condition, affairs, operations, properties, or assets of the
Company. The Company is not a party or subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality and no such order, writ, injunction, judgment or decree
questions the validity of this Agreement or the other Transaction Agreements or
the right of Clearwire to enter into this Agreement or the other
9
Transaction Agreements or to consummate the transactions contemplated hereby or
thereby. There is no action, suit, proceeding or investigation by the Company
currently pending or that the Company currently intends to initiate.
(m) Except as set forth on Schedule 8(m) attached hereto, there are no
agreements, understandings or proposed actions between the Company and any of
its officers, directors, stockholders, affiliates, or any affiliate thereof.
Except as set forth on Schedule 8(m) attached hereto, there are no binding
agreements, instruments or contracts to which the Company is a party or by which
it is bound that may involve (i) obligations (contingent or otherwise) of, or
payments to the Company in excess of, $1,000,000, (ii) the acquisition, lease,
sublease, license, transfer or assignment of BRS or EBS spectrum, (iii) the
license of any patent, copyright, trade secret or other proprietary right to or
from the Company, other than standard end-user object code license agreements,
or (iv) provisions that in the aggregate materially restrict or affect the
development, manufacture or distribution of the Company's products or services.
Except as set forth on Schedule 8(m) attached hereto, the Company has not (W)
declared or paid any dividends, or authorized or made any distribution upon or
with respect to, or redeemed or repurchased, any class or series of its capital
stock, (X) incurred any indebtedness for money borrowed or any other liabilities
individually in excess of $1,000,000 or, in the case of indebtedness and/or
liabilities individually less than $1,000,000, in excess of $3,000,000 in the
aggregate, (Y) made any loans or advances to any person, other than ordinary
advances for travel or other out-of-pocket expenses, or (Z) sold, exchanged or
otherwise disposed of any of its material assets or rights, other than the sale
of its inventory in the ordinary course of business. For the purposes of this
Section 8(m), all indebtedness, liabilities, binding agreements, instruments and
contracts involving the same person or entity (including persons or entities the
Company has reason to believe are affiliated therewith) shall be aggregated for
the purpose of meeting the individual minimum dollar amounts of this Section
8(m). Each agreement, instrument, contract, judgment, order, writ and decree set
forth on Schedule 8(m) attached hereto to which the Company is a party is a
valid, binding and enforceable obligation of the Company, and to the knowledge
of the Company, of the other party or parties thereto, and is in full force and
effect. To the knowledge of the Company, each agreement, instrument, contract,
judgment, order, writ and decree set forth on Schedule 8(m) attached hereto to
which each of the Subsidiaries is a party is a valid, binding and enforceable
obligation of such Subsidiary and of the other party or parties thereto, and is
in full force and effect. Neither the Company, nor to the knowledge of the
Company, any other party thereto, is, or is considered by any other party
thereto to be, in breach of or non-compliance with any term of any agreement,
instrument, contract, judgment, order, writ or decree set forth on Schedule 8(m)
attached hereto (nor, to the knowledge of the Company, is there any basis for
any of the foregoing) that could result in the termination of such agreement,
instrument or contract. The Company has not received any notice of cancellation
or non-renewal of any agreement, instrument or contract set forth on Schedule
8(m) attached hereto.
(n) Except as disclosed in Schedule 8(n) attached hereto, no employee,
officer, director or stockholder of the Company or member of his or her
immediate family or, in each such case, any affiliate thereof, is indebted to
the Company, nor is the Company indebted (or committed to make loans or extend
or guarantee credit) to any of them, other than in connection with expenses or
advances of expenses incurred in the ordinary course of business or employee
relocation expenses.
10
(o) None of this Agreement (including and as qualified by all exhibits
and schedules hereto), the other Equity Agreements, or any other written
statements or certificates made directly by, or, to the Company's knowledge, on
behalf of, the Company in connection herewith or therewith contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements herein or therein not misleading in light of the circumstances
under which they were made.
(p) To the knowledge of the Company, the Company has sufficient title
and ownership of all patents, patent applications, trademarks, trademark
applications, service marks, service mark applications, trade names, trade name
applications, copyrights, copyright applications, trade secrets, information,
proprietary rights and processes necessary for its business as now conducted,
without any conflict with or infringement of the rights of others. To the
knowledge of the Company, the Company is not in violation of, or by conducting
its business as presently or proposed to be conducted, would violate, any
technology licenses to which the Company is a party to, including without
limitation, any software licenses or open source licenses. Schedule 8(p)
attached hereto contains a complete list of all patents, pending patent
applications, trademarks and pending trademark applications of the Company.
Except as set forth on Schedule 8(p) attached hereto, the Company owns all of
such patents, pending patent applications, trademarks and pending trademark
applications free and clear of all mortgages, liens, licenses, charges, claims,
security interests and other encumbrances. To the knowledge of the Company, the
Company is not in violation of or, by conducting its business as presently or
proposed to be conducted, would violate any of the patents, trademarks, service
marks, trade names, copyrights or trade secrets or other proprietary rights of
any other person or entity. Except as set forth in Schedule 8(p), to the
knowledge of the Company, no person or entity is violating any of the patents,
trademarks, service marks, trade names, copyrights, trade secrets or other
proprietary rights of the Company except to the extent that such violation would
not have a material adverse effect on the Company. The Company has taken all
steps that it has determined to be reasonable and necessary to protect its
patents, trademarks, service marks, trade names, copyrights (and, in each case,
all applications related thereto), trade secrets and other proprietary rights.
(q) To the knowledge of the Company, the wireless broadband services
offered by the Company have not experienced any material (i) failures related to
the continuous provision of service, (ii) breaches of security or (iii)
instances of hacking. Further, the Company has no knowledge of any (a) likely
failures related to the continuous provision of service, (b) likely source of
security breach, or (c) likely source of vulnerability for hacking.
(r) The Company has delivered to Investor its audited financial
statements (balance sheet and income statement, statement of shareholders'
equity and statement of cash flows) as of December 31, 2003, December 31, 2004
and December 31, 2005 for the fiscal years then ended and unaudited financial
statements (balance sheet and income statement) as of March 31, 2006 for the
three months then ended (the "Financial Statements"). The Financial Statements
(i) are in accordance with the books and records of the Company (which are true
and complete in all material respects), and (ii) have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated, except that the unaudited Financial
Statements do not contain all footnotes and other disclosures required by
generally accepted accounting principles. The Financial Statements fairly
present in all material
11
respects the financial condition and operating results of the Company as of the
dates, and for the periods, indicated therein, subject to normal audit
adjustments with respect to the March 31 2006 Financial Statements. Except as
set forth in the Financial Statements or on Schedules 8(s) or 8(u), the Company
has no material liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business subsequent to December 31, 2005, and
(ii) obligations under contracts and commitments incurred in the ordinary course
of business and not required under generally accepted accounting principles to
be reflected in the Financial Statements, which, in both cases, individually or
in the aggregate, are not material to the financial condition or operating
results of the Company.
(s) Schedule 8(s) attached hereto identifies all material outstanding
loans, debts, notes, mortgages, indentures, security agreements, commitments and
other obligations of the Company individually in excess of $1,000,000 or, in the
case of such obligations individually less than $1,000,000, in excess of in the
aggregate $2,000,000 (collectively, the "Obligations"). To the Company's
knowledge, except as disclosed in Schedule 8(s) attached hereto, the Company is
not in default under (and has not received any notice that it has breached or
committed any material default under) any of the Obligations, and no event or
condition has occurred which, with the lapse of time or the giving of notice, or
both, would constitute such a default.
(t) To the knowledge of the Company, the Company has all franchises,
permits, licenses, and any similar authority necessary for the conduct of its
business as now being conducted by it, all of such franchises, permits, licenses
and any similar authority is valid and in full force and effect, and the Company
believes it can obtain, without undue burden or expense, any similar authority
for the conduct of its business as planned to be conducted. To the knowledge of
the Company, the Company is not in default in any respect under any of such
franchises, permits, licenses or other similar authority.
(u) Except as set forth on Schedule 8(u) attached hereto, since
December 31, 2005, there has not been:
(i) any material change in the assets, liabilities, financial
condition or operating results of the Company from that
reflected in the Financial Statements;
(ii) any material damage, destruction or loss, whether or not
covered by insurance;
(iii) any waiver, compromise or default by the Company of a
valuable right or of a material debt or obligation owed to
it;
(iv) any satisfaction or discharge of any lien, charge, claim or
encumbrance or payment of any obligation by the Company,
except in the ordinary course of business and that is not
material to the assets, properties, financial condition,
operating results or business of the Company;
12
(v) any transfer of or granting of any security interest in or
any exclusive license with respect to any material asset of
the Company; or
(vi) any material agreement or commitment by the Company to do
any of the things described in this Section 8(u).
(v) To the Company's knowledge, the Company is not in violation of any
applicable statute, law or regulation relating to the environment or
occupational health and safety, and no material expenditures are or will be
required in order to comply with any such existing statute, law or regulation.
During the period that the Company has owned, licensed or leased its properties
and facilities, (a) there have been no disposals, releases or threatened
releases of Hazardous Materials (as defined below) from such properties or
facilities, (b) neither the Company nor, to the Company's knowledge, any third
party, has used, generated, manufactured or stored on, under or about such
properties or facilities or transported to or from such properties or facilities
any Hazardous Materials. The Company has no knowledge of any presence, disposals
on, or releases or threatened releases of Hazardous Materials from, or under any
of such properties or facilities, which may have occurred prior to the Company
having taken possession of any of such properties or facilities. For the
purposes of this Section 8(v), the terms "disposal," "release," and "threatened
release" shall have the definitions assigned thereto by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980. 42 U.S.C.
Section 9601 et seq., as amended ("CERCLA"). For the purposes of this Section
8(v), "Hazardous Materials" shall mean any hazardous or toxic substance,
material or waste which is regulated under, or defined as a "hazardous
substance," "pollutant," "contaminant," "toxic chemical," "hazardous material,"
"toxic substance," or "hazardous chemical" under (i) CERCLA; (ii) the Emergency
Planning and Community Right-to-Know Act, 42 U.S.C. Section 11001 et seq.: (iii)
the Hazardous Materials Transportation Act, 49 U.S.C. Section 5101, et seq.;
(iv)the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; (v) the
Occupational Safety and Health Act of 1970, 29 U.S.C. Section 651 et seq.; (vi)
regulations promulgated under any of the above statutes; or (vii) any applicable
state or local statute, ordinance, rule, or regulation that has a scope or
purpose similar to those statutes identified above.
(w) Except as disclosed in Schedule 8(w) attached hereto and for
rights granted under the Investor Rights Agreement, the Company has not granted
or agreed to grant any registration rights, including without limitation any
piggyback or demand rights, to any person or entity.
(x) Except as set forth in Schedule 8(x) attached hereto, the Company
is not bound by or subject to (and none of its assets or properties is bound by
or subject to) any written or oral, express or implied, contract, commitment or
arrangement with any labor union, and no labor union has requested or, to the
Company's knowledge, has sought to represent any of the employees,
representatives or agents of the Company. There is no strike or other labor
dispute involving the Company pending, or to the Company's knowledge,
threatened, nor is the Company aware of any labor organization activity
involving its employees. To the Company's knowledge, the Company has complied in
all material respects with all applicable state and federal equal employment
opportunity and other laws related to employment.
13
(y) Except as disclosed in Schedule 8(y) attached hereto, the Company
is not party to or bound by any currently effective employment or consultancy
contracts involving payments by the Company in excess of $350,000 per annum,
excluding discretionary bonuses, deferred compensation agreements, bonus plans,
incentive plans, profit sharing plans, retirement agreements or plans, pension
plans or other employee compensation arrangements. Except as disclosed in
Schedule 8(y) attached hereto, and subject to general principles related to
wrongful termination of employees, the employment of each officer and employee
of the Company is terminable at the will of the Company. None of the officers or
key employee of the Company listed on Schedule 8(y) has given oral or written
notice of his or her termination of employment with the Company.
(z) Except as disclosed in Schedule 8(z) attached hereto, each current
officer, employee and consultant of the Company and, to the Company's knowledge,
each former officer, employee and consultant that contributed to the
intellectual property currently being used by the Company has executed in the
Company's favor a standard agreement regarding confidentiality and proprietary
information used by the Company and assignment of intellectual property rights
in favour of the Company. To the Company's knowledge, none of its current or
former employees, officers and consultants is in violation thereof. No such
person has excluded works or intellectual property rights made prior to his or
her employment or other contractual relationship with the Company from his or
her assignment of inventions pursuant to such agreement. Subject to any
limitations on such vesting imposed by applicable law, full title and ownership
of all inventions and proprietary rights, processes or methods developed or
invented by any and all employees and consultants during the period of their
employment and/or consultancy and resulting directly or indirectly from their
work for the Company vest in the Company pursuant to each such agreement. The
Company does not believe it is or will be necessary to utilize any inventions of
any of its employees (or people it currently intends to hire) made prior to or
outside the scope of their employment by the Company.
(aa) The Company holds the Federal Communications Commission ("FCC")
licenses, permits and authorizations set forth on Schedule 8(aa) attached hereto
(the "FCC Authorizations").
(bb) To the Company's knowledge, except as set forth on Schedule
8(bb), the FCC Authorizations are in full force and effect and have not been
revoked, suspended, cancelled, rescinded or terminated and have not expired,
except where renewal applications are currently pending. To the Company's
knowledge, there is not pending or threatened any action by or before the FCC to
revoke, suspend, cancel, rescind or modify any of the FCC Authorizations (other
than proceedings to amend FCC rules of general applicability), and there is not
now issued or outstanding or pending or threatened, by or before the FCC, any
order to show cause, notice of violation, notice of apparent liability, or
notice of forfeiture or complaint against the Company or any of its subsidiaries
or any wireless broadband system operated by Clearwire. Neither the Company nor
any of its subsidiaries is aware of any facts and has received no notice or
communication, formal or informal, indicating that the FCC is considering
revoking, suspending, cancelling, rescinding or terminating any FCC
Authorization.
(cc) To the Company's knowledge, all material reports and filings
required to be filed by the Company with the FCC have been timely filed, and all
such reports and filings are
14
accurate and complete. To the Company's knowledge, all regulatory fees required
to be paid by the Company to the FCC have been timely filed and paid.
(dd) The Company's systems include wireless systems operating in the
US in whole or in part on BRS, EBS, or other spectrum licensed by the FCC to
third parties (each a "Lessor") and used or leased by the Company under certain
spectrum leases, capacity use agreements or other similar arrangements between
the Company (or subsidiaries of the Company) and the Lessors (each a "Spectrum
Lease"). Except for Spectrum Leases grandfathered under the FCC's rules,
Clearwire believes each Spectrum Lease complies with the FCC's rules, including
but not limited to Sections 1.9020 and 1.9030. Except for Spectrum Leases
grandfathered under the FCC's rules, Clearwire believes each Spectrum Lease
constitutes either a "manager" lease (each a "Manager Lease") or a "de facto
transfer" Lease (each a "Transfer Lease") as described in the FCC's rules.
(ee) To the extent required under the FCC's rules and except for
Spectrum Leases grandfathered under the FCC's rules, the Company (or its
applicable subsidiary) has timely filed each Manager Lease with the FCC. To the
extent required under the FCC's rules and except for Spectrum Leases
grandfathered under the FCC's rules, the Company (or its applicable subsidiary)
has filed for and is awaiting (and the FCC Authorizations will include) FCC
consent to each Transfer Lease. To the knowledge of the Company, (i) each Lessor
holds all FCC licenses, permits and authorizations (the "Lessor Licenses")
necessary to operate the License that is subject to the Spectrum Lease to which
it is a party, (ii) the representations and warranties set forth in Section
8(bb) are true and correct with respect to the Lessor Licenses, and the
representations and warranties set forth in Section 8(cc) are true and correct
with respect to the Lessors, and (iii) the representations and warranties made
by the Lessors under the Spectrum Leases are true and correct. Each Spectrum
Lease is set forth on Schedule 8(ee) and identified as a grandfathered Lease, a
Manager Lease or a Transfer Lease.
(ff) Employee Benefits.
(i) Set forth in Schedule 8(ff) is a complete and correct list
of all "employee benefit plans" as defined by section 3(3)
of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), all specified fringe benefit plans as
defined in Section 6039D of the Code, and all bonus,
incentive-compensation, profit-sharing, stock-based
compensation, severance, change-in-control, or other
employee compensation or benefit programs, policies or
practices (whether written or unwritten) that are maintained
or contributed to by the Company or any Subsidiary, with all
such plans, programs and arrangements referred to as the
"Employee Plans".
(ii) Neither the Company nor any other entity, which together
with the Company is treated as a single employer under
Section 414 of the Code (an "ERISA Affiliate") maintains,
sponsors or is obligated to contribute to (or has ever
maintained, sponsored or been obligated to contribute to) an
Employee Plan that is subject to Section 302 of
15
ERISA, Section 412 of the Code, or Title IV of ERISA, or a
"multiemployer plan", as defined in Section 3(37) of ERISA.
(iii) Each Employee Plan has been maintained in all material
respects in accordance with its terms and with all
provisions of ERISA, the Code and other applicable laws, and
the Company and each of its Subsidiaries have not incurred,
and no facts exist which could result in, any obligation,
penalty, tax or other liability with respect to any Employee
Plan that could be imposed on Investor.
(gg) All insurance policies maintained by the Company are with
reputable insurance carriers, are in such amounts and provide coverage against
such customary risks incident to the business of the Company and its properties
and assets, are in character and amount and have deductibles consistent with
coverage carried by reasonably prudent persons of similar size engaged in
similar businesses and subject to the same or similar perils or hazards. The
Company has not received notice of any cancellation or termination or disclaimer
of liability under any such policy or notice or any indication of any intent to
do so or not to renew or to increase the premium with respect to any such
policy.
9. RESTRICTED SECURITIES. Investor understands that the Securities have not
been, and will not be, registered under the Securities Act, by reason of a
specific exemption from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of the investment intent
and the accuracy of Investor's representations as expressed herein. Investor
understands that the Securities are "restricted securities" under the Securities
Act, inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such Securities may be resold without registration under the Securities Act,
only in certain limited circumstances and Investor agrees not to transfer the
Securities unless the transfer of the Securities is made: (i) pursuant to an
effective registration statement under the Securities Act; (ii) to the Company;
(iii) outside the United States in accordance with Rule 904 of Regulation S
under the Securities Act and in compliance with local laws; or (iv) within the
United States (A) in accordance with the exemption from registration under the
Securities Act provided by Rule 144 thereunder, if available, and in compliance
with any applicable state securities laws, and Investor shall be required to
furnish to the Company an opinion to such effect from counsel of recognized
standing reasonably satisfactory to the Company prior to such offer, sale or
transfer or (B) in a transaction that does not require registration under the
Securities Act or applicable state securities laws, and Investor shall be
required to furnish to the Company an opinion to such effect from counsel of
recognized standing reasonably satisfactory to the Company prior to such offer,
sale or transfer. Investor acknowledges that the Company has no obligation to
register or qualify the Securities for resale except as set forth in the
Investor Rights Agreement and that the Company is required to refuse to register
any transfer not made in accordance with the provisions of this Section 9.
Investor further acknowledges that if an exemption from registration or
qualification is available, it may be conditioned on various requirements
including, but not limited to, the time and manner of sale, the holding period
for the Securities, and on requirements relating to the Company which are
outside of Investor's control, and which the Company is under no obligation and
may not be able to satisfy. Investor also acknowledges that the certificates
representing the Securities shall bear the restrictive legends required under
16
applicable federal and state securities laws and the Stockholders Agreement. The
provisions of this Section 9 shall survive the Closing.
10. STOCKHOLDERS AGREEMENT. Investor and Clearwire acknowledge and agree
that the Purchased Shares shall be subject to all of the terms of the Equity
Agreements, including, among other provisions, the restrictions on transfer and
confidentiality obligations set forth therein. Investor further agrees, at the
Closing, to sign the SA Joinder Agreement and to become bound by the terms and
conditions of the Equity Agreements.
11. INVESTOR RIGHTS AGREEMENT. At the Closing, Investor shall become a
party to the Investor Rights Agreement, by executing and delivering the Investor
Rights Agreement.
12. COMMERCIAL AGREEMENT. At the Closing, Investor and Clearwire US, LLC
shall enter into the Commercial Agreements.
13. COVENANTS.
(a) Except for the transactions contemplated under the Concurrent
Subscription Agreement and the agreements delivered by the Company pursuant
thereto and the Commercial Agreements and Acquisition Agreement, from the date
hereof until the Closing, the Company shall carry on, and ensure that its
subsidiaries carry on, their respective businesses in the ordinary course of
business and substantially in the same manner as previously conducted and
neither the Company nor any of its subsidiaries shall consummate any
extraordinary transaction which results in a fundamental change in the course of
the Company's business.
(b) Each of Investor and the Company shall use commercially reasonable
efforts to cause the conditions set forth in Section 5 and Section 6 herein to
be satisfied and to consummate the transactions contemplated herein.
14. SURVIVAL OF WARRANTIES. Except as otherwise provided herein, the
representations and warranties of the Company and Investor contained in or made
pursuant to this Agreement shall survive the execution and delivery of this
Agreement and the Closing for a period of one (1) year following the Closing.
Notwithstanding the foregoing, nothing in this Section 14 shall be construed to
extend the representations, warranties and covenants contained herein beyond the
period set forth in the applicable statute of limitations.
15. INDEMNITY. Investor and Clearwire will indemnify and hold each other,
as well as their respective officers, directors, stockholders, agents, attorneys
and affiliates (the "Indemnified Parties") harmless from and against, and will
reimburse the Indemnified Parties for, any and all losses, damages, debts,
liabilities, obligations, judgments, orders, awards, writs, injunctions,
decrees, fines, penalties, taxes, costs or expenses (including but not limited
to any legal and accounting fees and expenses) ("Losses") arising out of or
based upon any false representation or warranty or breach or failure by Investor
or Clearwire, as the case may be, to comply with any covenant or agreement made
by Investor or Clearwire, as the case may be, in this Agreement or in any other
document furnished by Investor or Clearwire, as the case may be, to the other in
connection with this Agreement (other than the other Transaction Agreements,
which shall be subject to any indemnification or other remedy provisions
contained therein).
17
16. REQUIRED FILINGS; COOPERATION. As promptly as practicable but in no
event more than five (5) days after the date of this Agreement, each of
Clearwire and Investor will make all filings required to be made by them in
order to complete the transactions contemplated under this Agreement (including
all filings under the HSR Act). Between the date of this Agreement and the
Closing, each party will (a) cooperate with the other party with respect to all
filings that such other party elects to make or is required by applicable laws
to make in connection with the transactions contemplated under this Agreement,
and (b) cooperate with the other party, including taking all actions reasonably
requested by such other party, to cause early termination of any applicable
waiting period under the HSR Act.
17. REVOCABILITY. Investor and Clearwire understand and agree that this
Agreement may be canceled, terminated, or revoked only by the mutual written
consent of Investor and Clearwire. Notwithstanding the foregoing, however, this
Agreement may be terminated by either Investor or Clearwire if the Closing shall
not have occurred on or before December 31, 2006, provided that the failure to
close on or before such date is not the fault of the terminating party.
18. NOTICE. Any notices or other communications in connection herewith
shall be sufficiently given if sent by registered or certified mail, postage
prepaid, or by facsimile transmission, and:
(i) if to the Company, at
Clearwire Corporation
5808 Lake Washington Blvd. NE, Suite 300
Kirkland, WA 98033
Facsimile No: 425-216-7900
Attn: Broady Hodder, General Counsel
With a copy to:
Davis Wright Tremaine LLP
2600 Century Square
1501 Fourth Avenue
Seattle, WA 98121
Facsimile No: 206-628-7699
Attn: Julie A. Weston, Esq.
(ii) if to Investor, at
Motorola, Inc.
1475 W. Shure Drive
Arlington Heights, IL 60004
Facsimile No: 847-632-3020
Attn: Kevin Gilbert
With a copy to:
18
Motorola, Inc.
1303 East Algonquin Road
Schaumburg, Illinois 60196
Facsimile No: (847) 576-3750
Attn: General Counsel
and
Winston & Strawn LLP
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Oscar A. David, Esq.
Fax: (312)558-5700
or at such other address as either Investor or the Company shall
designate to the other by notice in writing.
19. ASSIGNABILITY; SUCCESSORS AND ASSIGNS. Neither party may assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of the other party. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
20. MODIFICATION. Neither this Agreement nor any provision hereof shall be
modified, discharged or terminated except by an instrument in writing signed by
the party against whom any waiver, change, discharge or termination is sought.
21. ENTIRE AGREEMENT. This Agreement, the other Equity Agreements and the
documents referred to herein and therein constitute the entire agreement among
the parties with respect to the subject matter hereof and thereof and no party
shall be liable or bound to any other party in any manner by any warranties,
representations, covenants or agreements except as specifically set forth herein
or therein.
22. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the state of Delaware and, to the extent it involves
any United States statute, in accordance with the laws of the United States.
23. FINDERS' FEES. Except as provided otherwise in Schedule 23 attached
hereto, each party represents that it neither is nor will be obligated for any
finders' fees or commissions in connection with this Agreement or the
transactions contemplated hereby. Investor agrees to indemnify and to hold
harmless the Company from any liability for any commission or compensation in
the nature of finders' fees (and the costs and expenses (including legal, travel
and out-of-pocket expenses) of defending against such liability or asserted
liability) for which Investor or any of its officers, directors, employees, or
representatives is responsible. The Company agrees to indemnify and hold
harmless Investor from any liability for any commission
19
or compensation in the nature of a finders' fee (and the costs and expenses
(including legal, travel and out-of-pocket expenses) of defending against such
liability or asserted liability) for which the Company or any of its officers,
employees or representatives is responsible.
24. SEVERABILITY. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
25. FEES AND EXPENSES. Except as otherwise expressly provided for in this
Agreement, the Company, on the one hand, and Investor, on the other hand, shall
each pay all of its own expenses incurred in connection with the transactions
contemplated by this Agreement, including any and all legal, accounting,
investment banking and consulting fees and expenses incurred in negotiating,
executing and delivering this Agreement and the other agreements, exhibits,
schedules, documents and instruments contemplated by this Agreement.
Notwithstanding the foregoing, each of the Company and Investor shall pay
one-half of the filing fees under the HSR Act related to the transactions
contemplated by this Agreement.
26. CURRENCY. All dollar amounts referred to in this Agreement, including
the symbol "$", refer to lawful money of the United States of America.
27. COUNTERPARTS. This Agreement may be executed in two (2) or more
original or facsimile counterparts all of which together shall constitute one
and the same instrument.
28. DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement are
inserted for convenience of reference only and do not constitute a part of and
shall not be utilized in interpreting this Agreement.
29. DELAYS OR OMISSIONS. No failure to exercise or delay in the exercise of
any right, power or remedy accruing to Investor upon any breach or default of
the Company under this Agreement shall impair any such right, power or remedy of
Investor nor shall it be construed to be a waiver of any such breach or default,
or an acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring.
30. EFFECTIVE DATE. This Agreement shall not be effective, and Investor
shall have no obligations hereunder, until such time as that certain
Subscription Agreement as disclosed in final form to Investor prior to the date
hereof (the "Concurrent Subscription Agreement"), has been executed by the
Company and the investor identified therein (the "Concurrent Investor").
[Remainder of this page is intentionally left blank.]
20
The undersigned have duly executed this Agreement as of this 30th day of June,
2006.
MOTOROLA, INC.
By: /s/ GREGORY BROWN
---------------------------------
Name: GREGORY BROWN
Title: EXECUTIVE VICE PRESIDENT
CLEARWIRE CORPORATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
The undersigned have duly executed this Agreement as of this 30 day of June,
2006.
MOTOROLA, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
CLEARWIRE CORPORATION
By: /s/ Benjamin G. Wolff
---------------------------------
Name: Benjamin G. Wolff
Title: Co-Chief Executive Officer
EXHIBIT A TO SUBSCRIPTION AGREEMENT
JOINDER TO STOCKHOLDERS AGREEMENT
(attached)
EXHIBIT B TO SUBSCRIPTION AGREEMENT
INVESTOR RIGHTS AGREEMENT
(attached)
EXHIBIT C TO SUBSCRIPTION AGREEMENT
COMMERCIAL AGREEMENTS
(attached)
EXHIBIT D TO SUBSCRIPTION AGREEMENT
LEGAL OPINION
(attached)
EXHIBIT E TO SUBSCRIPTION AGREEMENT
INVESTOR LETTER
(attached)
EXHIBIT F TO SUBSCRIPTION AGREEMENT
ACQUISITION AGREEMENT
(attached)
EXHIBIT G TO SUBSCRIPTION AGREEMENT
THIRD AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
(attached)
EXHIBIT 10.47
June 30, 2006
Motorola, Inc.
1303 E. Algonquin Road
Schaumburg, IL 60196
Ladies and Gentleman:
Motorola, Inc. and Clearwire Corporation have entered into various
agreements for (a) the purchase by Motorola, Inc. ("Motorola") (i) of shares of
Class A Common Stock of Clearwire Corporation ("Clearwire"), and (ii) of all of
the issued and outstanding shares of capital stock of NextNet Wireless, Inc.
("NextNet") pursuant to that Stock Purchase Agreement dated of even date
herewith by and among Clearwire, NextNet and Motorola (the "SPA") and (b)
various commercial relationships to be entered into by Motorola and Clearwire US
LLC ("Clearwire LLC"), Motorola and Clearwire hereby agree to the terms and
obligations of this letter agreement (the "Agreement").
1. Development of Dual Mode ASIC. Section 5.1 (e) of the SPA prohibits
Clearwire from entering into any exclusive or sole licensing arrangement
regarding any Intellectual Property Rights of NextNet and its Subsidiaries or
entering into any non-exclusive licenses other than those non-exclusive use
licenses for NextNet's products and related Intellectual Property Rights of
NextNet that are entered into the ordinary course of business consistent with
past practice, without Motorola's prior written consent. Clearwire desires to
cause NextNet to enter into a contract with one Dual Mode ASIC developer, not
otherwise engaged in the development, manufacture or distribution of Wireless
Broadband Infrastructure Products or Subscriber Products (as defined in the
respective Supply Agreements, as defined below), prior to the Closing of the SPA
to facilitate development of Dual Mode devices, as defined in the Supply
Agreements (the "ASIC Contract"). Clearwire wants to ensure that work on Dual
Mode development activity continues following execution of the SPA, to increase
the likelihood that the Dual Mode development work will be completed on
Clearwire's desired schedule following the Closing. Such ASIC Contract would be
a Material Contract and not in the ordinary course of business. Motorola hereby
consents to NextNet entering into the ASIC Contract subject to the following:
(a) Clearwire shall give Motorola, Intel Corporation, and a third
party selected by Clearwire the opportunity to make a proposal for this
work, it being understood that Clearwire will have the right to select the
developer for such work.
(b) Clearwire will fund up to $3,000,000 for such ASIC development
work.
(c) To the extent necessary to induce a developer to enter into a
contract to perform such ASIC development work, Clearwire may cause NextNet
to provide such developer with volume purchase commitments, provided that
Clearwire agrees to back stop such volume commitments with orders placed
with Motorola.
(d) Clearwire will obtain on behalf of NextNet grant back rights from
the developer to make, have made, use and sell the Dual Mode ASIC, and
Clearwire will not, nor will it permit NextNet to, provide such ASIC
developer the right to grant licenses to other ODMs (design-ins) for: (i)
IP owned by NextNet covering the ASIC for Dual Modes devices or (ii) IP
developed by or on behalf of NextNet covering the ASIC for Dual Mode
devices.
2. Review of NextNet Cost Structure. Pursuant to the Wireless Broadband
System Infrastructure Agreement and the Wireless Broadband CPE Supply Agreement
described in the SPA (the "Supply Agreements") the parties have agreed to
specific product pricing set forth on Exhibit A to each Supply Agreement. Such
pricing was based on representations by Clearwire of NextNet's product component
costs multiplied by a factor of (a) 1.33 plus warranty of 1.5% for
Infrastructure products and (b) 1.15 plus warranty of 1.5% for CPE products. In
order to confirm the pricing set forth in the Supply Agreements, between signing
of the SPA and Closing under the SPA, Motorola will be permitted to review
NextNet product component costs as they relate to such product pricing. Motorola
will, subject to appropriate confidentiality protections, utilize the services
of a national accounting firm to review NextNet's cost structure with respect to
such product component costs. If NextNet's product component costs differ from
those represented by Clearwire, the parties will adjust the pricing under the
Supply Agreements such that the pricing equals the actual product component
costs multiplied by the factors set forth above.
3. Party Relationship. Each party is an independent contractor and not an
agent, joint venturer, or representative of the other, and neither party may
create any obligations or responsibilities on behalf of or in the name of the
other. Under no circumstances may either party hold itself out to be a partner,
employee, franchisee, representative, servant or agent of the other party.
Neither party will impose or create any obligation or responsibility, express or
implied, or make any promises, representations or warranties on behalf of the
other party, other than as expressly provided herein.
4. Waiver. The failure of either party to insist in any one or more
instances, upon the performance of any of the terms or conditions or to exercise
any right contained in this Agreement will not be construed as a waiver or
relinquishment of the future performance of any terms or conditions or the
future exercise of such right, but the obligation of the other party with
respect to such future performance will continue in full force and effect.
5. Dispute Resolution: Injunctive Relief. Any claims or disputes between
the parties will be submitted to non-binding mediation prior to initiation of
any formal legal process provided, however, that this provision does not
preclude either party from resorting to judicial proceedings if: (i) good faith
efforts to resolve the dispute under mediation are unsuccessful; or (ii) the
claim or dispute relates to intellectual property rights; or (iii) a party seeks
injunctive relief, such as a temporary restraining order. Each party agrees that
the other party shall be
2
entitled to seek injunctive relief to prevent breaches of the provisions of
Section 5 hereof and to specifically enforce the provisions of Section 5 hereof
in addition to any other remedy to which such party may be entitled at law or in
equity.
6. Notices. All notices, requests, demands, instructions, documents and
other communications to be given under this Agreement to any party shall be in
writing and sent to the address/fax number set forth on the signature page below
(provided that any party may at any time change its address for notice or other
such information by giving written notice thereof in writing to the other
parties hereto).
7. General. Except as otherwise expressly permitted, no alterations or
modifications of this Agreement will be binding upon either Clearwire or
Motorola unless made in writing and signed by an authorized representative of
each party. If any term or condition of this Agreement is to any extent held by
a court or other tribunal to be invalid, void or unenforceable, then that term
or condition will be inoperative and void, but the remaining rights and
obligations of the parties will be construed and enforced as if this Agreement
did not contain the particular term or condition held to be invalid, void or
unenforceable. This Agreement will accrue to the benefit of and be binding upon
the parties hereto and any successor entity into which either party will have
been merged or consolidated or to which either party will have sold or
transferred all or substantially all its assets, but it will not be otherwise
assigned by either party without the prior written consent of the other party.
The parties agree that any consent to a requested assignment will not be
unreasonably withheld or delayed. This Agreement will be governed by the laws of
the State of New York, without regard to conflict of law rules of New York.
Please confirm that the above correctly reflects our understanding and
agreement with respect to the foregoing matters by signing the enclosed copy of
this letter and returning such copy to the Company.
Very truly yours,
CLEARWIRE CORPORATION Address: 5808 Lake Washington Blvd. NE
Suite 300
Kirkland, WA 98033
By: /s/ Benjamin G. Wolff Fax No.: (425) 216-7776
---------------------------------
Name: Benjamin G. Wolff
Title: Co-Chief Executive Officer
Agreed and Accepted:
MOTOROLA, INC. Address: 1501 W. Shure Drive
Arlington Heights, IL 60004
Fax No.: (847) 632-2683
By: /s/ Donald F. Mcclellan
---------------------------------
Name: Donald F. Mcclellan
Title: Corporate Vice President
3
EXHIBIT 10.48
================================================================================
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
of
CLEARWIRE HAWAII PARTNERS LLC
by and between
CLEARWIRE US LLC
and
SHICHININ, LLC
Dated as of July 12, 2006
================================================================================
This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT, dated as of
July 12, 2006, by and between Clearwire US LLC, a Nevada limited liability
company ("Clearwire") and Shichinin, LLC, a Delaware limited liability company
("Hawaiian Member"), and supersedes in its entirety the limited liability
company agreement of Clearwire Hawaii Partners LLC dated July 11, 2006.
WHEREAS, Hawaiian Member formed Clearwire Hawaii Partners LLC (the
"Company") on July 7, 2006 and executed a subscription agreement, dated July 11,
2006 (the "Subscription Agreement") whereby Hawaiian Member has committed to
contribute Fifteen Million Dollars ($15,000,000.00) within 60 days after the
date of formation of the Company;
WHEREAS, in order to take advantage of their combined resources and
experience with respect to the ownership and operation of wireless
communications systems, Clearwire wishes to purchase a membership interest in
the Company and to enter into an Amended and Restated Limited Liability Company
Agreement which sets forth their mutual understandings and agreements with
respect to the Company and their interests therein;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, it is hereby agreed as follows:
ARTICLE 1
GENERAL
Section 1.1. Name
The name of the Company is CLEARWIRE HAWAII PARTNERS LLC.
Section 1.2. Principal Place of Business; Registered Office and Agent.
(a) The Company's principal office and place of business is located at
5808 Lake Washington Blvd. N.E., Suite 300, Kirkland, WA 98033. The
principal office and place of business may be changed from time to time,
and other offices and places of business may be established from time to
time, by the Manager with notice to the Members.
(b) The address of the registered office of the Company in the State
of Delaware shall be 2711 Centerville Road, Suite, 400, Wilmington,
Delaware or such other address as the Manager may determine from time to
time. The registered agent for service of process on the Company shall be
Corporation Services Company or such other agent as the Manager may
determine from time to time.
Section 1.3. Term.
The term of the Company shall commence on July 12, 2006 and, unless sooner
terminated in accordance with the terms hereof, shall be perpetual.
Section 1.4. Purpose and Powers.
(a) The purposes of the Company shall be to acquire, develop, own and
operate certain assets for the provision of wireless broadband services
within the State of Hawaii (the "Business") and includes any reasonable
extensions or modifications thereof.
(b) The foregoing provisions of this Section 1.4 may be modified by
the affirmative vote or consent of the holders of a Majority in Interest of
the Members. The foregoing provisions of this Section 1.4 shall not be
construed to authorize the Company to, and the Company shall not, and the
Members agree that the Company shall not, engage in any activities other
than the foregoing (and in particular any activities expanding or changing
the scope of the Business beyond that contemplated by the definition
thereof) without the consent of the holders of a Majority in Interest,
which they may withhold in their sole discretion.
Section 1.5. Filings.
The Manager shall cause to be executed, filed and published all such
certificates, notices, statements or other instruments, and amendments thereto,
under the laws of the State of Washington, Delaware, and Hawaii and other
applicable jurisdictions as the Manager may deem necessary or advisable for the
operation of the Company.
Section 1.6. Sole Agreement.
The parties intend that their obligations to each other and the scope of
their joint enterprise be as set forth in this Agreement, and that no further
authority to bind the other or the Company or any liabilities to each other or
any third party be inferred from the relationships described in such agreements.
Section 1.7. Definitions.
Capitalized terms used in this Agreement without other definition shall,
unless expressly stated otherwise, have the respective meanings specified in
this Section 1.7.
"Act" means the Delaware Limited Liability Company Act, 6 Del. C. Section
18.101 et seq., as the same may be amended or replaced from time to time.
"Adjustment Date" means the closing date of a sale of a majority of the
stock or all or substantially all of the assets in (i) Clearwire Corporation or
(ii) a Clearwire Affiliate.
"Affiliate" means, when used with reference to a specified Person, (i) any
Person that directly or indirectly controls or is controlled by or is under
common control with the specified Person, and (ii) any Person that is an officer
or director of, a manager of, a general partner in or a trustee of, or serves in
a similar capacity with respect to, the specified Person or any Person described
in clause (i) or of which the specified Person or any Person described in clause
(i) is a director, officer, general partner, manager or
2
trustee, or with respect to which the specified Person or any Person described
in clause (i) serves in a similar capacity; provided, that the Company shall be
deemed not to be an Affiliate of any of the Members or any of their respective
Affiliates. For purposes of this Section 1.7., the term "control" (including the
terms "controlling," "controlled by" and "under common control with") of a
Person means the possession, direct or indirect, of the power to (i) vote 50% or
more of the Units of such Person or (ii) direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
"Agents" is defined in Section 6.5(a).
"Agreement" means this Limited Liability Company Agreement, as amended,
modified, supplemented or restated from time to time.
"Alternative Rights Notice" is defined in Section 7.6(a).
"Alternative Transaction" is defined in Section 7.6(a).
"Alternative Transaction Purchase Price" is defined in Section 7.6(a).
"Assignment and Assumption Agreement" is defined in Section 2.2(a).
"Bankruptcy" means with respect to any Member:
(i) the filing by such Member of a voluntary petition seeking
liquidation, dissolution, reorganization, rearrangement, readjustment
or similar relief, in any form, of its debts under the Federal
Bankruptcy Code (or corresponding provisions of future laws) or any
other bankruptcy or insolvency law, or such Member's filing an answer
consenting to, or acquiescing in any such petition, or the
adjudication of such Member as a bankrupt or insolvent;
(ii) the making by such Member of an assignment for the benefit
of its creditors or any similar action for the benefit of creditors,
or the admission by such Member in writing of its inability to pay its
debts as they mature;
(iii) the expiration of sixty (60) days after the filing of an
involuntary petition under the Federal Bankruptcy Code (or
corresponding provisions of future laws) or any other bankruptcy or
insolvency law, an application for the appointment of a receiver for
the assets of such Member, or an involuntary petition seeking
liquidation, dissolution, reorganization, rearrangement or
readjustment of its debts or similar relief under any bankruptcy or
insolvency law, provided that the same shall not have been vacated,
set aside or stayed within such sixty (60)-day period;
(iv) the giving of notice by such Member to any Governmental
Authority of insolvency or pending insolvency or suspension or pending
3
suspension of operations;
(v) the appointment (or such Member's seeking or acquiescing in
such appointment) of any trustee, receiver, conservator or liquidator
of such Member of all or any substantial part of its properties or its
interest in the Company; or
(vi) the entry of an order for relief against such Member under
the Federal Bankruptcy Code (or corresponding provisions of future
laws) or any other bankruptcy or insolvency law.
The foregoing is intended to supersede and replace the events listed in Section
25.15.130 (1) (d) and (e) of the Act.
"Bill of Title Transfer" is defined in Section 2.2(a).
"Book Value" means (a) with respect to any property contributed to the
Company by a Member, the fair market value of such property reduced (but not
below zero) by all Depreciation with respect to such property charged to the
Members' Capital Accounts and (b) with respect to any other asset of the
Company, the adjusted basis of such property for federal income tax purposes,
all as of the time of determination, and subject to adjustment pursuant to
Section 2.1(b).
"Business" is defined in Section 1.4(a).
"Capital Account" is defined in Section 2.1(a).
"Change of Control" is defined in Section 7.9.
"Claim" is defined in Section 10.3(a).
"Clearwire Assets" is defined in Section 2.2(b).
"Clearwire Seller" is defined in Section 7.6(a).
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Company" is defined in the second paragraph of this Agreement.
"Confidential Information" means all documents and information concerning
the Company and/or its Subsidiaries, the Members or their Affiliates, furnished
to a Member or its Affiliate in connection with the transactions leading up to
and contemplated by this Agreement and the operation of the Company and/or its
Subsidiaries.
"Consent" means any consents and approvals of Governmental Authorities or
other third parties necessary to authorize, approve or permit the parties hereto
to consummate the Transactions and for the Company to operate its business.
"Contribution Option" is defined in Section 2.3(a).
4
"Deficit Capital Account" means, with respect to any Member, the deficit
balance, if any, in such Member's Capital Account as of the end of the taxable
year, after giving effect to the following adjustments:
(i) credit to such Capital Account any amount that such Member is
obligated to restore to the Company under Regulation Section
1.704-1(b)(2)(ii)(c), as well as any addition thereto pursuant to the
next to last sentences of Regulation Sections 1.704-2(g)(1) and
(i)(5); and
(ii) debit to such Capital Account the items described in
Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
This definition is intended to comply with the provisions of Regulation
Sections 1.704-1(b)(2)(ii)(d) and 1.704-2, and shall be interpreted consistently
with those provisions.
"Depreciation" means, for each fiscal year or other period, an amount equal
to the depreciation, amortization or other cost recovery deduction allowable
with respect to an asset for such year or other period for federal income tax
purposes; provided, that if the Book Value of an asset differs from its adjusted
basis for federal income tax purposes at the beginning of any such year or other
period, Depreciation shall be an amount that bears the same relationship to the
Book Value of such asset as the depreciation, amortization, or other cost
recovery deduction computed for federal income tax purposes with respect to such
asset for the applicable period bears to the adjusted tax basis of such asset at
the beginning of such period, or, if such asset has a zero adjusted tax basis,
Depreciation shall be an amount determined under any reasonable method selected
by the Manager.
"Distributable Cash" means, as of the end of any fiscal period, the excess
of the cash and cash equivalents held by the Company and its Subsidiaries over
the aggregate amount of any reserves established by the Manager (in accordance
with sound business practice) to fund the Company's reasonably anticipated cash
requirements.
"Drag Notice" is defined in Section 7.2.
"Drag Rights" is defined in Section 7.2.
"Equity Interests" means capital stock, partnership interests, limited
liability company interests or other ownership or beneficial interests of any
Person.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, with respect to any asset, as of the date of
determination, the cash price at which a willing seller would sell and a willing
buyer would buy, each being apprised of all relevant facts and neither acting
under compulsion, such asset in an arm's-length negotiated transaction with an
unaffiliated third party without time constraints. Without limiting the
foregoing the Fair Market Value of any Unit shall be the Fair Market Value of
the Company, taken as a whole, divided by the
5
total outstanding Units of the Company, as of the date of the determination.
Except as otherwise provided in Section 7.6, Fair Market Value shall be
determined in accordance with Section 7.9.
"FCC" means the Federal Communications Commission or any successor agency
or entity performing substantially the same functions.
"FCC Law" means the Communications Act of 1934, as amended (including as
amended by the Telecommunications Act of 1996), and the rules, regulations and
policies promulgated thereunder.
"GAAP" means generally accepted accounting principles as used by the
Financial Accounting Standards Board and/or the American Institute of Certified
Public Accountants.
"Governmental Authority" means a national, state, provincial, county, city,
local or other governmental or regulatory body or authority, whether domestic or
foreign.
"Immediate Family" means, with respect to any Person, such Person's spouse,
parents, siblings and children, and such Person's spouse's parents, siblings and
children.
"Indemnified Party" is defined in Section 10.1(b).
"Indemnifying Party" is defined in Section 10.3(a).
"Indenture" means that certain Indenture dated as of August 5, 2005, as
subsequently amended, among Clearwire, Clearwire LLC, Fixed Wireless Holdings,
LLC, NextNet Wireless, Inc., and The Bank of New York, as Trustee.
"Initiating Members" is defined in Section 6.8(e).
"Information Rights Member" means a Member holding at least 5% of the
outstanding Units in the Company.
"Interest" means the Membership Interest of a Member, and includes the
entire legal and equitable ownership interest of a Member in the Company.
"Law" means applicable common law and any statute, ordinance, code or other
law, rule, permit, permit condition, regulation, order, decree, technical or
other standard, policy, opinion, requirement or procedure enacted, adopted,
promulgated, applied or followed by any Governmental Authority.
"License" means a license, permit, certificate of authority, waiver,
approval, certificate of public convenience and necessity, registration or other
authorization, consent or clearance to construct or operate a facility
(including any emissions, discharges or releases therefrom), to transact an
activity or business, to construct a tower or to use an asset or process, in
each case issued or granted by a Governmental Authority.
6
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest, right of first refusal or other right of others
therein, or encumbrance of any nature whatsoever in respect of such asset.
"Liquidator" is defined in Section 9.3(b).
"Majority in Interest" means, with respect to any matter, any combination
of Members who, in the aggregate, own greater than 50% of the outstanding Units
of the Company.
"Manager" is defined in Section 6.1.
"Material Adverse Effect" means a material adverse effect on the business,
financial condition, assets, liabilities or results of operations or prospects
of the Person specified.
"Member" means Clearwire, Hawaiian Member and/or any Person who, at the
time of the reference thereto, has been admitted to the Company as a Member in
accordance with the terms of this Agreement and has not ceased to be a Member
hereunder, in such Person's capacity as a member (within the meaning of the Act)
of the Company.
"Membership Interest" means all of a Member's share in the net profits, net
losses, and other items of income or loss of the Company and distributions of
the Company's assets pursuant to this Agreement, based on the percentage of
outstanding Units owned by that Member, and all of a Member's rights to
participate in the management or affairs of the Company, including the right to
vote on, consent to or otherwise participate in any decision of the Members.
"Neutral Bank" means the internationally recognized investment banking firm
selected as follows: (a) Clearwire shall initially propose a slate of three
firms; and (b) from such slate Hawaiian Member shall select the firm.
"Non-Tax Distributions" means all distributions to a Member other than
distributions intended (as determined in good faith by the Manager) to provide
cash for the payment of such Member's federal income taxes based solely on such
Member's distributive share of the Company's income.
"Offer" is defined in Section 7.4.
"Option Amount" is defined in Section 2.3(a).
"Percentage Interest" means, with respect to a Unit Holder on a particular
date, a fraction, expressed as a percentage, the numerator of which is the
number of Units held by such Unit Holder on such date and the denominator of
which is the total number of Units then outstanding.
"Person" means any individual, corporation, partnership, firm, joint
venture,
7
limited liability company, limited liability partnership, association, joint
stock company, trust, estate, incorporated or unincorporated organization,
Governmental Authority, or other entity.
"Presenting Member" is defined in Section 6.6(b).
"Remaining Members" is defined in Section 6.8(e).
"Reporting Entities" is defined in Section 5.7.
"SEC" means the Securities and Exchange Commission.
"Sarbanes-Oxley Act" is defined in Section 5.7.
"Selling Member" is defined in Section 7.6(a).
"Significant Event" is defined in Section 6.3(a).
"Significant Matter" is defined in Section 6.3(a).
"Subscription Agreement" is defined in the Preamble.
"Subsidiary" means, when used with respect to a specified Person, any other
Person of which at least 50% of the Equity Interests are owned, directly or
indirectly, through one or more intermediaries by the specified Person.
"Tag Notice" is defined in Section 7.3.
"Tax Matters Partner" is defined in Section 5.6(d).
"Transactions" means the transactions contemplated by this Agreement.
"Treasury Regulations" means temporary and final regulations issued by the
United States Department of the Treasury pursuant to the Code.
"Unit Holder" means a Person who is the owner of Unit(s) in the Company.
"Units" means each of the 10,000,000 units in the Company issued pursuant
to Section 2.2 for the initial capital contributions by the Members, each of
which initially represents a 0.001% Membership Interest under this Agreement and
any Units subsequently issued pursuant to Section 2.3 or 2.4, or otherwise. The
Membership Interest represented by a Unit shall be proportionately adjusted for
any issuance of additional Units pursuant to Section 2.3 or 2.4 of this
Agreement or otherwise.
"Wireless Communications System" means the equipment and other assets
required for the provision of wireless communications services.
"Wireless Opportunity" is defined in Section 6.6(b).
8
ARTICLE 2
CAPITALIZATION
Section 2.1. Capital Accounts.
(a) A capital account ("Capital Account") shall be determined and
maintained for each Member in accordance with the principles of Regulation
Section 1.704-1(b) at all times throughout the full term of the Company. In
the event of a permitted sale or assignment of all or any part of a
Member's Units or Membership Interest, the Capital Account of the
transferor shall become the Capital Account of the transferee to the extent
it relates to the transferred Unit(s) or Membership Interest.
(b) The Book Value of all Company properties shall, unless otherwise
determined by the Manager, be adjusted to equal their respective gross fair
market values, as determined by the Manager, as of the following times: (1)
in connection with the acquisition of a Unit or Membership Interest by a
new or existing Member for more than a de minimis capital contribution; (2)
in connection with the grant of Units or other Membership Interest (other
than a de minimis interest) as consideration for the provision of services
to or for the benefit of the Company by an existing Member acting in a
member capacity, or by a new Member acting in a member capacity or in
anticipation of being a member; (3) in connection with the liquidation of
the Company as defined in Regulation Section 1.704-(1)(b)(2)(ii)(g); or (4)
in connection with a more than de minimis distribution to a retiring or a
continuing Member as consideration for all or a portion of his or its
Unit(s) or Membership Interest. In the event of a revaluation of any
Company assets hereunder, the Capital Accounts of the Members shall be
adjusted, including continuing adjustments for Depreciation, to the extent
provided in Regulation Section 1.704-(1)(b)(2)(iv)(f).
Section 2.2. Initial Capital Contributions.
(a) Effective July 11, 2006, pursuant to the Subscription Agreement,
Hawaiian Member made a commitment to contribute to the Company the amount
of Fifteen Million Dollars ($15,000,000) within sixty (60) days from the
date of the Company's formation. In connection with this commitment, the
Company issued to Hawaiian Member two million one hundred forty thousand
(2,140,000) Units to reflect its ownership interest in the Company.
(b) Within sixty (60) days from the date of the Company formation,
subject to the satisfaction of the applicable conditions set forth in
Section 2.2(d) below, Clearwire shall contribute those assets listed on
Schedule 2.2 (the "Clearwire Assets") pursuant to an Assignment and
Assumption Agreement in the form attached as Exhibit A (the "Assignment and
Assumption Agreement") and a Bill of Title Transfer in the form attached as
Exhibit B (the "Bill of Title Transfer") in exchange for 7,860,000 Units.
The Clearwire Assets are being transferred subject to a continuing lien on
these assets pursuant to the Indenture. Clearwire and Hawaiian
9
Member hereby agree that the initial Capital Account balance of Clearwire
is Fifty Five Million Dollars ($55,000,000).
(c) Immediately after giving effect to the contribution to the equity
of the Company by Clearwire set forth above in Section 2.2(b), Clearwire
shall own 78.6% of the outstanding Units in the Company and Hawaiian Member
shall own 21.4% of the outstanding Units in the Company.
(d) The obligations of Clearwire to consummate the contributions set
forth in this Section 2.2 shall be subject to the following:
(i) With respect to both Clearwire and Hawaiian Member, no
governmental entity of competent jurisdiction shall have enacted,
issued, promulgated, enforced, or entered into any statute, rule,
regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) that has the effect of
making the transactions contemplated by this Agreement illegal or
impractical.
(ii) The representation and warranties of Hawaiian Member set
forth in Section 8.3 hereof shall be true and correct in all material
respects on the date hereof and on the date of consummation of the
transaction contemplated by this Section 2.2, and (y) Hawaiian Member
shall have satisfied its obligations under the Subscription Agreement.
(iii) Hawaiian Member's contribution of Fifteen Million Dollars
($15,000,000) pursuant to Section 2.2(a).
(e) The obligation of Hawaiian Member to contribute Fifteen Million
Dollars ($15,000,000) pursuant to Section 2.2(a) shall be subject to the
following:
(i) The representation and warranties of Clearwire set forth in
Section 8.3 hereof shall be true and correct in all material respects
on the date hereof and on the date of consummation of the transaction
contemplated by this Section 2.2
(ii) Clearwire's contribution of the Clearwire Assets pursuant to
Section 2.2(b).
Section 2.3. Hawaiian Member Contribution Option.
(a) Contribution Option. For three (3) years from the date of this
Agreement, Hawaiian Member shall have the option to contribute an
additional Fifty Million Dollars ($50,000,000) ("Option Amount") in
immediately available funds in exchange for 5,680,000 additional Units in
the Company (the "Contribution Option"), subject to adjustment for
additional capital calls, non-prorata distributions, and reorganization
events.
(b) Notice and Payment. Hawaiian Member shall give written notice of
10
its intent to exercise the Contribution Option and shall, within ten (10)
days of such notice wire the Option Amount to the Company in exchange for
the additional ownership interest stated in Section 2.3(a) above.
(c) Amendment. Each of the Members agree that this Section 2.3 shall
not be modified or amended without the written consent of the Hawaiian
Member.
Section 2.4. Additional Contributions.
(a) Additional Contributions. The Manager shall determine whether it
is in the Company's interest to borrow amounts necessary to satisfy the
Company's additional capital needs or whether a capital call of the Members
should be made. In the event that the Manager determines that a capital
call is in the Company's best interests, or in the event that a Majority in
Interest decides to expand the scope of the Company's operations, whether
by adding additional services or increasing the market scope of the
Company, then the Manager shall provide written notice to each Member with
respect to the amount of required additional capital, the number of Units
to be sold and the price per Unit and requesting each Member to provide its
proportionate share of such additional capital. Within five (5) days of the
delivery of such notice, each Member will provide the Manager with written
notice as to whether it will contribute its proportionate share of the
additional capital.
(b) Disproportionate Contributions. If any Member chooses not to so
contribute, then the contributing Members shall have the option to purchase
the non-participating Member's share of the Units being sold in addition to
their own share of the Units.
(c) Insufficient Additional Contributions. If additional capital is
needed to expand the operations of the Company into new markets (including
markets in the islands of Hawaii) and the Company does not receive the full
amount of additional contributions requested pursuant to Section 2.4(a)
above, then the contributing Members may form a new entity with respect to
such expanded areas, and the non-contributing Member shall not have any
ownership interest in such new entity.
Section 2.5. No Withdrawals
Except as expressly set forth herein, no Member shall be entitled to
withdraw any portion of its capital contribution or Capital Account balance.
Section 2.6. No Interest on Capital Contribution.
Except as expressly set forth herein, no Member shall be entitled to
receive any interest on its capital contribution or Capital Account balance.
Section 2.7. No Third Party Beneficiaries
The provisions of this Article 2 are intended solely to benefit the Members
and, to the fullest extent permitted by applicable law, shall not be construed
as conferring any
11
benefit upon any creditor of the Company (and no such creditor shall be a third
party beneficiary of this Agreement), and no Member shall have any duty or
obligation to any creditor of the Company to make up any capital contributions
to the Company and no Member or Manager shall have any duty or obligation to any
creditor of the Company to issue any call for capital pursuant to this Article 2
or otherwise.
Section 2.8. Preemptive Right
(a) Grant of Preemptive Rights. The Company hereby grants to each
Eligible Member the preemptive rights set forth in this Section 2.8 with
respect to each issuance of Units, or securities or instruments convertible
into or exchangeable or exercisable for any Units, of any class of security
of the Company, other than the Units that are issued and outstanding as of
the date of this Agreement and other than Units issued or issuable in the
following circumstances (collectively, subject to the following exceptions,
"New Units"):
(i) Units (and/or options, warrants or other Unit purchase
rights, and the Units issued pursuant to such options, warrants or
other rights) issuable or issued to employees, consultants, directors,
vendors, lessors or others with whom the Company conducts business,
provided that such shares, options, warrants or other rights are
issued directly in a transaction approved by the Manager or pursuant
to a stock option plan or restricted stock plan approved by the
Majority in Interest;
(ii) Units (and/or options, warrants or other Unit purchase
rights, and the Units issued pursuant to such options, warrants or
other rights) issued to financial institutions or lessors in
connection with commercial credit arrangements, equipment financing or
similar transactions;
(iii) Units (and/or options, warrants or other Unit purchase
rights, and the Units issued pursuant to such options, warrants or
other rights) issued pursuant to transactions involving technology
licensing, research or development activities, the use or acquisition
of strategic assets, properties or rights, or the distribution,
manufacture or marketing of the Company's products, provided that each
of the foregoing transactions is primarily for non-financing purposes;
(iv) Units issuable or issued in connection with bona fide
acquisitions of or by the Company whether by merger, consolidation,
sale of assets, sale or exchange of equity or otherwise, the terms of
which are approved by the Manager and the Majority in Interest;
(v) Units (and/or options, warrants or other Unit purchase
rights, and the Units issued pursuant to such options, warrants or
other rights) issued or issuable (i) to the public pursuant to the IPO
or (ii) upon exercise of warrants or rights granted to underwriters in
connection with
12
such IPO;
(vi) Units (and/or options, warrants or other Unit purchase
rights, and the Units issued pursuant to such options, warrants or
other rights) issuable or issued pursuant to agreements and warrants
existing on the date hereof, including without limitation, the rights
of the Hawaiian Member to purchase Units pursuant to Section 2.3
hereof;
(vii) Units issued in connection with any equity split, equity
dividend, reserve equity split or other distribution of Units that
does not affect the economic interests or rights of holders of Units.
(b) Exercise of Preemptive Rights. Each time after the date of this
Agreement and prior to the time that the Company proposes to offer any New
Units, the Company shall first make an offering of such New Units to the
Eligible Member in accordance with this Section 2.8.
(i) The Company shall deliver a notice (the "Issue Notice") to
the Eligible Member stating (x) the bona fide intention of the Company
to offer such New Units, (y) the number of such New Units to be
offered, and (z) the price and terms upon which the Company proposes
to offer such New Units.
(ii) By written notification received by the Company, within 10
business days after receipt of the Issue Notice, each Eligible Member
may elect to purchase, at the price and on the terms specified in the
Issue Notice, a portion of such New Units that equals the proportion
that the number of Units including any options, warrants or other
share purchase rights held by such Member bears to the total number of
shares of Units of the Company then outstanding, on a fully diluted
basis, but excluding (x) any options, warrants or other rights to
acquire Units where the fair market value of the Units issuable on the
exercise of such options, warrants or other rights, as determined in
good faith by the Manager, is less that the exercise price of such
options, warrants or other rights and (y) any Units and options,
warrants or other rights to acquire Units that are reserved but
unallocated pursuant to any stock plan. Such written notification
shall be a binding, irrevocable commitment to purchase such New Units.
(iii) If Eligible Members do not elect to purchase all of the New
Units that Eligible Members are entitled to purchase under subsection
(ii), the Company may offer the unsubscribed portion of such New Units
to any Persons at a price not less than, and upon terms no more
favorable to the offeree, than those specified in the Issue Notice,
provided that the Company completes the offer and sale of such
unsubscribed portion within 120 business days after the date the
applicable Issue Notice is first delivered to stockholders of the
Company.
13
(iv) No Member may assign its rights under this Section 2.8
without the consent of the Manager, which may be withheld at its sole
discretion.
(c) Eligible Member. For the purposes of this Section 2.8, an
"Eligible Member" shall mean each Member holding at least 1% of the
outstanding capital equity of the Company, on a fully diluted basis on the
day immediately prior to the issuance of the Issue Notice.
ARTICLE 3
PROFITS AND LOSSES
Section 3.1. Allocation of Net Profit and Loss - In General.
(a) Allocation of Net Profit. After giving effect to the special
allocations set forth in Sections 3.2 and 3.3, the net profit for any
fiscal year of the Company shall be allocated among the Members in the
following order of priority:
(i) first, to the Members in the reverse chronological order in
which net losses were allocated to the Members pursuant to Sections
3.1(b)(iv), 3.1(b)(iii), and 3.1(b)(ii), respectively, until each
Member has received aggregate allocations of net profit under this
Section 3.1(a)(i) in an amount equal to, but not in excess of, the
aggregate allocations of net loss to such Member pursuant to Sections
3.1(b)(ii) through 3.1(b)(iv)) for all prior fiscal years; and
(ii) thereafter, to the Members in proportion to their respective
Percentage Interests.
(b) Allocation of Net Loss. After giving effect to the special
allocations set forth in Sections 3.2 and 3.3, the net loss for any fiscal
year of the Company shall be allocated among the Members in the following
order of priority:
(i) first, in proportion to the amounts allocated to the Members
pursuant to Section 3.1(a)(ii) in an amount equal to the excess, if
any, of (i) the cumulative net profits allocated to the Members
pursuant to Section 3.1(a)(ii) for all prior fiscal years, over (ii)
the cumulative net losses allocated to the Members pursuant to this
Section 3.1(b)(i) for all prior fiscal years;
(ii) second, to the Members in proportion to their respective
Percentage Interests; provided, however, that net losses shall not be
allocated to any Member pursuant to this Section 3.1(b)(ii) to the
extent such allocation would cause such Member to have a Deficit
Capital Account at the end of any fiscal year. Such excess net loss
shall, instead, be allocated in accordance with Section 3.1(b)(iii);
(iii) third, the remaining net loss, if any, shall be allocated
14
among those Members who do not have Deficit Capital Accounts in
proportion to their respective Percentage Interests; provided,
however, that no allocation under this Section 3.1(b)(iii) shall cause
any Member to have a Deficit Capital Account; and
(iv) thereafter, any remaining net loss shall be allocated among
the Members in proportion to their respective Percentage Interests.
Section 3.2. Special Allocations
The following special allocations shall be made for any fiscal year of the
Company in the following order:
(a) Minimum Gain Chargeback. If there is a decrease in the Company's
"partnership minimum gain," as defined in and determined under Regulation
Sections 1.704-2(b)(2) and 1.704-2(d), the minimum gain chargeback
provisions of Regulation Section 1.704-2(f), which are hereby incorporated
into this Agreement by this reference, shall be applied.
(b) Member Minimum Gain Chargeback. If there is a decrease in any
Member's share of "partner nonrecourse debt minimum gain," as defined in
and determined under Regulation Section 1.704-2(i), the partner nonrecourse
debt minimum gain chargeback provisions of Regulation Section
1.704-2(i)(4), which are hereby incorporated into this Agreement by this
reference, shall be applied.
(c) Qualified Income Offset. In the event that any Member unexpectedly
receives any adjustments, allocations, or distributions described in
Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Company
income and gain shall be specially allocated to such Member in accordance
with Regulation Section 1.704-(1)(b)(2)(ii)(d).
(d) Nonrecourse Deductions. "Nonrecourse deductions," as defined in
and determined under Regulation Sections 1.704-2(b)(1) and (c), shall be
allocated among the Members in accordance with the allocation pursuant to
Section 3.1(a)(ii).
(e) Member Nonrecourse Deductions. "Partner nonrecourse deductions,"
as defined in and determined under Regulation Sections 1.704-2(i)(1) and
(2), shall be specially allocated among the Members in accordance with
Regulation Section 1.704-2(i).Curative Allocations
Section 3.3. Corrective Allocations. The allocations set forth in Section
3.2 are intended to comply with certain regulatory requirements under Code
Section 704(b). The Members intend that, to the extent possible, all allocations
made pursuant to such Sections will, over the term of the Company, be offset
either with other allocations pursuant to Section 3.2 or with special
allocations of other items of Company income, gain, loss, or deduction pursuant
to this Section 3.3. Accordingly, the Manager is hereby authorized and directed
to make offsetting allocations of Company income, gain, loss or deduction under
this Section 3.3 in whatever manner the Manager determines is
15
appropriate so that, after such offsetting special allocations are made (and
taking into account the reasonably anticipated future allocations of income and
gain pursuant to Sections 3.2(a) and 3.2(b), the Capital Accounts of the Members
are, to the extent possible, equal to the Capital Accounts each would have if
the provisions of Section 3.2 were not contained in this Agreement and all
income, gain, loss and deduction of the Company were instead allocated pursuant
to Section 3.1.
Section 3.4. Other Allocation Rules.
(a) General. Except as otherwise provided in this Agreement, all items
of Company income, gain, loss, deduction, credit, and any other allocations
not otherwise provided for shall be divided among the Members in accordance
with their Percentage Interests, or as otherwise may be required under the
Code and the Regulations thereunder.
Section 3.5. Allocation of Excess Nonrecourse Liabilities. Solely for
purposes of determining a Member's proportionate share of the "excess
nonrecourse liabilities" of the Company within the meaning of Regulation Section
1.752-3(a)(3), the Members' interests in the Company's profits shall be their
respective Percentage Interests.
Section 3.6. Allocations in Connection with Varying Interests. If, during a
Company fiscal year, there is (i) a permitted transfer of all or a part of a
Member's interest in the Company, or (ii) the admission or withdrawal of a
Member, net profit, net loss, each item thereof, and all other tax items of the
Company for such fiscal year shall be divided and allocated among the Members by
taking into account their varying interests during such fiscal year in
accordance with Code Section 706(d) and using any conventions permitted by law
and selected by the Manager.
Section 3.7. Determination of Net Profit or Loss. The net profit or net
loss of the Company, for each fiscal year or other period, shall be an amount
equal to the Company's taxable income or loss for such period, determined in
accordance with Code Section 703(a) (and, for this purpose, all items of income,
gain, loss or deduction required to be stated separately pursuant to Code
Section 703(a)(1) shall be included in taxable income or loss), subject to the
following adjustments:
(a) Any income of the Company that is exempt from federal income tax
shall be added to such taxable income or loss;
(b) Any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as such pursuant to Regulation Section
1.704-1(b)(2)(iv)(i) shall be subtracted from such taxable income or loss;
(c) In lieu of the depreciation, amortization and other cost recovery
deductions taken into account in computing such taxable income or loss,
Depreciation for such fiscal year shall be taken into account;
(d) If the Book Value of any Company asset is adjusted pursuant to
Section 2.1(b), the amount of such adjustment shall be taken into account
as gain or
16
loss from the disposition of such asset for purposes of computing net
profit or loss;
(e) Gain or loss resulting from the disposition of any Company asset
with respect to which gain or loss is recognized for federal income tax
purposes shall be computed with reference to the Book Value of the asset
disposed of, notwithstanding that the adjusted tax basis of such asset
differs from the Book Value of such asset; and
(f) any items that are specially allocated pursuant to Section 3.2 or
Section 3.3 shall not be taken into account in computing the Company's net
profit or net loss.
Section 3.8. Mandatory Tax Allocations Under Code Section 704(c).
(a) In accordance with Code Section 704(c) and Regulation Section
1.704-3, income, gain, loss and deduction with respect to any property
contributed to the capital of the Company shall, solely for tax purposes,
be allocated among the Members so as to take account of any variation
between the adjusted basis of such property to the Company for federal
income tax purposes and its Book Value. Prior to the contribution of any
property to the Company that has a fair market value that differs from its
adjusted tax basis in the hands of the contributing Member on the date of
contribution, the contributing Member and the Manager shall agree upon the
allocation method to be applied with respect to that property under
Regulation Section 1.704-3, which allocation method shall be set forth on
attached Schedule 2, as amended from time to time. The same procedure shall
apply to any revaluation of Company property as permitted under Regulation
Section 1.704-1(b)(2)(iv)(f).
(b) Allocations pursuant to this Section 3.8 are solely for purposes
of federal, state, and local income and franchise taxes and shall not
affect, or in any way be taken into account in computing, any Member's
Capital Account or share of net profit, net loss, or other items as
computed for book purposes, or distributions pursuant to any provision of
this Agreement.
ARTICLE 4
DISTRIBUTIONS
Section 4.1. Distributable Cash
(a) Mandatory Distributions. Subject to Clearwire's satisfaction of
its debt obligations arising under the Indenture, to the extent
Distributable Cash is available therefor, the Company shall make a
distribution to the Members, on or before April 1st of each year pro-rata
in accordance with their Percentage Interests, if any, shall be distributed
to the Members in an amount equal to the product of (i) the maximum
combined federal and state income tax rate applicable to any Member in
effect for such year and (ii) the taxable income of the Company in the
immediately preceding year.
(b) Optional Distributions. Subject to Sections 4.2 and 6.3,
Distributable
17
Cash shall be distributed to the Members in proportion to their respective
Percentage Interests quarterly in arrears, provided that the Company shall
not be required to make any distribution to any Member if such distribution
would violate the Act or other applicable law.
Section 4.2. Liquidating Distributions.
Notwithstanding Section 4.1, distributions to the Members of cash or
property in connection with a dissolution of the Company shall be made, as
provided in Section 9.3(d)(ii).
Section 4.3. Other Distributions.
No Member shall be entitled to receive any other distribution from the
Company without the consent of the Manager or as otherwise provided in this
Article 4 and Section 9.3(d).
ARTICLE 5
ACCOUNTING AND RECORDS
Section 5.1. Fiscal Year
The fiscal year of the Company shall be the year ending December 31.
Section 5.2. Method of Accounting
Unless otherwise provided herein, the Company books of account shall be
maintained in accordance with GAAP; provided that for purposes of making
allocations and distributions hereunder (including distributions upon
dissolution of the Company in accordance with Capital Account balances as
required by Section 9.3(d)(ii)), the relevant items shall be determined in
accordance with federal income tax accounting principles utilizing the accrual
method of accounting, with adjustments required by Treasury Regulation Section
1.704-1(b) to properly maintain Capital Accounts. Each Member acknowledges that
the Capital Account balances of the Members for the purposes described in the
preceding sentence are not computed in accordance with GAAP and accordingly that
any GAAP financial statements for the Company may not reflect their true Capital
Account balances.
Section 5.3. Books and Records; Inspection
(a) Books of Account and Records. Proper and complete records and
books of accounts of the Company business for tax and financial purposes,
including all such transactions and other matters as are usually entered
into records and books of account maintained by Persons engaged in
businesses of like character or as are required by law, shall be kept by
the Company at the Company's principal office and place of business. The
Manager may delegate to a third party or any Member the duty to maintain
and oversee the preparation and maintenance of such records and books of
account. Books and records maintained for financial purposes shall be
18
maintained in accordance with GAAP, and books and records maintained for
tax purposes shall be maintained in accordance with the Code and applicable
Treasury Regulations.
(b) Inspection. All records and documents described in Section 5.3(a)
shall be open to inspection at the Company's primary offices and copying by
any of the Members at any reasonable time during business hours. Any Member
wishing to inspect such records shall provide at least five (5) business
days advance written notice prior to inspection, and any and all copying
and expenses related to the inspection shall be borne by the inspecting
Member.
Section 5.4. Financial Statements
Within ninety (90) days after the end of each fiscal year, and forty-five
(45) days after the end of each calendar quarter, the Manager shall cause to be
furnished to each Information Rights Member financial statements with respect to
such fiscal year or quarter of the Company, consisting of (i) a balance sheet
showing the Company's financial position as of the end of such fiscal year or
quarter, (ii) supporting profit and loss statements, (iii) a statement of cash
flows for such year or quarter, and (iv) Members' Capital Accounts.
Section 5.5. Operations Reporting.
Within thirty (30) days following the end of each month, the Manager shall
cause to be furnished to each Information Rights Member the operational
information described on Schedule 5.5 with respect of the Company's operations
during the previous month.
Section 5.6. Taxation
(a) Status of the Company. The Members acknowledge that this Agreement
creates a partnership for federal income tax purposes. Furthermore, the
Members hereby agree not to elect to be excluded from the application of
Subchapter K of Chapter 1 of Subtitle A of the Code or any similar state
statute.
(b) Tax Elections and Reporting.
(i) Generally. The Company shall make the following elections and
take the following positions under United States income tax laws and
Treasury Regulations and any similar state laws and regulations: (A)
adopt the year ending December 31 as the annual accounting period
(unless otherwise required by the Code and Treasury Regulations); (B)
adopt the accrual method of accounting; (C) insofar as permissible,
report the Company's tax attributes and results using principles
consistent with those assumed in connection with entering into this
Agreement; and (D) have the Company treated as a partnership for
federal income tax purposes in a manner consistent with Treasury
Regulations Section 301.7701-1, et seq.
19
(ii) Code Section 754 Election. The Manager shall, upon the
written request of any Member, cause the Company to file an election
under Code section 754 and the Treasury Regulations thereunder to
adjust the basis of the Company's assets under Code section 734(b) or
743(b) and a corresponding election under the applicable sections of
state and local law.
(c) Company Tax Returns. The Tax Matters Partner will prepare or cause
to be prepared the domestic and foreign tax returns and information returns
for the Company at no charge to the Company, except for all reasonable
out-of-pocket expenses (including accounting fees, if any). Any Member may,
at its own expense, engage a third party to review the tax returns and
information returns prepared by the Tax Matters Partner pursuant to the
preceding sentence. Any and all other tax returns shall be prepared in a
manner directed by the Tax Matters Partner consistent with the terms of
this Agreement. Each Member shall provide such information, if any, as may
be reasonably requested by the Company for purposes of preparing such tax
and information returns including, without limitation, the adjusted tax
basis for Federal income tax purposes of the assets contributed by any
Members pursuant to Section 2.2(a). The Tax Matters Partner shall use its
best efforts to (i) cause draft copies of all tax returns to be submitted
to each Member not fewer than thirty (30) days before the filing thereof
and within one hundred twenty (120) days after the end of each tax year of
the Company, (ii) cause copies of all final tax returns to be delivered to
each Member within one hundred eighty (180) days after the end of each tax
year of the Company, and (iii) deliver to each Member within ninety (90)
days after the end of each tax year any additional information in the
possession of the Company that the Members may require for the preparation
of their own income tax returns.
(d) Tax Audits. Clearwire shall be the "tax matters partner," as that
term is defined in Code section 6231(a)(7) (the "Tax Matters Partner") with
all of the rights, duties and powers provided for in sections 6221 through
6234, inclusive, of the Code, provided that the Tax Matters Partner shall
not pay or agree to pay any audit assessment, or any amount in settlement
or compromise of any litigation, in respect of income tax liability of the
Members attributable to the Interests in the Company, in excess of $200,000
in any one instance or series of related instances, unless approved by the
Manager. The Tax Matters Partner, as an authorized representative of the
Company, shall direct the defense of any tax claims made by the Internal
Revenue Service or any other taxing jurisdiction to the extent that such
claims relate to adjustment of Company items at the Company level and, in
connection therewith, shall retain and cause the Company to pay the fees
and expenses of counsel and other advisors chosen by the Tax Matters
Partner. The Tax Matters Partner shall also be responsible for timely
filing for all elections made by the Company. The Tax Matters Partner shall
deliver to each Member and the Manager a semi-annual report on the status
of all tax audits and open tax years relating to the Company, and shall
consult with and keep all Members and the Manager advised of all
significant developments in such matters coming to the attention of the Tax
Matters Partner. All reasonable expenses of the Tax Matters
20
Partner and its Affiliates (including reasonable internal time charges and
reasonable disbursements) and other reasonable fees and expenses in
connection with such defense shall be borne by the Company. The provisions
of Section 10.1 and 10.2 shall apply to any acts or omissions of the Tax
Matters Partner (other than failure to comply with the express terms of
this Agreement) while acting in that capacity. Except as provided in
Article 10, neither the Tax Matters Partner nor the Company shall be liable
for any additional tax, interest or penalties payable by a Member or any
costs of separate counsel chosen by such Member to represent the Member
with respect to any aspect of such challenge. The Company shall indemnify
and reimburse the tax matters partner for all reasonable expenses,
including legal and accounting fees, claims, liabilities, losses and
damages, incurred in connection with any administrative or judicial
proceeding with respect to the tax liability of the Members attributable to
the Company. The payment of all such expenses shall be made before any
Distributions are made to Members (and such expenses shall be taken into
consideration for purposes of determining Distributable Cash) or any
discretionary Reserves are set aside by the Manager. Neither the tax
matters partner nor any Member shall have any obligation to provide funds
for such purpose. The provisions for exculpation and indemnification of the
various Persons set forth in Sections and shall be fully applicable to any
Member acting as tax matters partner for the Company. With respect to State
of Hawaii income taxes, the Tax Matters Partner will work with the Hawaiian
Member to establish a structure so as to ensure that the economic benefits
therefrom to such Parties are realized in a manner that is as tax- and
accounting-efficient to such Parties as possible; provided, however that
such structure does not negatively affect the federal or other states
income taxes to be paid by any Member.
Section 5.7. Internal Control Over Financial Reporting
In consideration of the financial support provided to the Company by the
Members, the Company agrees to promptly establish and thereafter maintain
policies and procedures regarding internal control over financial reporting that
will enable the Members or their Affiliates to comply with the requirements of
Section 404 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and the
rules promulgated from time to time thereunder by the SEC to the extent that
such members or Affiliates are required to consolidate the Company pursuant to
FASB Interpretation No. 46 or are otherwise obligated to evaluate and report on
the effectiveness of the Company's internal control over financial reporting.
Those Members and their Affiliates that are subject to said Section 404 are
referred to collectively as the "Reporting Entities." The Company will (i)
furnish the Reporting Entities with copies of all written policies and
procedures established and maintained by the Company pursuant to this paragraph,
(ii) provide the Reporting Entities (and their independent auditors) with access
to the Company's financial books and records, and to the Company's management
and independent auditors, to the extent necessary to enable the Reporting
Entities to evaluate the adequacy of, and to monitor the Company's compliance
with, such policies and procedures, and otherwise cooperate with them to the
extent reasonably requested, and (iii) promptly adopt any new policies and
procedures regarding internal control over financial reporting, and promptly
implement any remedial measures with respect to any such existing policies
21
and procedures, as the Reporting Entities may reasonably request to enable them
to comply with the requirements of Section 404 of the Sarbanes-Oxley Act and the
rules promulgated from time to time thereunder by the SEC and thereby to
conclude and assert that the internal control over financial reporting of the
Company is effective.
ARTICLE 6
MANAGEMENT
Section 6.1. Manager
Clearwire (in such capacity, the "Manager") shall have full power and
authority to direct and control the property, business and affairs of the
Company, except with respect to those matters specifically made subject to the
approval requirements of Sections 6.3 and 6.4, and subject to the right of the
Manager to delegate such power and authority to Persons responsible for
day-to-day operation of the Company (it being understood that authority to
undertake Significant Events or Significant Matters prior to approval as
provided in Section 6.3(b) shall not be so delegated). Subject to the foregoing,
in addition to the powers and authorities by this Agreement expressly conferred
upon it, the Manager may exercise all such powers of the Company and do all such
lawful acts and things as are not by statute or by this Agreement directed or
required to be exercised or done by the Members. Except as otherwise provided in
this Agreement, no Member shall have any right or authority to take any action
on behalf of the Company with respect to third parties or to bind the Company.
The Company shall reimburse Clearwire for its direct costs and expenses, and for
an allocable share of its indirect costs and expenses, incurred in its capacity
as Manager, including but not limited to the compensation paid to its employees
to the extent allocable to time spent by them on the business and affairs of the
Company.
Section 6.2. Meeting Requirements
(a) Regular Meetings. The Manager shall hold a meeting of the Members
at such place agreed to by a Majority in Interest on such dates and at such
times as are established by the consent of a Majority in Interest.
(b) Special Meetings. A special meeting of the Members shall be held
at the request of the Manager. The location of such meeting shall be at
such place reasonably agreed to by a Majority in Interest.
(c) Telephonic Meetings. Any meeting of the Members may be held by
conference telephone call or through similar communications equipment by
means of which all persons participating in the meeting can hear and be
heard by each other. Participation in a telephonic meeting held pursuant to
this Section 6.2(c) shall constitute presence in person at such meeting.
(d) Notices. Notices of regular meetings and special meetings may be
given by the Manager, as the case may be, and shall state the date, hour
and purpose of the meeting. All such notices shall be accompanied by an
agenda for the meetings, as well as (to the extent practicable) the texts
of all resolutions proposed to be adopted at such
22
meetings. No item may be discussed if not on the agenda unless a quorum is
present and the Members present waive notice of the additional item(s).
Notice of a regular or special meeting shall be given by facsimile,
confirmed by certified mail, return receipt requested not less than 14 days
(in the case of a regular meeting) or 72 hours (in the case of a special
meeting) before the date of the meeting to each Member at the facsimile
number and address provided by the Member to the Company from time to time.
Any Member may waive, as to such Member only, in writing, the requirements
for notice before or after a meeting or by attending such meeting and not
protesting any lack of notice. Notwithstanding any other term hereof, no
regular or special meeting may occur without notice therefor being
delivered or waived in accordance with this Section 6.2(d).
(e) Quorum. At each meeting of the Members, the presence in person or
by telephone of Members holding a Majority in Interest shall be necessary
to constitute a quorum for the transaction of business.
(f) Written Consents. Subject at all times to Section 6.3 (including
without limitation the provisions relating to Significant Matters contained
therein), any action required or permitted to be taken at a meeting of the
Members may be taken without a meeting, but upon the requisite notice as
provided in paragraph (d) above, if the requisite Members consent thereto
in writing, and if a complete and correct copy of such consent is delivered
to all the Members following the execution of any such consent.
Section 6.3. Actions Requiring Majority Approval.
(a) The following actions require approval by a Majority in Interest:
(i) any Significant Event or Significant Matter; and
(ii) any other matter that a Majority in Interest or the Manager
determines shall require majority approval.
"Significant Event" means any of the following:
(1) Any Significant Matter;
(2) The adoption or amendment of any operating or capital budget,
subsequent business plan, marketing plan, financial plan, operational
plan, technical plan, communication plan, strategic plan or any other
material plan, policy, or strategy of the Company;
(3) The hiring or firing of the manager(s) of the operations of
the Company and the setting of compensation of such Person(s);
(4) The hiring or firing of the key personnel of the Company;
(5) The approval or amendment of material contracts;
(6) The commencement or prosecution of any material claim in a
23
judicial proceeding or arbitration forum, or the settlement of any
such claim against the Company;
(7) Any transaction or series of transactions or other activities
which, if carried out, could reasonably be expected to include in the
range of possible results the financial performance of the Company
materially diverging from the then current budget or business or other
plan of the Company;
(8) Any material change in the manner in which the Business is
conducted; and
(9) Any agreement, arrangement or understanding, written or oral,
between the Company, on the one hand, and any Affiliates thereof, on
the other hand.
"Significant Matter" means any of the following:
(1) The sale, transfer, assignment, pledge or other disposition
by the Company of any FCC License or otherwise any material portion of
the assets of the Company;
(2) The merger, combination or consolidation of the Company with
or into any other entity (regardless of whether the Company is the
surviving entity in any such merger, combination or consolidation),
the acquisition of any business by the Company, the formation of any
partnership or joint venture involving the Company, or the
liquidation, dissolution or winding up of the Company;
(3) Any offering or issuance of additional Units, or any other
securities or ownership interests in, the Company, including, without
limitation, warrants, options or other rights convertible into or
exchangeable for Units, or other securities or ownership interests in,
the Company;
(4) The repurchase by the Company of any Units other than as
provided herein;
(5) The payment by the Company of any distribution, direct or
indirect, on or on account of any Units, now or hereafter outstanding,
unless such distribution is being paid as expressly provided by any
Section of this Agreement other than Section 4.2.
(6) Except as otherwise provided in Section 11.2, the
authorization or adoption of any amendment to the certificate of
formation, limited liability company agreement, or any other
constituent document of the Company;
(7) The incurrence by the Company, whether directly or
indirectly, of any indebtedness for borrowed money or capital leases
not in the ordinary course of business, other than indebtedness
existing on the date hereof;
24
(8) The making of, or commitment to make, by the Company of any
material capital expenditure not in the ordinary course of business,
except as provided in the then current budget or business or other
plan of the Company;
(10) The acceptance of additional capital contributions or
approval of calls therefor;
(11) The hiring or firing of the independent certified public
accountants (if other than one of the Big Four accounting firms) or
other tax advisor for the Company, or the making of any tax election
on behalf of the Company; and
(12) The entering into any contract, agreement or understanding
to do any of the foregoing.
(b) Approval Requirements. The Company shall provide each Member with
adequate notice (in light of the time frame in which approval is sought) of
the substance of any matter requiring majority approval in order to afford
such Members sufficient time to review such matter and the Company's
analysis thereof.
(c) Certain Rights. Notwithstanding any other provision of this
Agreement to the contrary, the Manager shall have unfettered use of all
facilities and equipment of the Company and shall: (i) control the daily
operations of the Company; (ii) determine and carry out the policy
decisions of the Company, including preparing and filing applications with
the FCC; (iii) employ, supervise, and dismiss employees of the Company; and
(iv) be responsible for overseeing the financial operations of the Company,
including payment of financing obligations of the Company arising out of
operations and receiving on behalf of the Company moneys and profits from
the operation of the Company's facilities.
Section 6.4. Actions by Members
Notwithstanding any other provision in this Agreement to the contrary, the
following actions require the prior written approval by a Majority in Interest:
(i) change in permitted activities of the Company in accordance with Section
1.4, (ii) dissolution of the Company in accordance with Section 9.2(a)(ii), and
(iii) amendment of this Agreement in accordance with Section 11.2.
Section 6.5. Confidentiality
(a) Each Member shall, and shall cause each of its Affiliates, and
each of its and their respective partners, members, managers, shareholders,
directors, officers, employees and agents (collectively, "Agents") to, keep
secret and retain in strictest confidence, and not use for any purpose
except as contemplated by this Agreement, any and all Confidential
Information relating to the Company or any Member and shall not disclose
such information, and shall cause its Agents not to disclose such
information, to anyone except (i) such Member's Affiliates or Agents who
have a need to know such information in connection with the matters
contemplated by this Agreement, and (ii) other Persons (such as lenders to
a
25
Member) who have a bona fide business reason for obtaining such information
in connection with their dealings with such Member and who agree in writing
to keep in confidence all Confidential Information in accordance with the
terms of this Section 6.5. The obligations under this Section 6.5 shall
survive the termination of this Agreement for a period of three years (or,
if earlier, as to any Person, three years following the date such Person
ceases to be a Member). The foregoing provisions of this Section 6.5 were
negotiated in good faith by the parties hereto and the parties hereto agree
that such provisions are reasonable and are not more restrictive than is
necessary to protect the legitimate interests of the Members and the
Company.
(b) The obligations set forth in Section 6.5(a) shall not apply with
respect to Confidential Information that (i) is or becomes generally
available to the public other than as a result of disclosure by the
receiving party or its Agents, (ii) was in or comes into the possession of
the receiving party from a source not known by the receiving party after
reasonable inquiry to be bound by a confidentiality agreement with respect
to the information in question, (iii) is required to be disclosed by the
receiving party pursuant to Law or (iv) is required to be disclosed in the
receiving party's financial statements prepared in accordance with GAAP.
(c) To the fullest extent permitted by law, if a Member or any of its
Affiliates or Agents breaches or threatens to commit a breach of this
Section 6.5, the other Members and the Company shall have the right to have
this Section 6.5 specifically enforced by any court having jurisdiction, it
being acknowledged and agreed that money damages will not provide an
adequate remedy to such other Members or the Company. Nothing in this
Section 6.5 shall be construed to limit the right of any Member or the
Company to collect money damages in the event of a breach of this Section
6.5, nor to limit the right of any Member to report the financial condition
and results of operations of the Company to its shareholders, bondholders
or to regulatory authorities to the extent required by law, regulation or
the terms of existing instruments.
(d) Anything else in this Agreement notwithstanding, each Member shall
have the right to disclose any information, including Confidential
Information of any other Member or such other Member's Affiliate(s), in any
filing with any regulatory agency, court or other Governmental Authority to
the extent that the disclosing Member determines in good faith that it is
required by Law, provided that any such disclosure shall be as limited in
scope as possible and shall only be made after giving the other Member as
much notice as practicable of such required disclosure and an opportunity
to contest such disclosure if possible.
(e) Clearwire may disclose this Agreement to its Affiliates, strategic
partners, actual or potential investors, lenders, acquirers, merger
partners, and others whom Clearwire deems in good faith to have a need to
know such information for purposes of pursuing a transaction or business
relationship with Clearwire. Hawaiian Member may disclose this Agreement
and any Confidential Information to any actual or potential bona fide
purchaser of any of the Hawaiian Member's Membership Interests provided
that prior to any such disclosure, (i) it has notified
26
the Manager at least five (5) Business Days, and (ii) prior to it receives
from such person an executed confidentiality agreement in form and
substance reasonably satisfactory to the Manager.
Section 6.6. Non-Competition.
(a) The Members and their Affiliates may engage in or possess an
interest in other business ventures in which the Company is not a party,
and may engage in any other activities, independently or with others in
which the Company is not a party. Notwithstanding the foregoing, the
Members and their Affiliates shall not acquire any interests in, act on
behalf of, either as an officer, director, employee or consultant, any
Person involved in the provision, sale, operation or development of
wireless communications or broadband services or the ownership, leasing or
rights to use wireless spectrum for the delivery of wireless broadband
services in the State of Hawaii, including without limitation, the
ownership and leasing of wireless spectrum in the 2.5 to 2.69 GHz range;
provided, however that foregoing restrictions shall not prohibit the
Members from owning a minority interest of not more than 5% of a company
headquartered in the State of Hawaii whose equities are publicly traded on
a nationally recognized stock exchange or on the NASDAQ National Market
System.. Recognizing Clearwire's expertise in acquiring wireless spectrum
and the Hawaiian Member's business relationships in Hawaii, Clearwire and
the Hawaiian Member will work together to support the Company's acquisition
of additional spectrum in Hawaii. The Hawaiian Member will use its
commercially reasonable efforts to support the Company's initiatives in
this regards by undertaking such actions as the Manager may reasonably
request provided that such actions (i) do not involve material expense or
dedication of material resources by Hawaiian Member unless reimbursed by
the Company, and (ii) do not impose any additional material restrictions
beyond those set forth in this Agreement on Hawaiian Member's or its
Affiliate's respective activities. To that end, the Company and the Members
will determine in good faith what, specifically, the Hawaiian Member can do
to support the Company's efforts to acquire additional spectrum to benefit
the Company.
(b) In the event that a Member is presented with an opportunity to
engage in a business venture in the communications and broad band industry
(the "Wireless Opportunity"), such Member (the "Presenting Member") shall,
whether or not it desires to accept the Wireless Opportunity, present it in
writing to the Manager and the other Members as an opportunity for the
Company. If a Majority in Interest decides not to pursue the Wireless
Opportunity, then, so long as pursuing the Wireless Opportunity would not
breach the provisions of Section 6.6(a), the Presenting Member shall be
free to pursue the Wireless Opportunity on the same terms and conditions
that were presented to the Company and neither the Company nor any of the
other Members shall have any rights or interest in the Wireless
Opportunity. If a Majority in Interest decides to pursue the Wireless
Opportunity, then the Presenting Member shall take all efforts necessary to
transfer such opportunity to the Company.
Section 6.7. Duties. To the extent that, at law or in equity, any Member or
any
27
Affiliate of a Member, or any member, manager, partner, director, officer,
stockholder, employee, agent or representative of a Member or such Affiliate,
would have duties (including fiduciary duties) and liabilities to the Company or
the Members different from or in addition to those provided in this Agreement,
all rights of the other Members and the Company arising out of such other duties
and liabilities are hereby waived and no such Person shall be liable to the
Company or to any Member for its good faith reliance on the provisions of this
Agreement.
Section 6.8. Dispute Resolution
(a) If a dispute arises out of this Agreement or the Transactions, the
parties shall make a good faith effort to resolve such dispute promptly. If
the parties are unable to resolve the dispute within thirty (30) days of
notice by one Member to the other Members and Manager of the dispute, then
any Member (the "Initiating Member") may initiate arbitration proceedings
against the other Member (the "Remaining Members"). The dispute shall then
be settled by arbitration in accordance with the CPR Institute for Dispute
Resolution Rules for Non-Administered Arbitration in effect on the date
hereof, by a panel of three arbitrators. The Initiating Member shall select
one of three arbitrators, the Remaining Members shall select a second
arbitrator, and these two arbitrators shall select the third arbitrator.
The arbitrators shall be governed by the United States Arbitration Act, 9
U.S.C. Sections 1-16, and judgment upon the award rendered by the
arbitrators may be entered by any court having jurisdiction thereof. The
place of arbitration shall be chosen by the three arbitrators. The parties
agree that all communications and negotiations between the parties during
the dispute resolution process, and any settlements agreed upon are
confidential. The reasonable out-of-pocket costs (including reasonable
attorneys' fees and expenses) of the prevailing party in any arbitration
proceeding shall be paid by the other party. The arbitrators shall
determine which party is the prevailing party for purposes of this
paragraph, and shall include such determination in their award. If the
arbitrators determine that neither party is the prevailing party for
purposes of this paragraph, then each party shall bear its own costs and
expenses, including attorneys' fees and expenses, and shall share equally
the fees of the arbitrators.
ARTICLE 7
TRANSFER OR ENCUMBRANCE OF INTERESTS
Section 7.1. General Restriction on Transfer or Encumbrance.
No Interest may be directly or indirectly assigned, sold, transferred or
otherwise disposed of, or pledged, hypothecated or otherwise encumbered, whether
voluntarily or involuntarily, in whole or in part (any such transaction being
referred to in this Article 7 as a "transfer"), except in accordance with the
terms of this Article 7, Article 11 hereof or as otherwise specifically provided
in this Agreement. Notwithstanding the foregoing, Clearwire may, at any time in
connection with other debt financing, pledge its Units, including any pledges
currently required under the Indenture. Further, this Article 7 shall not apply
to any transfers by Clearwire to any of its Affiliates, to any indirect
transfers
28
resulting from any change of control of Clearwire, or to any transfers by
Clearwire arising by operation of law.
Section 7.2. Drag-Along Rights.
In the event that Clearwire (together with its Affiliates) commits to
transfer 25% or more of its Units or Interests in the Company, in a bona fide
arm's-length transaction, or a series of related bona fide arm's length
transactions, to a person or entity that is not an Affiliate of Clearwire, then
Clearwire will provide notice (the "Drag Notice") to the other Members
identifying the Units or Interest to be sold and the price to be paid therefor.
Within ten (10) days of the Drag Notice, Clearwire shall have the ability to
require all other Members to transfer their pro rata shares of their Units or
Interests to the potential buyer at the same price and upon the same terms and
conditions as Clearwire is transferring its Units or Interest (the "Drag
Rights").
Section 7.3. Tag-Along Rights.
If Clearwire does not invoke its Drag Rights, within fifteen (15) days of
the Drag Notice, then any Member may, if it so chooses, participate with
Clearwire with respect to such transfer by providing written notice of its
intention to do so (the "Tag Notice"). Such Tag Notice shall constitute the
Member's irrevocable election to cause the transferee to purchase, at the same
price and upon the same terms and conditions as those received by the Clearwire,
a pro rata portion of the Member's Units or Interest in the Company and the
Units or Interest to be purchased from Clearwire shall be reduced accordingly.
Section 7.4. Rights of First Refusal.
If any Member other than Clearwire has received a bona fide, written,
binding offer and commitment (the "Offer") for the acquisition of any or all of
the Member's Units or Interest in the Company (the "Subject Company Interest"),
and the selling Member wishes to accept the Offer, then upon acceptance of the
Offer, the selling Member shall first provide Clearwire notice of the Offer,
which notice will identify the offeree and provide all of the material terms of
the offer, including the number of Units constituting the Subject Company
Interest, the purchase price of such Subject Company Interest and manner in
which the purchase price is to be paid. The notice shall constitute the selling
Member's binding offer to sell such Subject Company Interest to Clearwire on the
same terms. Clearwire shall have twenty (20) business days after delivery of
such notice to exercise its right to purchase all, but not less than all of, the
Subject Company Interest in the Company on the same terms and conditions as set
forth in the notice. If Clearwire does not elect to purchase the Subject
Interest within such twenty (20) day period, then the selling Member shall have
a period of ninety (90) days in which to close the sale of the Subject Company
Interest in accordance with the terms of the Offer. If such sale is not closed
within such 90 day period, then any proposed transfer by such Member of any
Units or Interest in the Company shall again be subject to this Section 7.4.
Section 7.5. Substituted Members.
Any transfer pursuant to Section 7.4 other than to Clearwire must be
approved in
29
writing by a Majority in Interest prior to any such transfer, such approval not
to be unreasonably withheld or delayed, and no such transferee shall become a
Member without such approval. Upon the admission of any such transferee as a
Member, the transferring Member shall be relieved of any obligation arising
under this Agreement subsequent to such transfer with respect to the Interest
being transferred, and if the transferring Member no longer holds any Interest,
the transferring Member shall be relieved of all obligations arising under this
Agreement except for its obligations under Section 6.5 or with respect to any
breach of this Agreement arising prior to such transfer.
Section 7.6. Alternative Sale Rights.
(a) In the event that Clearwire or any Clearwire Affiliate that
directly or indirectly owns or controls Clearwire (each, a "Clearwire
Seller") commits to sell all of its stock or membership interests or all or
substantially all of its assets, in a bona fide arm's-length transaction or
a series of related bona fide arm's length transactions (an "Alternative
Transaction") to a Person that is not an Affiliate of the Clearwire Seller,
then the Clearwire Seller will have the option, by providing written notice
(the "Alternative Rights Notice") to the other Members, to require all
other Members (each, a "Selling Member") to sell their Interest to the
Clearwire Seller in exchange for a purchase price equal to the Fair Market
Value of the Selling Member's Interest in the Company (the "Alternative
Transaction Purchase Price"). For purposes of this Section 7.6, "Fair
Market Value" shall be determined as of the Adjustment Date by the Neutral
Bank, which determination shall be conclusive and binding on all parties.
(b) If the consideration being received by the Clearwire Seller in the
Alternative Transaction consists of securities and/or other noncash assets,
(i) such securities and/or other noncash assets shall be deemed to have a
Fair Market Value for the purposes of this Section 7.6 equal to the value
established for such securities and/or other noncash assets in the
Alternative Transaction, and (ii) to satisfy the Alternative Transaction
Purchase Price, in lieu of paying cash, the Clearwire Seller shall have the
option to deliver to each Selling Member a portion of such securities
and/or other noncash assets received in the Alternative Transaction with a
Fair Market Value equal to the Alternative Transaction Purchase Price
payable to such Selling Member. Upon any election by the Clearwire Seller
under this subsection (b), each Selling Member shall be required to enter
into any agreements contemplated in the Alternative Transaction to be
entered into by the recipients of securities and/or other noncash assets in
such Alternative Transactions.
Section 7.7. Invalid Transfers Void. Any purported transfer of an Interest
or any part thereof not in compliance with the foregoing provisions of this
Article 7 shall be void and of no force or effect and the transferring Member
shall be liable to the other Members and the Company for all liabilities,
obligations, damages, losses, costs and expenses (including but not limited to
reasonable attorneys' fees and court costs) arising out of such noncomplying
transfer.
Section 7.8. No Change of Control. Neither the Hawaiian Member nor any of
30
its interest holders shall take any action or fail to take any action that could
result in a change of control of the Hawaiian Member, without the prior written
consent of Clearwire, which may be given or withheld in its discretion. A
"Change of Control" for the purposes of this Agreement shall mean (i) a sale of
all or substantially all of the assets of the Hawaiian Member or its interest
holders, as applicable; (ii) the transfer by the Hawaiian Member or its interest
holders, as applicable, by means of a merger, consolidation, reorganization,
recapitalization or otherwise, of more than 50% of the voting power of the
Hawaiian Member or its interest holders, as applicable; or (iii) the transfer by
the Hawaiian Member or its interest holders, whether contractually or otherwise,
of the right to appoint the manager or a majority of the board of directors of
the Hawaiian Member or its interest holders, as applicable, or the power to
director or cause the direction of the management and policies of the Hawaiian
Member or its interest holders.
Section 7.9. Certain Determinations
Except as provided in Section 7.6, Fair Market Value shall be determined in
the following manner:
Within fifteen days after the delivery of the notice requiring such
determination, the Members shall attempt in good faith to agree on the
Fair Market Value, and if the parties fail within fifteen days
thereafter to agree thereon, the Company and the Member shall attempt
to reach agreement upon a qualified independent appraiser experienced
in the valuation of closely held businesses and properties of the kind
held by the Company. If the parties are unable to agree upon a single
appraiser within thirty (30) days of the occurrence of the event
requiring computation of a Fair Market Value, then either party shall
be entitled to notify the other of such party's institution of a
three-appraiser procedure. Within ten (10) days of such notice, each
party shall appoint a qualified independent appraiser experienced in
the valuation of closely held businesses and properties of the kind
held by the Company. The two appraisers shall appoint a third
similarly qualified appraiser; and each appraiser shall complete an
appraisal within sixty (60) days of appointment of the first
appraiser. The Fair Market Value shall be determined by the median
appraisal. Each party shall bear the costs associated with the
appraisers it selected, and the costs associated with the third
appraiser (and any court costs), shall be split evenly between the
Company and the Member, if applicable. If either party shall fail to
appoint an appraiser within the allotted time period, or if either
such appraiser shall fail to complete the appraisal within the
allotted time period, the appraisal of the appraiser appointed by the
other party shall be final and binding, and shall control the
determination of the Fair Market Value.
ARTICLE 8
CERTAIN AGREEMENTS; REPRESENTATIONS AND WARRANTIES
31
Section 8.1. Prohibited Actions. During the term of this Agreement, the
Company shall not take any action or omit to take an action if such action or
omission, as the case may be, would (i) cause the Company to be in violation of
FCC Law or any rule, regulation, practice, policy or opinion promulgated,
applied or followed by the FCC, or cause the Company or any Member or any
Affiliate thereof to be required to divest an Interest in the Company or asset
in order to comply with any such Law, or (ii) cause the Company or any Member or
any Affiliate thereof to be ineligible to participate in any auction, tender,
business combination or similar transaction.
Section 8.2. Additional Covenants of the Members
(a) The Company shall at all times (i) observe all corporate or
limited liability company formalities, as the case may be, including the
maintenance of current minute books, (ii) maintain, separate from any other
Person, its own separate and distinct books of account, bank accounts and
corporate or limited liability company records, (iii) maintain separate
financial statements and cause its financial statements to be prepared and
maintained in accordance with GAAP in a manner that indicates its assets
and liabilities, (iv) pay all its liabilities out of its own funds
(including the salaries of its employees), and (v) maintain an arm's-length
relationship with its Affiliates.
(b) No Member other than Clearwire shall (i) pledge its assets for the
benefit of any other Person, (ii) commingle its assets with those of any
other Person, (iii) assume or guarantee the liabilities or obligations of
any other Person or otherwise hold out its credit as being available or
able to satisfy the indebtedness, liabilities or obligations of any other
Person, (iv) acquire obligations or securities of, or make loans or
advances to, any of its Affiliates, (v) permit there to be a complete
identity of its managers and officers with the managers and officers of any
of its Affiliates, (vi) incur any indebtedness, liabilities or obligations
relating to the operation of its business, or (vii) engage in any business
activities other than holding and managing its Interests.
Section 8.3. Representations and Warranties of the Members
Each of Clearwire and Hawaiian Member represents and warrants to the other
that:
(a) it is a corporation or limited liability company duly organized
and subsisting in the jurisdiction of its organization;
(b) it has all requisite power and authority and has taken all action
necessary in order to execute and deliver this Agreement;
(c) this Agreement has been duly executed and delivered by it and is a
valid and binding agreement of it enforceable against it in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles;
32
(d) no notices, reports or other filings are required to be made by it
with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by it from, any Governmental Entity,
in connection with its execution and delivery of this Agreement, except
those that have been made or obtained or that the failure to make or obtain
are not, individually or in the aggregate, reasonably likely to (x) result
in a material adverse effect on the Company or (y) prevent, materially
delay or materially impair its ability to perform its obligations under
this Agreement;
(e) the execution, delivery and performance of this Agreement by it
does not, and the consummation by it of the transactions contemplated
hereby will not, constitute or result in (i) a breach or violation of, or a
default under, its articles of organization, limited liability company
agreement and other constitutive documents, (ii) a breach of or violation
of or a default under, or the acceleration of any obligations of or the
creation of a lien or encumbrance on its assets (with or without notice,
lapse of time or both) pursuant to, any contracts binding upon it or any
applicable law or governmental or non-governmental permit or license to
which it is subject or (iii) any change in the rights or obligations of any
party under any of such contracts to which it is a party, except, in the
case of clause (ii) or (iii) above, for any breach, violation, default,
acceleration, creation or change that, individually or in the aggregate, is
not reasonably likely to (x) result in a material adverse effect on the
Company or (y) prevent, materially delay or materially impair its ability
to perform its obligations under this Agreement;
(f) there is no (i) legal action, claim, proceeding, investigation or
controversy pending or, to its knowledge, threatened against it, or (ii)
judgment, order, award or consent decree outstanding against or affecting
it, which in either event is reasonably likely to (x) result in a material
adverse effect on the Company or (y) materially delay or materially impair
its ability to perform its obligations under this Agreement; and
(g) with respect to Clearwire, it has access to funds sufficient to
perform its obligations under Section 2.2, and with respect to the Hawaiian
Member, it has funds sufficient to perform its obligations under the
Subscription Agreement.
Section 8.4. Additional Representations and Warranties of Clearwire.
Clearwire has good and marketable title to the Clearwire Assets, free and clear
of all material liens and encumbrances, other than those liens and encumbrances
described in the Security Agreement and Pledge Agreement, each dated August 5,
2005, as amended, securing the obligations of Clearwire Corporation to the
holders of the Notes of the Company dated August 5, 2005 and February 16, 2006
as described in that certain Indenture dated August 5, 2005, as amended, between
Clearwire and the Bank of New York as the Trustee, as amended, ordinary course
business liabilities and liabilities relating directly to such Clearwire Assets
(e.g. lease payments), and such other liabilities that in the aggregate are not
material to the operation of the Clearwire Assets as currently operated. The
Company will assume all of the liabilities directly associated with the
Clearwire Assets.
33
Section 8.5. Additional Representations and Warranties of Hawaiian Member.
Prior to the date of consummation of the transactions contemplated by Section
2.2, the Company has engaged in no business or operations and has no assets or
liabilities of any kind. There are no rights, agreements or arrangements
relating to the issuance of equity of the Company other than as contemplated by
the Subscription Agreement and this Agreement.
Section 8.6. Representations and Warranties of the Company. Prior to the
date of consummation of the transactions contemplated by Section 2.2, the
Company has engaged in no business or operations.
ARTICLE 9
DISSOLUTION AND TERMINATION
Section 9.1. No Termination
Except as expressly provided in this Agreement or as otherwise provided by
law, no Member shall have the right, and each Member hereby agrees not, to
dissolve, terminate or liquidate the Company, or to resign or withdraw as a
Member.
Section 9.2. Events of Dissolution
The Company shall be dissolved upon the first to occur of the following:
(i) the agreement in writing of all of the Members to dissolve
the Company, but only on the effective date of dissolution specified
by the Members in such agreement; or
(ii) the election by a Majority in Interest within ninety (90)
days after the sale, exchange, condemnation or involuntary transfer of
all or substantially all of the assets of the Company.
Section 9.3. Procedures Upon Dissolution
(a) General. In the event the Company dissolves it shall commence
winding up pursuant to the appropriate provisions of the Act and the
procedures set forth in this Section 9.3. Notwithstanding the dissolution
of the Company, until the winding up of the Company's affairs is completed,
the business of the Company and the affairs of the Members, as such, shall
continue to be governed by this Agreement.
(b) Control of Winding Up. The winding up of the Company shall be
conducted under the direction of the Manager or such other Person as may be
designated by a court of competent jurisdiction (herein sometimes referred
to as the "Liquidator"); provided that any Member whose breach of this
Agreement shall have caused the dissolution of the Company shall not
participate in the control of the winding up of the Company; and provided
further, that if the dissolution is caused by entry of a decree of judicial
dissolution, the winding up shall be carried out in accordance with such
decree.
34
(c) Manner of Winding Up. The Company shall engage in no further
business following dissolution other than necessary for the orderly winding
up of business and distribution of assets. The Company's maintenance of
offices shall not be deemed a continuation of business for purposes of this
Section 9.3. Upon dissolution of the Company, the Liquidator shall, subject
to Section 9.3(a), first attempt to distribute assets in kind if it can
obtain the consent of a Majority in Interest and, to the extent necessary,
the creditors of the Company. If such consent is not obtained, the
Liquidator shall sell all of the Company's property in such manner and on
such terms as it deems fit, consistent with its fiduciary responsibility
and having due regard to the activity and condition of the relevant market
and general financial and economic conditions. Except as otherwise provided
in Section 9.3(d)(ii) each Member shall share net profits, net losses and
other items after the dissolution of the Company and during the period of
winding up in the same manner as described in Article 3.
(d) Application of Assets. Upon dissolution of the Company, the
Company's assets (which shall, after the sale or sales referenced in
Section 9.3(c), consist of the proceeds thereof) shall be applied as
follows:
(i) Creditors. To creditors, including Members who are creditors,
to the extent otherwise permitted by law, in satisfaction of
liabilities of the Company (whether by payment or the reasonable
provision for the payment thereof). Any reserves set up by the
Liquidator may be paid over by the Liquidator to an escrow agent or
trustee, to be held in escrow or trust for the purpose of paying any
such contingent or unforeseen liabilities or obligations, and, at the
expiration of such period as the Liquidator may deem advisable, such
reserves shall be distributed to the Members or their assigns in the
manner set forth in Section 9.3(d)(ii).
(ii) Members. By the end of the tax year in which the liquidation
occurs (or, if later, within ninety (90) days after the date of such
liquidation), to the Members in proportion to the positive balances of
their respective Capital Accounts, as determined after taking into
account all Capital Account adjustments for the taxable year during
which the liquidation occurs (other than those made pursuant to this
Section 9.3(d)(ii)).
Section 9.4. Termination
Upon completion of the winding up of the Company and the distribution of
all Company assets, the Company's affairs shall terminate and the Members shall
cause to be executed and filed any and all documents required by the Act to
effect the termination of the Company.
ARTICLE 10
SURVIVAL, LIABILITY AND INDEMNIFICATION
35
Section 10.1. No Personal Liability
(a) Except as otherwise provided by the Act, the debts, obligations
and liabilities of the Company, whether arising in contract, tort or
otherwise, shall be solely the debts, obligations and liabilities of the
Company, and no Member or other Indemnified Party (as defined in paragraph
(b) below) shall be obligated personally for any such debt, obligation or
liability of the Company solely by reason of being a Indemnified Party.
(b) No Member or Member's Affiliate, or any of their respective
shareholders, directors, officers, employees, agents, members, managers, or
partners (each, an "Indemnified Party") shall be liable, responsible or
accountable in damages or otherwise to the Company or to any other
Indemnified Party for any act or omission performed or made by a
Indemnified Party in connection with the transactions contemplated hereby,
whether for mistake of judgment or negligence or other action or inaction,
unless such action or omission constitutes a breach of this Agreement,
willful misconduct, gross negligence, bad faith or conduct violating
Section 18-607 of the Act. Each Indemnified Party may consult with counsel,
accountants and other experts in respect of the affairs of the Company and
such Indemnified Party shall be fully protected and justified in any action
or inaction which is taken in good faith in accordance with the advice or
opinion of such counsel, accountants or other experts, provided that they
shall have been selected with reasonable care.
(c) The Company shall protect, indemnify and defend each Indemnified
Party against, and hold each harmless from, (i) all claims, liabilities and
expenses of whatever nature arising out of the conduct of the business of,
or any other activities undertaken in connection with or by, the Company or
the ownership and use of their respective properties and assets and (ii)
any acts or omissions performed or made by a Member pursuant to this
Agreement unless the Member's action or omission constituted a breach of
this Agreement, constituted willful misconduct, gross negligence, bad faith
or conduct violating Section 18-609 of the Act, or as a result of which
action or omission such Member gained in fact a financial profit or other
advantage to which such Member was not legally entitled. The
indemnification authorized under this Section 10.1(c) shall include payment
on demand (with appropriate evidence of the amounts claimed) of reasonable
attorneys' fees and other expenses incurred in connection with, or in
settlement of, any legal proceedings between the Indemnified Party and a
third party and the removal of any Liens affecting any property of the
Indemnified Party. Such indemnification rights shall be in addition to any
and all rights, remedies and recourse to which any Indemnified Party shall
be entitled, whether or not pursuant to the provisions of this Agreement,
at law or in equity. The indemnities provided for in this Section 10.1(c)
shall be recoverable only from the assets of the Company, and there shall
be no recourse to any Member or other Person for the payment of such
indemnities.
Section 10.2. Survival; Exclusivity
36
The representations and warranties made in this Agreement shall survive
until twelve (12) months and shall thereupon expire together with any right to
indemnification in respect thereof (except to the extent a written notice
asserting a claim for breach of any such representation or warranty and
describing such claim in reasonable detail shall have been given on or prior to
such date to the party which made such representation or warranty). Except with
respect to claims referred to in the immediately preceding sentence, the sole
and exclusive remedy of the parties for any breach or inaccuracy of any
representation or warranty contained in this Agreement, or any other claim
(whether or not alleging a breach of this Agreement) that arises out of the
facts and circumstances constituting such breach or inaccuracy, shall be the
indemnities provided in this Article 10. Subject to the provisions of Section
6.8, the sole and exclusive remedy in respect of a breach of this Agreement
(other than such a breach arising out of the gross negligence or willful
misconduct of the breaching party) shall be the indemnity provided in this
Article 10.
Section 10.3. Procedures
(a) The terms of this Section 10.3 shall apply to any claim (a
"Claim") for indemnification under the terms of Sections 10.1. The
Indemnified Party shall give prompt written notice of such Claim to the
indemnifying party (the "Indemnifying Party") under the applicable Section,
which party may assume the defense thereof, provided that any delay or
failure to so notify the Indemnifying Party shall relieve the Indemnifying
Party of its obligations hereunder only to the extent, if at all, that it
is materially prejudiced by reason of such delay or failure. Any such
notice shall (i) describe in reasonable detail the facts and circumstances
with respect to the Claim being asserted and (ii) refer to this Article 10.
The Indemnified Party shall have the right to approve any counsel selected
by the Indemnifying Party and to approve the terms of any proposed
settlement, such approval not to be unreasonably delayed or withheld
(unless such settlement provides only, as to the Indemnified Party, the
payment of money damages actually paid by the Indemnifying Party and a
complete release of the Indemnified Party in respect of the Claim in
question). Notwithstanding any of the foregoing to the contrary, the
provisions of this Article 10 shall not be construed so as to provide for
the indemnification of any Indemnified Party for any liability to the
extent (but only to the extent) that such indemnification would be in
violation of applicable law or that such liability may not be waived,
modified or limited under applicable law, but shall be construed so as to
effectuate the provisions of this Article 10 to the fullest extent
permitted by law.
(b) In the event that the Indemnifying Party undertakes the defense of
any Claim, the Indemnifying Party will keep the Indemnified Party advised
as to all material developments in connection with such Claim, including,
but not limited to, promptly furnishing the Indemnified Party with copies
of all material documents filed or served in connection therewith. The
Indemnified Party shall provide reasonable assistance to the Indemnifying
Party in the defense of the Claim.
(c) In the event that the Indemnifying Party fails to assume the
defense of
37
any Claim within ten (10) business days after receiving written notice
thereof, the Indemnified Party shall have the right, subject to the
Indemnifying Party's right to assume the defense pursuant to the provisions
of this Article 10, to undertake the defense, compromise or settlement of
such Claim for the account of the Indemnifying Party. Unless and until the
Indemnifying Party assumes the defense of any Claim, the Indemnifying Party
shall advance to the Indemnified Party any of its reasonable attorneys'
fees and other costs and expenses incurred in connection with the defense
of any such Claim. Each Indemnified Party shall agree in writing prior to
any such advance that, in the event he or it receives any such advance,
such Indemnified Party shall reimburse the Indemnifying Party for such
fees, costs and expenses to the extent that it shall be determined that he
or it was not entitled to indemnification under this Article 10.
(d) Notwithstanding any of the foregoing to the contrary, the
provisions of this Article 10 shall not be construed so as to provide for
the indemnification of any Indemnified Party for any liability to the
extent (but only to the extent) that such indemnification would be in
violation of applicable law or such liability may not be waived, modified,
or limited under applicable law, but shall be construed so as to effectuate
the provisions of this Article 10 to the fullest extent permitted by law;
provided, that if and to the extent that the Indemnifying Party's
indemnification obligation under this Article 10 is unenforceable for any
reason, the Indemnifying Party hereby agrees to make the maximum
contribution permissible under applicable law to the payment and
satisfaction of the losses of the Indemnified Party, except to the extent
such losses are found in a final, nonappealable judgment by a court of
competent jurisdiction to have resulted from the Indemnified Party's gross
negligence or willful misconduct.
Section 10.4. Directors' and Officers' Insurance
The Company may provide appropriate directors' and officers' insurance to
the extent such insurance is available to the Company on commercially reasonable
terms.
ARTICLE 11
MISCELLANEOUS
Section 11.1. Entire Agreement
This Agreement in effect on the date hereof, together with any schedules
and exhibits hereto and thereto, contain the entire agreement and understanding
of the Members and the Company relating to the subject matter hereof and
supersede all prior negotiations, proposals, offers, agreements and
understandings (written or oral) relating to such subject matter.
Section 11.2. Amendment; Waiver
The Manager may make the following amendments to this Agreement on behalf
of all of the Members: (i) any amendment reasonably necessary, in the opinion of
counsel for the Company, to satisfy the requirements of the Code with respect to
the tax laws
38
applicable to the Company or of any federal or state securities laws or
regulations, provided such amendment does not adversely affect the interest of
any Member; (ii) any amendment to change the name of the Company or the location
of its principal place of business, and any amendment to Schedule 3.6 made in
accordance with Section 3.6(a); and (iii) any amendment to correct a scrivener's
error in this Agreement and any certificates filed in connection therewith;
provided that any other amendment or modification of this Agreement or any
provision hereof may be made only upon the consent or approval of a Majority in
Interest. No failure or delay of any Member in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce any such right or power, preclude any other further exercise
thereof or the exercise of any other right or power. No waiver by any Member of
any departure by any other Member from any provision of this Agreement shall be
effective unless the same shall be in a writing signed by the Member against
which enforcement of such waiver or consent is sought, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice or similar communication by any Member
to another shall entitle such other Member to any other or further notice or
similar communication in similar or other circumstances, except as specifically
provided herein.
Section 11.3. Specific Performance
The Members acknowledge that money damages may not be an adequate remedy
for violations of this Agreement and that any Member may, in its sole
discretion, in an arbitration or a court of competent jurisdiction to the extent
permitted hereunder, apply for specific performance or injunctive or other
relief as such arbitration or court may deem just and proper in order to enforce
this Agreement or to prevent violation hereof and, to the extent permitted by
applicable law, each Member waives any objection to the imposition of such
relief.
Section 11.4. Remedies Cumulative
All rights, powers and remedies provided under this Agreement or otherwise
available in respect hereof at law or in equity shall, unless otherwise
specifically provided herein, be cumulative and not alternative, and the
exercise or beginning of the exercise of any thereof by a Member shall not
preclude the simultaneous or later exercise of any other such right, power or
remedy by such Member.
Section 11.5. Successors and Assigns
This Agreement shall be binding upon and shall inure to the benefit of the
Members and their respective successors and permitted assigns. No Member may
assign its rights or delegate its duties under this Agreement without the
written consent of the other Members except to the extent expressly provided in
this Agreement.
Section 11.6. No Third Party Beneficiaries
This Agreement is entered into solely for the benefit of the Members and no
39
Person other than the Members, their respective successors and permitted
assigns, and (to the extent provided in Article 10) the Persons entitled to
indemnification pursuant to Article 10, may exercise any right or enforce any
obligation hereunder.
Section 11.7. Further Assurances
Each Member will execute and deliver such further documents and take such
further actions as any other Member may reasonably request consistent with the
provisions hereof in order to effect the intent and purposes of this Agreement.
Section 11.8. Notices
All notices or other communications hereunder shall be in writing and shall
be deemed to have been duly given or made (i) upon delivery if delivered
personally (by courier service or otherwise) or (ii) upon confirmation of
dispatch if sent by facsimile transmission (which confirmation shall be
sufficient if shown by evidence produced by the facsimile machine used for such
transmission), in each case to the applicable addresses set forth below (or such
other address as the recipient may specify in accordance with this Section):
If to Hawaiian Member:
Shichinin, LLC
c/o U.S. Pacific Capital Co., Ltd.
1001 Bishop Street
1360 Pauahi Tower
Honolulu, HI 96813
Attention: Mark Mukai
Fax (808) 441-0003
With a copy to:
Preston Gates & Ellis LLP
925 Fourth Avenue, Suite 2900
Seattle, WA 98104
Attention: Eric Simonson, Esq.
Fax: (206) 623-7022
If to Clearwire:
Clearwire US LLC
5808 Lake Washington Blvd. N.E.
Suite 300
Kirkland, WA 98033
Attention: Broady Hodder, General Counsel
Fax: (425) 828-8061
With a copy to:
40
Davis Wright Tremaine LLP
2600 Century Square
1501 Fourth Avenue
Seattle, Washington 98101-1688
Attention: Julie Weston, Esq.
Fax: (206) 628-7699
Section 11.9. Governing Law
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Delaware, without regard to principles of
conflicts of law.
Section 11.10. Severability
If any term of this Agreement or the application thereof to any Member or
any circumstance shall be held invalid or unenforceable to any extent, the
remainder of this Agreement and the application of such term to the other
Members or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by applicable law, so long as the economic and
legal substance of this Agreement and the actions contemplated hereby is not
affected in any manner adverse to any Member.
Section 11.11. Independent Contractors
The Members are independent contractors, and this Agreement does not create
a partnership or agency relationship among the Members, or any other
relationship between the Members except as expressly set forth herein. No Member
shall have any right or authority to assume, create or incur any liability or
obligation, express or implied, in the name or on behalf of any other Member.
Section 11.12. Disposition of Interests
Upon the sale or other disposition by a Person of all its Interests in the
Company, following which such Person and Affiliate thereof is no longer a Member
of the Company, this Agreement shall terminate as to such Member and its
Affiliates except as provided in Section 11.13 below.
Section 11.13. Survival of Rights and Duties
Termination of this Agreement for any reason shall not relieve any Member
of any liability which at the time of termination has already accrued to such
Member or which thereafter may accrue in respect of any act or omission prior to
such termination, nor shall any such termination affect in any way the survival
of any right, duty or obligation of any Member which is expressly stated
elsewhere in this Agreement to survive termination hereof. Section 6.5 and
Articles 10 and 11 shall survive any termination of this Agreement.
Section 11.14. Counterparts
41
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
one instrument.
Section 11.15. Construction
The captions used herein are for convenience of reference only and shall
not affect the interpretation or construction hereof. All pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine, neuter,
singular or plural as the context may require. Unless otherwise specified, (a)
the terms "hereof," "herein" and similar terms refer to this Agreement as a
whole, (b) references herein to Articles or Sections refer to articles or
sections of this Agreement and (c) the word "including" connotes the words
"including without limitation" unless the context requires otherwise.
Section 11.16. No Right to Partition
No Member shall have the right to bring an action for partition against the
Company. Each of the Members hereby irrevocably waives any and all rights which
it may have to maintain an action to partition Company property or to compel any
sale or transfer thereof.
Section 11.17. Securities
The Interests shall constitute "securities" within the meaning of (i)
Article 8 of the Uniform Commercial Code (including Section 8-102(a)(15)
thereof) as in effect from time to time in the State of Delaware and (ii) the
Uniform Commercial Code of any other applicable jurisdiction that now or
hereafter substantially includes the 1994 revisions to Article 8 thereof as
adopted by the American Law Institute and the National Conference of
Commissioners on Uniform State Laws and approved by the American Bar Association
on February 14, 1995.
[Signature page follows]
42
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
CLEARWIRE US LLC
By /s/ Scott A. Hopper
-------------------------------------
Name: Scott A. Hopper
----------------------------------
Title: Vice President
---------------------------------
SHICHININ, LLC
By Its Managing Member
U.S. Pacific Capital Co., Ltd.
By /s/ Mark Mukai
-------------------------------------
Name: Mark Mukai
Title: President/CEO
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 GENERAL........................................................ 1
Section 1.1. Name................................................... 1
Section 1.2. Principal Place of Business; Registered Office
and Agent.............................................. 1
Section 1.3. Term................................................... 1
Section 1.4. Purpose and Powers..................................... 2
Section 1.5. Filings................................................ 2
Section 1.6. Sole Agreement......................................... 2
Section 1.7. Definitions............................................ 2
ARTICLE 2 CAPITALIZATION................................................. 9
Section 2.1. Capital Accounts....................................... 9
Section 2.2. Initial Capital Contributions.......................... 9
Section 2.3. Hawaiian Member Contribution Option.................... 10
Section 2.4. Additional Contributions............................... 11
Section 2.5. No Withdrawals......................................... 11
Section 2.6. No Interest on Capital Contribution.................... 11
Section 2.7. No Third Party Beneficiaries........................... 11
Section 2.8. Preemptive Right....................................... 12
ARTICLE 3 PROFITS AND LOSSES............................................. 14
Section 3.1. Allocation of Net Profit and Loss - In General......... 14
Section 3.2. Special Allocations.................................... 15
Section 3.3. Corrective Allocations................................. 15
Section 3.4. Other Allocation Rules................................. 16
Section 3.5. Allocation of Excess Nonrecourse Liabilities........... 16
Section 3.6. Allocations in Connection with Varying Interests....... 16
Section 3.7. Determination of Net Profit or Loss.................... 16
Section 3.8. Mandatory Tax Allocations Under Code Section 704(c).... 17
ARTICLE 4 DISTRIBUTIONS.................................................. 17
Section 4.1. Distributable Cash..................................... 17
Section 4.2. Liquidating Distributions.............................. 18
Section 4.3. Other Distributions.................................... 18
ARTICLE 5 ACCOUNTING AND RECORDS......................................... 18
Section 5.1. Fiscal Year............................................ 18
Section 5.2. Method of Accounting................................... 18
Section 5.3. Books and Records; Inspection.......................... 18
Section 5.4. Financial Statements................................... 19
Section 5.5. Operations Reporting................................... 19
Section 5.6. Taxation............................................... 19
Section 5.7. Internal Control Over Financial Reporting.............. 21
</TABLE>
<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE 6 MANAGEMENT..................................................... 22
Section 6.1. Manager................................................ 22
Section 6.2. Meeting Requirements................................... 22
Section 6.3. Actions Requiring Majority Approval.................... 23
Section 6.4. Actions by Members..................................... 25
Section 6.5. Confidentiality........................................ 25
Section 6.6. Non-Competition........................................ 27
Section 6.7. Duties................................................. 27
Section 6.8. Dispute Resolution..................................... 28
ARTICLE 7 TRANSFER OR ENCUMBRANCE OF INTERESTS........................... 28
Section 7.1. General Restriction on Transfer or Encumbrance......... 28
Section 7.2. Drag-Along Rights...................................... 29
Section 7.3. Tag-Along Rights....................................... 29
Section 7.4. Rights of First Refusal................................ 29
Section 7.5. Substituted Members.................................... 29
Section 7.6. Alternative Sale Rights................................ 30
Section 7.7. Invalid Transfers Void................................. 30
Section 7.8. No Change of Control................................... 30
Section 7.9. Certain Determinations................................. 31
ARTICLE 8 CERTAIN AGREEMENTS; REPRESENTATIONS AND WARRANTIES............. 31
Section 8.1. Prohibited Actions..................................... 32
Section 8.2. Additional Covenants of the Members.................... 32
Section 8.3. Representations and Warranties of the Members.......... 32
Section 8.4. Additional Representation and Warranties of Clearwire.. 33
ARTICLE 9 DISSOLUTION AND TERMINATION.................................... 34
Section 9.1. No Termination......................................... 34
Section 9.2. Events of Dissolution.................................. 34
Section 9.3. Procedures Upon Dissolution............................ 34
Section 9.4. Termination............................................ 35
ARTICLE 10 SURVIVAL, LIABILITY AND INDEMNIFICATION....................... 35
Section 10.1. No Personal Liability.................................. 36
Section 10.2. Survival; Exclusivity.................................. 36
Section 10.3. Procedures............................................. 37
Section 10.4. Directors' and Officers' Insurance..................... 38
ARTICLE 11 MISCELLANEOUS................................................. 38
Section 11.1. Entire Agreement....................................... 38
Section 11.2. Amendment; Waiver...................................... 38
Section 11.3. Specific Performance................................... 39
Section 11.4. Remedies Cumulative.................................... 39
Section 11.5. Successors and Assigns................................. 39
Section 11.6. No Third Party Beneficiaries........................... 39
Section 11.7. Further Assurances..................................... 40
</TABLE>
ii
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 11.8. Notices................................................ 40
Section 11.9. Governing Law.......................................... 41
Section 11.10. Severability........................................... 41
Section 11.11. Independent Contractors................................ 41
Section 11.12. Disposition of Interests............................... 41
Section 11.13. Survival of Rights and Duties.......................... 41
Section 11.14. Counterparts........................................... 41
Section 11.15. Construction........................................... 42
Section 11.16. No Right to Partition.................................. 42
Section 11.17. Securities............................................. 42
</TABLE>
Schedule 2.2 - Clearwire Assets
Schedule 3.6 - Tax Allocations
Schedule 5.5 - Operational Information
Exhibit A - Assignment and Assumption Agreement
Exhibit B - Bill of Title Transfer
Exhibit C - Trademark Licensing Agreement
iii
SCHEDULE 2.2
CLEARWIRE ASSETS
[***]
[*** Confidential Treatment Requested]
[***]
[*** Confidential Treatment Requested]
ii
[***]
[*** Confidential Treatment Requested]
iii
[***]
[*** Confidential Treatment Requested]
iv
[***]
[*** Confidential Treatment Requested]
v
[***]
[*** Confidential Treatment Requested]
vi
[***]
[*** Confidential Treatment Requested]
[***]
[*** Confidential Treatment Requested]
EXHIBIT A
ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT B
BILL OF TITLE TRANSFER
EXHIBIT C
TRADEMARK LICENSING AGREEMENT
EXHIBIT 10.51
EXECUTION VERSION
INTEL/CLEARWIRE CONFIDENTIAL
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (the "AGREEMENT") is entered into as
of June 28, 2006 (the "EFFECTIVE DATE") by and among Clearwire Corporation, a
Delaware corporation (the "COMPANY"), and Intel Pacific, Inc., a Delaware
corporation ("PURCHASER").
RECITALS
WHEREAS, the Company desires to sell, and Purchaser desires to purchase,
shares of the Company's Class A Common Stock, $0.0001 par value per share (the
"CLASS A COMMON STOCK"), and Class B Common Stock, $0.0001 par value per share
(the "CLASS B COMMON STOCK" and, together with the Class A Common Stock, the
"COMMON STOCK") having the rights, preferences, privileges and restrictions set
forth in the Restated Certificate (as defined below);
WHEREAS, in order to induce Purchaser to enter into this Agreement,
concurrently with or prior to the issuance and sale of the Shares (as defined
below):
(i) the Company and Purchaser shall enter into that certain Investor
Rights Agreement, in substantially the form attached to this Agreement as
Exhibit A (the "INVESTOR RIGHTS AGREEMENT");
(ii) the Company, Purchaser and certain other stockholders of the
Company shall enter into a joinder agreement to that certain Amended and
Restated Stockholders Agreement, dated as of March 16, 2004 (the "STOCKHOLDERS
AGREEMENT"), in substantially the form attached to this Agreement as Exhibit B
(the "JOINDER AGREEMENT");
(iii) the Company, Purchaser and certain other stockholders of the
Company shall enter into a Voting Agreement in substantially the form attached
to this Agreement as Exhibit C (the "VOTING AGREEMENT"); and
(iv) the Company and certain members of the management of the Company
shall enter into non-compete agreements in substantially the form attached to
this Agreement as Exhibit D (the "EMPLOYEE NON-COMPETE AGREEMENT").
WHEREAS, in order to induce Purchaser to enter into this Agreement,
concurrently with or prior to either the execution of this Agreement:
(i) the Company, Purchaser and Intel Capital Corporation shall enter
into an amendment and restatement of that certain Side Letter Agreement dated
October 13, 2004, in substantially the form attached to this Agreement as
Exhibit E (the "SIDE LETTER AMENDMENT");
(ii) the Company and Purchaser (or one of its affiliates) shall enter
into that certain Collaboration Agreement (the "COLLABORATION AGREEMENT"), in
substantially the form attached to this Agreement as Exhibit F, which
Collaboration Agreement relates to the deployment of an 802.16e WiMAX network in
the United States and internationally; and
1
(iii) the Company, Purchaser and Eagle River Holdings, LLC ("EAGLE
RIVER") shall enter into a Voting Agreement and Waiver of Preemptive Rights in
substantially the form attached to this Agreement as Exhibit G (the "EAGLE RIVER
VOTING AGREEMENT").
The Investor Rights Agreement, the Joinder Agreement, the Voting Agreement, the
Non-Compete Agreements, the Side Letter Amendment, the Collaboration Agreement,
and the Eagle River Voting Agreement are collectively referred to herein as the
"TRANSACTION AGREEMENTS."
AGREEMENT
NOW, THEREFORE, In consideration of the mutual promises, covenants and
conditions hereinafter set forth, the parties hereto agree as follows:
1. AGREEMENT TO PURCHASE AND SELL STOCK
1.1. Authorization. Prior to the Closing (as defined below), the
Company shall adopt and file with the Secretary of State of the State of
Delaware the amended and restated Certificate of Incorporation of the Company
attached to this Agreement as Exhibit H (the "RESTATED CERTIFICATE").
1.2. Agreement to Purchase and Sell Stock. Subject to the terms and
conditions hereof, on the date of the Closing, Purchaser agrees to purchase and
the Company agrees to issue and sell to Purchaser 70,282,803 shares of Class A
Common Stock and 29,717,197 shares of Class B Common Stock (collectively, the
"SHARES"), in each case, subject to adjustment as set forth in Section 1.3 and
Section 5.5 hereof, at a price of $6.00 per share for an aggregate purchase
price of $600,000,000.00 (the "AGGREGATE PURCHASE PRICE").
1.3. Adjustment in Number of Shares. The number of shares of Class A
Common Stock and shares of Class B Common Stock to be issued and sold to
Purchaser hereunder on the date of the Closing is based on the total voting
power of the Company's capital stock held, owned or controlled by Eagle River
and/or its affiliates, which total voting power shall be determined in
accordance with the provisions of Section 5.5(g) hereof. To the extent there is
any change in the a total voting power of the Company's capital stock held,
owned or controlled by Eagle River and/or its affiliates on or prior to the date
of the Closing, the number of shares of Class A Common Stock and shares of Class
B Common Stock to be issued and sold to Purchaser hereunder on the date of the
Closing will be adjusted such that the total voting power of the Company's
capital stock represented by the Shares equals 60% of the total voting power of
the Company's capital stock held by Eagle River and/or its affiliates; provided
that, except in the event of a Dilutive Issuance (as defined below), in no any
event will the aggregate number of Shares exceed 100,000,000.
2. CLOSING; DELIVERY
2.1. The Closing. The purchase and sale of the Shares hereunder shall
take place remotely via the exchange of documents and signature pages at 10:00
a.m. (Pacific time), on the date that is two business days following the
satisfaction of all of the conditions set forth in
2
Sections 6 and 7 hereof, or at such other time and place as the Company and
Purchaser may mutually agree upon (the "CLOSING").
2.2. Delivery. At the Closing, the Company will deliver to Purchaser
stock certificates representing the number of Shares purchased by Purchaser
hereunder against payment of the full purchase price therefor by wire transfer
of immediately available funds to an account designated in written wire transfer
instructions delivered to Purchaser by the Company at least one (1) business day
prior to the Closing.
3. COMPANY REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants to Purchaser that, except as set
forth in the Schedule of Exceptions ("SCHEDULE OF EXCEPTIONS") delivered to
Purchaser in connection with the Closing and attached to this Agreement as
Exhibit I (which Schedule of Exceptions shall be deemed to be part of the
representations and warranties made hereunder and which exceptions shall be
deemed to be an exception to or exclusion from only the particular
representation and warranty against which it is listed, unless it is readily
apparent on its face from a reasonable reading of the disclosure that such
disclosures is applicable to another representation and warranty, whether or not
the listed representation and warranty includes a reference to such section of
the Schedule of Exceptions), the statements in this Section 3 are all true and
correct, unless otherwise specified herein. For purposes of this Agreement, (i)
the term "MINOR SUBSIDIARIES" means, both individually and together, each entity
that is listed under the heading "Minor Subsidiary" on Schedule 3.4(a) to the
Schedule of Exceptions; (ii) the term "MAJOR SUBSIDIARIES" means, both
individually and together, each entity (A) in which the Company, directly or
indirectly, owns or holds more than 50% of the outstanding equity interests, (B)
which is consolidated in the Financial Statements (as defined below), or (C) of
which the Company, directly or indirectly, has the ability or power to elect a
majority of the directors (or individuals performing similar functions), other
than (1) the Minor Subsidiaries and (2) NextNet Wireless, Inc. (to the extent
that it is sold prior to the date of the Closing); and (iii) the term
"SUBSIDIARIES" means, both individually and together, the Minor Subsidiaries and
the Major Subsidiaries. For the purposes of this Agreement, the terms
"knowledge", "known", "believe", "aware" or any similar term when referring to
the Company and/or any of its Subsidiaries shall mean the knowledge, information
and/or belief, formed after making reasonable inquiry, of the Company's co-Chief
Executive Officers, co-Presidents, Chief Operating Officer, and Chief Financial
Officer.
3.1. Due Authorization. All corporate action on the part of the
Company its officers, directors and shareholders necessary for the
authorization, execution and delivery of, and the performance of all obligations
of the Company under, this Agreement and the Transaction Agreements and
necessary for the consummation of the transactions contemplated hereby and
thereby, including, without limitation, the authorization, issuance, reservation
for issuance and delivery of the Shares and Conversion Shares (as defined below)
being sold under this Agreement, has been taken or will be taken prior to the
Closing. The execution, delivery and performance by the Company of this
Agreement and the Transaction Agreements and the consummation of the
transactions contemplated hereby and thereby will not conflict with, or
constitute or result in, with or without the passage of time or the giving of
notice or both, either a
3
violation, breach or default by the Company or any Subsidiary of, (i) any Order
(as defined below) of any court or other tribunal or of any federal, state,
local or foreign governmental authority, regulatory authority, commission or
agency (a "GOVERNMENT AUTHORITY"), provided that with respect to a Minor
Subsidiary, except where such violation, breach or default would not have or
result, individually or in the aggregate, in a Material Adverse Effect (as
defined below), (ii) any agreement, mortgage, indebtedness, lease, license,
indenture, contract, instrument, arrangement, understanding, commitments or
other undertaking ("CONTRACT"), to which the Company or any Subsidiary is a
party or by which the Company or such Subsidiary or any of their respective
properties or assets may be bound, except for this clause (ii), where such
violation, breach or default would not have or result in, individually or in the
aggregate, a Material Adverse Effect, (iii) any provision of the Restated
Certificate, the Company's bylaws (the "BYLAWS"), the charter, bylaws and/or
other governing documents of each of the Subsidiaries, or the Stockholders
Agreement, each as amended to date, or (iv) the provisions of any laws, statute,
rule, regulation or requirement ("LAWS") of the United States (including,
without limitation, any federal, state or local Governmental Authority) and
jurisdictions outside the United States applicable to or binding upon the
Company or any Subsidiary or any of their respective properties or assets,
provided that with respect to a Minor Subsidiary, except where such violation,
breach or default would not have or result in, individually or in the aggregate,
a Material Adverse Effect. The signature of the Company on this Agreement and
each of the Transaction Agreements is genuine. This Agreement constitutes a
legal, valid and binding obligation of the Company, enforceable in accordance
with its terms, subject, as to enforcement of remedies, to applicable
bankruptcy, insolvency, moratorium, reorganization and similar Laws affecting
creditors' rights generally and to general equitable principles. Each of the
Transaction Agreements, when executed and delivered by the Company, shall
constitute legal, valid and binding obligations of the Company enforceable in
accordance with their respective terms, subject, as to enforcement of remedies,
to applicable bankruptcy, insolvency, moratorium, reorganization and similar
Laws affecting creditors' rights generally and to general equitable principles
and, with regard to the indemnification provisions contained in the Investor
Rights Agreement, to the extent such indemnification provisions may be limited
by applicable federal and state securities Laws and principles of public policy.
3.2. Organization, Good Standing, Corporate Power and Qualification.
The Company and each Major Subsidiary is duly incorporated or organized, as
applicable, and validly existing under the Laws of the jurisdiction of its
incorporation or formation, as applicable, and is in good standing under such
Laws. The Company and each Major Subsidiary is duly qualified to transact
business and is in good standing in each jurisdiction in which the failure to be
so qualified and/or be in good standing would have or result in, individually or
in the aggregate, a material adverse effect on the financial condition,
business, assets (including, without limitation, intangible assets), or
operations of the Company and the Subsidiaries, taken together (a "MATERIAL
ADVERSE EFFECT"). The Company and each Major Subsidiary has all requisite power
and authority to own and operate its respective properties and assets, to carry
on its business as presently conducted and as presently proposed to be conducted
and to enter into this Agreement and the Transaction Agreements and to perform
its obligations hereunder and thereunder, including, without limitation, the
issuance, sale and delivery of the Shares and the Conversion Shares.
4
3.3. Minutes. Copies of all minute books of the Company and each Major
Subsidiary that include all meeting minutes and consent actions of the Board of
Directors (the "BOARD") and stockholders of the Company and each such Major
Subsidiary, as the case may be, have been made available to Purchaser. These
copies are true and complete copies of all resolutions evidencing actions taken
by the Board of the Company and stockholders of the Company and each such Major
Subsidiary since its respective date of incorporation.
3.4. Subsidiaries. Schedule 3.4(a) of the Schedule of Exceptions sets
forth the name and jurisdiction of each Major Subsidiary and each Minor
Subsidiary as of the Effective Date. Except as set forth on Schedule 3.4(b) of
the Schedule of Exceptions, each Subsidiary is wholly-owned, directly or
indirectly, by the Company. Other than the Subsidiaries, the Company does not
own or control, directly or indirectly, any interest in, or participate in, any
other corporation, partnership, trust, joint venture, limited liability company,
association or other entity or similar arrangement. The shares of the capital
stock or membership or other equity interests, as applicable, of each of the
Subsidiaries owned by the Company are duly authorized, validly issued, fully
paid, and non-assessable, and free and clear of all Liens (as defined below). As
of the Effective Date, the outstanding securities of each of the Subsidiaries
are owned by the stockholders, optionholders, warrantholders and other
securityholders and in the numbers and by the class, series and type of each
security specified in Schedule 3.4(c) of the Schedule of Exceptions.
3.5. Capitalization; Valid Issuance of Stock.
(a) The authorized capital stock of the Company and the shares of
capital stock of the Company issued and outstanding on the Effective Date are as
set forth on Schedule 3.5(a)(i) of the Schedule of Exceptions. All of the
outstanding shares of the capital stock of the Company are duly authorized,
validly issued, fully paid and non-assessable, and free and clear of all Liens,
other than imposed by or through the holder of the securities. As of the
Effective Date, the outstanding securities of the Company are owned by the
stockholders, optionholders, warrantholders and other securityholders and in the
numbers and by the class, series and type of each security specified in Schedule
3.5(a)(ii) of the Schedule of Exceptions. In addition, Schedule 3.5(a)(iii) of
the Schedule of Exceptions sets forth a true and complete list, as of the
Effective Date, of all outstanding options and warrants issued by the Company,
including for each, the name of the grantee, number of shares subject to the
option or warrant granted, the exercise price per share, the vesting schedule,
if applicable, and the date of issuance. As of the Effective Date, Eagle River
and/or its affiliates hold, own or control, beneficially or of record, or have
the power to vote, the number of Voting Securities (as defined below) specified
in Schedule 3.5(a)(iv) of the Schedule of Exceptions.
(b) The Shares, when issued, sold and delivered in accordance
with the terms and for the consideration set forth in this Agreement, will be
duly authorized, validly issued, fully paid and non-assessable, and free and
clear of all Liens, other than Liens created by or imposed by Purchaser.
Additionally, the Shares are free of restrictions on transfer, other than
restrictions on transfer under this Agreement and the Stockholders Agreement, as
amended to date, and under applicable state and federal securities Laws. The
Company has and/or at Closing will have reserved 29,717,197 shares of its Class
A Common Stock for issuance to Purchaser
5
upon conversion of the Class B Common Stock to be issued to Purchaser hereunder
(the "CONVERSION SHARES"). The Conversion Shares have been and/or at the Closing
will have been duly and validly reserved for issuance and, upon issuance in
accordance with the terms of the Restated Certificate, will be duly and validly
issued, fully paid and non assessable and free of restrictions on transfer other
than restrictions on transfer under this Agreement and the Stockholders
Agreement, as amended to the date and the date of the Closing, and under
applicable state and federal securities Laws and free of any Liens, other than
Liens created by or imposed by Purchaser. Except as provided by the Stockholders
Agreement, which rights Eagle River and its affiliates have validly waived as of
the Effective Date, the sale and issuance of the Shares and the Conversion
Shares are not subject to any preemptive rights or rights of first refusal or
similar rights.
(c) As of the Effective Date, the Company has reserved 30,000,000
shares of its Class A Common Stock for issuance to officers, directors,
employees and consultants of the Company and the Subsidiaries under the
Company's 2003 Stock Option Plan, pursuant to which (i) no shares of Class A
Common Stock have been issued pursuant to stock purchase agreements, restricted
stock units or awards and the exercise of stock options, (ii) options to
purchase 27,589,599 shares of Class A Common Stock are outstanding, and (iii)
2,410,401 shares of Class A Common Stock remain available for the grant of
future options or other equity-based awards. Other than the Company's 2003 Stock
Option Plan and Stock Appreciation Rights Plan, and the individual stock bonus
arrangements entered into by the Company, each as listed on Schedule 3.5(c) of
the Schedule of Exceptions, neither the Company nor any Subsidiary has or is
bound by any stock plan, stock purchase, stock option or other similar benefit,
bonus or incentive plan or program. Other than as described in the first two
sentences of this Section 3.5(c), neither the Company nor any Subsidiary is
bound by, or has any obligation to grant or enter into, any outstanding
subscriptions, options, warrants, rights (including, without limitation,
conversion or pre-emptive rights), calls, commitments, or Contract of any
character calling for it to issue, deliver or sell, or cause to be issued,
delivered or sold, any shares or any other equity securities or equity
securities convertible into, exchangeable for, or representing the right to
subscribe for, purchase, or otherwise acquire any shares or any other equity
securities in the capital of the Company or any Subsidiary. The Company has made
available to Purchaser true and complete copies of the forms of all stock
restriction agreements with respect to the securities of the Company and any
Subsidiary.
(d) Except as set forth on Schedule 3.5(a) of the Schedule of
Exceptions, all outstanding options issued under the Company's 2003 Stock Option
Plan vest as follows: twenty-five percent (25%) of the shares vest one (1) year
following the vesting commencement date, with another twenty-five percent (25%)
vesting on each subsequent anniversary so that the option fully vests over four
(4) years from the vesting commencement date. The Company has never adjusted or
amended the exercise price of any stock options previously awarded, whether
through amendment, cancellation, replacement grant, repricing, or any other
means, except as required to comply with Section 409A of the Internal Revenue
Code of 1986, as amended (the "CODE"), which instances are described on Schedule
3.5(d) of the Schedule of Exceptions. No stock plan, stock purchase, stock
option, option agreement or other similar benefit, bonus or incentive plan or
program or other Contract between the Company and any holder of any equity
securities or rights to purchase equity securities provides for
6
acceleration or other changes in the vesting provisions, lapse of any Company
repurchase rights or other changes in the terms of such Contract as the result
of (i) termination of employment or consulting services (whether actual or
constructive) of any shareholder; (ii) any merger, consolidation, sale of stock
or assets, change in control or any other transaction(s) by the Company or any
Subsidiary; or (iii) the occurrence of any other event or combination of events.
(e) All Holders of outstanding shares of the Common Stock are
parties to and bound by the Stockholders Agreement. Similarly, with respect to
each person who, pursuant of any stock plan, stock purchase, stock option or
other similar benefit, bonus or incentive plan or program of the Company, holds
any currently outstanding shares of Common Stock or other securities of the
Company or any Subsidiary or any option, warrant or right to acquire such shares
or other securities, the Company has a right to require that each such person
enter into or otherwise be bound by a Contract granting the Company (i) a right
of first refusal in favor of the Company upon proposed transfer by such holder
of such Common Stock or other security; and (ii) a lock-up or market standoff
agreement of not less than 180 days following the Company's initial public
offering pursuant to a registration statement filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder (the "1933 ACT"). Other than the
Stockholders Agreement, as amended to date, neither the Company nor any
Subsidiary is a party or subject to any Contract, and, to the Company's
knowledge, there is no Contract between any persons and/or entities, which
affects or relates to the voting or giving of written consents with respect to
any security or by a director of the Company or any Subsidiary.
(f) Except as set forth in the Restated Certificate, neither the
Company nor any Subsidiary has any outstanding obligation, contractual,
contingent or otherwise, to repurchase, redeem, or otherwise acquire any shares
or other equity securities in the capital of the Company or any Subsidiary.
Except for rights granted under that certain Registration Rights Agreement of
the Company dated March 16, 2004, that certain Registration Rights Agreement of
the Company dated November 13, 2003, that certain Registration Rights Agreement
of the Company dated August 5, 2005, or to be granted to Purchaser under the
Investor Rights Agreement, neither the Company nor any Subsidiary is a party to
or bound by any Contract under which any person or entity has the right, nor has
the Company or any Subsidiary granted or agreed to grant to any person or entity
any right, including, without limitation, any piggyback or demand rights, to
require the Company or such Subsidiary to effect, or to include any securities
held by such person or entity in, any registration with the United States
Securities and Exchange Commission (the "SEC") or any other Government Authority
or to distribute any such securities to the public.
(g) All of the outstanding shares of capital stock, options,
warrants and other securities of the Company and the Subsidiaries were offered,
issued and sold in full compliance with the registration and prospectus delivery
requirements of the 1933 Act and the registration and qualification requirements
of all applicable state securities Laws, or in compliance with applicable
exemptions therefrom, and all other provisions of all applicable federal, state
and provincial securities Laws, including, without limitation, anti-fraud
provisions, except for such non-compliance as would not have or result in,
individually or in the aggregate, a Material Adverse Effect. Assuming the
accuracy of the representations of Purchaser set forth in
7
Section 4 hereof, the offer, issuance and sale of the Shares pursuant to this
Agreement are exempt from the registration requirements of Section 5 of the 1933
Act by virtue of Regulation D thereunder, from the qualification requirements of
the California Corporate Securities Law of 1968, as amended, and from the
registration or qualification requirements of all other applicable state
securities Laws, and the issuance of the Conversion Shares in accordance with
the Restated Certificate will be exempt from such registration and qualification
requirements.
3.6. Government and Third Party Consents. Except (i) for the filing of
the Restated Certificate, which will have been filed as of the Closing, (ii) for
filings pursuant to Regulation D of the 1933 Act and Section 25102(f) of the
California Corporation Code, which may and will be timely filed after the
Closing, and (iii) for filings required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder ("HSR ACT"), no consent, waiver, approval, order, permit,
authorization, declaration, notification, filing, designation, qualification or
registration ("CONSENT") of or with any Governmental Authority or any other
person is required to be made or obtained by the Company or any Major Subsidiary
in connection with (A) the execution and delivery of this Agreement or any of
the Transaction Agreements; or (B) the performance by the Company of its
obligations under this Agreement or the Transaction Agreements or the
consummation of the transactions contemplated hereby and thereby, other than
Consents required with respect to the performance of the Collaboration Agreement
after the date of the Closing that may be obtained after the Closing and for
which the Company does not currently believe that it will be unable to obtain in
a timely manner.
3.7. Title to Properties and Assets; Absence of Liens. The Company and
the Major Subsidiaries have good and marketable title to and own their
respective property and assets, including, without limitation, the property and
assets reflected in the unaudited consolidated balance sheet of the Company
dated March 31, 2006, free and clear of all mortgages, pledges, liens, deeds of
trust, claims of any kind, licenses, restrictions, security interests and other
encumbrances ("LIENS"), except such Liens imposed by Law that arise in the
ordinary course of business and do not materially impair the Company's or any
such Major Subsidiary's ownership or use of such property or assets. With
respect to the property and assets it leases (excluding any Spectrum Leases (as
defined below), which are covered by Section 3.23 hereof), the Company and each
Major Subsidiary, as the case may be, is in compliance with the lease covering
such property and assets and the Company or such Major Subsidiary, as
applicable, holds a valid leasehold interest in such leased property and assets
free of any Liens (other than those of the lessors of such property or assets),
except with respect to leases of which the termination or loss of rights would
not have or result in, individually or in the aggregate, a Material Adverse
Effect.
3.8. Tax Matters. The Company and each Major Subsidiary has duly and
timely filed all returns, declarations, reports, and information statements
("RETURNS") required to be filed in respect of any and all Taxes (as defined
below). All Returns filed by the Company or any each Major Subsidiary are true,
correct, and complete in all material respects. The Company and each Major
Subsidiary, as applicable, has paid all Taxes due and payable on a timely basis,
whether or not shown on such Returns, except those Taxes contested by the
Company in good faith that are listed in Schedule 3.8 of the Schedule of
Exceptions. There are no federal, state,
8
county or local Taxes of the United States (including, without limitation any
federal, state or local government agency) or Taxes of jurisdictions outside the
United States due and payable by the Company or any Subsidiary which have not
been timely paid, except where the failure to timely pay such Taxes would not
have or result in, individually or in the aggregate, a Material Adverse Effect.
The provision for Taxes as shown in the Financial Statements (as defined below)
is adequate for the payment of, and are at least equal to all unpaid Taxes of
the Company and the Subsidiaries, due or accrued, whether or not assessed or
disputed, as of the date of the Financial Statements. The Company has not
elected pursuant to the Code, to be treated as an "S" corporation pursuant to
Section 1362(a) of the Code or a collapsible corporation pursuant to Section
341(f) of the Code, and neither the Company nor any Major Subsidiary has made
any other elections pursuant to the Code (other than elections that relate
solely to methods of accounting, depreciation, or amortization) that would have
or result in, individually or in the aggregate, a Material Adverse Effect. None
of the Returns has ever been audited by any applicable Governmental Authority,
and there is no current audit, investigation, Action (as defined below) or
deficiency proposed or assessed against the Company or any Major Subsidiary with
respect to Taxes. Neither the Company nor any Major Subsidiary has executed any
waiver of any statute of limitations on the assessment or collection of any
Taxes. Since the date of the Financial Statements, neither the Company nor any
Major Subsidiary has incurred any Taxes other than in the ordinary course of
business, and the Company and each Major Subsidiary has made adequate provisions
on its books of account for all Taxes with respect to its business, properties
and operations for such period. There are no Liens for Taxes upon any of the
assets of the Company or any Major Subsidiary, except Liens for Taxes not yet
due and payable. The Company and each Major Subsidiary have withheld and
collected all Taxes required to be withheld or collected under the Code or other
applicable Law, and has paid such Taxes to the proper Governmental Authority,
all on a timely basis. Neither the Company nor any Major Subsidiary has been a
"distributing corporation" or a "controlled corporation" in connection with a
distribution described in Section 355 of the Code. Neither the Company nor any
Major Subsidiary has ever been a member of an affiliated group of corporations,
within the meaning of Section 1504 of the Code (or any predecessor provision or
comparable provision of state, local or foreign Law), or a member of combined,
consolidated or unitary group for state, local or foreign Tax purposes, other
than the group of which the Company is the common parent. Neither the Company
nor any Major Subsidiary has any liability for Taxes of any person (other than
the Company or such Major Subsidiary) under Treasury Regulations Section
1.1502-6 (or any corresponding provision of state, local or foreign income Tax
Law), as transferee or successor, or pursuant to a contract. Neither the Company
nor any Major Subsidiary has engaged in a transaction that constitutes a
"reportable transaction", as such term is defined in Treasury Regulation Section
1.6011-4(b)(1), or a transaction that constitutes a "listed transaction", as
such term is defined in Treasury Regulation Section 1.6011-4(b)(2). For purposes
of this Agreement, the term "TAXES" means (i) all charges, fees, levies, or
other assessments, including, without limitation, all net income, gross income,
gross receipts, sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, social security, unemployment, excise,
estimated, severance, stamp, occupation, property, or other taxes, together with
all interest and penalties on such taxes, (ii) any liability for payment of
amounts described in clause (i) whether as a result of transferee liability, of
being a member of an affiliated, consolidated, combined or unitary group for any
period, or otherwise through operation of Law, and (iii) any liability for the
payment of amounts described in clauses (i) or (ii) as a result of any tax
sharing,
9
tax indemnity or tax allocation Contract or any other express or implied
Contract to indemnify any other person..
3.9. Litigation. There is no litigation, arbitration, action, claim,
suit, proceeding or, to the Company's knowledge, investigation (whether
conducted by or before any judicial or regulatory body, Governmental Authority,
arbitrator, or other person) ("ACTION") pending or, to the knowledge of the
Company, threatened or contemplated, (i) against the Company or any Major
Subsidiary, or any or their respective activities, properties or assets, (ii) to
the Company's knowledge, against any officer, director or employee of the
Company or any Subsidiary in connection with such officer's, director's or
employee's relationship with, or actions taken on behalf of the Company, or
(iii) that questions the validity of this Agreement or the Transaction
Agreements or the right of the Company to enter into them, or to perform its
obligations hereunder and thereunder or to consummate any of the transactions
contemplated by this Agreement or the Transaction Agreements. Neither the
Company, nor any Major Subsidiary, nor, to the Company's knowledge, any of their
respective officers, directors or employees, is a party or subject to the
provisions of any order, writ, injunction, judgment, ruling or decree ("ORDER")
of any court or Governmental Authority or instrumentality (in the case of
officers, directors and employees, such as would affect the Company or any Major
Subsidiary). There is no Action by the Company or any Subsidiary currently
pending or that the Company or any Subsidiary currently intends to initiate.
3.10. Compliance with Other Instruments. Neither the Company nor any
Major Subsidiary is in, nor shall the conduct of its respective business as now
conducted and as presently proposed to be conducted result in, any violation,
breach or default of (i) any existing or, to the extent known to the Company,
currently proposed Order or Law of any court or other tribunal or of any
Governmental Authority, (ii) any Contract, to which the Company or any Major
Subsidiary is a party or by which the Company or any Major Subsidiary or any of
their respective properties may be bound, (iii) any provision of the Restated
Certificate, the Bylaws, the charter, bylaws and/or other governing documents of
each of the Subsidiaries, or the Stockholders Agreement, each as amended to the
date, or (iv) the provisions of any Laws of the United States (including,
without limitation any federal, state or local government agency) and
jurisdictions outside the United States applicable to or binding upon the
Company or any Major Subsidiary, except as would not have or result in,
individually or in the aggregate, a Material Adverse Effect.
3.11. Interested Party Transactions. There are no Contracts or
proposed transactions between the Company or any Major Subsidiary and any of
their respective officers, directors, stockholders, affiliates, or any affiliate
thereof. To the Company's knowledge, none of the Company's or any Major
Subsidiary's directors or any Key Employees (as defined below), or any members
of their immediate families, or any "AFFILIATE" (as defined in Rule 405
promulgated under the 1933 Act) of any such person has or has had, either
directly or indirectly, a material interest in: (a) any person or entity which
purchases from or sells, licenses or furnishes to the Company or any Major
Subsidiary any goods, property, technology, intellectual or other property
rights or services; (b) any firm or corporation with which the Company or any
Major Subsidiary is affiliated or with which the Company or any Major Subsidiary
has a business relationship, or (c) any firm or corporation which competes with
the Company or any Major
10
Subsidiary, except that directors, officers or Key Employees or members of their
immediate families may own stock in (but not exceeding one percent (1%) of the
outstanding capital stock of) publicly traded companies. To the Company's
knowledge, none of the Company's or any Major Subsidiary's directors or any Key
Employees, or any members of their immediate families, or affiliates of any such
person has or has had, either directly or indirectly, a material interest in any
Contract to which the Company or any Major Subsidiary is a party or by which it
may be bound or affected (other than such Contracts as relate to any such
person's ownership of capital stock or other securities of the Company). None of
the Company's or any Major Subsidiary's directors or any Key Employees, or any
members of their immediate families, or affiliates of any such person has or has
had, either directly or indirectly, a material commercial, industrial, banking,
consulting, legal, accounting, charitable or familial relationship with any of
the Company's or any Major Subsidiary's customers, suppliers, service providers,
joint venture partners, licensees and competitors.
3.12. Agreements; Actions.
(a) As of the Effective Date, there are no Contacts (oral or
written) or proposed transactions to which the Company or any Major Subsidiary
is a party or by which any of them is bound that may involve (i) obligations
(contingent or otherwise) of, or payments to the Company or any Major Subsidiary
in excess of, $5,000,000, (ii) indemnification by the Company or any Major
Subsidiary of any person or entity with respect to infringement of Proprietary
Rights outside the ordinary course of the Company's or any Major Subsidiary's
business, (iii) the acquisition, lease, sublease, license, transfer or
assignment of BRS or EBS spectrum, (iv) the license of any patent, copyright,
trade secret or other proprietary right to or from the Company or any Major
Subsidiary, other than standard end-user object code license agreements, or (v)
the granting of any rights or any provisions that, individually or in the
aggregate, materially restrict or adversely affect the development, manufacture,
production, assembly, licensing, marketing, distribution or sale of the
Company's or any Major Subsidiary's products or services (each a "MATERIAL
CONTRACT" and, collectively, the "MATERIAL CONTRACTS").
(b) Neither the Company nor any Major Subsidiary has (i) declared
or paid any dividends or authorized or made any distribution upon or with
respect to any class or series of its capital stock, (ii) incurred any
indebtedness for money borrowed or any other liabilities individually in excess
of $5,000,000 or, in the case of indebtedness and/or liabilities individually
less than $5,000,000, in excess of $10,000,000 in the aggregate, (iii) made any
loans or advances to any person, other than ordinary advances for travel or
other out-of-pocket expenses, or (iv) sold, exchanged or otherwise disposed of
any of its assets or rights, other than the sale of its inventory in the
ordinary course of business. For the purposes of this Section 3.12(b), all
indebtedness, liabilities, Contracts or transactions subject to a binding
agreement or understanding involving the same person or entity (including,
without limitation, persons or entities the Company has reason to believe are
affiliated with each other) shall be aggregated for the purpose of meeting the
individual minimum dollar amounts of this Section 3.12(b).
(c) Each of the Material Contracts is a valid, binding and
enforceable obligation of the Company or such Major Subsidiary, as the case may
be, and, to the knowledge
11
of the Company, of the other party or parties thereto, in each case, enforceable
in accordance with its terms, subject, as to enforcement of remedies, to
applicable bankruptcy, insolvency, moratorium, reorganization and similar Laws
affecting creditors' rights generally and to general equitable principles, and
is in full force and effect. Neither the Company, nor any Major Subsidiary is in
material default or breach of or in non-compliance with any term of any Material
Contract, nor, to the Company's knowledge, does any other party to a Material
Contract consider the Company or such Major Subsidiary to be in default or
breach of or in non-compliance with any term of such Material Contract, nor, to
the knowledge of the Company, is there any basis for any of the foregoing. To
the Company knowledge, no other party to a Material Contract is in default or
breach of or in non-compliance with any term of such Material Contract, except
as would not have or result in, individually or in the aggregate, a Material
Adverse Effect.
(d) No employee, officer, director, stockholder or equityholder
of the Company or any Major Subsidiary or any member of his or her immediate
family is indebted to the Company or any Major Subsidiary, nor is the Company or
any Major Subsidiary indebted (or committed to make loans or extend or guarantee
credit) to any of them, other than in connection with expenses or advances of
expenses incurred in the ordinary course of business or employee relocation
expenses.
3.13. Disclosure. The Company has fully provided Purchaser with all of
the information that Purchaser has requested for deciding whether to acquire the
Shares. None of this Agreement (including, without limitation and as qualified
by all exhibits and schedules hereto), the Transaction Agreements or any other
written statements or certificates made by or on behalf of the Company or any
Major Subsidiary in connection with this Agreement or any of the Transaction
Agreements or any of the transactions contemplated hereby or thereby, contains
any untrue statement of a material fact or omits to state a material fact
necessary to be stated therein or necessary in order to make the statements
herein or therein not misleading in light of the circumstances under which they
were made.
3.14. Intellectual Property.
(a) Proprietary Rights. The Company and the Major Subsidiaries
have good title and ownership of, or have exclusive, perpetual license to, all
patents, patent applications, trademarks, service marks, trade names,
copyrights, maskworks, trade secrets, information, proprietary rights, designs,
processes and similar intellectual property (collectively, the "PROPRIETARY
RIGHTS") necessary to enable them to carry on their respective business as now
conducted and as presently proposed to be conducted without any conflict with or
infringement of the rights of others. No third party has any ownership right,
title, interest, claim in, encumbrance or Lien on any of the Company's or any
Major Subsidiary's Proprietary Rights and the Company and each Major Subsidiary
has taken all steps reasonably necessary to preserve its legal rights in, and
the secrecy, confidentiality and value of, all its Proprietary Rights, except
for disclosure which is required for legitimate business or legal reasons.
Schedule 3.14(a) of the Schedule of Exceptions contains with respect to
Proprietary Rights of the Company and/or any Major Subsidiary, a true, correct
and complete list of (i) each patent and patent application, the patent number
or application serial number for each jurisdiction in which filed, the
jurisdiction, date filed or issued, and present status thereof; (ii) each
trademark, service mark and trade name,
12
whether registered, applied for and unregistered, and if registered or applied
for, the application serial number or registration number (if registered) for
each jurisdiction in which filed, the jurisdiction, date filed or issued,
present status thereof, and the class of goods covered or the nature of the
goods or services, (iii) for any URL or domain name, the registration date, any
renewal date and name of registry; and (iv) for each registered copyrighted
work, the number and date of registration for each country, province and state,
in which a copyright application has been registered. The Company and the Major
Subsidiary's own all of such Proprietary Rights free and clear of all Liens,
licenses and other encumbrances. No Company or any Major Subsidiary patent,
patent application, registered trademark, service mark and trade name nor
registered copyrighted work has been or is currently involved in any
interference, reissue, reexamination, opposition, cancellation or similar
proceeding and, to the Company's knowledge, no such action is or has been
threatened with respect to any of the foregoing.
(b) Licenses; Other Agreements. Neither the Company or any Major
Subsidiary has granted, and there are not outstanding, any options or Contracts
of any kind relating to any Proprietary Rights of the Company or any Major
Subsidiary, nor is the Company or any Major Subsidiary bound by or a party to
any option or Contract of any kind with respect to any of its respective
Proprietary Rights. Neither the Company or any Major Subsidiary is in violation
of, or by conducting its business as now conducted or as presently proposed to
be conducted, would violate, any licenses with respect to the Proprietary Rights
to which the Company or any Major Subsidiary is a party to, including, without
limitation, any software licenses or open source licenses.
(c) No Infringement. To the Company's knowledge, neither the
Company nor any Major Subsidiary (i) has violated or infringed, (ii) is
currently violating or infringing or (iii) by conducting its respective business
as presently proposed to be conducted, will violate or infringe, any of the
Proprietary Rights of any other person or entity. Neither the Company nor any
Major Subsidiary has received any written or, to the Company's knowledge, verbal
communications alleging that the Company or any Major Subsidiary (or any of its
employees or consultants) has violated or infringed or, by conducting its
business as now conducted or as presently proposed to be conducted, would
violate or infringe, any Proprietary Rights of any other person or entity nor,
to the Company's knowledge, is there any factual or legal basis therefor. To the
Company's knowledge, no person or entity has violated or infringed or is
currently violating or infringing any of the Company's or any Major Subsidiary's
Proprietary Rights.
(d) Licenses from Third Parties; Royalties; Open Source Software.
Other than with respect to commercially available software products under
standard end-user object code license agreements, neither the Company nor any
Major Subsidiary is bound by or a party to any options or Contracts of any kind
relating to the Proprietary Rights of any person or entity. Neither the Company
nor any Major Subsidiary is obligated to pay any royalties or other payments to
any person or entity with respect to the marketing, sale, distribution,
manufacture, license or use of any Proprietary Rights in connection with the
conduct of the Company's or any Major Subsidiary's business. Neither the Company
nor any Major Subsidiary has embedded any open source, copyleft or community
source code in any of its products generally available or in
13
development, including, but not limited to, any libraries or code licensed under
any General Public License, Lesser General Public License or similar license
arrangement.
(e) Employee NDAs. Each current and former officer, employee and
consultant of the Company or any Major Subsidiary, including, without
limitation, each Key Employee, has executed in the Company's favor a standard
agreement regarding confidentiality and proprietary information used by the
Company or any Major Subsidiary and assignment of intellectual property rights
in favor of the Company and/or any such Major Subsidiary substantially in the
form of the Employee Non-Compete Agreement attached to this Agreement as Exhibit
D, and all such agreements are in full force and effect. To the Company's
knowledge, none of its current or former employees, officers and consultants is
in violation thereof. No such person has excluded works or intellectual property
rights made prior to his or her employment or other contractual relationship
with the Company or any Major Subsidiary from his or her assignment of
inventions pursuant to such agreement. Subject to any limitations on such
vesting imposed by applicable Law, full title and ownership of all inventions
and proprietary rights, processes or methods developed or invented by any and
all employees and consultants of the Company or any Major Subsidiary during the
period of their employment and/or consultancy and resulting directly or
indirectly from their work for the Company or any Major Subsidiary vest in the
Company or such Major Subsidiary pursuant to each such agreement.
(f) No Breach by Employee. To the Company's knowledge, (i) none
of the Company's or any Major Subsidiary's employees or consultants are
obligated under any Contract of any nature or subject to any Order of any court
or Governmental Authority, or any other restriction that would interfere with
the use of his or her best efforts to carry out his or her duties for the
Company or any Major Subsidiary or to promote the interests of the Company or
any Major Subsidiary or that would conflict with the Company's or any Major
Subsidiary's business as now conducted and as presently proposed to be conducted
and (ii) none of the Company's or any Major Subsidiary's employees or
consultants is, by virtue of such employee's or consultant's activities in
connection with the Company's or any Major Subsidiary's business, infringing, or
misappropriating any Proprietary Rights of any former employer of such employee
or consultant. Neither the execution or delivery of this Agreement or the
Transaction Agreements, nor the carrying on of the Company's or any Major
Subsidiary's business by the employees and consultants of the Company or any
Major Subsidiary, nor the conduct of the Company's or any Major Subsidiary's
business will, to the Company's knowledge, conflict with or result in a breach
of the terms, conditions or provisions of, or constitute a default under, any
Contract, covenant or instrument under which any of such employees or
consultants or the Company or any Major Subsidiary is now obligated. It will not
be necessary for the Company or any Major Subsidiary to utilize any inventions
of any of the employees of the Company or any Major Subsidiary (or persons the
Company or any Major Subsidiary currently intends to hire) made prior to or
outside the scope of their employment by the Company or such Major Subsidiary to
enable the Company or any Major Subsidiary to carry on its respective business
as now conducted and as presently proposed to be conducted. To the Company's
knowledge, at no time during the conception of or reduction of any of the
Company's or any Major Subsidiary's Proprietary Rights to practice was any
developer, inventor or other contributor to the Company's or any Major
Subsidiary's patents operating under any grants from any governmental entity or
agency or private source, performing research sponsored by any governmental
entity or agency
14
or private source or subject to any employment agreement or invention assignment
or nondisclosure agreement or other obligation with any third party that could
adversely affect the Company's or any Major Subsidiary's rights in such
Proprietary Rights.
(g) Neither (A) the wireless broadband services offered by the
Company or any Major Subsidiary, nor (B) any systems or data bases of the
Company or any Major Subsidiary or any information contained thereon, have
experienced (i) any failures, including, without limitation, those related to
the continuous provision of service, (ii) any breaches of security or (iii) any
instances of hacking which would have or result in, individually or in the
aggregate, a Material Adverse Effect.
3.15. Financial Statements. The Company has delivered to Purchaser the
audited consolidated financial statements of the Company (balance sheet and
income statement, statement of shareholders' equity and statement of cash flows)
as of December 31, 2003, December 31, 2004 and December 31, 2005 and for the
fiscal years then ended and unaudited financial statements (balance sheet and
income statement) as of March 31, 2006 and for the three months then ended (the
"FINANCIAL STATEMENTS"). The Financial Statements (i) are in accordance with the
books and records of the Company and the Subsidiaries (which are true and
complete in all material respects), and (ii) have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods indicated, except that the unaudited Financial Statements
do not contain all footnotes and normal year-end audit adjustments that are not,
individually or in the aggregate, material. The Financial Statements fairly
present in all material respects the financial condition and operating results
of the Company and the Subsidiaries as of the dates, and for the periods,
indicated therein, subject to normal audit adjustments with respect to the March
31 2006 Financial Statements. Except as set forth in the Financial Statements,
neither the Company nor any Subsidiary has any debts, liabilities or obligations
of any nature, whether due or to become due, (including, without limitation,
absolute liabilities, accrued liabilities, and contingent liabilities) or with
respect to which the Company or any Subsidiary has otherwise become directly or
indirectly liable, other than (i) liabilities incurred in the ordinary course of
business subsequent to March 31, 2006, and (ii) liabilities and obligations
under contracts and commitments incurred in the ordinary course of business and
not required under generally accepted accounting principles to be reflected in
the Financial Statements, which, in all such cases, individually or in the
aggregate, would not have or result in a Material Adverse Effect.
3.16. Indebtedness; Guarantees. Schedule 3.16 of the Schedule of
Exceptions identifies, as of the Effective Date, all outstanding loans, debts,
notes, mortgages, indentures, security agreements, commitments and other
obligations of the Company or any Major Subsidiary individually in excess of
$5,000,000 or, in the case of such obligations individually less than
$5,000,000, in excess of in the aggregate $10,000,000 (collectively, the
"OBLIGATIONS"). Neither the Company nor any Major Subsidiary is in default under
(or has received any notice that it has breached or committed any default under)
any of the Obligations, and no event or condition has occurred which, with the
lapse of time or the giving of notice, or both, would constitute such a default.
Neither the Company nor any Subsidiary is a guarantor or indemnitor of any
indebtedness of any person or entity, including, without limitation, any
Subsidiary that is not wholly-owned.
15
3.17. Permits. The Company and the Major Subsidiaries have all
franchises, permits, Consents, licenses, leases and any similar authority
necessary for the conduct of its business as now being conducted, and the
Company believes it can obtain, without undue burden or expense, any similar
authority for the conduct of its business as presently proposed to be conducted.
Neither the Company nor any Major Subsidiary is in default in any respect under
any of such franchises, permits, Consents, licenses, leases or other similar
authority.
3.18. Absence of Certain Events. Since March 31, 2006, there has not
been:
(i) any change in the assets, liabilities, financial condition or
operating results of the Company or any Subsidiary from that reflected in the
Financial Statements, except changes in the ordinary course of business that
have not had and would not have or result in, individually or in the aggregate,
a Material Adverse Effect;
(ii) any material damage, destruction or loss, whether or not
covered by insurance, that has had or would have or result in, individually or
in the aggregate, a Material Adverse Effect;
(iii) any waiver, compromise or default by the Company or any
Subsidiary of a valuable right or of an Obligation or other material debt or
obligation owed to it;
(iv) any satisfaction or discharge of any Lien or payment of any
obligation by the Company or any Subsidiary, except in the ordinary course of
business and that is not material to the assets, properties, financial
condition, operating results or business of the Company and its Subsidiaries
taken together;
(v) any transfer of or granting of any security interest in any
material asset of the Company or any Subsidiary;
(vi) any change or amendment to a Material Contract or other
material arrangement by which the Company or any Major Subsidiary or any of
their respective assets or properties is bound or subject;
(vii) any change in any compensation arrangement or Contract with
any present or prospective Key Employee, officer or director of the Company or
any Subsidiary, other than changes in the ordinary course of business that do
not exceed $25,000 on an annual basis for any individual Key Employee, officer
or director;
(viii) any resignation or termination of the employment of any
Key Employee or director of the Company or any Major Subsidiary;
(ix) any Lien, created by the Company or any Major Subsidiary,
with respect to any of its properties or assets, except Liens for taxes not yet
due or payable and Liens that arise in the ordinary course of business and do
not materially impair the Company's or any Major Subsidiary ownership or use of
such property or assets;
16
(x) any loans or guarantees made by the Company or any Subsidiary
to or for the benefit of its employees, officers or directors, or any members of
their immediate families, other than travel advances and other advances made in
the ordinary course of its business;
(xi) any declaration, setting aside or payment or other
distribution in respect of any capital stock of the Company's or any Subsidiary
that is not wholly-owned by the Company, or any direct or indirect redemption,
purchase, or other acquisition of any of such stock by the Company or any such
Subsidiary;
(xii) any sale, assignment or transfer of any Company's or any
Major Subsidiary's Proprietary Rights;
(xiii) receipt of notice that there has been a loss of, or
material order cancellation by, any major customer of the Company or any Major
Subsidiary;
(xiv) any other events or conditions of any character which would
have or result in, individually or in the aggregate, a Material Adverse Effect;
or
(xv) any Contract or commitment by the Company or any Subsidiary
to do any of the things described in this Section 3.18.
3.19. Environmental Matters. Neither the Company nor any Major
Subsidiary is in violation of any applicable Law relating to the environment or
occupational health and safety, and no material expenditures are or will be
required in order to comply with any such existing Law. During the period that
the Company or any Major Subsidiary has owned, licensed or leased its properties
and facilities, (a) there have been no disposals, releases or threatened
releases of Hazardous Materials (as defined below) on, from or under such
properties or facilities, (b) neither the Company nor any Major Subsidiary nor,
to the Company's knowledge, any third party, has used, generated, manufactured
or stored on, under or about such properties or facilities or transported to or
from such properties or facilities any Hazardous Materials. To the Company's
knowledge, there have been no disposals, releases or threatened releases of, of
nor the presence of any, Hazardous Materials on, from or under any of such
properties or facilities, which may have occurred prior to the Company or any
Major Subsidiary having taken possession of any of such properties or
facilities. For the purposes of this Section 3.19, the terms "disposal,"
"release," and "threatened release" shall have the definitions assigned thereto
by the Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. Section 9601 et seq., as amended ("CERCLA"). For the purposes of
this Section 3.19, "HAZARDOUS MATERIALS" shall mean any hazardous or toxic
substance, material or waste which is regulated under, or defined as a
"hazardous substance," "pollutant," "contaminant," "toxic chemical," "hazardous
material," "toxic substance," or "hazardous chemical" under (i) CERCLA; (ii) the
Emergency Planning and Community Right-to-Know Act, 42 U.S.C. Section 11001 et
seq.; (iii) the Hazardous Materials Transportation Act, 49 U.S.C. Section 5101,
et seq.; (iv) the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.;
(v) the Occupational Safety and Health Act of 1970, 29 U.S.C. Section 651 et
seq.; (vi) regulations promulgated under any of the above statutes; or (vii) any
applicable state or local statute,
17
ordinance, rule, or regulation that has a scope or purpose similar to those
statutes identified above.
3.20. Insurance. The Company and the Major Subsidiaries maintain
insurance issued by insurers of recognized financial responsibility of the types
and in the amounts that are adequate for its businesses and consistent with
insurance coverage maintained by similar companies in similar businesses,
including, but not limited to, insurance covering directors and officers, errors
and omissions, commercial general liability, products liability and real and
personal property owned or leased by the Company or any Major Subsidiary against
theft, damage, destruction, acts of vandalism and all other risks customarily
insured against, all of which insurance is in full force and effect. The Company
and/or each Major Subsidiary is in compliance with the terms of all such
insurance policies, except to the extent that any such non-compliance could
result in the suspension or termination of such insurance policy, and has not
received notice of default under any such insurance policy or received notice of
any pending or threatened termination or cancellation, coverage limitation or
reduction or premium increase with respect to any such insurance policy, and the
Company has no reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business
without a material increase in cost or risk. Neither the Company nor any Major
Subsidiary has during the past three fiscal years been denied any insurance
coverage which it has sought or for which it has applied.
3.21. Certain Business Practices. Neither the Company nor any Major
Subsidiary nor any officer, director, agent or employee purporting to act on
behalf of the Company or any Major Subsidiary has at any time, directly or
indirectly, (i) made, provided or paid any unlawful contributions, gifts,
entertainment or other unlawful expenses to any candidate for political office,
or failed to disclose fully any such contributions in violation of Law, (ii)
made any payment to any local, state, federal or foreign governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments required or allowed by applicable Law (including, without
limitation, the Foreign Corrupt Practices Act of 1977, as amended), (iii) made
any payment to any agent, employee, officer or director of any entity to which
the Company or any Major Subsidiary does business for the purpose of influencing
such agent, employee, officer or director to do business with the Company or
such Major Subsidiary, (iv) engaged in any transactions, maintained any bank
account or used any corporate funds, except for transactions, bank accounts and
funds which have been and are reflected in the normally maintained books and
records of the Company and/or such Major Subsidiary, (v) violated any provision
of the Foreign Corrupt Practices Act of 1977, as amended, or (vi) made any
payment in the nature of criminal bribery or any other unlawful payment.
3.22. Employee Matters.
(a) Agreements; "At will" Employment. As of the Effective Date,
the Company and the Major Subsidiaries employ that number of full-time employees
and that number of part-time employees and engage that number of consultants or
independent contractors as set forth on Schedule 3.22(a) to the Schedule of
Exceptions. All of the employees of the Company in the United States are
employed by the Company or Clearwire US LLC.
18
Other than (i) standard director and officer indemnification agreements approved
by the Board of the Company, (ii) with regard to the purchase of shares of the
Company's Class A Common Stock and the issuance of options to purchase shares of
the Company's Class A Common Stock, in each instance, approved by the Board of
the Company or a committee to which the Board of the Company has delegated the
responsibility, and (iii) agreements disclosed in Schedule 3.22(a)(iii) of the
Schedule of Exceptions, there are no Contracts or proposed transactions between
the Company or any Major Subsidiary and any of their respective its employees,
officers or directors. No employee of the Company or any Major Subsidiary has
been granted the right to continued employment and the employment of each
employee is terminable at the will of the Company or such Major Subsidiary and
the employee.
(b) Severance Agreements. No plan, policy, practice, program or
Contract between the Company or any Major Subsidiary and any employee provides
for the payment of compensation, severance benefits or continuation of benefits
(other than as required by COBRA) as the result of (i) termination of employment
or consulting services (whether actual or constructive); (ii) any merger,
consolidation, sale of stock or assets, change in control or any other
transaction(s) by the Company or any Major Subsidiary; or (iii) the occurrence
of any other event or combination of events.
(c) Compliance with Laws; Withholding Obligations. Neither the
Company nor any Major Subsidiary is delinquent in payments to any of its
employees, consultants, or independent contractors for any wages, salaries,
commissions, bonuses, or other direct compensation for any service performed for
it or amounts required to be reimbursed to such employees, consultants, or
independent contractors. To the Company's knowledge, the Company and the Major
Subsidiaries have complied with all applicable state and federal equal
employment opportunity Laws and with other Laws related to employment including,
but not limited to, those related to wages, hours, worker classification, and
collective bargaining, and the Company is not aware of any pending demand
letters, charge, claims or lawsuits alleging violations of such Laws. The
Company and the Major Subsidiaries have withheld and paid to the appropriate
governmental entity or is holding for payment not yet due to such governmental
entity all amounts required to be withheld from employees of the Company or any
Major Subsidiary including, but, not limited to, federal income taxes, Federal
Insurance Contribution Act taxes and Federal Unemployment Tax Act taxes required
to be withheld or collected therefrom, and is not liable for any arrears of
wages, taxes, penalties, or other sums for failure to comply with any of the
foregoing.
(d) Employee Departures. To the Company's knowledge, no officer
or Key Employee intends to terminate employment with the Company or any Major
Subsidiary or is otherwise likely to become unavailable to continue as an
officer or employee, nor does the Company or any Major Subsidiary have a present
intention to terminate the employment of any of the foregoing. Schedule 3.22(d)
of the Schedule of Exceptions lists those individuals who are agreed to be
"officers" and/or "key employees" of the Company and the Major Subsidiaries (the
"KEY EMPLOYEES") for the purposes of this Agreement.
(e) Equity Incentives. Neither the Company nor any Major
Subsidiary has made any representations regarding equity incentives to any
officer, employees, director or
19
consultant that are inconsistent with the share amounts and terms set forth in
the minutes and actions by written consent of Board of the Company.
(f) Termination of Employment; Release of Claims. Each former
officer or key employee whose employment was terminated by the Company or a
Major Subsidiary has entered into an agreement with the Company or such Major
Subsidiary providing for the full release of any claims against the Company,
Major Subsidiary and any related party arising out of such employment.
(g) Employee Benefit Plans. Section 3.22(g) of the Schedule of
Exceptions sets forth each employee benefit plan maintained, established or
sponsored by the Company or any Major Subsidiary, or which the Company or any
Major Subsidiary participates in, contributes to or is subject to and further
indicates which plans are subject to the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"). The Company and each Major Subsidiary has made
all required contributions and has no liability to any such employee benefit
plan, other than contributions that are in the process of being completed on a
timely basis and liability for health plan continuation coverage described in
Part 6 of Title I(B) of ERISA, and has complied in all material respects with
all applicable Laws for any such employee benefit plan.
(h) Organized Labor. Neither the Company nor any Major Subsidiary
is bound by or subject to (and none of its assets or properties is bound by or
subject to) any written or oral, express or implied, contract, commitment or
arrangement with any labor union, and no labor union has requested or, to the
Company's knowledge, has sought to represent any of the employees,
representatives or agents of the Company or any Major Subsidiary. There is no
strike or other labor dispute involving the Company or any Major Subsidiary
pending, or to the Company's or any Major Subsidiary's knowledge, threatened,
nor is the Company or any Major Subsidiary aware of any labor organization
activity involving its employees.
(i) Actions Against Officers and Directors. To the Company's
knowledge, none of the directors of the Company or any Major Subsidiary or the
Key Employees has been (i) subject to voluntary or involuntary petition under
the federal bankruptcy Laws or any state insolvency Law or the appointment of a
receiver, fiscal agent or similar officer by a court for his or her business or
property, or any partnership in which he or she was a general partner or any
corporation or business association of which he or she was an executive officer;
(ii) convicted in a criminal proceeding or named as a subject of a pending
criminal proceeding (excluding traffic violations and other minor offenses);
(iii) subject to any Order (not subsequently reversed, suspended, or vacated) of
any court of competent jurisdiction permanently or temporarily enjoining him
from engaging, or otherwise imposing limits or conditions on his engagement in
any securities, investment advisory, banking, insurance, or other type of
business or acting as an officer or director of a public company; or (iv) found
by a court of competent jurisdiction in a civil action or by the SEC or the
Commodity Futures Trading Commission to have violated any federal or state
securities, commodities, or unfair trade practices Law, which such judgment or
finding has not been subsequently reversed, suspended, or vacated.
20
3.23. FCC Matters.
(a) The Company and its direct or indirect Subsidiaries, Fixed
Wireless Holding, LLC, Clearwire Spectrum Holdings LLC, Winbeam Inc., Jonsson
Communications Corporation, Craig Wireless Honolulu, Unison Wireless, Inc.,
Clearwire Technologies, Inc., Clearwire Spectrum Corp. and Clearwire
Communications, Inc. (collectively, the "COMPANY FCC LICENSE HOLDERS") validly
hold the Federal Communications Commission ("FCC") licenses, permits and
authorizations set forth on Schedule 3.23(a) of the Schedule of Exceptions (the
"COMPANY FCC AUTHORIZATIONS"), true and correct copies of which have been made
available to Purchaser. Schedule 3.23(a) of the Schedule of Exceptions sets
forth all of the licenses, permits and authorizations issued by the FCC that are
currently held by the Company or any of the Subsidiaries.
(b) The Company FCC License Holders' wireless systems operating
in whole or in part on BRS spectrum or EBS spectrum (the "SYSTEMS") utilize
spectrum licensed by the FCC to third parties (each a "LESSOR") that is made
available for use by the Company FCC License Holders under certain spectrum
leases, subleases, capacity use agreements or other similar arrangements between
the Company FCC License Holders and the Lessors (each such arrangement, together
with all together with all amendments, waivers, notices, and ancillary
agreements related thereto (whether written or oral), a "SPECTRUM LEASE").
Schedule 3.23(b) of the Schedule of Exceptions sets forth for each Spectrum
Lease: (i) name of the Lessor and the Lessee, (ii) whether such lease is a De
Facto Transfer Lease entered into pursuant to Section 1.9010 of the FCC's Rules,
a Spectrum Manager Lease entered into pursuant to Section 1.9020 of the FCC's
Rules or a "grandfathered" lease pursuant to Section 27.1214 or Section 27.1215
of the FCC's Rules; (iii) the specific channel names and number of channels
covered by such Spectrum Lease; (iv) the call sign and geographic market for
each FCC license, permit and authorization that is covered by such Spectrum
Lease (collectively, the "LEASED FCC AUTHORIZATIONS"); and (v) the expiration
date of each Leased FCC Authorization. Schedule 3.23(b) sets forth all of the
Spectrum Leases that are currently held by the Company or any of the
Subsidiaries and each of the Leased FCC Authorizations thereunder. True and
correct copies of all Spectrum Leases and Leased FCC Authorizations have been
made available to Purchaser
(c) The Company FCC Authorizations and the Leased FCC
Authorizations (collectively, the "FCC AUTHORIZATIONS") have been granted to the
Company FCC License Holders or the applicable Lessor by Final Order, are in full
force and effect and have not been revoked, suspended, cancelled, rescinded, or
terminated. No FCC Authorization has expired (except for any FCC Authorization
that has expired but for which a timely-filed renewal application is currently
pending before the FCC). To the Company's knowledge, each FCC Authorization was
duly and validly issued by the FCC pursuant to procedures which comply with all
requirements of applicable Law, including, without limitation, the FCC's Rules.
There is not pending, or to the Company's knowledge threatened, anticipated or
reasonably likely if facts or circumstances known to the Company were brought to
the attention of the FCC, any action by or before the FCC that questions the
validity of any FCC Authorization or seeks (i) to revoke, suspend, cancel,
rescind or modify any of the FCC Authorizations, except for routine
modifications set forth on Schedule 3.23(c) of the Schedule of Exceptions or
(ii) to impair the ability of the Company FCC License Holders to utilize the
spectrum covered by the FCC
21
Authorizations (other than proceedings to amend FCC rules of general
applicability). There is not now issued or outstanding or pending or to the
Company's knowledge, threatened, anticipated or reasonably likely if facts or
circumstances known to the Company were brought to the attention of the FCC, by
or before the FCC, any order to show cause, notice of violation, notice of
apparent liability, or notice of forfeiture or complaint against the Company FCC
License Holders, any Lessor, or relating to any FCC Authorization or any System,
except where the existence of such would not have or result in, or would not be
reasonably likely to have or result in, individually or in the aggregate, a
Material Adverse Effect. "FINAL ORDER" means an Action or decision of the FCC as
to which (A) no request for a stay or similar request is pending, no stay is in
effect, the Action or decision has not been vacated, reversed, set aside,
annulled or suspended and any deadline for filing such request that may be
designated by Law, has passed, (B) no petition for rehearing or reconsideration
or application for review is pending and the time for the filing of any such
petition or application has passed, (C) the FCC does not have the Action or
decision under reconsideration on its own motion and the time within which it
may effect such reconsideration has passed, and (D) no appeal is pending
including, without limitation, other administrative or judicial review, or in
effect and any deadline for filing any such appeal that may be designated by Law
has passed.
(d) No applications are currently pending before the FCC related
to the FCC Authorizations or the Spectrum Leases. Each such application has been
timely filed with the FCC accompanied by payment of such fees as may be
required. No petition to deny or other objection has been filed with the FCC
against any such application, to the Company's knowledge no such petition or
other objection has been threatened, and no reasonable basis exists for the
filing of any such petition or other objection by any party or the FCC on its
own motion.
(e) All applications, notices, reports and filings required to be
filed by the Company FCC License Holders and, to the Company's knowledge, each
Lessor with the FCC have been timely filed. All applications, notices, reports
and filings by the Company FCC License Holders are true, accurate and complete.
To the Company's knowledge, all such reports and filings by each Lessor are
true, accurate and complete. To the Company's knowledge, all regulatory fees,
payments to the Universal Service Fund, if any, and other fees or payments
required to be paid by the Company FCC License Holders and each Lessor pursuant
to the FCC's Rules have been timely filed and paid, except where the failure to
make such timely payment would not have or result in, individually or in the
aggregate, a Material Adverse Effect
(f) Each Spectrum Lease is in full force and effect, is free from
any claims, liabilities or Liens and is unimpaired by any acts or omissions of
the Company FCC License Holders. The Company FCC License Holders have a valid
leasehold interest in each Spectrum Lease. With respect to each Spectrum Lease,
the Company FCC License Holders have complied in all material respects with all
of the terms and conditions of the Spectrum Lease since entering into or
assuming such Spectrum Lease, the Lessor has not provided the Company FCC
License Holders with any notice of default or otherwise notified the Company FCC
License Holders that it considers the Spectrum Lease to have been breached
(except for such breaches that would not have or result in, individually or in
the aggregate, a Material Adverse Effect), and the Company FCC License Holders
are entitled to exercise all of the rights to which the
22
Company FCC License Holders are entitled under the terms of the Spectrum Lease.
To the best of Company's knowledge, no facts or circumstances exist that would
permit the Lessor to terminate any Spectrum Lease upon the requisite notice to
the Company FCC License Holders. To the best of Company's knowledge, the Lessor
under each Spectrum Lease has complied in all material respects with all of the
terms and conditions of the Spectrum Lease, and the Company FCC License Holders
have not notified any Lessor that it considers the Spectrum Lease to have been
breached. Each Spectrum Lease permits the Company FCC License Holders to utilize
the spectrum covered by the Leased FCC Authorization(s) to provide two-way
broadband data services to subscribers, except for such Spectrum Leases that
afford the Company FCC License Holders use of spectrum that collectively
represents less than five percent (5%) of the FCC Authorizations, measured on
the basis of MHz/pops; provided, however, that no Spectrum Lease fails to permit
the Company FCC License Holders to utilize the spectrum covered by the Leased
FCC Authorization(s) to provide two-way broadband data services to subscribers
where such failure would materially restrict or adversely affect the
development, manufacture, production, assembly, licensing, marketing,
distribution or sale of the Company's or any Majority Subsidiary's products or
services within the geographic area subject to such Spectrum Lease. To the
Company's knowledge, no person or entity, other than the Company FCC License
Holders and the Lessor, has asserted any right to utilize any Leased FCC
Authorization or the spectrum licensed thereunder. Each Spectrum Lease complies
with all applicable Laws, including, without limitation, the FCC's Rules.
(g) Neither any Company FCC License Holder nor any Lessor is
bound by any Contracts or other understandings relating to the assignment,
transfer, conveyance or pledge of any FCC Authorization or any Spectrum Lease,
in whole or in part, or any interest therein.
(h) Neither any Company FCC License Holder nor, to the Company's
knowledge, any Lessor is subject to any Contract or other understanding
restricting its ability to deploy and operate facilities that would otherwise be
permitted pursuant to the FCC Authorizations and the FCC's Rules or to construct
and operate facilities utilizing any particular technical parameters; and (ii)
neither any Company FCC License Holder nor, to the Company's knowledge, any
Lessor is bound by any Contract or other understanding pursuant to which it is
obligated to accept electromagnetic interference to the facilities authorized
under any FCC Authorization (other than FCC rules of general applicability), to
restrict the manner in which facilities authorized under any FCC Authorization
are operated, or to otherwise mitigate or eliminate interference, except for
such Contracts that do not materially restrict or adversely affect the
development, manufacture, production, assembly, licensing, marketing,
distribution or sale of the Company's or any Majority Subsidiary's products or
services within the geographic area subject to such Contract.
(i) The Company FCC License Holders and, to the Company's
knowledge, all Lessors currently are in compliance in all material respects with
all applicable Laws governing operations under the FCC Authorizations
(including, without limitation, the FCC's Rules governing the construction and
operation of facilities and eligibility for and the leasing of Educational
Broadband Service authorizations) and have been at all times since the
applicable Company FCC License Holder acquired the Company FCC Authorization or
entered
23
into or assumed the Spectrum Lease, as the case may be. None of the Systems are
operating pursuant to special temporary authority, developmental authority or
experimental authority issued by the FCC.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company as follows:
4.1. Authorization. All corporate action on the part of Purchaser, its
officers, directors and shareholders necessary for the authorization, execution
and delivery of, and the performance of all obligations of Purchaser under this
Agreement and the Transaction Agreements and necessary for the consummation of
the transactions contemplated hereby and thereby. The execution, delivery and
performance by Purchaser of this Agreement and the Transaction Agreements and
the consummation of the transactions contemplated hereby and thereby will not
conflict with or constitute or result in, with or without the passage of time or
the giving of notice or both, either a violation, breach or default by Purchaser
of (i) any Order of any Government Authority or (ii) any constituent documents
of Purchaser. This Agreement and the Transaction Agreements when executed and
delivered by Purchaser will constitute a valid and legally binding obligation of
Purchaser enforceable in accordance with its terms, subject, as to enforcement
of remedies, to applicable bankruptcy, insolvency, moratorium, reorganization
and similar Laws affecting creditors' rights generally and to general equitable
principles and, with regard to the indemnification provisions contained in the
Investor Rights Agreement, to the extent such indemnification provisions may be
limited by applicable federal and state securities Laws and principles of public
policy.
4.2. Investigation; Economic Risk. Purchaser has had an opportunity to
discuss the Company's business, management, financial affairs and the terms and
conditions of the offering with the Company's management and has had an
opportunity to review the information provided by the Company. The foregoing,
however, does not limit or modify the representations and warranties of the
Company in Section 3 of this Agreement or the right of Purchaser to rely
thereon. Purchaser acknowledges that it is able to fend for itself in the
transactions contemplated by this Agreement and has the ability to bear the
economic risks of its investment pursuant to this Agreement.
4.3. Purchase for Own Account. The Shares will be acquired for
investment for its own account, not as a nominee or agent, and not with a view
to or in connection with the sale or distribution of any part thereof, and that
Purchaser has no present intention of selling, granting any participation in, or
otherwise distributing the same. By executing this Agreement, Purchaser further
represents that it does not have any Contract with any person or entity to sell,
transfer or grant participations to such person or entity or to any third person
or entity, with respect to any of the Shares. The Purchaser has not been formed
for the specific purpose of acquiring any of the foregoing.
4.4. Exempt from Registration; Restricted Securities. Purchaser
understands that the Shares and the Conversion Shares have not been, and will
not be, registered under the 1933 Act, by reason of a specific exemption from
the registration provisions of the 1933 Act which depends upon, among other
things, the bona fide nature of the investment intent and the
24
accuracy of Purchaser's representations as expressed herein. Purchaser
understands that the Shares being purchased hereunder are "restricted
securities" within the meaning of Rule 144 under the 1933 Act; that the Shares
and the Conversion Shares are not registered and must be held indefinitely
unless they are subsequently registered or an exemption from such registration
is available.
4.5. Restrictive Legends. It is understood that each certificate
representing the Shares and the Conversion Shares and any other securities
issued in respect of the any of the foregoing upon any stock split, stock
dividend, recapitalization, merger or similar event shall be stamped or
otherwise imprinted with a legend substantially in the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY
MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE
ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE
WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
4.6 Removal of Restrictive Legend. The legend set forth above shall be
removed by the Company from any certificate evidencing Shares or the Conversion
Shares upon delivery to the Company of an opinion by counsel, reasonably
satisfactory to the Company, that a registration statement under the 1933 Act is
at that time in effect with respect to the legended security or that such
security can be freely transferred in a public sale pursuant to Rule 144 without
such a registration statement being in effect and that such transfer will not
jeopardize the exemption or exemptions from registration pursuant to which the
Company issued the Shares.
4.7. Accredited Investor. Purchaser is an "accredited investor" as
defined in Rule 501(a) of Regulation D promulgated under the 1933 Act.
4.8. No General Solicitation. The Shares were not offered or sold to
Purchaser by any form of general solicitation or general advertising.
5. COVENANTS OF THE COMPANY
The Company covenants to Purchaser as follows:
5.1 Use of Proceeds. The Company agrees that not less than
$200,000,000 of the proceeds from the sale of the Shares will be used for
capital expenditures and operational
25
expenditures associated with the deployment and operation of a Mobile WiMAX
network in the United States, including, but not limited, to expenditures for
spectrum acquisitions, site acquisition, network construction, and WiMAX CPE and
WiMAX network infrastructure [***]. In order to confirm the expenditure of the
proceeds in the manner set forth above, Purchaser shall have the right to
exercise the audit rights provided to Purchaser in Section 5.6 of the
Collaboration Agreement.
5.2 Conduct of Business by the Company and the Major Subsidiaries
Pending the Closing. Except as expressly contemplated by this Agreement,
including, without limitation, the Schedule of Exceptions, or the Transaction
Agreements, during the period between the Effective Date and the date of the
Closing, the Company shall use commercially reasonable efforts to, and shall
cause the Major Subsidiaries to carry on its respective business in the ordinary
course of its business in substantially the same manner as currently conducted
and, to the extent consistent therewith, use all commercially reasonable efforts
to preserve intact its respective current business organizations, keep available
the services of its respective current directors, officers and employees and
preserve its relationships with customers, suppliers and others having business
dealings with it to the end that its ongoing business shall be unimpaired at the
date of the Closing.
5.3 Issuances of Securities. Between the Effective Date and the
earlier of the Closing Date or the thirty first day following the Effective
Date, neither the Company nor any Subsidiary will sell or issue any shares of
Common Stock, or any securities exercisable or exchangeable for, or convertible
into, shares of Common Stock, without the consent of Purchaser, other than (i)
the issuance of shares of Class A Common Stock pursuant to obligations existing
as of the Effective Date, as set forth in Schedule 5.3 of the Schedule of
Exceptions, (ii) the issuance of shares of Class A Common Stock in connection
with future spectrum acquisitions, provided that the valuation of such shares is
not less than $6.00 per share and the total value of the shares issued does not
exceed $57 million in the aggregate (provided, further, that, with respect to
the period between the Effective Date and the date of the Closing, the total
value of shares issued in connection with future spectrum acquisitions shall not
exceed $57 million in the aggregate, unless the shares that are issued in excess
of the $57 million limitation are issued at a valuation of not less than $7.50
per share), (iii) the issuance of up to $300,000,000 in shares of Class A Common
Stock at not less than $6.00 per share, (iv) the issuance of shares of Class A
Common Stock pursuant to the exercise of any preemptive or similar rights
directly or indirectly arising out of this Agreement or the transactions
described in Section 5.3(iii), which rights Eagle River and its affiliates have
validly waived as of the Effective Date and the Company will use commercially
reasonable efforts to cause to be waived by the other holders of such rights,
(v) the issuance of shares of Class A Common Stock upon the exercise of any
options or warrants outstanding on the Effective Date, or (vi) the grant of
stock options under the Company's 2003 Stock Option Plan to employees of the
Company and its Subsidiaries at an exercise price of not less that $6.00 per
shares and subject to a maximum of 1,750,000 shares; provided that at no time
prior to the Closing shall the Company or any Subsidiary sell any shares
[* * * Confidential Treatment Requested]
26
of Class B Common Stock or any securities exercisable or exchangeable for, or
convertible into, shares of Class B Common Stock other than pursuant to the
exercise of any preemptive or similar rights directly or indirectly arising out
of this Agreement or the transactions described in Section 5.3(iii), which
rights Eagle River and its affiliates have validly waived as of the Effective
Date and the Company will use commercially reasonable efforts to cause to be
waived by the other holders of such rights.
5.4 Closing Capitalization Tables. At the Closing, the Company will
provide to Purchaser a true and correct (i) capitalization table of the Company
and each Subsidiary setting forth the authorized capital stock (or membership or
other equity interests, as applicable) of the Company or such Subsidiary, as the
case may be, and all shares of the capital stock (or membership or other equity
interests, as applicable), options and warrants (including, without limitation,
for each the name of the grantee, number of shares subject to the option or
warrant granted, the exercise price per share, the vesting schedule and the date
of issuance) and any other securities of the Company or such Subsidiary, as the
case may be, issued and outstanding, reserved and/or available for issuance, in
each case, as of the date of the Closing, and (ii) an updated Schedule
3.5(a)(iv) of the Schedule of Exceptions with respect to the number of Voting
Securities that Eagle River and its affiliates hold, own or control,
beneficially or of record, or have or control the power to vote as of the date
of the Closing, in each case, attached to a certificate of the Chief Financial
Officer of the Company certifying the capitalization tables and updated Schedule
3.5(a)(iii) as true and correct and that (a) all of the outstanding shares of
the capital stock of the Company or such Subsidiary, as the case may be, set
forth of such capitalization tables are duly authorized, validly issued, fully
paid and non-assessable, and free and clear of all Liens imposed by or through
the holder thereof, (b) that the outstanding securities of the Company or such
Subsidiary, as the case may be, are owned by the stockholders, optionholders and
securityholders and in the numbers and by the class and series of each security
specified on such capitalization table.
5.5 Antidilution.
(a) Any time after the Effective Date that the Company sells or
issues or agrees to sell or issue (or is deemed to do so under Section 5.5(e))
Dilutive Shares (as defined below) to any person or entity for no consideration
or consideration per share that is less than the Trigger Price (as defined
below) in effect immediately prior to such issuance or sale (each, a "DILUTIVE
ISSUANCE"), the Company shall concurrently issue to Purchaser for no
consideration a number of shares of Class A Common Stock equal to (i)
Purchaser's Adjusted Shares (as defined below) less (ii) Purchaser's Original
Shares (as defined below) (the "ANTIDILUTION SHARES"). No fractional shares of
Class A Common Stock shall be issued pursuant to this Section 5.5. The number of
shares of Class A Common Stock issued shall be rounded to the nearest integral
number of whole shares of Class A Common Stock. For the purposes of this Section
5.5, whenever Dilutive Shares are issued for a consideration other than cash,
either in whole or in part, the fair market value of the Dilutive Shares issued
shall be as established in good faith by resolution of the Company's Board.
27
(b) Definitions. For the purposes of this Section 5.5, for each
Dilutive Issuance, the following terms shall have the following meanings:
(i) "ADJUSTED SHARES" means the number of shares of Class A
Common Stock equal to the product of (x) the Purchaser's Original Shares,
multiplied by (y) the quotient of (1) the Trigger Price in effect immediately
prior to a Dilutive Issuance, divided by (2) the Trigger Price in effect
immediately after such Dilutive Issuance. Any Adjusted Shares issued under this
Agreement shall be deemed to be "Shares."
(ii) "COMMON SHARES" means shares of Class A Common Stock,
shares of Class B common stock or any other class of common stock of the
Company.
(iii) "CONVERTIBLE SECURITIES" means any evidences of
indebtedness, shares or other securities directly or indirectly convertible into
or exchangeable for Common Shares, but excluding Options.
(iv) "DILUTIVE SHARES" means Common Shares, Options and
Convertible Securities issued or deemed issued after the Effective Date other
than:
(A) Common Shares issued pursuant to Article IV,
Section 2(d) of the Restated Certificate;
(B) (1) Common Shares outstanding on the Effective
Date, (2) Convertible Securities or Options outstanding on the Effective Date
(and the Common Shares issued upon conversion, exchange or exercise of such
Convertible Securities or Options), and (3) Common Shares (and/or Convertible
Securities and Options, and the Common Shares issuable upon conversion, exchange
or exercise of such Convertible Securities or Options) issued pursuant to
agreements in effect or other commitments or offers outstanding on the Effective
Date that (y) relate to the acquisition of spectrum rights or related assets by
the Company and/or the Subsidiaries, or (z) are otherwise set forth in Schedule
3.5(c) of the Schedule of Exceptions;
(C) Common Shares (and/or Convertible Securities and/or
Options, and the Common Shares issuable upon conversion, exchange or exercise of
such Convertible Securities or Options) issued to employees, consultants,
directors, vendors, lessors or others with whom the Company conducts business,
provided that such shares, options, warrants or other rights are issued pursuant
to a stock option plan or restricted stock plan approved by the Board of the
Company and solely for compensation purposes;
(D) Common Shares actually issued upon exercise of any
Options outstanding as of the Effective Date or conversion or exchange of any
Convertible Securities existing as of the Effective Date, or Options or
Convertible Securities issued after the Effective Date in accordance with this
clause (iv); and/or
(E) Common Shares (and/or Convertible Securities and
Options, and the Shares issuable upon conversion, exchange or exercise of such
Convertible Securities or Options) issued in connection with any stock split,
stock dividend, reverse stock split, recapitalization, reorganization or other
distribution of Shares (each, a "RECAPITALIZATION
28
EVENT") that does not affect the relative economic interests or rights of
holders of Common Shares.
(v) "OPTIONS" means rights, options or warrants to subscribe
for, purchase or otherwise acquire, directly or indirectly, Common Shares or
Convertible Securities.
(vi) "ORIGINAL SHARES" means (x) with respect to the first
Dilutive Issuance, the total number of shares of Class A Common Stock and Class
B Common Stock set forth in Section 1.2 hereof (as adjusted pursuant to Section
1.3 hereof), to be acquired by Purchaser pursuant to this Agreement (as adjusted
for any Recapitalization Event) and (y) with respect to each Dilutive Issuance
thereafter, the total number of Adjusted Shares immediately prior to such
Dilutive Issuance (as adjusted for any Recapitalization Event). For the
avoidance of doubt, any Common Shares acquired by Purchaser or an affiliate of
Purchaser from either the Company or any other stockholder of the Company under
any Contract other than this Agreement shall in no event be included in the
number of Original Shares under this Section 5.5 or any adjustment pursuant to
this Section 5.5.
(vii) "TRIGGER PRICE" shall initially mean $6.00 per share
(as subsequently adjusted for any Recapitalization Event, the "ORIGINAL ISSUE
PRICE"). In connection with each Dilutive Issuance, the Trigger Price shall be
adjusted downwards to equal the lowest price per Dilutive Share paid for the
Dilutive Shares issued or sold in such Dilutive Issuance. The Trigger Price
shall also be proportionately adjusted from time to time for any
Recapitalization Event pursuant to which securities of the Company are issued
with respect to the Original Shares and/or Adjusted Shares. Notwithstanding the
foregoing, in no event shall the Trigger Price be adjusted downwards to an
amount less than $5.00 per share (as adjusted for any Recapitalization Event).
(c) Covenant Regarding Antidilution Shares. The Company hereby
represents, warrants and covenants that (i) as a condition precedent to the
issuance or sale of any Dilutive Shares in a Dilutive Issuance, the Company
shall have reserved at the time of such Dilutive Issuance out of its authorized
but unissued capital stock sufficient shares of Class A Common Stock to enable
the Company to issue all of the applicable Antidilution Shares pursuant to this
Section 5.5, and (ii) all Antidilution Shares issued pursuant to this Section
5.5 shall, upon issuance for no additional consideration, be duly authorized,
validly issued, fully paid and nonassessable and free and clear of all Liens,
other than Liens created by or imposed by Purchaser.
(d) Termination of Antidilution Rights. The rights granted under
this Section 5.5 shall terminate immediately after the first to occur of the
following: (i) the date which is nine (9) months following the date of the
Closing or (ii) the closing of the Company's initial public offering, defined as
an underwritten public offering of equity securities in which the Company raises
an aggregate of not less than US$400,000,000 in cash.
(e) Deemed Issuances of Shares. In the case of any issuance
(whether on or after the Effective Date) by the Company of any Convertible
Securities or Options, the following provisions shall apply for all purposes of
this Section 5.5:
29
(i) For any Convertible Securities issued (other than
pursuant to the exercise of Options) after the Effective Date, the aggregate
maximum number of Common Shares deliverable upon conversion or exercise of or in
exchange for any such Convertible Securities shall be deemed to have been issued
at the time such Convertible Securities were issued and for a consideration
equal to the consideration, if any, received by the Company upon the issuance of
such Convertible Securities plus the minimum additional consideration, if any,
to be paid under the terms of such Convertible Security upon conversion,
exercise or exchange of such Convertible Securities into the Common Shares
covered thereby.
(ii) For any Options issued, the aggregate maximum number of
Common Shares deliverable upon exercise of the Options, or, in the case of
Options for Convertible Securities, the conversion, exercise or exchange of such
Convertible Securities, shall be deemed to have been issued at the time such
Options were issued for a consideration equal to the consideration, if any,
received by the Company for such Options, plus the minimum exercise price
provided in such Options for the Common Shares or Convertible Securities covered
thereby, and, in the case of Options for Convertible Securities, plus the amount
of additional consideration, if any, to be paid upon the conversion, exercise or
exchange of such Convertible Securities.
(f) Adjustment in Shares. In addition to any necessary adjustment
pursuant to Section 1.3 hereof, upon the issuance of any Antidilution Shares,
Purchaser agrees to convert such number of its shares of Class B Common Stock,
if any, as necessary so that the total voting power of the Company's capital
stock held by Purchaser that is represented by the Shares after such issuance of
the Antidilution Shares is equal to 60% of the total voting power of the
Company's capital stock held, owned or controlled by Eagle River and/or its
affiliates.
(g) Voting Power of Eagle River. The total voting power of the
Company's capital stock held, owned or controlled by Eagle River and/or its
affiliates shall be determined based on the total number of Common Shares,
Convertible Shares and other voting securities of the Company (collectively,
"VOTING SECURITIES") that Eagle River and/or its affiliates then hold, own or
control, beneficially or of record, or have or control the power to vote;
provided that if at any time after the Effective Date Eagle River or any of its
affiliates sells, transfers, assigns, converts, exchanges or otherwise disposes
of any Voting Securities, or the power to vote any such securities, then such
sold, transferred, assigned, converted, exchanged or otherwise disposed of
Voting Securities or rights shall continue to be deemed to be held, owned or
controlled by Eagle River and/or its affiliates (without giving effect to any
reduction in the voting power of such Voting Securities or rights as a result of
such sale, transfer, assignment, conversion, exchange or otherwise disposition)
for purposes of determining the total voting power of the Company held, owned or
controlled by Eagle River and its affiliates; and provided, further that, (i)
any Voting Securities or the power to vote any such securities acquired by Eagle
River and/or its affiliates from either the Company or any other stockholder of
the Company after the date of the Closing pursuant to any Contract that was
entered into after the date of the Closing shall in no event be included in the
calculation of the total voting power of the Company held, owned or controlled
by Eagle River and/or its affiliates under this Section 5.5; and (ii) for the
avoidance of doubt, any Voting Securities or the power to vote any such
securities acquired by Eagle River and/or its affiliates from either the Company
or any other stockholder of the
30
Company, whether before of after the date of the Closing, pursuant to any
Contract that was entered into on or prior to the date of the Closing shall be
included in the calculation of the total voting power of the Company held, owned
or controlled by Eagle River and/or its affiliates under this Section 5.5.
5.6. Closing Schedules. At least two (2) business days prior to the
Closing, the Company will provide to Purchaser a true and correct update of the
Schedule of Exceptions, but only with respect to any events, conditions,
circumstances or matters arising during the period from the Effective Date to
the date of the Closing, which if existing on the Effective Date would have been
included or described in the Schedule of Exception (the "CLOSING SCHEDULES"),
which items shall be factual and described in detail on the schedules and which
schedules shall identify the specific exception to the representations and
warranties that the item represents, and with respect to which items Purchaser
shall be entitled to request additional information from the Company. In advance
of the delivery of the Closing Schedules, from time to time during the period
between the Effective Date and the date of the Closing as any events,
conditions, circumstances or matters of the type set forth on Schedules 3.5(c),
3.5(e), 3.5(f), 3.9, 3.11, 3.12(a), 3.12(b), 3.12(c), 3.12(d), 3.18. or 3.23 of
the Schedule of Exceptions, or any other material events, conditions,
circumstances or matters on any other schedule, arise that will be, or are
reasonably expected to be, listed on the Closing Schedules, the Company shall
provide Purchaser with notice of the occurrence of any such events, conditions,
circumstances or matters and copies of or access to any agreements and/or other
documentation that relate to or document such events, conditions, circumstances
or matters, using commercially reasonable efforts to segregate or otherwise
clearly identify such agreements and/or other documentation in any data room;
provided, that any such notice need not be delivered more than once every two
(2) weeks regardless of the occurrence of any such events, conditions,
circumstances or matters; and provided, further, that any breach by the Company
of its obligations under this paragraph shall not be considered in determining
whether the Company has satisfied its obligations under Section 6.2 of this
Agreement.
6. CONDITIONS TO PURCHASER'S OBLIGATIONS AT THE CLOSING
The obligation of Purchaser to purchase the Shares at the Closing is
subject to the fulfillment, to the satisfaction of Purchaser on or prior to the
Closing, of the following conditions, unless otherwise waived in writing:
6.1. Representations and Warranties.
(a) Except as set forth in the Schedule of Exceptions, the
representations and warranties of the Company in Section 3 hereof that are
qualified as to materiality shall have been true and correct in all respects,
and all other representations and warranties of the Company in Section 3 hereof
shall be true and correct in all material respects, as of the Effective Date,
other than representations and warranties that expressly refer to a specific
date (in which case, such representations and warranties will be true and
correct as of such date).
(b) Except as set forth in the Schedule of Exceptions or the
Closing Schedules, the representations and warranties of the Company in Section
3 hereof that are
31
qualified as to materiality shall be true and correct in all respects, and all
other representations and warranties of the Company in Section 3 hereof shall be
true and correct in all material respects, in each case, as if made on and as of
the Closing Date, other than representations and warranties that expressly refer
to a specific date (in which case such representations and warranties will be
true and correct as of such date).
6.2. Performance of Obligations. The Company and the Subsidiaries
shall have performed and complied with all agreements, obligations and
conditions contained in this Agreement and the Transaction Agreements that are
required to be performed or complied with by it on or before the Closing and
shall have obtained all Consents necessary to complete the purchase and sale
described herein and for consummation of the other transactions contemplated by
this Agreement and the Transaction Agreements that are required to be obtained
prior to the Closing.
6.3. Compliance Certificate. At the Closing, the Company on its behalf
and on behalf of the Subsidiaries shall deliver to Purchaser a certificate,
dated the date of Closing, signed by the Company's President certifying that the
conditions specified in Sections 6.1 and 6.2 have been fulfilled.
6.4. Secretary's Certificate. At the Closing, the Company shall
deliver to Purchaser certificates, dated as of the date of the Closing and in
form and substance reasonably acceptable to Purchaser, signed by the Secretary
of the Company and each of the Major Subsidiaries, as the case may be,
certifying that (i) the Restated Certificate (which shall be certified as filed
by the Secretary of State of the State of Delaware) and the Bylaws or the
charter, bylaws and/or other governing documents attached to the Secretary's
certificate are in full force and effect on the date of such Closing, and (ii)
the Board of the Company and shareholder resolutions approving the Restated
Certificate, this Agreement, the Transaction Agreements and the transactions
contemplated hereunder and thereunder, as applicable, are true, correct and
complete and have not been amended since the date of such resolutions.
6.5 Antitrust; Qualifications. Any waiting period (and any extension
thereof) under any United States or foreign antitrust or merger control Law
applicable to the transactions contemplated by this Agreement and the
Transaction Agreements, including, without limitation, the HSR Act, shall have
expired or shall have been terminated. All Consents, if any, of any Governmental
Authority or regulatory body within the United States and outside the United
States that are required for the consummation of the transactions contemplated
by this Agreement and the Transaction Agreements (other than Consents required
with respect to the performance of the Collaboration Agreement after the date of
the Closing that may be obtained after the Closing and for which the Company
does not currently believe that it will be unable to obtain in a timely manner),
including, without limitation, in connection with the lawful issuance and sale
of the Shares pursuant to this Agreement, shall be obtained or filed and
effective as of the Closing.
6.6. Amendment to Restated Certificate. The filing of the Restated
Certificate shall have been accepted by the Secretary of State of the State of
Delaware. The Company shall deliver to Purchase (i) a good standing certificate
of the Company and each Major Subsidiary issued by the Secretary of State or
other applicable official of the jurisdiction of such entity's
32
formation and (ii) foreign qualification and good standing certificates of the
Company and each Major Subsidiary issued by the Secretary of State or other
applicable official of California, Delaware, Florida, Nevada and Washington.
6.7. Opinion of Company's Counsel. Purchaser shall have received from
counsel to the Company an opinion addressed to Purchaser, dated the date of the
Closing, in form and substance reasonably acceptable and substantially the form
attached hereto as Exhibit J.
6.8. Board of Directors. The Company's Board shall consist of nine (9)
directors and, concurrent with the Closing, shall include as directors two
individuals designated by Purchaser, the names of which will be provided by
Purchaser to the Company at least two (2) business days prior to the date of the
Closing.
6.9. Execution of Investor Rights Agreement. The Company shall have
executed and delivered to Purchaser the Investor Rights Agreement in
substantially the form attached hereto as Exhibit A.
6.11. Execution of Joinder Agreement. The Company and each of the
other shareholders of the Company named as parties thereto shall have executed
and delivered to Purchaser the Joinder Agreement in substantially the form
attached hereto as Exhibit B.
6.13. Execution of Voting Agreement. The Company and each of the other
shareholders of the Company named as parties thereto shall have executed and
delivered to Purchaser the Voting Agreement in substantially the form attached
hereto as Exhibit C.
6.14. Execution of Side Letter Amendment. The Company shall have
executed and delivered to Purchaser the Side Letter Amendment in substantially
the form attached hereto as Exhibit E and such agreement shall continue to be in
full force and effect on the date of the Closing.
6.15. Execution of Collaboration Agreement. The Company shall have
executed and delivered to Purchaser the Collaboration Agreement in substantially
the form attached hereto as Exhibit F and such agreement shall continue to be in
full force and effect on the date of the Closing.
6.16. Management Employee Non-Compete Agreements. Each of Benjamin G.
Wolff, R. Gerard Salemme, Nicholas Kauser and Perry Saterlee shall have executed
and delivered to the Company, with a true and correct copy provided to
Purchaser, a non-compete agreement in substantially the form attached hereto as
Exhibit D, each of which shall continue to be in full force and effect on the
date of the Closing.
6.17. Eagle River Voting Agreement. Eagle River and the Company shall
have executed and delivered to Purchaser the Eagle River Voting Agreement in
substantially the form attached hereto as Exhibit G, which shall continue to be
in full force and effect on the date of the Closing.
33
6.18. Preemptive Rights. The Company shall have fully satisfied
(including, without limitation, with respect to rights of timely notification)
or obtained enforceable waivers in respect of any preemptive or similar rights
directly or indirectly relating to, arising out of or affecting the Shares or
the Conversion Shares or their issuance and sale to Purchaser.
6.19. Sale of NextNet. Prior to the Closing, the Company shall have
sold or otherwise disposed of all of its interests in NextNet Wireless, Inc. or
substantially all of its assets.
6.20. Material Adverse Change. Between the Effective Date and the date
of the Closing, no events, conditions, circumstances or matters of any nature
(including, without limitation, any events, conditions, circumstances or matters
that are set forth in the Closing Schedules, but are not set forth on the
Schedule of Exceptions) shall have occurred, or be reasonably expected to occur,
which would have or result in, individually or in the aggregate, (i) a Material
Adverse Effect with respect to the business of the Company and the Subsidiaries,
taken as a whole, as currently conducted and as presently proposed to be
conducted, (ii) a materially adverse impact on the ability of any party to
perform its obligations under, or to consummate the transactions contemplated
by, this Agreement or any of the Transaction Agreements, provided that Purchaser
shall not have taken any action or actions for the intended purpose of causing
such a materially adverse impact with respect to Purchaser to occur; or (iii) a
materially adverse impact to the Company's ability to implement its business
plan or to compensate Purchaser as provided in the Collaboration Agreement.
7. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING
The obligations of the Company under this Agreement are subject to the
fulfillment, to the satisfaction of the Company on or prior to the Closing, of
the following conditions, unless otherwise waived in writing:
7.1. Representations and Warranties. The representations and
warranties of Purchaser in Section 4 hereof that are qualified as to materiality
shall be true and correct in all respects and all other representations and
warranties of Purchaser in Section 4 hereof shall be true and correct in all
material respects, in each case as if made on and as of the Closing Date, other
than representations and warranties that expressly refer to a specific date (in
which case such representations and warranties will be true and correct as of
such date).
7.2. Performance of Obligations. Purchaser shall have performed and
complied with all agreements, obligations and conditions contained in this
Agreement and the Transaction Agreements that are required to be performed or
complied with by it on or before the Closing and shall have obtained all
Consents necessary to complete the purchase and sale described herein and for
consummation of the other transactions contemplated by this Agreement and the
Transaction Agreements.
7.3. Payment of Purchase Price. Purchaser shall have delivered to the
Company the purchase price in accordance with the provisions of Section 2.2
hereof.
34
7.4. Amendment to Restated Certificate. The filing of the Restated
Certificate shall have been accepted by the Secretary of State of the State of
Delaware.
7.5. Antitrust; Qualifications. Any waiting period (and any extension
thereof) under any United States or foreign antitrust or merger control Law
applicable to the transactions contemplated by this Agreement and the
Transaction Agreements, including, without limitation, the HSR Act, shall have
expired or shall have been terminated. All Consents, if any, of any Governmental
Authority or regulatory body within the United States and outside the United
States that are required for the consummation of the transactions contemplated
by this Agreement and the Transaction Agreements (other than Consents required
with respect to the performance of the Collaboration Agreement after the date of
the Closing that may be obtained after the Closing and for which the Company
does not currently believe that it will be unable to obtain in a timely manner),
including, without limitation, in connection with the lawful issuance and sale
of the Shares pursuant to this Agreement, shall be obtained or filed and
effective as of the Closing.
7.6. Securities Exemptions. The offer and sale of the Shares to
Purchaser pursuant to this Agreement shall be exempt from the registration
requirements of the 1933 Act, and the registration and/or qualification
requirements of all applicable state securities Laws.
7.7. Execution of Investor Rights Agreement. Purchaser shall have
executed and delivered to the Company the Investor Rights Agreement in
substantially the form attached hereto as Exhibit A.
7.8. Execution of Joinder Agreement. Purchaser shall have executed and
delivered to the Company the Joinder Agreement in substantially the form
attached hereto as Exhibit B.
7.9. Execution of Voting Agreement. Purchaser shall have executed and
delivered to the Company the Voting Agreement in substantially the form attached
hereto as Exhibit C.
7.10. Execution of Side Letter Amendment. Purchaser shall have
executed and delivered to the Company the Side Letter Amendment in substantially
the form attached hereto as Exhibit F.
7.11. Execution of Collaboration Agreement. Purchaser shall have
executed and delivered to the Company the Collaboration Agreement in
substantially the form attached hereto as Exhibit G.
8. TERMINATION
8.1 Events of Termination. This Agreement may be terminated at any
time prior to the Closing: (a) by mutual written consent of the Company and
Purchaser; (b) by either the Company or Purchaser if any Governmental Authority
of competent jurisdiction shall have issued a final and nonappealable Order
permanently enjoining or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement or the Transaction
35
Agreements; provided, that the party so requesting termination shall have
complied with Section 9.17; (c)(i) by the Company, if any of the conditions set
forth in Section 7 shall have become incapable of fulfillment on or prior to
June 30, 2007 (the "TERMINATION DATE"), or (ii) by Purchaser, if any of the
conditions set forth in Section 6 shall have become incapable of fulfillment
prior to the Termination Date; provided, that the right to terminate this
Agreement pursuant to this Section 8.1(c) shall not be available if the failure
of the party so requesting termination to fulfill any obligation under this
Agreement shall have been the cause of the failure of such condition to be
satisfied on or prior to such date. The party seeking to terminate this
Agreement pursuant to this Section 8.1 (other than Section 7.1(a)) shall give
written notice of such termination to the other party.
8.2. Effect of Termination. In the event of termination of this
Agreement as provided in Section 8.1, this Agreement shall forthwith become void
and there shall be no liability hereunder on the part of the Company or
Purchaser or any of their respective officers, directors or affiliates;
provided, however, that nothing contained in this Section 8.2 shall relieve any
party hereto from any liability for any willful breach of a representation,
warranty, or covenant contained in this Agreement prior to such termination.
9. MISCELLANEOUS
9.1. Governing Law. This Agreement shall be governed by and construed
in accordance with the General Corporation Law of the State of Delaware as to
matters within the scope thereof, and as to all other matters shall be governed
by and construed in accordance with the internal Laws of the State of Delaware,
without regard to principles of conflicts of Laws.
9.2. Survival. The parties agree that, regardless of any investigation
made by the parties, the representations, warranties, covenants and agreements
(in the case of covenants and agreements, to the extent of performance or
non-performance prior to the date of the Closing) of the parties contained in
this Agreement shall survive the execution and delivery of this Agreement for a
period beginning on the Effective Date and ending at 5:00 p.m., California time,
on the third (3rd) anniversary of the date on which the Closing occurs;
provided, however, that (i) the representations and warranties contained in
Section 3.8 (Tax Matters), Section 3.9 (Litigation Matters), Section 3.10
(Compliance with Laws), Section 3.14(c) (Intellectual Property - No
Infringement), Section 3.19 (Environmental Matters), Section 3.21 (Certain
Business Practices), and Section 3.22 (Employee Matters) shall survive until the
date which is sixty (60) days after the end of the statute of limitations
applicable to third party claims with respect to the subject matter of such
representations and warranties, and (ii) the representations and warranties
contained in Section 3.5 (Capitalization; Valid Issuance of Stock) shall survive
indefinitely.
9.3. Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto. Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective
successors, assigns, heirs, executors and administrators any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement. This Agreement and the rights and
obligations herein may not be assigned by Purchaser without the written consent
of the Company, except to a parent corporation, a subsidiary or affiliate;
36
provided that if no such consent is obtained, Purchaser shall continue to be
liable for payment of the Aggregate Purchase Price. This Agreement and the
rights and obligations therein may not be assigned by the Company without the
written consent of Purchaser.
9.4. Entire Agreement. This Agreement and the schedules and exhibits
hereto, which are hereby expressly incorporated herein by this reference, the
Restated Certificate and the Transaction Agreements constitute the entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof; provided, however, that nothing in this Agreement shall be
deemed to terminate or supersede the provisions of any confidentiality and
nondisclosure agreements executed by the parties hereto prior to the Effective
Date, which agreements shall continue in full force and effect until terminated
in accordance with their respective terms.
9.5. Notices. All notices, requests, waivers and other communications
made pursuant to this Agreement shall be in writing and shall be conclusively
deemed to have been duly given (a) when hand delivered to the other party; (b)
when sent by facsimile if sent during normal business hours of the recipient
with confirmation of sending to the fax number set forth below or, if sent after
normal business hours with confirmation of sending, then notice shall be deemed
to have been duly given on the next business day; (c) three (3) business days
after deposit in the U.S. mail with registered or certified mail return receipt
requested first class postage prepaid and addressed to the other party as set
forth below; or (d) the next business day after deposit with a national
overnight delivery service, postage prepaid, addressed to the parties as set
forth below with next-business-day delivery guaranteed, provided that the
sending party receives a confirmation of delivery from the delivery service
provider. All notices, requests, waivers and other communications shall be sent
to the receiving party at its address as set forth below, or to such address or
facsimile number as subsequently modified by written notice given in accordance
with this Section 9.5.
(i) if to the Company, at:
Clearwire Corporation
5808 Lake Washington Blvd. NE, Suite 300
Kirkland, WA 98033
Facsimile No: (425) 216-7900
Attn: Broady Hodder, General Counsel
With a copy to:
Davis Wright Tremaine, LLP
1501 Fourth Avenue
2600 Century Square
Seattle, WA 98121
Facsimile No: (206) 628-7699
Attn: Julie Weston, Esq.
37
(ii) if to Purchaser:
Intel Pacific, Inc.
c/o Intel Corporation
2200 Mission College Blvd., RN6-46
Santa Clara, CA 95054-1549
Attn: Intel Capital Portfolio Manager
Fax Number: (408) 765-6038
With copies to: portfolio.manager@intel.com
Each person making a communication hereunder by facsimile shall promptly confirm
by telephone to the person to whom such communication was addressed each
communication made by it by facsimile pursuant hereto, but the absence of such
confirmation shall not affect the validity of any such communication.
9.6. Amendments and Waivers. Any term of this Agreement may be
amended, terminated or waived only with the written consent of the Company and
Purchaser. Any amendment, termination or waiver effected in accordance with this
Section 9.6 shall be binding upon each transferee of the Shares, each future
holder of all such securities, and the Company.
9.7. Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to the Company or to Purchaser, upon any breach or
default of any party hereto under this Agreement, shall impair any such right,
power or remedy of the Company, or Purchaser nor shall it be construed to be a
waiver of any such breach or default, or an acquiescence therein, or of or in
any similar breach of default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any Consent of any kind or character on the
part of the Company or Purchaser of any breach of default under this Agreement
or any waiver on the part of the Company or Purchaser of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement, or by Law or otherwise afforded to the Company or Purchaser
shall be cumulative and not alternative.
9.8. Corporate Securities Law. THE SALE OF THE SECURITIES WHICH ARE
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE
QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE
QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON
THE QUALIFICATION BEING OBTAINED UNLESS THE SALE IS SO EXEMPT.
38
9.9. Legal Fees. The Company and Purchaser shall each pay their own
expense in connection with the transactions contemplated by this Agreement.
Furthermore, in the event of any action at law, suit in equity or arbitration
proceeding in relation to this Agreement or any Shares or other securities of
the Company issued or to be issued, the prevailing party shall be paid by the
other party a reasonable sum for attorney's fees and expenses for such
prevailing party in addition to any other relief to which such party may be
entitled. Notwithstanding the foregoing, each of the Company and Purchaser shall
pay one-half of the filing fees under the HSR Act relating to the transactions
contemplated by this Agreement and the Transaction Agreements.
9.10. Finder's Fees. Each party represents and warrants to the other
party hereto that it has retained no finder or broker in connection with the
transactions contemplated by this Agreement, provided, that, it is acknowledged
that the Company may have utilized the services of Merrill Lynch, Morgan Stanley
and JP Morgan in connection with its financing activities, including the
transactions contemplated by this Agreement and the Transaction Agreements. The
Company covenants and agrees that it will not pay any fee or compensation in
excess of $1,500,000 in the aggregate to Merrill Lynch, Morgan Stanley and JP
Morgan or any other finder or broker, in connection with, relating to or arising
from this Agreement, the Transaction Agreements and/or any of the transactions
contemplated hereby or thereby, without the prior written consent of Purchaser.
Notwithstanding anything to the contrary contained herein, each party hereby
agrees to indemnify and to hold harmless the other party hereto from and against
any liability for any commission or compensation in the nature of a finder's
fee, broker commission or banker's fee of any broker, investment banker or other
person or firm (including, without limitation, any fees or compensation that may
be payable by the Company to Merrill Lynch, Morgan Stanley and JP Morgan) and
the costs and expenses of defending against such liability or asserted
liability, for which the indemnifying party or any of its employees or
representatives are responsible.
9.11. Titles and Subtitles. The titles of the sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing or interpreting this Agreement.
9.12. Counterparts; Facsimile. This Agreement may be executed and
delivered by facsimile signature in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one and the
same instrument.
9.13. Severability. Should any provision of this Agreement be
determined to be illegal or unenforceable, such determination shall not affect
the validity or enforceability of any other provision of this Agreement.
9.14 Dispute Resolution. The parties agree to negotiate in good faith
to resolve any controversy or claim arising out of or relating to this
Agreement, or the interpretation or breach hereof. If the negotiations do not
resolve the dispute to the reasonable satisfaction of both parties, then each
party shall nominate one senior officer of the rank of Vice President or higher
as its representative. These representatives shall, within thirty (30) days of a
written request by either party to call such a meeting, meet and attempt in good
faith to resolve the dispute. If the disputes cannot be resolved by such senior
officers in the meeting, the parties agree that they
39
shall, if requested in writing by either party, meet within thirty (30) days
after such written notification for one day with a neutral mediator agreed upon
by the parties and consider dispute resolution alternatives other than
litigation. If an alternative method of dispute resolution is not agreed upon
within thirty (30) days after the one day mediation, either party may begin
litigation proceedings. This procedure shall be a prerequisite before taking any
additional action hereunder.
9.16. No Commitment for Additional Financing. The Company acknowledges
and agrees that Purchaser has not made any representation, undertaking,
commitment or agreement to provide or assist the Company or any Subsidiary in
obtaining any financing, investment or other assistance, other than the purchase
of the Shares as set forth herein and subject to the conditions set forth
herein. In addition, the Company acknowledges and agrees that (i) no statements,
whether written or oral, made by Purchaser or its representatives on or after
the Effective Date shall create an obligation, commitment or agreement to
provide or assist the Company or any Subsidiary in obtaining any financing or
investment, (ii) the Company shall not rely on any such statement by Purchaser
or its representatives and (iii) an obligation, commitment or agreement to
provide or assist the Company or any Subsidiary in obtaining any financing or
investment may only be created by a written agreement, signed by Purchaser and
the Company, setting forth the terms and conditions of such financing or
investment and stating that the parties intend for such writing to be a binding
obligation or agreement. Purchaser shall have the right, in it sole and absolute
discretion, to refuse or decline to participate in any other financing of or
investment in the Company or any Subsidiary, and shall have no obligation to
assist or cooperate with the Company or any Subsidiary in obtaining any
financing, investment or other assistance.
9.17 Required Filings; Cooperation. As promptly as reasonably
practicable, but in any event within 20 days from the Effective Date with
respect to the initial filings under the HSR Act, each of the Company and
Purchaser will make all filings required to be made by them in order to complete
the transactions contemplated under this Agreement and the Transaction
Agreements, including, without limitation, all filings under the HSR Act.
Between the Effective Date and the Closing, each party hereto will, subject to
such confidentiality restrictions as may be reasonable requested or are required
by applicable Law, (i) reasonably cooperate with the other party with respect to
all filings that such other party elects to make or is required by applicable
Laws to make in connection with the transactions contemplated under this
Agreement, and (ii) reasonably cooperate with the other party, including,
without limitation, taking all actions reasonably requested by such other party,
to cause early termination of any applicable waiting period under the HSR Act.
Each of the Company and Purchaser shall keep the other reasonably apprised of
the status of any such filing and any inquiries or requests for additional
information from the Federal Trade Commission ("FTC") and the Antitrust Division
of the Department of Justice ("DOJ"). The parties shall use commercially
reasonable efforts to comply with any such inquiry, request and/or conditions of
the FTC and DOJ. Nothing in this Agreement, however, shall require or be
construed to require any party hereto, in order to obtain the consent or
successful termination of any review of the FTC, DOJ or any other Governmental
Authority regarding the transactions contemplated by this Agreement and the
Transaction Agreements, to (i) sell or hold separate, or agree to sell or hold
separate, before or after the Closing, any assets, businesses or any interests
in any assets or businesses, of such party or any of its affiliates (or to
consent to any sale, or agreement to sell, any assets or businesses, or any
40
interests in any assets or businesses), or any change in or restriction on the
operation by such party of any assets or businesses, or (ii) enter into any
agreement or be bound by any obligation that, in such party's good faith
judgment, may have an adverse effect on the benefits to such party of the
transactions contemplated by this Agreement and the Transaction Agreements.
IN WITNESS WHEREOF, the parties hereto have executed this Common Stock
Purchase Agreement as of the day and year herein above first written.
PURCHASER:
INTEL PACIFIC, INC.
/s/ Arvind Sodhani (STAMP)
-------------------------------------
Signature
Arvind Sodhani
-------------------------------------
Printed Name
President
-------------------------------------
Title
COMPANY:
CLEARWIRE CORPORATION
/s/ Benjamin G. Wolff
-------------------------------------
Signature
Benjamin G. Wolff
-------------------------------------
Printed Name
Co-Chief Executive Officer
-------------------------------------
Title
[SIGNATURE PAGE TO COMMON STOCK PURCHASE AGREEMENT WITH CLEARWIRE CORPORATION]
41
EXHIBIT A
FORM OF INVESTOR RIGHTS AGREEMENT
EXHIBIT B
FORM OF JOINDER IN AND AMENDMENT TO STOCKHOLDERS AGREEMENT
EXHIBIT C
FORM OF VOTING AGREEMENT
EXHIBIT D
FORM OF EMPLOYEE NON-COMPETE AGREEMENT
EXHIBIT E
FORM OF SIDE LETTER AMENDMENT
EXHIBIT F
FORM OF COLLABORATION AGREEMENT
EXHIBIT G
FORM OF EAGLE RIVER VOTING AGREEMENT AND WAIVER OF PREEMPTIVE RIGHTS
EXHIBIT H
FORM OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
EXHIBIT I
SCHEDULE OF EXCEPTIONS
EXHIBIT J
FORM OF DWT LEGAL OPINION
EXHIBIT 10.52
CONFIDENTIAL
MOBILE WIMAX NETWORK COLLABORATION AGREEMENT
THIS MOBILE WIMAX NETWORK COLLABORATION AGREEMENT (this "Agreement") is
made and entered into as of this 28th day of June, 2006 ("Execution Date") by
and between Intel Corporation, a Delaware corporation ("Intel"), and Clearwire
Corporation ("Clearwire"). Each of Clearwire and Intel is referred to herein
individually as a "Party" and collectively as the "Parties".
RECITALS
A. The Parties desire to establish a strategic relationship through which
Clearwire will develop and deploy a Mobile WiMAX Network in the United States,
and Intel will develop and market certain integrated circuits, modules and other
platforms as more clearly defined below to enable OEMs to further develop and
sell end user devices for use on the Clearwire Mobile WiMAX Network. Through the
strategic relationship, the Parties also plan to enable the delivery of
broadband access and additional value added services targeted at Mobile
Computing Devices, on the terms and conditions hereinafter set forth.
B. The Parties are entering into this Agreement with the objective of
accelerating deployment and adoption of WiMAX products and networking services
in the United States by proactively building a Mobile WiMAX Network that will
provide leading edge wireless broadband access for customers using WiMAX
products, transitioning existing Expedience based networks to Mobile WiMAX
Networks and providing appropriate incentives to OEMs that manufacturer Mobile
Computing Devices to incorporate WiMAX technology as soon as it is appropriate
to do so as more clearly described below.
C. The Parties are entering into this Agreement with the understanding that
the respective commitments of the Parties regarding Mobile WiMAX Network
deployment, product development, intellectual property framework, co-marketing
efforts and other collaborative activities envisioned herein are predicated on
the other Party meeting its commitments hereunder for such Mobile WiMAX Network
deployment, product development, intellectual property framework and marketing
efforts.
D. Intel Pacific Inc., an affiliate of Intel, and Clearwire have entered
into that certain Stock Purchase Agreement dated June 27, 2006 (the "Investment
Agreement") pursuant to which Intel is making a significant investment in
Clearwire Corporation, subject to certain conditions to Closing (as that term is
defined in the Investment Agreement) which investment is integral to the
relationship established pursuant to the terms hereinafter set forth.
1. DEFINITIONS.
1.1 "ACCESS" means the establishment of wireless internet connectivity
between a client device and the Clearwire Network over licensed spectrum.
1.2 "ACCESS FEE" shall have meaning set forth in Section 5.2.3.
1.3 "ACCESS REVENUES" means end user access revenue [***]
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[***]
1.4 "ACTIVATION FEE" shall have the meaning set forth in Section 5.2.1.
1.5 [***]
1.6 [***]
1.7 "BACKGROUND IP" means all Intellectual Property and Patents belonging
to or controlled by either Party, (i) developed, conceived, obtained or acquired
prior to the Effective Date of this Agreement or (ii) developed, conceived,
obtained or acquired independently of this Agreement or not in furtherance of
any work pursuant to the Prior Agreement or this Agreement.
1.8 "BASE SUBSCRIBER LEVEL" means the number of Subscribers using Intel
Mobile Computing Devices in a given period as shown in the table in Part 3 of
Exhibit A.
1.9 "CLEARWIRE DEVELOPMENTAL SOFTWARE" means Clearwire's developmental
software comprised of appropriate modules required by Intel to support the
development, test and validation of Clearwire systems based on Intel Silicon.
1.10 "CLEARWIRE FIELD OF USE" means the deployment of broadband wireless
access systems and the marketing, sale and distribution of Clearwire Products.
1.11 "CLEARWIRE INVENTIONS" means those Inventions that are either (i) made
solely by employees of Clearwire while engaged in work pursuant to this
Agreement, (ii) Derivatives of copyrights or Patents owned or licensed by
Clearwire, or (iii) developed jointly by employees of Clearwire and Intel while
engaged in work pursuant to this Agreement and are physically integrated into a
Clearwire Product.
1.12 "CLEARWIRE NETWORK" means Clearwire's implementation of a Mobile WiMAX
Network that is owned, controlled or managed by Clearwire. For the avoidance of
doubt the term "Clearwire Network" shall not include roaming arrangements.
1.13 "CLEARWIRE PRODUCTS" means the following products manufactured by or
for Clearwire: Base station equipment and customer premise equipment based on
Intel Silicon operating in the 2.5GHz, 3.5GHz and 5.8GHz frequency bands or
other frequency bands, and that comply with the Solution Specifications of the
IEEE 802.16e Standard.
1.14 "CLEARWIRE RESELLER" means any third party re-seller of the Clearwire
Network services.
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1.15 "CMA" means cellular market area as that term is customarily defined
in the industry.
1.16 "CO-BRANDED SERVICE OFFERING" means a Mobile WiMAX Network service
[***]. For the avoidance of doubt,Co-Branded service offering does not include a
service offering that is marketed with a standard Intel technology brand or
Intel platform brand such as Intel(R) Centrino.
1.17 "DERIVATIVE" means (i) for material subject to copyright protection,
any work that is based upon one or more pre-existing works, such as a revision,
modification, translation, abridgment, condensation, expansion, collection,
compilation or any other form in which such pre-existing works may be recast,
transformed or adapted, or (ii) for patentable or patented materials, any
adaptation, subset, addition, improvement or combination.
1.18 "DUAL MODE DEVICE(S)" means broadband wireless residential gateway
modems designed to operate on a Mobile WiMAX Network and on a broadband wireless
network based on Expedience technology and that will primarily operate in the
2.5 GHz and 3.5 GHz spectrum bands, or such other bands as dictated by business
needs.
1.19 "EFFECTIVE DATE" means the date of Closing (as that term is defined in
the Investment Agreement).
1.20 "EXPEDIENCE" means the NextNet proprietary non-line of sight broadband
wireless technology.
1.21 "INTEL ARCHITECTURE" means microprocessors developed and sold by Intel
based on the X86 instruction set or its successors.
1.22 "INTEL DEVELOPMENTAL SOFTWARE" means Intel's developmental software
comprised of appropriate modules used by Clearwire to support the operation of
Intel Silicon based Clearwire systems.
1.23 "INTEL FIELD OF USE" means the marketing, sales and distribution of
Intel Silicon and related technologies to be utilized in connection with WiMAX.
1.24 "INTEL INVENTIONS" means those Inventions that are either (i) made
solely by employees of Intel while engaged in work pursuant to this Agreement,
or (ii) Derivatives of copyrights or Patents owned or licensed by Intel or (iii)
developed jointly by employees of Clearwire and Intel while engaged in work
pursuant to this Agreement or the Prior Agreement and are physically integrated
into Intel Silicon.
1.25 "INTEL SILICON" means Intel IEEE 802.16e-2005 standards based
integrated circuits including medium access control/baseband and transceivers.
1.26 "INTEL MOBILE COMPUTING DEVICE" means a battery operated mobile or
portable computing device containing Intel Architecture.
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1.27 "GOVERNMENTAL AUTHORITY" means any foreign, federal, national,
supranational, international, state, provincial, municipal, local, or similar
government, governmental, regulatory or administrative authority, agency, board,
commission, entity or instrumentality or any court, tribunal, or judicial or
arbitral body.
1.28 "GOVERNMENTAL ORDER" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.
1.29 "GSA" means geographic service area.
1.30 "INITIAL SERVICE LAUNCH" means that period of time when there are
[***] POPs Covered and the Integrated Service is commercially available in
conjunction with the availability of a WiMAX-enabled Intel Mobile Computing
Device.
1.31 "INTEGRATED SERVICE" means the Intel and Clearwire Co-Branded Service
Offering as developed by the Parties as contemplated in this Agreement.
1.32 "INTELLECTUAL PROPERTY" means any and all intellectual property rights
related to the Technology and Inventions, including all of the following and all
rights in, arising out of, or associated therewith: (i) procedures, designs,
inventions, and discoveries; (ii) works of authorship, copyrights and other
rights in works of authorship; (iii) mask work rights; and (iv) know-how,
show-how and trade secrets on a world wide basis, but excluding all Patents
issued or issuable thereon, and all trademarks, trade names, or other forms of
corporate or product identification.
1.33 "INVENTIONS" means any software, hardware, systems, material, works,
information, discoveries, inventions, processes, data or products, including
Derivatives, that are (i) copyrightable, patentable or subject to trade secret
protection, and (ii) created by Intel or Clearwire in the performance of this
Agreement or the Prior Agreement. Inventions are Clearwire Inventions, Intel
Inventions or Joint Inventions.
1.34 "INVESTMENT AGREEMENT" means the Stock Purchase Agreement between
Intel Pacific Inc. and Clearwire Corporation, dated as of the Execution Date.
1.35 "IOT" means interoperability testing.
1.36 "JOINT INVENTIONS" means those inventions that were Joint Inventions
under the Prior Agreement or made with joint inventive contributions by
employees of Clearwire and Intel while performing work pursuant to this
Agreement that are not Intel Inventions and not Clearwire Inventions.
1.37 "LAW" means any foreign, federal, national, supranational,
international, state, provincial, municipal, local or similar statute, law,
ordinance, regulation, rule, code, order, requirement or rule of law.
1.38 "MOBILE WIMAX NETWORK" means a broadband wireless network based on the
IEEE 802.16e-2005 standard.
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1.39 "NATIONWIDE SERVICE LAUNCH" occurs when there are [***] POPS Covered
and commercial services are available to Subscribers on the Clearwire Network.
1.40 "NETWORK DEPLOYMENT SCHEDULE" means the Network Deployment Plan and
Schedule set forth in Part 1 of Exhibit A attached hereto.
1.41 "NEXTNET" means NextNet Wireless, Inc.
1.42 "OEMS" means original equipment manufacturers.
1.43 "PARTIES" means Intel and Clearwire.
1.44 "PATENTS" means all classes or types of patents (including, without
limitation, originals, divisions, continuations, continuations-in-part,
extensions or reissues), and applications for these classes or types of patent
rights in all countries of the world.
1.45 "PERFORMANCE NOTEBOOK" means a Intel Mobile Computing Device that has
WiFi capability and is branded or marketed by Intel as high performance (i.e.
Intel(R) Centrino(R), Centrino-Duo(R), or any equivalent or successor brands),
and is part of the general industry defined notebook personal computer market
segment.
1.46 "POPS" means population in a particular geographic area.
1.47 "POPS COVERED" means natural persons who reside within the geographic
area in which Clearwire Network services are available and who can access the
Clearwire Network for a standard level of service, based on census data.
1.48 "PRIOR AGREEMENT" means the Joint Development Agreement between Intel
and Clearwire Corporation, dated October 23,2004.
1.49 "SUBSCRIBER" means a subscriber to the mobile services offering made
available through the Clearwire Network.
1.50 "SUBSIDIARY" means any corporation, partnership or other entity, now
or hereafter existing, (i) more than percent (50%) of whose outstanding shares
or securities entitled to vote for the election of directors or similar managing
authority is directly or indirectly owned or controlled by a Party hereto, or
(ii) that does not have outstanding shares or securities but more than fifty
percent (50%) of whose ownership interest representing the right to make the
decisions for such entity is directly or indirectly owned or controlled by a
Party hereto.
1.51 "TECHNICAL PERFORMANCE CRITERIA DOCUMENT" is the document that is
attached as Exhibit B.
1.52 "TECHNOLOGY" means all information other than Inventions relating to
or developed while performing the functions described in any statement of work
into which the Parties enter in connection with this Agreement and during
distribution of semiconductor silicon products and technologies to be utilized
in systems deployed in IEEE802.16e-2005 / WiMAX networks.
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1.53 "TIER 1 DEPLOYMENT" means a deployment by Clearwire of any broadband
wireless network in any of the largest 50 CMAs by population.
1.54 "VALUE ADDED SERVICES" means those services provided by Clearwire as
part of the Clearwire Service other than Access or those services offered as
part of the Integrated Service
1.55 "WIMAX FORUM WAVE 1 CERTIFIED" means the definition as used by the
WiMAX Forum.
1.56 "WIMAX FORUM WAVE 2 CERTIFIED" means the definition as used by the
WiMAX Forum.
2. DEVELOPMENT COLLABORATION.
2.1 [***] Clearwire and Intel will work together to determine the [***].
Clearwire will develop or have developed a [***]. If Clearwire decides to
develop a [***] Clearwire and Intel will work together, and will use
commercially reasonable efforts to obtain NextNet's participation, to develop
[***]
2.2 EQUIPMENT AND DEVICES FOR MOBILE SERVICES.
2.2.1 Promptly after the Effective Date, Clearwire will begin a
process to select infrastructure equipment vendor(s) to support the deployment
of the Clearwire Networks in accordance with the Network Deployment Schedule.
2.2.2 Intel will develop and offer to OEMs WiMAX enabled Intel Mobile
Computing Devices. Beginning in the [***] Intel will conduct IOT on a Clearwire
Network with the infrastructure vendors chosen by Clearwire to ensure client
device and infrastructure equipment interoperability.
2.2.3 Intel will work with OEMs and original design manufacturers to
help ensure the availability of client devices (including Intel Mobile Computing
Devices) for Mobile WiMAX Networks from multiple vendors.
2.2.4 The Parties will collaborate on [***]. The objective of these
collaborations is to
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help improve Mobile WiMAX Network performance, drive network and subscriber
device interoperability and enable worldwide roaming.
2.2.5 The Parties will meet on an as needed basis to review and manage
the multiple areas of collaboration outlined herein.
3. MOBILE WIMAX NETWORK AND EQUIPMENT DEPLOYMENT.
3.1 MOBILE WIMAX NETWORK DEPLOYMENT. In consideration for the significant
efforts and expenditures anticipated to enable customers to use a leading edge
Mobile WiMAX Network on which they will use WiMAX enabled products and related
services, and subject to applicable Law, Clearwire agrees to perform the
following activities:
3.1.1 Clearwire will use commercially reasonable efforts to deploy the
Clearwire Network and offer the Integrated Services as contemplated herein
pursuant to the Network Deployment Schedule specified in Exhibit A hereto. After
the time that the performance criteria specified in the Technical Performance
Criteria Document specified in Exhibit B hereto have all been met, and until
such time as Clearwire has achieved [***] million POPs Covered in the United
States, Clearwire will not commercially deploy any wireless broadband or data
networks other than a Mobile WiMAX Network [***]. The Parties understand and
agree that once the [***] million POPs Coverage has been met, Clearwire is free
to deploy other networks.
3.1.2 Clearwire agrees that any new Tier 1 Deployment by Clearwire
(other than those listed in Exhibit C attached hereto - which Exhibit may be
modified by Clearwire with Intel's prior written approval) will be Mobile WiMAX
Networks, provided that Clearwire may deploy Expedience-based networks as
follows (A) [***] within the [***] and (B) [***] in [***]. The foregoing
limitations with respect to Expedience based networks will be modified by
mutual agreement of the Parties in the event that the performance criteria
specified in the Technical Performance Criteria Document attached hereto as
Exhibit B are not achieved by the milestone completion date specified in the
Network Deployment Schedule, and each Party agrees to act in a commercially
reasonable manner in negotiating such modification.
3.1.3 Clearwire will use commercially reasonable efforts to [***]
3.1.4 Clearwire will use commercially reasonable efforts to transition
existing Expedience-based networks to Clearwire Networks in accordance with the
Technical Performance Criteria Document.
3.2 [***]:
3.2.1 for a period of [***] years from the Effective Date for Intel
Mobile Computing Devices, but only so long as (a) Intel Mobile Computing Devices
are commercially available from Clearwire's primary, vendor and at least one
additional OEM from the following list:
[***]
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[***] and (b) the solutions are cost competitive as compared to similar
solutions available for Mobile WiMAX Networks; and
3.2.2 for the [***] of residential gateway modems that operate solely
in 802.16e-2005 mode [***] deployed by Clearwire (it being understood that, for
the purposes of this paragraph, a product generation includes all devices
designed for a given wave of the certification as defined by the WiMAX Forum),
but only if (a) such solutions are commercially available from Clearwire's
primary vendor or an alternative vendor in the event Clearwire's primary vendor
does not have a commercially available solution available at the time of device
design selection, and (b) the solutions are cost competitive as compared to
similar solutions available for Mobile WiMAX Networks. [***]
3.2.3 In the event that [***] Clearwire will provide Intel with a
written explanation as to the specific issues which precluded [***], in such a
way that does not breach confidentiality terms (if any) between Clearwire and
any potential vendor, and will give Intel a reasonable time period to address
such issues prior to [***].
3.3 NETWORK DEPLOYMENTS OUTSIDE OF THE UNITED STATES. Clearwire will use
commercially reasonable efforts to deploy Mobile WiMAX Networks for all new
wireless broadband network deployments outside of the United States on or after
[***], provided that the key milestones for deployments in the United States, as
defined in the Network Deployment Schedule, have been met. Notwithstanding the
foregoing, from and after the time that the performance criteria specified in
the Technical Performance Criteria Document have all been met, Clearwire will
use commercially reasonable efforts to deploy Mobile WiMAX Networks for all new
wireless broadband network deployments outside the United States.
3.4 QUARTERLY MEETINGS. Senior management of the Parties will agree to
meet, beginning Q4'06, and continuing on at least a quarterly basis for the
duration of this Agreement, to review the current information regarding spectrum
acquisition, Clearwire Network deployment status and milestones, client device
availability, [***] and POPs Covered data. The prior quarter's [***] and POPs
Coved data will be provided in writing to the other Party prior to the quarterly
meeting or within (60) days from the end of each fiscal quarter. Such data will
be certified by an officer of the disclosing Party prior to the disclosure of
such data to the other Party as specified in this Section. The information
disclosed shall be considered the confidential information of the disclosing
Party.
3.5 LIQUIDATED DAMAGES. The Parties agree that it is difficult to estimate
the amount of damages that Intel may suffer by reason of a failure by Clearwire
to deploy Mobile WiMAX Networks in accordance with its obligations under Section
3.1 and the other terms of this
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Agreement and that Parties have agreed that, in the event of such failure by
Clearwire, Intel shall be entitled to receive from Clearwire as liquidated
damages, and not as a penalty, the sum of [***] U.S. dollars [***].
4. MARKETING FOR MOBILE SERVICES.
4.1 COMMITMENT OF MARKETING DOLLARS.
4.1.1 Subject to the provisions of this Section 4; Intel expects to
spend a total of [***] for marketing [***] for WiMAX enabled devices enabled to
work on the Clearwire Network ("Marketing Funds"). Intel commits to spend (i)
$[***] of the Marketing Funds upon successful completion of Milestone #6 in
Section 1 of Exhibit A (Network Deployment Plan) and (ii) an additional $[***];
provided Clearwire has successfully achieved [***] million POPs Covered. Upon
successful completion of both (i) and (ii) of the foregoing sentence and unless
otherwise agreed to by the Parties, Intel will spend the entirety of such
Marketing Funds within [***] after Clearwire reaches [***] million POPs Covered.
4.1.2 The purpose of these Marketing Funds is to increase Subscribers
to the Integrated Service Offering, increase demand for Intel Mobile Computing
Devices enabled to work on the Clearwire Network and to reduce Clearwire's
expenses associated with acquiring Subscribers. As the Clearwire Mobile Network
is deployed per the Network Deployment Schedule specified in Exhibit A hereto
and as the Integrated Service Offering is made available to prospective
Subscribers, Intel will spend the committed Marketing Funds, or portion thereof,
pursuant to Section 4.1.1 above in a manner and on a schedule that it reasonably
believes is likely to accomplish the foregoing purposes, taking into account the
need to balance the importance of creating early brand awareness and customer
growth with the greater effectiveness of marketing when the Clearwire Network is
more fully developed.
4.1.3 The marketing activities to be funded by Intel using such
Marketing Funds may include, but not be limited to, [***] Intel will retain sole
discretion over how the marketing funds are used for specific activities
identified herein.
4.2 INTENTIONALLY BLANK
4.3 MARKETING PLAN. In addition to the marketing activities specified in
Section 4.1 above, Intel and Clearwire will develop a mutually agreed upon
multi-year co-marketing plan to promote the adoption of Clearwire Network based
mobile services using Intel Architecture based devices, including but not
limited to: [***]. Each Party will make in kind resource contributions and
equally share in any external costs related to the co-marketing efforts.
4.4 CONTROL OVER BRANDING AND MARKS. Except as otherwise expressly agreed
to in writing by the Parties in connection with the branding or co-branding
arrangements contemplated
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under this Agreement, (a) each Party will retain sole discretion over the use of
their respective brands, trade names, trademarks and service marks, and (b)
neither Party will use the other Party's brands, trade names, trademarks or
service marks.
5. MOBILE SERVICES COLLABORATION.
5.1 COLLABORATION ON INTEGRATED SERVICE. Subject to applicable Law, the
Parties will collaborate on the definition and roadmap for the Integrated
Service for Intel Mobile Computing Devices to be delivered over the Clearwire
Network. The structure of this joint, Integrated Service offering is as follows.
5.1.1 Except for the obligations of Intel as expressly stated in this
Agreement, Clearwire will be responsible for all service and support
requirements necessary to provide the Integrated Service offering.
5.1.2 The scope and terms of the Integrated Service offering will be
mutually agreed upon by the Parties.
5.1.3 [***].
5.1.4 Clearwire will make themselves available to discuss Integrated
Services and the plans for the Clearwire Network with the OEMs that manufacture
Intel Mobile Computing Devices beginning [***].
5.2 FEES. Clearwire will pay Intel the following fees:
5.2.1 Clearwire will pay Intel [***] for each new subscriber addition
using a Intel Mobile Computing Device that is activated on the Clearwire Network
after Clearwire has successfully achieved Nationwide Service Launch, [***]
Clearwire's obligation to pay Intel the Activation Fee will commence upon
Clearwire successfully achieving the Nationwide Service Launch and will continue
for a period of time equal to [***].
5.2.2 Subject to applicable Law, Clearwire agrees to pay the
distribution channel, including OEMs and retailers, marketing fees sufficient to
incentivize them to promote activation of the Integrated Services at a level
such that such fees, in the aggregate, are equal to the lesser of [***] or an
amount equal to [***].
5.2.3 Clearwire will pay to Intel [***] of the Access Revenue
hereafter received by Clearwire, its Subsidiaries or affiliates ("Access Fee").
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5.2.4 The Activation Fee and the Access Fee will be payable on a
quarterly basis within fifteen (15) days after completion of Clearwire's
financial statements for the applicable quarter. Clearwire shall wire transfer
the full amount of the Activation Fees and the Access Fees due with respect to
such quarter to an account specified by Intel. Simultaneously with paying the
Activation Fees and the Access Fees each quarter, Clearwire shall submit a
report, in a form reasonably acceptable to Intel, which shall be certified by an
authorized representative of Clearwire and which will state the number of new
Subscriber additions using a Intel Mobile Computing Device activated on the
Clearwire Network during such quarter, the Access Revenue earned by Clearwire or
its affiliates during such quarter and set forth therein a calculation of the
Activation Fees and the Access Fees payable to Clearwire with respect thereto.
In all cases, the Access Revenues employed in the computation of Access Fees
shall be genuine and accurate. Clearwire covenants not to engage in manipulative
transfer pricing or any other means to avoid the intended application of this
Section. Reports shall be sent to the following: Intel Post Contract Management
- M/S JF3-149,2111 N.E. 25th Avenue, Hillsboro, Oregon 97124.
5.2.5 [***]
5.2.6 Intel will retain the rights to work with other service
providers to offer similar services.
5.3 [***]
5.4 [***]
5.4.1 For a period of [***] from Nationwide Service Launch, [***]
provided (a) that this obligation shall not apply to [***]; and (b) an
appropriate feasible technical solution is identified to support the obligations
of this provision. The Parties will define an appropriate feasible technical
solution and Clearwire will not unreasonably withhold its consent and
implementation to the solution proposed.
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5.4.2 For the Integrated Services as mutually defined and developed by
the Parties as contemplated herein, [***]. This section survives any termination
of the Agreement for so long as such Integrated Service is being offered by the
Parties.
5.4.3 For a period of [***] from Nationwide Service Launch, Clearwire
agrees to [***]
5.5 VALUE ADDED SERVICES. The Parties will investigate the development and
deployment of Value Added Services over the Clearwire Network that utilizes
current and future features of Intel Mobile Computing Devices. The Parties
acknowledge that third parties may become involved in these development efforts.
For each new Value Added Service offered by Clearwire on the Clearwire Network,
Clearwire shall provide Intel with the option to include such Value Added
Service as part of the Integrated Service on terms and conditions no less
favorable than Clearwire offers to any third party.
5.6 PRIOR AGREEMENT. Except as set forth in this Agreement, the Joint
Development and Collaboration Agreement between the Parties dated October 13,
2004 (the "Prior Agreement") is terminated as of the Effective Date of this
Agreement. Each Party releases the other Party and its Affiliates from any
liability or obligations arising under such Agreement, and each Party waives all
claims relating to, the Prior Agreement.
5.7 AUDIT RIGHTS.
5.7.1 Clearwire agrees to make and to maintain until the expiration of
[***] after the last payment under this Agreement is due, sufficient books,
records and accounts regarding activation of Subscribers on the Clearwire
Network, activation of any Intel Mobile Computing Devices, Access Revenue,
Clearwire's compliance with the WiMAX spending commitment contained in the "Use
of Proceeds" section of the Investment Agreement or other information that is
relevant to Clearwire's payment and revenue share obligations hereunder and the
WiMAX spending commitment contained in the "Use of Proceeds" section of the
Investment Agreement. Intel shall have the right not more than once every [***]
to, directly or through an agent reasonably acceptable to Clearwire, examine
such books, records and accounts, upon reasonable notice and during Clearwire's
normal business hours, to verify Clearwire's reports on the amount of payments
made to Intel under this Agreement, Clearwire's compliance with the terms and
conditions of this Agreement and Clearwire's compliance with the terms and
conditions of the "Use of Proceeds" section of the Investment Agreement.
5.7.2 If any such examination discloses a shortfall or overpayment in
the amounts due to Intel hereunder, the appropriate Party shall reimburse the
other Party for the full amount of such shortfall or overpayment. Should the
audit discover any errors or omissions by Clearwire which result in Clearwire
underpaying Intel by more than [***] of the amounts due with respect to any
particular month being audited, Clearwire shall reimburse Intel for the costs of
such audit.
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5.7.3 Should such examination disclose that Clearwire has materially
failed to meet the conditions of the "Use of Proceeds" section contained in the
Investment Agreement, Intel may terminate this Agreement for material breach and
may exercise any other remedies available to Intel under this Agreement, the
Investment Agreement or otherwise.
5.8 CURRENCY. All Activation Fees, Access Fees and other payments to Intel
hereunder shall be in United States Dollars. Payments based on transaction in
currencies other than U.S. Dollars shall be converted to dollars according to
the official rate of exchange for that currency, as published in the Wall Street
Journal (Western Edition), on the last banking day of the calendar month in
which the royalties accrued.
5.9 WITHHOLDING TAX. All payments shall be made free and clear without
deduction for any and all present and future taxes imposed by any taxing
authority. In the event that Clearwire is prohibited by Law from making such
payments unless such deductions are made or withheld therefrom, then Clearwire
shall pay such additional amounts as are necessary in order that the net amounts
received by Intel, after such deduction or withholding, equal the amounts which
would have been received if such deduction or withholding had not occurred;
provided, however, that no such additional amount shall be required to be paid
if (i) Intel is entitled to claim a foreign or other tax credit with respect to
such tax, (ii) such tax is an income, gross receipts or property tax that is the
liability of Intel under the laws of the jurisdiction imposing such tax or (iii)
such tax may be avoided by Intel or Clearwire, as applicable, providing the
other with a resale or other certificate. In the event any tax or deduction is
withheld from any payment, Clearwire shall promptly furnish Intel with a copy of
an official tax receipt or other appropriate evidence of such taxes, including
any taxes on any additional amounts paid pursuant to this Section 5.9. Anything
in this Section 5.9 to the contrary notwithstanding, Intel shall be solely
responsible for all income and franchise taxes imposed on it for payments
received by it under this Agreement, as well as for sales and property taxes
imposed upon it in connection with such payments. In the event that any tax or
duty for which Clearwire is responsible for paying under this Section 5.9 is
legally imposed initially on Intel or Intel is later assessed by any taxing
authority, then Intel will be promptly reimbursed by Clearwire for such tax or
duty plus any interest and penalties suffered by Intel with respect to such tax.
Intel and Clearwire agree to cooperate in good faith to resolve any disagreement
between them as to the applicability of any sales, use, stamp or value added tax
to any payment and further agree to consult with each other and to work in good
faith toward a joint resolution of any audit or similar proceeding in which any
taxing authority seeks to impose any such tax on a payment called for under this
Agreement. Clearwire agrees to pay all reasonable out-of-pocket expenses
incurred by Intel in contesting the imposition by any taxing authority of any
sales, use, stamp or value added tax on a payment called for by this Agreement.
This clause shall survive the termination of this Agreement.
5.10 LATE PAYMENT. Clearwire agrees that any payments required under the
terms of this Agreement which are not paid when due will accrue interest at the
prime lending rate established by Citibank, New York, commencing thirty (30)
days after the due date as established by this Agreement. The right to collect
interest on such late payments shall be in addition to any other rights that
Intel may have.
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5.11 FULFILLMENT OF RESPONSIBILITIES. The commercial relationships
described in this Section 5 are contingent upon each Party's satisfaction of its
other responsibilities identified in this Agreement.
5.12 INTERNATIONAL COLLABORATION. Subject to applicable Law, the Parties
may agree to develop [***] consistent with the terms and conditions of this
Agreement.
6. INTELLECTUAL PROPERTY.
6.1 OWNERSHIP.
6.1.1 BACKGROUND IP. Intel shall have exclusive ownership of Intel's
Background IP, and Clearwire shall have exclusive ownership of Clearwire's
Background IP.
6.1.2 INTEL INVENTIONS AND CLEARWIRE INVENTIONS. Intel shall have
exclusive ownership of Intel Inventions, and Clearwire shall have exclusive
ownership of Clearwire Inventions.
6.1.3 COLLABORATIVE DEVELOPMENT. The Parties acknowledge that they do
not currently envision collaborative generation of inventions under this
Agreement that will constitute Joint Inventions. In the event the Parties
undertake collaborative development of such inventions, the Parties will
establish an IP Review Board to determine ownership as between the Parties. In
the event any disputes regarding ownership of such inventions cannot be resolved
by the IP Review Board, the Parties will follow the procedure specified in
Section 13.2 below. [***], the Parties will define and mutually agree upon terms
related to intellectual property rights related to that specific area of
development.
6.2 FILING OF PATENT APPLICATIONS. Intel, with respect to Intel Inventions,
and Clearwire, with respect to Clearwire Inventions, shall have the exclusive
right to file any patent applications arising from such Inventions anywhere in
the world at its own sole expense, and shall thereafter own all such
applications and any continuations, continuations-in-part, divisions,
extensions, reissues and reexaminations of any such applications, as well as any
patents resulting from such applications.
6.3 COPYRIGHTS. Intel shall have copyright ownership of any Intel
Inventions and any other software and documents it writes by itself or through
its designated contractors during the term of this Agreement. Clearwire shall
have copyright ownership of any Clearwire Inventions and any other software and
documents it writes by itself or through its designated contractors during the
term of this Agreement. Information generated jointly by the Parties that is
copyrighted or copyrightable information and that is not an Intel Invention or
Clearwire Invention shall be jointly owned copyright property of both Parties.
Subject to the terms of Section 10 (Confidentiality) of this Agreement, such
jointly owned copyright property may be reproduced, distributed, displayed,
performed and made into derivatives or modified by either of the Parties without
the consent of the
[*** Confidential Treatment Requested]
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other Party, but shall not be transferred, sold, or publicly distributed without
the prior written consent of the other Party.
6.4 TRADE SECRETS. To the extent that any information generated jointly by
the Parties hereunder is not subject to a license to any Background IP held by
the Parties provided in this Section 6, such information will be treated as the
confidential, jointly owned trade secrets of both Parties and shall not be
transferred, sold, or publicly disclosed or released without the prior written
consent of the other Party.
6.5 RECIPROCAL SOFTWARE LICENSE. Subject to the terms and conditions of
this Agreement, Clearwire grants to Intel a world-wide, non-transferable,
royalty free, fully paid up, copyright license (without the right to sublicense)
to reproduce and create derivative works of Clearwire Developmental Software,
solely within Intel for its internal use and solely for the purpose of
performing its obligations under this Agreement. Subject to the terms and
conditions of this Agreement, Intel grants to Clearwire a world-wide,
non-transferable, royalty free, fully paid up, copyright license (without the
right to sublicense) to reproduce and create derivative works of Intel
Developmental Software, solely within Clearwire for its internal use and solely
for the purpose of performing its obligations under this Agreement.
6.6 RECIPROCAL LICENSE TO JOINT INVENTIONS. Clearwire grants to Intel a
world-wide, irrevocable, transferable, royalty-free, fully-paid perpetual
license (with the right to sublicense) under Clearwire's copyrights and trade
secrets (which have been disclosed to Intel in the performance of this
Agreement), to reproduce, have reproduced, prepare and have prepared Derivatives
of, translate, display, distribute and perform Joint Inventions, but only within
the Intel Field of Use. Intel grants to Clearwire a world-wide, irrevocable,
transferable, royalty-free, fully-paid perpetual license (with the right to
sublicense) under Intel's copyrights and trade secrets (which have been
disclosed to Clearwire in the performance of this Agreement), to reproduce, have
reproduced, prepare and have prepared Derivatives of, translate, display and
distribute Joint Inventions, but only within the Clearwire Field of Use.
6.7 NO OTHER LICENSES. Except as provided herein, no license or other right
is granted, by either Party to the other, by implication, estoppel or otherwise,
under any patents, trade secrets, copyrights, or other Intellectual Property
rights now or hereafter owned or controlled by such Party except for the
licenses and rights expressly granted in this Agreement. Nothing contained in
this Agreement shall be construed as:
6.7.1 a warranty or representation by either Party as to the validity,
enforceability, and/or scope of any Intellectual Property or Patent;
6.7.2 a license or any other rights under any of Intel's Patent Rights
or Intellectual Property rights or technical information related to any
microprocessor (including, without limitation, coprocessors and embedded
controllers), associated core logic device (including without limitation
chipsets), flash memory or semiconductor process and manufacturing technology;
6.7.3 imposing upon either Party any obligation to institute any suit
or action for infringement of any Intellectual Property or Patent, or to defend
any suit or action brought by a third
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Party which challenges or concerns the validity, enforceability, or scope of any
Intellectual Property or Patent;
6.7.4 imposing on either Party any obligation to file any patent
application or other Intellectual Property right application or registration or
to secure or maintain in force any Patent or other Intellectual Property;
6.7.5 a license to any of Intel's Background IP, Clearwire's
Background IP, Intel Inventions or Clearwire Inventions;
6.7.6 an obligation to furnish any technical information or know-how
except as otherwise might be expressly required hereunder;
6.7.7 conferring any right to use in advertising, publicity, or
otherwise, any trademark, trade name or names, or any contraction, abbreviation
or simulation thereof, of either Party; or
6.7.8 conferring by implication, estoppel or otherwise, upon any Party
licensed hereunder, any license or other right under any Intellectual Property
right or Patent Right except the licenses and rights expressly granted
hereunder.
6.8 LICENSING FREEDOM. Except as set forth in Section 6.3 above, each Party
shall have the right to license independently to any third party any
Intellectual Property rights arising from any Joint Inventions, any of its own
Inventions and confidential information, whether or not made or created during
the Collaboration. All royalties resulting from such licensing may be retained
solely by the licensor, and there shall be no requirement for accounting to the
other Party to this Agreement.
6.9 FURTHER ASSURANCES.
6.9.1 INSTRUMENTS AND DOCUMENTS. At any time or from time to time on
and after the Effective Date, each Party shall, at the request of the other
Party: (a) deliver to the requesting Party such records, data or other documents
consistent with this Agreement, (b) execute, and deliver or cause to be
delivered, all such assignments or further instruments of transfer or license,
and (c) take or cause to be taken all such other actions, as the other Party may
reasonably deem necessary or desirable in order for the requesting Party to
obtain the full benefits of this Agreement and the transactions contemplated
hereby. Specifically, at the request of a Party and at such Party's expense, the
other Party shall execute, and deliver or cause to be delivered, all such
instruments of transfer, and shall take or cause to be taken all such other
actions as the other Party may reasonably deem necessary or desirable in order
to carry out any assignment hereunder or perfect any rights in any Inventions or
Joint Inventions. Any assigning Party further agrees that its obligation under
this section, when it is in its power to do so, shall continue after the
termination of this Agreement.
6.9.2 ASSIGNMENT OF INTELLECTUAL PROPERTY RIGHTS. Each Party shall
take commercially reasonable and good faith measures to ensure that any
Intellectual Property rights and Patent Rights of its employees as inventors of
any Joint Invention will be explicitly assigned to that Party. This obligation
includes an obligation to make commercially reasonable payments to its
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employees who invent any Joint Invention in order to acquire all Intellectual
Property rights and Patent Rights of such employees in such Joint Invention.
7. WIMAX PATENT ALLIANCE, CLAIMS OF THIRD PARTY PATENT RIGHTS AND INJUNCTION
7.1 WIMAX PATENT ALLIANCE. Intel will endeavor to create a patent alliance
among holders of essential patents related to IEEE 802.16 based broadband
wireless networks. Clearwire understands that this patent alliance is in the
formative stage. In the event this formation of the patent alliance is
successful, Clearwire will: (a) join the patent alliance under commercially
reasonable terms and conditions; (b) contribute any essential patents to the
patent alliance; (c) participate in the patent alliance as a licensee; (d)
participate in the defensive mechanism and contribute applicable patents to the
patent alliance; and (e) work with Intel to encourage its Mobile WiMAX Network
vendors and suppliers to participate and adhere to patent alliance terms to
obtain the benefits there under.
7.2 CLAIMS OF THIRD PARTY PATENT RIGHTS.
7.2.1 During the period of time that Intel receives Activation Fees as
specified in Section 5.2.1 above, should Clearwire become subject to court
ordered royalty obligations or a monetary judgment due to third party patent
rights in the United States that are necessarily infringed by [***]
7.2.2 [***]
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[***]
7.3 INJUNCTION. In the event that Clearwire becomes subject to an
injunction associated with its deployment or operation of the Clearwire Network
and related services contemplated under this Agreement due to infringement of
third party intellectual property rights, the specific obligations under this
Agreement that are the subject of such injunction will be suspended to the
minimum extent necessary for Clearwire to comply with such court ordered
injunction but only after Clearwire has used its commercially reasonable efforts
to meet the obligations under this Agreement and exhausted every reasonable
legal option to oppose such injunction. Intel may participate in the defense of
such action at its option, and at its expense. Clearwire will still be obligated
to fully perform the other obligations contained in this Agreement, including
those related to the deployment or operation of the Clearwire Network services
that are not expressly the subject of any such injunction. Clearwire also agrees
to work with Intel to explore other commercially reasonable alternatives in the
event of any such injunction, such as licensing arrangements or modifying the
network in such a way as to be non-infringing.
8. REPRESENTATIONS AND WARRANTIES
8.1 CLEARWIRE REPRESENTATIONS AND WARRANTIES. Clearwire hereby represents
and warrants to Intel as follows:
8.1.1 It is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has all
necessary power and authority to enter into this Agreement, to carry out its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery by Clearwire of this Agreement, and the performance
by Clearwire of its obligations hereunder have been duly authorized by all
requisite action on the part of Clearwire. This Agreement has been duly executed
and delivered by Clearwire, and (assuming due authorization, execution and
delivery by Intel) this Agreement constitutes a legal, valid and binding
obligation of Clearwire, enforceable against Clearwire in accordance with its
terms.
8.1.2 The execution, delivery and performance by Clearwire of this
Agreement does not and will not (i) violate, conflict with or result in the
breach of any provision of its organizational documents, (ii) conflict with or
violate any Law or Governmental Order applicable to it or any of its assets,
properties or business or (iii) conflict with, result in any breach of,
constitute a default (or event which with the giving of notice of a lapse of
time, or both, will become a default) under any agreement with a third party.
8.1.3 Clearwire will comply in all material respects with all Laws,
judgments and other directions or orders imposed by any Governmental Authority
to which its activities under this Agreement are subject and will obtain and
maintain all necessary licenses and certifications required for the performance
of its obligations hereunder.
8.2 INTEL REPRESENTATIONS AND WARRANTIES. Intel hereby represents and
warrants to Clearwire as follows:
[* * * Confidential Treatment Requested]
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8.2.1 It is a company duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization and
has all necessary power and authority to enter into this Agreement, to carry out
its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by Intel of this
Agreement, and the performance by Intel of its respective obligations hereunder
have been duly authorized by all requisite action on the part of Intel. This
Agreement has been duly executed and delivered by Intel, and (assuming, due
authorization, execution and delivery by Clearwire) this Agreement constitutes a
legal, valid and binding obligation of Intel, enforceable against Intel in
accordance with their respective terms.
8.2.2 The execution, delivery and performance by Intel of this
Agreement does not and will not (i) violate, conflict with or result in the
breach of any provision of its organizational documents, (ii) conflict with or
violate any Law or Governmental Order applicable to it or any of its assets,
properties or business, or (iii) conflict with, result in any breach of,
constitute a default (or event which with the giving of notice of a lapse of
time, or both, will become a default) under, any agreement with a third party.
8.2.3 Intel will comply in all material respects with all Laws,
judgments and other directions or orders imposed by any Governmental Authority
to which its activities under this Agreement are subject, and will obtain and
maintain all necessary licenses and certifications required for the performance
of its obligations hereunder.
8.3 DISCLAIMER. EXCEPT AS EXPLICITLY PROVIDED IN THIS ARTICLE, THE PARTIES
MAKE NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, STATUTORY OR
OTHERWISE, AND SPECIFICALLY DISCLAIM, ANY WARRANTIES AS TO THE USEFULNESS,
ACCURACY, RELIABILITY OR EFFECTIVENESS OF ANY SERVICES, OR THAT SUCH SERVICES
WILL MEET THE NEEDS OF ANY PARTY. WITHOUT LIMITING THE FOREGOING, EACH PARTY
DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE AND NON-INFRINGEMENT.
9. LIMITATION OF LIABILITY.
EXCEPT AS EXPRESSLY PROVIDED FOR IN THE LIQUIDATED DAMAGES SECTION 3.5
ABOVE [***] IN NO EVENT SHALL EITHER PARTY HAVE ANY LIABILITY FOR ANY INDIRECT,
SPECIAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT, UNDER ANY CAUSE
OF ACTION OR THEORY OF LIABILITY, AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGE.
10. CONFIDENTIALITY AND PUBLICITY.
All confidential or proprietary information and materials disclosed to the
other Party hereunder shall be disclosed in accordance with the requirements of
the Corporate Non-Disclosure Agreement ("CNDA"), No. 6061146, entered into
between the Parties. Each Party agrees to maintain such confidential information
in accordance with the terms of this Agreement and the CNDA and any other
applicable, separate non-disclosure agreement between the Parties. At a
[*** Confidential Treatment Requested]
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minimum, each Party agrees to maintain such information in confidence and limit
disclosure on a need to know basis, to take reasonable precautions to prevent
unauthorized disclosure, and to treat such information as it treats its own
information of a similar nature, until the information becomes rightfully
available to the public through no fault of the non-disclosing Party. Except as
otherwise set forth in this Agreement, neither Party shall publish or use any
advertising, sales promotion, press releases or publicity matters relating to
this Agreement without the prior written approval of the other Party. Except as
otherwise set forth in this Section and the Side Letter Agreement (dated as of
the date herewith) between Clearwire Corporation and Intel Pacific Inc., neither
Party shall publish or use any advertising, sales promotion, press releases or
publicity matters relating to this Agreement without the prior written approval
of the other Party.
11. EXPORT LAWS.
The disclosure and transfer of technical information by either Party under
this Agreement shall be subject to the then-existing United States export
control Laws and regulations, as may be applicable. Neither Party shall
disclose, transmit, or export, directly or indirectly, any of such information
disclosed to it by the other, or any direct product of such information, to or
for use in any foreign country unless such disclosure, transmittal, or
exportation is permitted by applicable law or shall have been authorized
previously in an export license granted pursuant to any of such laws or
regulations. As a condition to the export or re-export of any products derived
from or containing Inventions, the exporting or re-exporting Party shall insure
that the distribution and export/re-export of such product is in compliance with
all Laws, regulations, orders, or other restrictions of the U.S. Export
Administration Regulations.
12. TERM, TERMINATION, AND SURVIVAL.
12.1 TERM. This Agreement shall be effective on the Effective Date and
shall continue until the seventh anniversary of the Effective Date unless
otherwise terminated or extended by written agreement of the Parties.
Notwithstanding anything to the contrary herein, should the Investment Agreement
terminate pursuant to Section 8 thereof, the Parties acknowledge that this
Agreement is immediately null and void.
12.2 TERMINATION FOR BREACH. Subject to the Parties exhaustion of the
dispute resolution process as set forth in Section 13.2, either Party may
thereafter terminate this Agreement if:
12.2.1 the other Party breaches any material provision of this
Agreement (for purposes of this Agreement, a failure to pay any material amounts
owing shall be considered a material breach) and fails to remedy such breach
within thirty (30) days of the non-breaching Party's written notice of such
breach (or, if such breach cannot be remedied in that time, failure to commence
remedial procedures reasonably satisfactory to the non-breaching Party); or
12.2.2 the other Party dissolves, becomes insolvent or makes a general
assignment for the benefit of its creditors; or
12.2.3 a voluntary or involuntary petition or proceeding is commenced
by or against the other Party under the Federal Bankruptcy Act or any other
statute of any state or country relating to insolvency or the protection of the
rights of creditors, or any other insolvency or
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bankruptcy proceeding or other similar proceeding for the settlement of the
other Party's debt is instituted; or a receiver of all or substantially all of
the property of the other Party is appointed.
12.2.4 Except as expressly limited by this Agreement, termination of
this Agreement under this Section 12.2 will be without prejudice to any other
remedy that may be available to a Party under applicable law.
12.3 TERMINATION FOR CONVENIENCE. In the event that the net Subscriber
activations do not meet 100% of the Base Subscriber Level beginning in 2011 as
specified in the attached Exhibit A hereto, then Intel shall have the right, in
its sole discretion, to terminate this Agreement for convenience upon three
months advance written notice. In the event that there is no commercially
available Mobile WiMAX Network infrastructure equipment on a timely basis to
enable Clearwire to meet the schedule specified herein, then the time for
termination for convenience will be adjusted by a time period equal to such
availability of such infrastructure equipment.
12.4 SURVIVAL. Except as otherwise stated in this Agreement, this Section
12.4 and Sections 1., 5.2.1, 5.2.3, 5.4.2, 5.7, 5.8, 5.9, 5.10, 6, 8, 9, 10, 11
and 13, and any other legal obligation created hereby which by its terms would
survive termination, shall survive the expiration or termination of this
Agreement by either Party for any reason. Notwithstanding the foregoing,
Sections 5.2.1 and 5.2.3 survive any expiration or termination of this Agreement
except in the event of a termination of this Agreement by Intel for its
convenience pursuant to Section 12.3 above or a termination of this Agreement by
Clearwire in the event of an uncured material breach by Intel hereunder.
13. GENERAL.
13.1 GOVERNING LAW. Any claim arising under or relating to this Agreement
shall be governed by the internal substantive laws of the State of Delaware or
federal courts or state courts located in Delaware, without regard to principles
of conflict of laws.
13.2 DISPUTE RESOLUTION. All disputes arising directly under the express
terms of this Agreement or the grounds for termination thereof shall be resolved
as follows: The senior management of both Parties shall meet to attempt to
resolve such disputes. If the disputes cannot be resolved by the senior
management, either Party may make a written demand for formal dispute resolution
and specify therein the scope of the dispute. Within thirty days after such
written notification, the Parties agree to meet for one day with an impartial
mediator and consider dispute resolution alternatives other than litigation,
including referral to the National Patent Board. If an alternative method of
dispute resolution is not agreed upon within thirty days after the one day
mediation, either Party may begin litigation proceedings.
13.3 ASSIGNMENT AND CHANGE OF CONTROL.
13.3.1 ASSIGNMENT. Neither Party may sell, transfer, assign,
subcontract or delegate (collectively, "Transfer") in whole or in part this
Agreement (whether by operation of law or otherwise), or any rights, duties,
obligations or liabilities under this Agreement, without the prior written
consent of the other Party, which consent may be withheld in such Party's sole
and absolute discretion. Subject to the foregoing, this Agreement will inure to
the benefit of and be binding upon each Party's permitted successors and
permitted assigns. Any Transfer in contravention of this
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Section 13.3 will be null and void. For purposes of this Agreement, any Change
of Control (as defined below) involving a Party, including without limitation, a
Change of Control pursuant to which the contracting Parties to this Agreement
remain unchanged, shall be deemed a Transfer by such Party.
13.3.2 CHANGE OF CONTROL.
13.3.2.1 ASSIGNMENT UPON CHANGE OF CONTROL. Notwithstanding the
provisions of Section 13.3.1, a Party may Transfer this Agreement, and all of
the rights, duties, obligations and liabilities hereunder, in a Change of
Control (as defined below) provided that:
(i) the Party undergoing the Change of Control (the "Change of Control
Party") must comply with the provisions of Section 13.3.2.2 below; and
(ii) with respect to a Change of Control of Clearwire, the prior
written consent of Intel (which consent may be withheld in Intel's sole and
absolute discretion) to such Transfer is required if the other party to the
Change of Control (the "Acquiror") is (1) [***] or any Affiliate (as defined
below) of [***] or any entity that has acquired substantially all of the assets
or business of [***] or (2) [***] or any Affiliate of such a third party; and
(iii) subject to Section 13.3.2.1(iv) and Section 13.3.2.3, with
respect to a Change of Control of Clearwire, the contracting party to this
Agreement following such Change of Control expressly agrees in writing to assume
this Agreement and all of the rights, duties, obligations and liabilities
hereunder, including without limitation, the obligations under Section 5.2; and
(iv) if the Acquiror or any affiliate of the Acquiror [***], then
Intel shall have the right, at its sole and absolute discretion, but not the
obligation, to either [***] Intel may exercise this right, if at all, by
providing written notice, to Clearwire within thirty (30) days following receipt
of the Notice (as defined below) and prior to the Transfer upon the Change of
Control, [***] which notice by Intel [***]. Clearwire, [***], and Intel shall
execute and deliver any documentation as may be reasonably necessary or
requested to reflect or effect any election that Intel may make pursuant to the
terms of this Section 13.3.2.1(iv).
13.3.2.2 NOTICE. Prior to entering into, effecting, permitting or
approving any transaction that would result in a Change of Control, the Change
of Control Party shall give the other Party written notice of such event (the
"Notice"). The Notice shall describe in reasonable detail the proposed terms of
the transaction or transactions that would constitute a Change of Control and
shall identify each "person" or "group" (as such terms are used in Sections
13(d) and
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14(d) of the Exchange Act) that is a party to such transaction or transactions
and each "person" or "group" that is, or is proposed to become, the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act) of the Change of
Control Party or of any such person or group, directly or indirectly. The Notice
shall be delivered as soon as practicable but no later than [***] after the date
the Change of Control Party first approves or agrees to such offer or proposed
Change of Control and in any case at least [***] before the closing of such
Change of Control. The Change of Control Party also shall notify the other Party
of (1) any material changes relating to the Change of Control prior to the
consummation of such Change of Control, and (2) the consummation of any Change
of Control. If the Change of Control Party enters into an exclusivity or
"no-shop" arrangement or agreement or confidentiality agreement in connection
with a proposed Change of Control, such exclusivity or "no-shop" arrangement or
agreement or confidentiality agreement shall contain an exception permitting the
Change of Control Party to provide the Notice and other information required
pursuant to this Section 13.3. The Change of Control Party shall provide to the
other Party any and all information reasonably requested by such other Party
relating to such Change of Control or any person or group that is a party
thereto or that is a beneficial owner, directly or indirectly, of any such
person or group. The Party receiving the notice or information hereunder agrees
to keep strictly confidential any such notice or other information received
pursuant to this Section 13.4.
13.3.2.3 LIMITATIONS. Subject to the provisions of this Section 13.3,
if Intel expressly agrees in writing to any Transfer in whole or in part of this
Agreement (whether by operation of law or otherwise), or any rights, duties,
obligations or liabilities under this Agreement, or upon any permitted Transfer
as a result of any Change of Control of Clearwire under and subject to Section
13.3.2:
(i) the following provisions of this Agreement shall terminate (unless
otherwise agreed to in writing by Intel) effective as of the consummation of a
Change of Control of Clearwire, and such provisions shall have no further force
or effect: [***] and
(ii) this Agreement shall be automatically amended, without any
further action required on the part of any Party or any third party, to add the
following provision as Section 13.14 of this Agreement:
"13.14 SPECIFIC PERFORMANCE; INJUNCTIVE RELIEF. Each Party
acknowledges (1) that it will be impossible to measure in money the
damage to Intel if Clearwire and/or its successors or assigns
(collectively, the "Breaching Party") or any legal representative of
the Breaching Party breaches or otherwise fails to comply with any of
the provisions of this Agreement, and (2) that in the event of any
such breach or failure, Intel will suffer irreparable harm and will
not have an adequate remedy at law or in damages. Accordingly, the
Parties agree that in the event of a breach or threatened breach by
the Breaching Party or other failure of the Breaching Party to comply
with any of the provisions of this Agreement, Intel shall be entitled
to specific performance of each of the terms of this Agreement and to
preliminary and permanent injunctive relief (without the requirement
of the posting of a bond or other security), from any court of
competent jurisdiction, to enforce the terms of this Agreement and
restrain the Breaching Party from violating the provisions of this
Agreement, and the Breaching Party hereby waives any defense thereto,
including,
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without limitation, the defenses of availability of relief in damages.
Nothing herein contained shall be construed as prohibiting Intel from
pursuing any other remedies available to it for such breach or
threatened breach, including without limitation, the recovery of
damages from Breaching Party. In the event of any breach of this
Agreement, Intel shall have the right and remedy, in addition to any
other rights and remedies it may have, to require Breaching Party to
account for and pay to Intel all consideration, profits, monies,
accruals, increments or other benefits (collectively, the "BENEFITS")
derived or received by Breaching Party as the result of any
transactions constituting a breach of any of the provisions of this
Agreement, and Breaching Party hereby agrees to account for and pay
over such Benefits to Intel. In the event that it is necessary to make
a determination of any damages resulting from a breach of this
Agreement, the amount of such damages shall not be determined based
upon any cash payment made by Intel to Breaching Party, and the
parties hereby acknowledge that damages resulting from a breach of
this Agreement may, under certain circumstances, be higher than any
cash amounts paid by Intel to Breaching Party."
Unless otherwise expressly agreed to in writing by Intel, and except as
expressly provided in this Section 13.3, all other provisions of this Agreement,
other than the provisions enumerated in the immediately preceding sentence,
shall remain in full force and effect following any such Transfer with respect
to which Intel has affirmatively agreed in writing to assign this Agreement or
as otherwise permitted upon a Change of Control of Clearwire pursuant to Section
13.3.2.
13.3.2.3 [***]
13.3.3 NO CIRCUMVENTION. Neither of the Parties shall enter into,
effect, consent to or approve of any transaction designed to circumvent the
provisions of this Section 13.3, and any attempt to do so shall be deemed a
breach of this Agreement by such Party.
13.3.4 DEFINITIONS.
(i) "Affiliate" shall mean any Party that directly, or indirectly
through one of more intermediaries, controls, or is controlled by, or is under
common control with another Party.
(ii) "Change of Control" of a Party shall mean the occurrence or
existence of any of the following events or circumstances, whether accomplished
directly or indirectly, or in one or a series of related transactions:
(A) any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of more than [***] of
the
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total voting power of the outstanding capital stock of such
Party; provided, that, this provision shall not be
applicable to the beneficial ownership or acquisition by
Eagle River Holdings, LLC and/or Intel (or their respective
Affiliates) of capital stock of Clearwire;
(B) such Party merges with or into, or consolidates with, or
consummates any reorganization or similar transaction with,
another person and, immediately after giving effect to such
transaction, less than [***] of the total voting power of
the outstanding capital stock of the surviving or resulting
person is "beneficially owned" (within the meaning of Rule
13d-3 under the Exchange Act) in the aggregate by the
stockholders of such Party immediately prior to such
transaction;
(C) in one transaction or a series of related transactions, such
Party, directly or indirectly (including through one or more
of its subsidiaries) sells, assigns, conveys, transfers,
leases or otherwise disposes of, all or substantially all of
the assets or properties (including capital stock of
subsidiaries) of such Party, but excluding sales,
assignments, conveyances, transfers, leases or other
dispositions of assets or properties (including capital
stock of subsidiaries) by such Party or any of its
subsidiaries to any direct or indirect wholly-owned
subsidiary of such Party (an "Asset Acquisition");
(D) solely with respect to Clearwire, in one transaction or a
series of related transactions, Clearwire, directly or
indirectly (including through one or more of its
subsidiaries and including through any liquidation or
dissolution) sells, assigns, conveys, transfers, leases or
otherwise disposes of, a majority of Clearwire's assets or
properties (including capital stock of subsidiaries)
relating to Clearwire's WiMAX business, but excluding sales,
assignments, conveyances, transfers, leases or other
dispositions of assets or properties (including capital
stock of subsidiaries) by Clearwire or any of its
subsidiaries to any direct or indirect wholly-owned
subsidiary of Clearwire (a "WiMAX Asset Acquisition");
(E) during [***] individuals who at the beginning of such period
constituted the Board of Directors of such Party (together
with any new directors whose election by such Board of
Directors or whose nomination for election by the
stockholders of such Party was approved by a vote of a
majority of the directors then still in office who were
directors at the beginning of such period, other than in
connection with a transaction described in (A),
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(B), (C) or (D) above cease for any reason to constitute a
majority of the Board of Directors of such Party then in
office;
(F) the adoption of any plan for the liquidation or dissolution
of such Party, other than in connection with a
reorganization or similar transaction in which the holders
of the voting stock of such Party immediately prior to such
transaction continue to represent more than [***] of the
combined voting power of the surviving entity immediately
after giving effect to such transaction (a "Liquidation");
(G) solely with respect to Clearwire, any Change of Control of
Eagle River Holdings, LLC or any entity that directly or
indirectly controls Eagle River Holdings, LLC; provided,
however, that a change in ownership of Eagle River Holdings,
LLC or any entity that directly or indirectly controls Eagle
River Holdings, LLC resulting solely and directly as a
result of the death or incapacity of Craig McCaw (but not
any subsequent change in ownership) shall not be deemed a
Change of Control hereunder; or
(H) solely with respect to Clearwire, (x) the beneficial
ownership, directly or indirectly, by Eagle River Holdings,
LLC and Intel, together with their respective Affiliates, of
Clearwire decreases to a level such that a "person" or
"group" (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act) is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act) of a
higher percentage of the total voting power of the
outstanding capital stock of Clearwire than the percentage
of the combined voting power of the outstanding capital
stock beneficially owned by (I) McCaw and his Affiliates and
(II) Intel and its Affiliates.
(iii) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
13.4 RELATIONSHIP OF PARTIES. The Parties are independent contractors. No
Party has any express or implied right or authority to assume or create any
obligations on behalf of the other or to bind the other to any contract,
agreement or undertaking with any third party. Nothing in this Agreement shall
be construed to create a partnership, joint venture, employment or agency
relationship between the Parties. Each Party may have similar agreements with
others provided such agreements do not conflict with this Agreement. Except as
otherwise expressly provided for in this Agreement, each Party may design,
develop, manufacture, acquire or market competitive products and services, and
conduct its business in whatever way it chooses. Neither Party is obligated to
announce or market any products or services or commercialize any Technology or
Inventions. Unless specifically indicated otherwise in this Agreement, each
Party will independently establish prices for its products and services.
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13.5 ENTIRE AGREEMENT. The terms and conditions of this Agreement,
including its Exhibits, together with the CNDA, constitutes the entire agreement
between the Parties with respect to the subject matter hereof, and merges and
supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions. No amendments or modifications shall be effective
unless in a writing signed by authorized representatives of each Party.
13.6 NOTICES. All notices required or permitted to be given hereunder shall
be in writing, shall make reference to this Agreement, and shall be delivered by
hand, or dispatched by prepaid air courier or by registered or certified
airmail, postage prepaid, to the address specified below. Such notices shall be
deemed served when received by addressee or, if delivery is not accomplished by
reason of some fault of the addressee, when tendered for delivery. Any Party may
give written notice of a change of address and, after notice of such change has
been received, any notice or request shall thereafter be given to such Party at
such changed address.
If to Clearwire: If to Intel:
Clearwire Corporation Intel Corporation
5808 Lake Washington Blvd. NE Attn: General Counsel
Suite 300 2200 Mission College Blvd.
Kirkland, WA 98033 Santa Clara, CA 95052
Attn.: General Counsel United States of America
with a copy to: with a copy to:
Davis Wright Tremaine LLP Intel Post Contract Management
2600 Century Square 2111 N.E 25th Ave.
1501 Fourth Avenue Hillsboro, OR 97124
Seattle, WA 98101 United States of America
Attn: Julie Weston
13.7 WAIVER. Failure by any Party to enforce any term of this Agreement
shall not be deemed a waiver of future enforcement of that or any other term in
this Agreement or any other agreement that may be in place between the Parties.
13.8 SEVERABILITY. If any provision of this Agreement is determined by a
court to be unenforceable, the Parties will deem the provision to be modified to
the extent necessary to allow it to be enforced to the extent permitted by Law,
or if it cannot be modified, the provision will be severed and deleted from this
Agreement, and the remainder of the Agreement will continue in effect.
13.9 RIGHTS AND REMEDIES. The rights and remedies of the Parties herein are
in addition to any other rights and remedies provided by law or in equity.
13.10 TAXES. Each Party shall be responsible for the payment of its own tax
liability arising from this transaction.
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13.11 CONFIDENTIALITY OF TERMS. The Parties hereto shall keep the terms of
this Agreement confidential and shall not now or hereafter divulge these terms
to any third party except with prior written notice to the other Party in the
following limited circumstances:
13.11.1 with the prior written consent of the other Party;
13.11.2 to any governmental body having jurisdiction to call
therefore;
13.11.3 subject to Section 13.11.4 below, as otherwise may be required
by law or legal process, including to legal and financial advisors in their
capacity of advising a Party in such matters;
13.11.4 during the course of litigation so long as the disclosure of
such terms and conditions are restricted in the same manner as is the
confidential information of other litigating Parties and so long as (i) the
restrictions are embodied in a court-entered protective order and (ii) the
disclosing Party informs the other Party in writing at least ten (10) days in
advance of the disclosure; or
13.11.5 in confidence to legal counsel, accountants, banks and
financing sources and their advisors solely in connection with complying with
financial transactions.
13.12 COMPLIANCE WITH LAWS. Anything contained in this Agreement to the
contrary notwithstanding, the obligations of the Parties hereto shall be subject
to all laws, present and future, of any Governmental Authority having
jurisdiction over the Parties, and to orders, regulations, directions or
requests of any such Governmental Authority.
13.13 FORCE MAJEURE. The Parties shall be excused from any failure to
perform any obligation hereunder to the extent such failure is caused by war,
acts of public enemies, fires, floods, acts of God, or any causes of like or
different kind beyond the control of the Parties.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed on the date below written.
INTEL CORPORATION CLEARWIRE CORPORATION
/s/ Arvind Sodhani /s/ Benjamin G. Wolff
------------------------------------- ----------------------------------------
Signature Signature
Arvind Sodhani Benjamin G. Wolff
Printed Name Printed Name
Senior Vice President Co-Chief Executive Officer
Title Title
June 28, 2006 June 28, 2006
Date Date
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EXHIBIT A
1. NETWORK DEPLOYMENT SCHEDULE
This table is subject to the Technical Performance Criteria defined in Exhibit B
A more detailed plan to achieve the POPs Covered will be provided by Clearwire
to add as attachment to this Exhibit.
<TABLE>
<CAPTION>
MILESTONE # DATE MILESTONE
----------- ---- ---------
<S> <C> <C>
[***] [***] [***]
</TABLE>
a) Contingencies for Intel Milestones
(i) Milestone 2: The Parties will conduct a [***]
- [***]
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(ii) Milestone 6: [***]
- [***]
2. PERFORMANCE NOTEBOOK PERSONAL COMPUTER [***]
The [***] are show in the table below and will be contingent on the Clearwire
Network deployment and [***] as described below.
[***]
a) [***]
b) [***]
Notes:
1. [***]
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3. [***]
<TABLE>
<CAPTION>
Milestone: POPs Covered with
Mobile WiMAX Network Timing
---------------------------- ------
<S> <C>
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
</TABLE>
4. BASE SUBSCRIBER LEVEL
<TABLE>
<CAPTION>
END OF YEAR (BASED ON [***]
INTEGRATED SERVICES LAUNCH) 2008 2009 2010 2011 2012
--------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
[***] [***] [***] [***] [***] [***]
</TABLE>
<TABLE>
<CAPTION>
END OF YEAR (BASED ON [***]
INTEGRATED SERVICES LAUNCH) 2013 2014 2015 2016 2017
--------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
[***] [***] [***] [***] [***] [***]
</TABLE>
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EXHIBIT B
TECHNICAL PERFORMANCE CRITERIA DOCUMENT
This inserts at a Milestone that has sometimes been labeled "Joint Review of
Technology Trial Results. [***]
TECHNOLOGY TRIAL
- [***]
- [***]
- [***]
- [***]
EXIT CRITERIA
- [***]
- [***]
- [***]
- [***]
- [***]
- [***]
- [***]
This inserts at a Milestone that has sometimes been labeled "Joint Review of
Field Trial and Systems Performance Testing Results. [***]"
SYSTEM PERFORMANCE TEST
[***]
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[***]
[*** Confidential Treatment Requested]
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[***]
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[***]
[***]
Tests will be conducted by first performing the test on the Expedience then
turning off the Expedience infrastructure and activating the Mobile WiMax
Network infrastructure and performing the test then performing the next test on
Mobile WiMax Network then turning off the Mobile WiMax Network infrastructure
and repeating the test and so on until all tests are done.
No later than [***] after successful completion of the first Wave 2 tests as
defined above, the overall spectral efficiency of the network will deliver [***]
given a mix of traffic, devices and services on a loaded network.
Clearwire and Intel will jointly develop a detailed test plan to cover
technology and field test based on the scope of the tests outlined in the above
paragraphs. Both companies will jointly conduct the tests, along with
Clearwire's infrastructure vendor. Failed tests will be repeated until
performance objectives are met. Remediation of Mobile WiMax failures is the
responsibility of Clearwire's infrastructure vendor. Once all tests are passed,
commercial system rollout may begin.
Tests will be defined at stages prior to this final set of tests so that system
performance issues may be detected and remediated as early as possible in the
schedule.
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Exhibit C
Existing Tier 1 Deployments of Clearwire
[***]
[*** Confidential Treatment Requested]
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EXHIBIT 10.53
EXECUTION VERSION
STOCK PURCHASE AGREEMENT
BY AND AMONG
CLEARWIRE CORPORATION
NEXTNET WIRELESS, INC.
AND
MOTOROLA, INC.,
DATED JUNE 30, 2006
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I PURCHASE AND SALE ............................................. 1
1.1 Purchase and Sale of the Shares ............................... 1
1.2 Purchase Price ................................................ 1
1.3 Allocation of Purchase Price .................................. 2
1.4 Closing ....................................................... 2
ARTICLE II ADJUSTMENT TO PURCHASE PRICE ................................. 2
2.1 Pre-Closing Calculation ....................................... 2
2.2 Post-Closing Calculation ...................................... 3
2.3 Dispute Notice ................................................ 3
2.4 Adjustments ................................................... 3
2.5 Withholding ................................................... 4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER .................... 4
3.1 Authority ..................................................... 4
3.2 Validity ...................................................... 5
3.3 Due Organization .............................................. 5
3.4 Subsidiaries .................................................. 6
3.5 Capital Structure; Ownership of Shares ........................ 7
3.6 Transactions with Affiliates .................................. 7
3.7 Financial Statements .......................................... 8
3.8 Interim Change ................................................ 9
3.9 Accounts Receivable and Bank Accounts ......................... 10
3.10 Insurance ..................................................... 10
3.11 Title to Assets ............................................... 11
3.12 Real Property ................................................. 11
3.13 Personal Property Leases ...................................... 12
3.14 Customers and Suppliers ....................................... 12
3.15 Licenses and Permits .......................................... 12
3.16 Material Contracts ............................................ 13
3.17 Tax Matters ................................................... 15
3.18 Product Warranty .............................................. 18
3.19 Product Liability ............................................. 19
3.20 Legal Proceedings ............................................. 19
3.21 Environmental Matters ......................................... 20
3.22 Compliance with Law ........................................... 21
3.23 Intellectual Property ......................................... 21
3.24 Liabilities ................................................... 24
3.25 Employees and Subcontractors .................................. 24
3.26 Employee Benefits ............................................. 25
3.27 Import and Export Control Laws ................................ 28
3.28 Foreign Corrupt Practices Act ................................. 28
3.29 Brokers and Change of Control Payments ........................ 29
</TABLE>
i
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
3.30 Investment Company Act ........................................ 29
3.31 Financial Controls ............................................ 29
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER .................. 29
4.1 Authority ..................................................... 30
4.2 Validity ...................................................... 30
4.3 Due Organization .............................................. 30
4.4 Brokers ....................................................... 30
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS ..................... 30
5.1 Conduct of Business ........................................... 30
5.2 Exclusivity ................................................... 33
ARTICLE VI ADDITIONAL AGREEMENTS ........................................ 34
6.1 Notice of Developments ........................................ 34
6.2 Access to Information ......................................... 34
6.3 Further Action ................................................ 35
6.4 Public Announcements .......................................... 35
6.5 Appropriate Action; Consents; Filings ......................... 35
6.6 Non-Competition; No-Solicitation .............................. 36
6.7 Transition .................................................... 37
ARTICLE VII ACQUIRED EMPLOYEE MATTERS ................................... 38
7.1 Acquired Employees ............................................ 38
7.2 Compensation .................................................. 38
7.3 Severance ..................................................... 38
7.4 Paid Time Off ................................................. 38
7.5 Service Credit ................................................ 39
7.6 401(k)Plan .................................................... 39
7.7 Other Employee Benefit Plans .................................. 39
7.8 Employee Communications ....................................... 40
ARTICLE VIII TAX MATTERS ................................................ 40
8.1 Allocation of Liability for Taxes ............................. 40
8.2 Tax Return Filing and Payment of Taxes ........................ 41
8.3 Tax Contests; Audit Responsibilities .......................... 41
8.4 Code Section 338 Election ..................................... 42
8.5 Cooperation ................................................... 42
8.6 Option Exercises After Closing ................................ 43
8.7 Taxes Not Subject to Limitations .............................. 44
ARTICLE IX CONDITIONS PRECEDENT ......................................... 44
9.1 Conditions to Obligations of Seller and Purchaser ............. 44
9.2 Additional Conditions to Obligations of Purchaser ............. 45
9.3 Additional Conditions to Obligations of Seller ................ 47
</TABLE>
ii
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE X TERMINATION AND AMENDMENT ..................................... 48
10.1 Termination ................................................... 48
10.2 Effect of Termination ......................................... 49
10.3 Amendment ..................................................... 49
10.4 Fees and Expenses ............................................. 49
10.5 Extension; Waiver ............................................. 49
ARTICLE XI SURVIVAL AND INDEMNIFICATION ................................. 50
11.1 Survival ...................................................... 50
11.2 Indemnification ............................................... 50
11.3 Limitations on Indemnification ................................ 51
11.4 Matters Involving Third Parties ............................... 52
11.5 Other Indemnification Provisions .............................. 54
11.6 No Circular Recovery .......................................... 54
ARTICLE XII GENERAL PROVISIONS .......................................... 54
12.1 Notices ....................................................... 54
12.2 Interpretation ................................................ 56
12.3 Counterparts .................................................. 56
12.4 Entire Agreement, No Third-Party Beneficiaries ................ 56
12.5 Governing Law ................................................. 56
12.6 Assignment .................................................... 56
12.7 Severability .................................................. 56
12.8 Enforcement of this Agreement ................................. 57
12.9 Extension; Waiver ............................................. 57
12.10 Disputes ...................................................... 57
12.11 Jurisdiction .................................................. 58
12.12 Authorship .................................................... 58
12.13 No Joint Venture .............................................. 58
ARTICLE XIII DEFINITIONS ................................................ 59
</TABLE>
EXHIBITS
Exhibit A Sample Working Capital Calculation
Exhibit B Opinion of Counsel to Seller and NextNet
Exhibit C Form of Release Agreement
Exhibit D Commercial Agreements
iii
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into
this 30th day of June, 2006 by and among Clearwire Corporation, a Delaware
corporation ("SELLER"), NextNet Wireless, Inc., a Delaware corporation
("NEXTNET"), and Motorola, Inc., a Delaware corporation ("PURCHASER"). Except as
otherwise set forth herein, capitalized terms used herein shall have the
meanings set forth in Article XIII.
RECITALS
WHEREAS, NextNet and its Subsidiaries are engaged in the design,
development and sale of modems, base stations and other equipment that enable
deployment of non-line-of-sight, wireless broadband connectivity (the
"BUSINESS");
WHEREAS, Seller owns, beneficially and of record, all of the issued and
outstanding shares of capital stock of NextNet (the "SHARES"); and
WHEREAS, Seller wishes to sell to Purchaser, and Purchaser wishes to
purchase from Seller, all of the Shares, upon the terms and subject to the
conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, the Parties agree as set forth below.
ARTICLE I
PURCHASE AND SALE
1.1 PURCHASE AND SALE OF THE SHARES. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing, Seller shall sell,
assign, transfer, convey and deliver to Purchaser, free and clear of any and all
Encumbrances (other than restrictions on transfer under applicable securities
Laws), and Purchaser shall purchase, all of the Shares.
1.2 PURCHASE PRICE. In consideration for the sale of the Shares pursuant to
Section 1.1, upon the terms and subject to the conditions set forth in this
Agreement, Purchaser shall pay to Seller an amount equal to Fifty Million
Dollars ($50,000,000), subject to adjustment in accordance with Article II (as
so adjusted in accordance with Article II, the "PURCHASE PRICE"). At the
Closing, Purchaser shall pay to Seller the payment determined pursuant to
Section 2.1 minus the Closing Indebtedness Amount (the "CLOSING PAYMENT") by
wire transfer of immediately available funds to a single United States account
designated in writing to Purchaser by Seller at least three (3) Business Days
prior to the Closing. In addition, at the Closing, Purchaser shall pay the
Closing Indebtedness Amount to such lenders and other creditors in accordance
with the payoff letters provided by such creditors as contemplated by Section
9.2(e)(ix).
1.3 ALLOCATION OF PURCHASE PRICE. Within one hundred twenty (120) days
after the Closing Date, Purchaser shall prepare and deliver to Seller an
allocation schedule (the "ALLOCATION SCHEDULE") pursuant to which the Purchase
Price and the liabilities of NextNet (plus other relevant items) for which such
election is made will be allocated in accordance with Code sections 338 and 1060
to the assets of NextNet for all purposes (including Tax and financial
accounting purposes). Seller shall review the Allocation Schedule and, if it
disagrees in good faith with such schedule, shall provide written notice to
Purchaser of such disagreement not later than thirty (30) days after Purchaser's
delivery of the Allocation Schedule or shall be deemed to have accepted the
Allocation Schedule. If Seller disagrees in good faith with the Allocation
Schedule, Purchaser and Seller shall negotiate in good faith in order to
mutually agree with respect thereto. Purchaser, Seller and NextNet will file all
Tax Returns (including amended returns and claims for refund) and information
reports in a manner consistent with such allocations and agree not to take any
position during the course of any audit or other proceeding inconsistent with
such allocations unless required by a determination of the applicable taxing
authority that is final. Seller shall cooperate with Purchaser to take actions
necessary and appropriate (including filing or providing to Purchaser such
additional forms, returns, elections, schedules and other documents) as may be
required to effect and preserve a timely Section 338(h)(10) Election. Purchaser
and Seller shall make appropriate adjustments to the Allocation Schedule to
reflect changes in the Purchase Price.
1.4 CLOSING. The closing of the transactions contemplated by this Agreement
(the "CLOSING") shall occur at the offices of Winston & Strawn LLP, 35 West
Wacker Drive, Chicago, Illinois, on such date and at such time as Seller and
Purchaser may mutually agree, which date shall be as soon as practicable, but in
no event later than three (3) Business Days after satisfaction or waiver of such
conditions, or at such other time and place as Purchaser and Seller may agree in
writing (the "CLOSING DATE"). All documents delivered and actions taken at
Closing shall be deemed to have been delivered or taken simultaneously and shall
be deemed to be effective as of 11:59 P.M. (Central Standard Time) on the
Closing Date, and no such delivery or action shall be considered effective or
complete unless or until all other such deliveries or actions are completed or
waived in writing by the Party against whom such waiver is sought to be
enforced.
ARTICLE II
ADJUSTMENT TO PURCHASE PRICE
2.1 PRE-CLOSING CALCULATION.
(a) At least three (3) Business Days prior to the Closing Date, Seller
shall prepare and deliver to Purchaser a consolidated balance sheet of NextNet
and its Subsidiaries (the "PRE-CLOSING BALANCE SHEET") setting forth the
Preliminary Working Capital. The Pre-Closing Balance Sheet shall be calculated
in accordance with GAAP consistently applied and applied on a basis consistent
with the Financial Statements, and shall be reasonably acceptable to Purchaser.
2
(b) If the Preliminary Working Capital is less than $8,000,000, then
the Closing Payment shall be equal to $50,000,000 minus such difference. If the
Preliminary Working Capital is greater than $8,000,000, then the Closing Payment
shall be equal to $50,000,000.
2.2 POST-CLOSING CALCULATION. Within sixty (60) days following the Closing
Date, Purchaser shall prepare and deliver to Seller a consolidated balance sheet
of NextNet and its Subsidiaries as of the Closing Date (the "POST-CLOSING
BALANCE SHEET") setting forth the Closing Working Capital as of the Closing
Date. The Post-Closing Balance Sheet shall be prepared in accordance with GAAP
consistently applied and applied on a basis consistent with the Financial
Statements, and include an accrual for all unpaid Transaction Expenses. In
connection therewith, from and after the Closing, Purchaser shall provide Seller
with reasonable access to all NextNet records and work papers necessary to
compute the Closing Working Capital. The calculation of the Closing Working
Capital as delivered to Seller shall be final and binding on the Parties unless,
within thirty (30) days after delivery to Seller, Seller shall deliver to
Purchaser a Dispute Notice. After delivery of a Dispute Notice, Purchaser and
Seller shall promptly negotiate in good faith with respect to the subject of the
Dispute Notice, and if they are unable to reach an agreement within ten (10)
Business Days after delivery to Purchaser of the Dispute Notice, the dispute
shall be submitted to the Independent Auditor. The Independent Auditor shall be
directed to issue a final and binding decision within thirty (30) days of
submission of the Dispute Notice, as to the issues of disagreement referred to
in the Dispute Notice and not resolved by the Parties. The calculation of the
Closing Working Capital, as so adjusted by agreement or by the Independent
Auditor (if required), shall be final and binding on the Parties. "WORKING
CAPITAL" shall mean the amount equal to the total current assets (excluding cash
and cash equivalents and any deferred tax assets) of NextNet and its
Subsidiaries less the total current liabilities (excluding the current portion
of installment loan and any Indebtedness for Borrowed Money and Transaction
Expenses) of NextNet and its Subsidiaries, calculated in accordance with GAAP
consistently applied and applied on a basis consistent with the Financial
Statements. A sample calculation of Working Capital as of April 30, 2006 is
attached hereto as Exhibit A.
2.3 DISPUTE NOTICE. In connection with the calculations of the Closing
Working Capital, a "DISPUTE NOTICE" shall mean a written notice from Seller
indicating disagreement with the calculation of the Closing Working Capital, and
summarizing the items in dispute. The "INDEPENDENT AUDITOR" shall mean a
national public accounting firm with no material relationship to either Seller
or Purchaser or their respective Affiliates chosen by agreement of Seller or
Purchaser, or, if they are unable to agree, shall mean a national firm with no
such material relationship chosen by lot. The fees and expenses of the
Independent Auditor retained as a result of any dispute related to any statement
shall be equitably allocated by the Independent Auditor. The full force and
effect of the representations and warranties set forth in this Agreement or the
Ancillary Agreements shall in no way be diminished by any adjustment pursuant to
this Article II.
2.4 ADJUSTMENTS.
(a) Following the Closing, if the Closing Working Capital and the
Preliminary Working Capital are each less than $8,000,000:
3
(i) if the Closing Working Capital is less than the Preliminary
Working Capital, then Seller shall pay to Purchaser the amount of the
difference; and
(ii) if the Closing Working Capital is greater than the
Preliminary Working Capital, then Purchaser shall pay to Seller the amount
of the difference.
(b) Following the Closing, if the Closing Working capital is greater
than $8,000,000 and the Preliminary Working Capital is less than $8,000,000,
then Purchaser shall pay to Seller the amount of the difference between
$8,000,000 and the Preliminary Working Capital.
(c) Following the Closing, if the Closing Working Capital is less than
$8,000,000 and the Preliminary Working Capital is greater than $8,000,000, then
Seller shall pay to Purchaser the amount of the difference between $8,000,000
and the Closing Working Capital.
(d) Following the Closing, if the Closing Working Capital and the
Preliminary Working Capital are each greater than $8,000,000, then neither
Seller nor Purchaser shall be required to make an adjustment payment (in which
case the Purchase Price as finally determined shall be equal to $50,000,000).
(e) Any payment required pursuant to this Section 2.4 shall be made
within three (3) Business Days of the final determination of the Closing Working
Capital in accordance with Section 2.2, by wire transfer of immediately
available funds, as directed by the recipient in writing, accompanied by
interest on such amount from the date of final determination to the date of
payment computed at the rate of eight percent (8.00%) per annum, compounded
monthly, on the basis of a 365-day year.
2.5 WITHHOLDING. Purchaser shall be entitled to deduct and withhold from
any and all payments made under this Agreement such amounts as may be required
to be deducted and withheld under applicable Laws. To the extent such amounts
are withheld and paid to the appropriate taxing authority in accordance with
applicable Laws, such withheld amount shall be treated for all purposes of this
Agreement as having been paid to the Person to whom such amounts would have
otherwise been paid.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser that the statements made in
this Article III are true, correct and complete as of the date of this Agreement
(except to the extent expressly made as of an earlier date, in which case as of
such date), except as set forth in the Schedules accompanying this Agreement:
3.1 AUTHORITY. Each of Seller and NextNet has the full right, power and
authority, without the Consent of any other Person, to execute and deliver this
Agreement and the Ancillary Agreements to which it is a party and to carry out
the transactions contemplated hereby and thereby. All acts or proceedings
required to be taken by Seller and NextNet to authorize the sale
4
of the Shares and the execution, delivery and performance of this Agreement and
the Ancillary Agreements to which it is a party, and all transactions
contemplated hereby and thereby, have been duly and properly taken.
3.2 VALIDITY. This Agreement and the Ancillary Agreements to which it is a
party have been (or, in the case of such agreements to be executed after the
date hereof and at or prior to Closing, will be), and the documents to be
delivered by Seller at Closing will be, duly executed and delivered and,
assuming the due execution and delivery of the other parties hereto or thereto,
do constitute or will constitute, as the case may be, valid and legally binding
obligations of Seller and NextNet, as applicable, enforceable in accordance with
their respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles. Except as set
forth in Schedule 3.2, the execution and delivery by each of Seller and NextNet
of this Agreement and the Ancillary Agreements to which it is a party and the
consummation of the transactions contemplated hereby and thereby will not result
in the creation of any Encumbrance of any kind upon the Shares or the assets of
NextNet or the termination or acceleration of any Indebtedness or other
obligation of NextNet, and are not prohibited by, do not violate or conflict
with any provision of, and do not constitute a default under or a breach of (a)
the Certificate of Incorporation or Bylaws of Seller or NextNet, (b) any note,
bond, indenture, contract, agreement, License and Permit or other instrument to
which Seller or NextNet is a party or by which Seller or NextNet or any of their
respective assets are bound, except, with respect to Seller, to the extent that
any such violation or conflict would not have a Material Adverse Effect, (c) any
order, writ, injunction, decree or judgment of any Governmental Authority
applicable to Seller or NextNet, or (d) any Law applicable to Seller or NextNet.
Except as set forth in Schedule 3.2, no Consent of any Person, including any
Governmental Authority, is required for the execution and delivery by each of
Seller and NextNet of this Agreement, the documents to be delivered at Closing
or the consummation by Seller and NextNet of the transactions contemplated
hereby, except, with respect to Seller, to the extent that the failure to obtain
any Consent would not have a Material Adverse Effect.
3.3 DUE ORGANIZATION.
(a) NextNet is a corporation duly organized, validly existing and in
good standing under the Laws of the State of Delaware, and has full power and
authority and all requisite rights, licenses, permits and franchises to own,
lease and operate its assets and to carry on the Business. NextNet is duly
licensed, registered and qualified to do business as a foreign corporation and
is in good standing in all jurisdictions in which the ownership, leasing or
operation of its assets or the conduct of its business requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a Material Adverse Effect. Schedule 3.3(a) sets
forth each state or other jurisdiction in which NextNet is licensed or qualified
to do business as a foreign corporation. Seller has made available to Purchaser
an accurate, correct and complete copy of NextNet's Certificate of Incorporation
and Bylaws.
(b) Except as set forth on Schedule 3.3(b), the minute books and stock
records of NextNet (i) contain accurate, correct and complete records of all
meetings held since March 16, 2004 (the "SELLER ACQUISITION DATE"), and to the
Knowledge of Seller, since the
5
incorporation of NextNet, (ii) accurately reflect all other material corporate
action of its stockholder and NextNet's Board of Directors, and any committees
of the Board of Directors of NextNet since the Seller Acquisition Date, and to
the Knowledge of Seller, since the incorporation of NextNet, and (iii)
accurately reflect the ownership of NextNet.
3.4 SUBSIDIARIES.
(a) Schedule 3.4 sets forth a true and complete list of each
Subsidiary of NextNet, together with the jurisdiction of incorporation or
organization of such Subsidiary. Each Subsidiary of NextNet is a corporation
duly incorporated, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation, and has full power and authority and all
requisite rights, licenses, permits and franchises to own, lease and operate its
assets and to carry on the Business. Each Subsidiary of NextNet is duly
licensed, registered and qualified to do business as a foreign corporation and
is in good standing in all jurisdictions in which the ownership, leasing or
operation of its assets or the conduct of its business requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a Material Adverse Effect. Schedule 3.4 sets forth
each state or other jurisdiction in which each Subsidiary of NextNet is licensed
or qualified to do business as a foreign corporation. Seller has made available
to Purchaser an accurate, correct and complete copy of the Certificate of
Incorporation and Bylaws of other organizational documents of each Subsidiary of
NextNet.
(b) Schedule 3.4 also sets forth a true and complete list, as of the
date hereof, of the authorized, issued and outstanding capital stock of each
Subsidiary of NextNet, and, if applicable, the custodian by whom the original
shares of such capital stock are held. All of the outstanding shares of capital
stock of each Subsidiary of NextNet are owned beneficially and of record by the
Person indicated on Schedule 3.4, and are validly issued, fully paid and
nonassessable and free of preemptive rights or any Encumbrance (other than
restrictions on transfer pursuant to applicable securities Laws) and constitute
all of the issued and outstanding shares of capital stock or other equity
interest of such Subsidiary of NextNet. None of the shares of capital stock of
any Subsidiary of NextNet were issued in violation of any preemptive rights or
rights of first refusal or first offer.
(c) Other than as set forth on Schedule 3.4(c), there are no
outstanding (i) shares of capital stock of any Subsidiary of NextNet, (ii)
securities convertible into, or exchangeable or exercisable for, shares of
capital stock or equity securities of such Subsidiary, (iii) options, warrants
to purchase or subscribe, or other rights (preemptive or otherwise) to acquire
from any such Subsidiary any shares of capital stock or equity securities or
securities convertible into or exchangeable or exercisable for shares of capital
stock or equity securities of such Subsidiary, or rights of first refusal or
first offer, or (iv) bonds, debentures, notes or other Indebtedness or
securities of any such Subsidiary having the right to vote (or convertible into,
or exchangeable for, securities having the right to vote) on any matters on
which stockholders of the Subsidiary may vote. There are (x) no contracts or
restrictions (other than as may be imposed by Law or by the charter or bylaws or
other organizational documents of such Subsidiary) relating to any shares of
capital stock of any such Subsidiary or any other securities of any such
Subsidiary, whether or not outstanding, (y) no outstanding or authorized stock
appreciation, phantom stock or similar rights with respect to any such
Subsidiary, and (z) no contracts
6
affecting or relating to the voting, issuance, purchase, redemption,
registration, repurchase or transfer of any shares of capital stock or any other
securities of any such Subsidiary.
(d) Schedule 3.4(d) also contains a complete and accurate list of any
and all Persons not constituting Subsidiaries of which NextNet directly or
indirectly owns an equity or similar interest, or an interest convertible into
or exchangeable or exercisable for an equity or similar interest (collectively,
the "INVESTMENTS").
3.5 CAPITAL STRUCTURE; OWNERSHIP OF SHARES.
(a) The authorized capital stock of NextNet consists of 1,000 shares
of NextNet Common Stock, all of which are issued and outstanding. The Shares
represent the only issued and outstanding shares of capital stock of NextNet.
The Shares are duly authorized, validly issued, fully paid and non-assessable
and free of any preemptive rights. There are no securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any kind
to which Seller or NextNet is a party or by which they are bound obligating
NextNet to issue, deliver, sell or create, or cause to be issued, delivered,
sold or created, or evidencing any right to subscribe for, additional shares of
capital stock or other voting securities or Stock Equivalents of NextNet, or
obligating Seller or NextNet to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement, arrangement or
undertaking. There are no outstanding stock appreciation rights, phantom stock
or other similar rights with respect to NextNet, the value of which is
determined in whole or in part by the value of any capital stock of NextNet
("STOCK EQUIVALENTS"). There are no outstanding bonds, debentures, notes or
other indebtedness of NextNet having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matter on which
stockholders may vote.
(b) Except as set forth on Schedule 3.5(b), Seller owns, beneficially
and of record, and has valid title to, all of the Shares, free and clear of all
Encumbrances. At the Closing, Purchaser will acquire good and marketable title
to the Shares, free and clear of all Encumbrances.
(c) Except as set forth on Schedule 3.5(c), there are no restrictions
to which Seller or NextNet is party affecting the transferability of the Shares
other than those arising under applicable Laws, including securities Laws.
(d) Except as set forth on Schedule 3.5(d), NextNet has not lent or
advanced any money to, or borrowed any money from, or guaranteed or otherwise
become liable for any Indebtedness or other obligations of, or acquired any
capital stock, obligations or securities of, Seller or any other Person.
3.6 TRANSACTIONS WITH AFFILIATES. Since December 31, 2005, there have not
been any dividends or other distributions of assets by NextNet to Seller which
have been declared but not paid or distributed. Except as set forth in Schedule
3.6, neither Seller nor any officer, director or employee of NextNet or Seller
or, to Seller's Knowledge, any Affiliate of NextNet or Seller:
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(a) owns, directly or indirectly, any debt, equity or other interest
or investment in any Person which is a competitor, lessor, lessee, customer,
supplier or advertiser of NextNet;
(b) has any cause of action or other claim whatsoever against (in the
case of employees of NextNet or Seller, to the Knowledge of Seller) or owes any
amount to, or is owed any amount by, NextNet or its Subsidiaries, other than
salary, expense reimbursements and bonuses payable to any employee of NextNet or
its Subsidiaries;
(c) has any interest in or owns any property or right used in the
conduct of the Business, other than the assets of Seller used in the
administration of general overhead operations undertaken by Seller on behalf of
NextNet;
(d) is a party to any contract, lease, license, agreement, arrangement
or commitment with NextNet or one of its Subsidiaries or, except for such
contracts, leases, licenses, agreements, arrangements or commitments of Seller
used in the administration of general overhead operations undertaken by Seller
on behalf of NextNet, used in the Business; or
(e) receives from or furnishes to NextNet or one of its Subsidiaries
any goods, services, technology or intellectual or proprietary rights, other
than, with respect to employees of NextNet, in the ordinary course of their
employment, and, with respect to Seller, the administration of general overhead
operations undertaken by Seller on behalf of NextNet.
3.7 FINANCIAL STATEMENTS.
(a) The consolidated audited financial statements of Seller for the
two fiscal years ended December 31, 2004 and December 31, 2005 (the "SELLER
STATEMENTS"), and the audited financial statements of NextNet for the fiscal
year ended December 31, 2003, the unaudited statement of income of NextNet for
the fiscal year ended December 31, 2005, and the unaudited balance sheet of
NextNet as of March 31, 2006 (the "MOST RECENT BALANCE SHEET") and the related
financial statements for the period ended March 31, 2006 attached hereto as
Schedule 3.7(a) (collectively, the "NEXTNET STATEMENTS", and together with the
Seller Statements, the "FINANCIAL STATEMENTS") (a) are correct and complete in
all material respects as of the dates and for the periods indicated therein, (b)
are in accordance with the books of account and records of NextNet and its
Subsidiaries with respect to the NextNet Statements, or Seller with respect to
the Seller Statements, (c) present fairly in all material respects the financial
condition and results of operations of NextNet with respect to the NextNet
Statements, or Seller with respect to the Seller Statements, as of the dates and
for the periods indicated therein, (d) with respect to the NextNet Statements,
reflect appropriate accruals for vacation days and bonuses that have been earned
by employees of NextNet, but not yet paid, and any Liabilities relating to the
NextNet Plans, in each case in accordance with GAAP, and (e) were prepared in
accordance with GAAP, except that the unaudited financial statements of NextNet
as of and for the period ended March 31, 2006 do not contain all of the
footnotes required by GAAP and are subject to year-end adjustments consistent
with past practice. The books of account and other records (financial and
otherwise) of NextNet and the Business are in all material respects complete and
correct and are maintained in accordance with good business practices and are
accurately reflected on the NextNet Statements.
8
(b) Schedule 3.7(b) sets forth a true, correct and complete list of
all Indebtedness of NextNet and its Subsidiaries (by creditor and dollar amount)
as of the date hereof. Neither NextNet nor any of its Subsidiaries has any
Indebtedness for Borrowed Money as of the date hereof.
3.8 INTERIM CHANGE. Except as set forth in Schedule 3.8 or as contemplated
by the terms of the Commercial Agreements or this Agreement, since December 31,
2005, NextNet and its Subsidiaries have operated the Business only in the
ordinary course, consistent with past practices, and there has not been:
(a) any material adverse change in the financial condition, assets,
liabilities (fixed or contingent) or business affairs of NextNet and its
Subsidiaries or the Business;
(b) any material adverse change in NextNet and its Subsidiaries'
relationships with licensors, licensees, suppliers, vendors, customers, lessors
or employees (in each case, as a group or class);
(c) any damage, destruction or loss to or of any of the assets of
NextNet and its Subsidiaries, whether or not covered by insurance, in excess of
$50,000 individually, or $150,000 in the aggregate;
(d) any forgiveness, cancellation or waiver of any material rights of
NextNet or one of its Subsidiaries;
(e) any disposition of assets of NextNet and its Subsidiaries, other
than sales of inventory in the ordinary course of business and other than
dispositions of obsolete assets, worn-out assets or assets no longer used or
useful to NextNet and its Subsidiaries in an aggregate amount not to exceed
$100,000;
(f) any increase in the compensation or benefits payable or to become
payable by Seller or NextNet to their employees, consultants or independent
contractors engaged in the Business (other than for general increases applicable
to employees in an amount consistent with past practice or pursuant to the terms
of the agreements, policies or procedures in effect as of the date of the Most
Recent Balance Sheet);
(g) any declaration, authorization or payment of dividends or
distributions on or in respect of NextNet and its Subsidiaries Common Stock or
any redemption, retirement, purchase or other acquisition by NextNet and its
Subsidiaries of shares of NextNet and its Subsidiaries Common Stock;
(h) any change in the accounting methods, principles or practices
followed by NextNet and its Subsidiaries, whether for general financial or Tax
purposes, or any change in depreciation or amortization policies or rates
adopted therein, other than changes required by changes in GAAP;
(i) any issuance by NextNet and its Subsidiaries of any shares of its
capital stock;
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(j) any grant by NextNet and its Subsidiaries of any option, warrant
or other right to purchase shares of its capital stock;
(k) any material change in credit practices as to customers of NextNet
and its Subsidiaries, individually or in the aggregate;
(l) any incurrence of any Encumbrance on any assets of NextNet or its
Subsidiaries, other than a purchase money security interest granted in
connection with the purchase of goods pursuant to the terms of a Material
Contract;
(m) any sale, assignment, transfer, license or other disposition of
any Patent Right, Trademark, Copyright, Propriety Information and Technology or
other intangible asset other than in the ordinary course of business, consistent
with past practices; or
(n) any agreement, commitment or understanding entered into by Seller,
NextNet or any of its Subsidiaries to do any of the foregoing described in
clauses (a) through (m) above.
3.9 ACCOUNTS RECEIVABLE AND BANK ACCOUNTS. Schedule 3.9 contains an
accurate, correct and complete aging of all outstanding accounts receivable of
NextNet and its Subsidiaries (the "ACCOUNTS RECEIVABLE") as of June 15, 2006.
All outstanding Accounts Receivable are and (if not collected prior to the
Closing Date) will be on the Closing Date: (a) due and valid claims against
account debtors for goods or services delivered or rendered and (b) to Seller's
Knowledge, subject to no defenses, offsets or counterclaims, each except as
reserved against on the Most Recent Balance Sheet. Neither Seller nor NextNet
has received any written notice that any Accounts Receivable is not collectible
in the ordinary course of business consistent with past practice. All Accounts
Receivable arose in the ordinary course of business. No Accounts Receivable are
subject to prior assignment or Encumbrance. To Seller's Knowledge, NextNet has
no liability for any refunds, liability allowances or returns in respect of
products manufactured, processed, distributed or sold by or for the account of
NextNet on or prior to the Closing Date that are not adequately reserved for on
the Financial Statements. Schedule 3.9 contains an accurate, correct and
complete list of the names and addresses of all banks and financial institutions
in which NextNet has an account, deposit, safe-deposit box, line of credit or
other loan facility, or lock box or other arrangement for the collection of
Accounts Receivable, with the names of all Persons authorized to draw or borrow
thereon or to obtain access thereto.
3.10 INSURANCE. NextNet is insured by insurers of recognized financial
responsibility against such risks, casualties and contingencies in such amounts
as Seller believes to be prudent for the conduct of the Business as currently
conducted. All such policies are in full force and effect. There are no pending
or asserted claims by NextNet and its Subsidiaries against any Insurance as to
which any insurer has denied liability or reserved rights, and there are no
claims under any Insurance that have been disallowed or improperly filed since
the Seller Acquisition Date. Schedule 3.10 sets forth the claims experience
since the Seller Acquisition Date and the interim period through the date hereof
with respect to NextNet and its Subsidiaries (both insured and self-insured). No
notice of cancellation or nonrenewal with respect to, or material increase of
premium for, any Insurance has been received by NextNet and its Subsidiaries
since the Seller Acquisition Date.
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3.11 TITLE TO ASSETS. Each of NextNet and its Subsidiaries is the sole and
exclusive legal and equitable owner of all right, title and interest in and has
good and marketable title to all of the assets it purports to own. Except as set
forth in Schedule 3.11 and other than Permitted Encumbrances, none of the assets
which NextNet or one of its Subsidiaries purports to own are subject to (a) any
title defect or objection; (b) any contract of lease, license or sale; (c) any
Encumbrance of any kind or character, direct or indirect, whether accrued,
absolute, contingent or otherwise, except those disclosed in the Financial
Statements; (d) any royalty or commission arrangement; or (e) any covenant or
restriction. Schedule 3.11 includes a complete and accurate list of all third
party tangible assets used by NextNet and its Subsidiaries in connection with
the Business. The tangible assets owned by NextNet and its Subsidiaries and
third party tangible assets set forth in Schedule 3.11 are in good operating
condition and repair (reasonable wear and tear excepted), are not obsolete, and
are suitable for the purposes for which they are presently being used, and are
adequate to meet all present requirements of the Business as presently
conducted. The assets owned by NextNet and its Subsidiaries and third party
assets set forth in Schedule 3.11 and Schedule 3.23(e)(i) represent all assets
used in and necessary to conduct the Business as currently conducted, other than
the assets of Seller used in the administration of general overhead operations
undertaken by Seller on behalf of NextNet.
3.12 REAL PROPERTY.
(a) NextNet has not owned and does not own any real property.
(b) Schedule 3.12 sets forth the address of each parcel of real
property leased by NextNet, and a true and complete list of all leases to which
NextNet or one of its Subsidiaries is a party for each such parcel of leased
real property (the "LEASES"). Seller has made available to Purchaser a true and
complete copy of each such Lease. With respect to each such Lease: (i) the Lease
is legal, valid, binding, enforceable in accordance with its terms, and in full
force and effect; (ii) neither NextNet or any Subsidiary, nor, to the Knowledge
of Seller, any other party, is in breach or default, and no event has occurred
which with notice or lapse of time would constitute a breach or default by
NextNet or any Subsidiary, or permit termination, modification, or acceleration,
under the Lease; (iii) NextNet has not, and has not received written notice that
any other party, has repudiated any provision of the Lease; and (iv) except as
set forth in Schedule 3.12, each such Lease will continue to be legal, valid,
binding, enforceable and in full force and effect on identical terms immediately
following the Closing Date.
(c) The leased real property identified in Schedule 3.12 comprises all
of the real property occupied and used by NextNet and its Subsidiaries in the
conduct of the Business, and neither NextNet nor any of its Subsidiaries is a
party to any agreement or option to purchase any real property or any fee
interest therein.
(d) To the Knowledge of Seller, all buildings, structures, fixtures,
building systems and equipment, and all components thereof (including the roof,
foundation and structural elements), included in the leased real property (the
"IMPROVEMENTS") are in good condition and repair (normal wear and tear excepted)
and sufficient for the operation of the Business as currently conducted by
NextNet and its Subsidiaries. To Seller's Knowledge, there are no facts or
conditions affecting any of the Improvements which would, individually or in the
aggregate, interfere in any material respect with the use or occupancy of the
Improvements or any portion
11
thereof in the operation of the Business as currently conducted by NextNet and
its Subsidiaries thereon.
(e) Subject to the respective terms and conditions in the Leases,
NextNet or one of its Subsidiaries has a valid leasehold interest in the leased
real property identified in Schedule 3.12, free and clear of all Encumbrances
other than Permitted Encumbrances. To the Knowledge of Seller, there are no
pending or threatened condemnation, eminent domain or similar proceedings, or
litigation or other proceedings affecting the leased real property identified in
Schedule 3.12 or any portion or portions thereof. To the Knowledge of Seller,
there are no pending or threatened requests, applications or proceedings to
alter or restrict any zoning or other use restrictions applicable to the leased
real property identified in Schedule 3.12 or the Improvements.
3.13 PERSONAL PROPERTY LEASES. Schedule 3.13 sets forth an accurate,
correct and complete list of all leases or bailments of tangible personal
property which (a) are used in the Business as currently conducted by NextNet
and its Subsidiaries and (b) provide for payments by NextNet or one of its
Subsidiaries in excess of $1,500 per month (the "PERSONAL PROPERTY LEASES").
NextNet or one of its Subsidiaries has been in peaceable possession of the
property covered by each Personal Property Lease since the commencement thereof.
Seller has made available to Purchaser an accurate, correct and complete copy of
each Personal Property Lease.
3.14 CUSTOMERS AND SUPPLIERS. Except as set forth on Schedule 3.14, all
contracts or agreements with customers, licensors, licensees and suppliers of
NextNet and its Subsidiaries were entered into by or on behalf of NextNet or one
of its Subsidiaries in the ordinary course of business and on an arms-length
basis with the other party thereto. Schedule 3.14 sets forth an accurate,
correct and complete list of the 10 largest customers and 10 largest suppliers
of NextNet, determined on the basis of revenues from items sold or licensed
(with respect to customers) or costs of items purchased or licensed (with
respect to suppliers) for each of the two (2) fiscal years ended December 31,
2005. To the Knowledge of Seller, no customer, licensee, supplier or licensor
will cease to do business or materially reduce their business with NextNet after
or as a result of the consummation of the transactions contemplated hereby, and,
to the Knowledge of Seller, no customer, licensee, supplier or licensor is
threatened with bankruptcy or insolvency. To the Knowledge of Seller, no fact,
condition or event exists which would adversely affect NextNet's relationship
with any customer, licensee, supplier or licensor.
3.15 LICENSES AND PERMITS. Schedule 3.15 contains an accurate, correct and
complete list of each license, permit, certificate, approval, exemption,
franchise, registration, variance, accreditation or authorization currently
issued to NextNet or one of its Subsidiaries by a Governmental Authority or
that, to the Knowledge of Seller, are known by Seller to be required in the
future in order to conduct the Business as presently conducted by NextNet and
its Subsidiaries (collectively, the "LICENSES AND PERMITS"). The Licenses and
Permits are valid and in full force and effect and there are no pending or, to
the Knowledge of Seller, threatened proceedings which could result in the
termination, revocation, limitation or impairment of any License or Permit.
NextNet or one of its Subsidiaries has all Licenses and Permits as are necessary
in order to enable it to own and conduct the Business as it is presently
conducted and to occupy and lease its real property, and no Third Party has
asserted in writing that others are required. Since the Seller Acquisition Date,
neither Seller nor NextNet has received written
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notice of any violations from any Governmental Authority in respect of any
Licenses and Permits.
3.16 MATERIAL CONTRACTS.
(a) Schedule 3.16(a) sets forth an accurate, correct and complete list
of all instruments, commitments, agreements, arrangements and understandings
(other than this Agreement or any of the Ancillary Agreements) to which NextNet
or one of its Subsidiaries is a party or bound, or by which any of NextNet's or
one of its Subsidiaries' assets are subject or bound, or pursuant to which
NextNet or one of its Subsidiaries is a specifically named third-party
beneficiary, meeting any of the descriptions set forth below:
(i) any contract with any current customer of NextNet and its
Subsidiaries with respect to which NextNet and its Subsidiaries recognized
cumulative revenue during the twelve-month period ended May 31, 2006 in excess
of $500,000 (each such customer, a "MAJOR CUSTOMER," and each contract
referenced in this Section 3.16(a)(i), a "MAJOR CUSTOMER CONTRACT");
(ii) any contract with any current customer of NextNet and its
Subsidiaries that contains any (A) penalties for late deliveries or breach of
other performance obligations, or (B) penalties associated with repairs, returns
or quality performance;
(iii) any contract with any (A) direct supplier of goods
(including software) and/or services with respect to which NextNet and its
Subsidiaries made cumulative expenditures during the twelve-month period ended
May 31, 2006 greater than $250,000, or (B) indirect supplier of goods (including
software) and/or services with respect to which NextNet and its Subsidiaries
made cumulative expenditures during the twelve-month period ended May 31, 2006
greater than $250,000 (each such supplier, a "MAJOR SUPPLIER");
(iv) (A) any contract with any sole source suppliers, or (B)
original equipment manufacturer ("OEM") contracts, electronic manufacturing
services ("EMS") contracts, original design and manufacturing supply ("ODM")
contracts, third party logistics ("TML") contracts, transportation contracts,
and contract manufacturing contracts, or any other contract that licenses or
otherwise authorizes any third party to design, manufacture, reproduce, develop
or modify the products, services or technology of NextNet and its Subsidiaries;
(v) contracts (A) that contain any "take or pay" or volume
commitment provisions, or (B) that contain provisions granting any exclusive
rights, most favored customer pricing, rights of first refusal, rights of first
negotiation or similar rights to any Person;
(vi) any contract limiting in any respect the right of NextNet or
any of its Subsidiaries to engage in any line of business, compete with any
Person in any line of business or to compete with any party or the manner or
locations in which any of them may engage, or that otherwise prohibits or limits
the right of NextNet or any of its Subsidiaries to make, sell or distribute any
products or services;
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(vii) any contract with any Affiliate of NextNet (other than its
Subsidiaries);
(viii) any purchase order, agreement or commitment obligating
NextNet or its Subsidiaries to sell, license or deliver any product, technology
or service at a price which does not cover the expected cost (including labor,
materials and production overhead) thereof to NextNet and its Subsidiaries;
(ix) any evidence of Indebtedness;
(x) any joint venture, partnership, cooperative arrangement or
any other agreement involving a sharing of profits or development costs;
(xi) any contract or arrangement pursuant to which NextNet or one
of its Subsidiaries sells or licenses any product outside of the United States;
(xii) any contract with respect to the discharge, storage or
removal of effluent, waste or pollutants;
(xiii) any distribution or royalty agreement;
(xiv) any power of attorney, proxy or similar instrument
currently in effect;
(xv) any contract for the purchase, sale or license of any assets
of NextNet (whether or not completed) other than in the ordinary course of
business or any contract granting an option or preferential rights to purchase,
sell or license any assets of NextNet other than in the ordinary course of
business;
(xvi) any contract whose primary purpose is to indemnify any
party or to share in or contribute to the liability of any party;
(xvii) any contract relating to the acquisition by NextNet or one
of its Subsidiaries of a business or the equity interests of any other Person
(whether or not completed);
(xviii) any other contract, commitment, agreement, arrangement or
understanding (other than those excluded by an express exception from the
descriptions set forth in the subsections above) which provides for future
payments or performance by either party thereto having an aggregate value of
$100,000 or more, or with respect to contracts for performance for more than one
year, $100,000 or more per year (unless terminable without payment or penalty on
thirty (30) days (or less) notice);
(xix) any contract with respect to information technology
services, including without limitation, hosting services, application service
provider, disaster recovery, storage and/or outsourcing arrangements;
14
(xx) other than any contract otherwise disclosed pursuant to this
Section 3.16(a), any other contract that is otherwise material to NextNet and
its Subsidiaries or the Business; and
(xxi) any contract currently being negotiated of a type that if
entered into would be a Material Contract.
The foregoing, together with the Leases, the agreements set forth in Schedule
3.23(e) and the Personal Property Leases are collectively referred to as the
"MATERIAL CONTRACTS."
(b) Accurate, correct and complete copies of each Material Contract
have been made available to Purchaser. Each Material Contract is in full force
and effect and is valid, binding and enforceable in accordance with its terms.
Each of NextNet and its Subsidiaries, and to the Knowledge of Seller, each of
the other parties thereto, has complied with all commitments and obligations on
its part to be performed or observed under each Material Contract to which it is
a party. Except as set forth in Schedule 3.16(b), no event has occurred which is
or, after the giving of notice or passage of time, or both, would constitute a
default under or a breach of any Material Contract by NextNet or one of its
Subsidiaries, or, to the Knowledge of Seller, by any other party. Neither Seller
nor NextNet has received or given notice of an intention to cancel or terminate
a Material Contract or to exercise or not exercise options or rights under a
Material Contract. Neither Seller nor NextNet has received any written notice of
a default, offset or counterclaim under any Material Contract, or any other
communication calling upon NextNet or one of its Subsidiaries to comply with any
provision of any Material Contract or ascertaining noncompliance. There is no
Encumbrance of any kind on NextNet's interest under any Material Contract.
(c) Neither NextNet nor any of its Subsidiaries is a party to: (A)
contracts with any Governmental Authority (the "DIRECT CONTRACTS"); (B)
contracts with a non-Governmental Authority in support of a contract with a
Governmental Authority (the "SUBCONTRACTS"); (C) Direct Contracts or
Subcontracts in which NextNet was subject to the requirements of the Truth in
Negotiations Act ("TINA"), 10 U.S.C. Section 2306(f), or claimed an exemption
from TINA based upon any reason other than adequate price competition; (D)
Direct Contracts or Subcontracts in which NextNet or one of its Subsidiaries
applied for payments based upon representations of cost incurred; or (E) Direct
Contracts or Subcontracts in which NextNet or one of its Subsidiaries agreed to
provide "most favored" or other preferential treatment with regard to prices.
(d) Except as set forth in Schedule 3.16(d), during the last twelve
(12) months, to the Knowledge of Seller, none of the Major Customers has
terminated or failed to renew any of its Major Customer Contracts and neither
NextNet nor any of its Subsidiaries has received any written notice of
termination from any of the Major Customers.
3.17 TAX MATTERS.
(a) Except as set forth in Schedule 3.17(a), (i) each of the Acquired
Companies and any Affiliated Group has complied in all material respects with
all laws relating to Taxes and filed or caused to be filed in a timely manner
(within any applicable extension
15
periods) for all years and all periods (and portions thereof) all Tax Returns or
estimates or extensions, all prepared in material compliance with applicable
Laws, required to be filed by the Code or by applicable state, local or
non-United States Tax Laws; (ii) all Taxes owed by any of the Acquired Companies
or (to the extent relevant to the Acquired Companies) any Affiliated Group
(whether or not shown on any Tax Return) have been timely paid in full; (iii)
all such Tax Returns are true, correct and complete in all material respects;
(iv) there are no proposed adjustments or Actions pending or, to the Knowledge
of Seller, threatened for the assessment or collection of Taxes against any of
the Acquired Companies; (v) to the Knowledge of Seller, none of the Acquired
Companies have been at any time a member of any partnership or joint venture or
other arrangement that could be classified as a partnership for federal income
Tax purposes for any period for which the statute of limitations for any Tax has
not expired; (vi) to the Knowledge of Seller, there are no proposed
reassessments by Tax authorities of any real property owned or leased by the
Acquired Companies that could reasonably be expected to increase any Tax to
which any Acquired Company would be subject; (vii) no Acquired Company is a
party to, bound by, or has any obligation under any Tax sharing or allocation
agreement or similar agreement; (viii) no Acquired Company has any liability for
the Taxes of any other Person under Regulations section 1.1502-6 (or any similar
provision of state, local or non-United States Law), as a transferee or
successor, under a contract or otherwise; and (ix) none of the Acquired
Companies has been a member of any consolidated, combined or unitary group for
federal, state, local or foreign Tax purposes (other than the group for which
NextNet was the parent prior to the Seller Acquisition Date and the group for
which Seller is the parent).
(b) Except as set forth in Schedule 3.17(b), (i) none of the Acquired
Companies has made any consent under former Section 341 of the Code and none of
the Acquired Companies is a corporation described in former Section 341(b) of
the Code; (ii) none of the Acquired Companies (A) is or was a "controlled
foreign corporation" or a "United States Shareholder" as defined in the Code,
(B) has an unrecaptured overall foreign loss within the meaning of Section
904(f) of the Code, (C) files, has filed or is required to file Tax Returns in
jurisdictions outside the United States and (D) currently has (or ever has had)
a permanent establishment in a jurisdiction outside of the United States; (iii)
the Acquired Companies do not have income reportable for a period ending after
the Closing Date that is attributable to an activity or a transaction (e.g., an
installment sale) occurring in, or a change in accounting method made for, a
period ending on or prior to the Closing Date that resulted in a deferred
reporting of income from such transaction or from such change in accounting
method; (iv) neither the Internal Revenue Service ("IRS") nor any other agency
has proposed any adjustment or change in accounting methods that affects any
taxable year ending after the Closing Date; and (v) the Acquired Companies do
not have any application pending with any Taxing authority requesting permission
for any changes in accounting methods that relate to the Business or their
operations.
(c) Seller and the Acquired Companies, as applicable, have (i)
withheld all required amounts from the employees, agents, and contractors of the
Acquired Companies and remitted such amounts to the proper agencies or other
Persons; (ii) paid when due all employer contributions and premiums; and (iii)
filed when due all federal, state, local and foreign returns and reports with
respect to employee income Tax withholding, social security Taxes, unemployment
Taxes and premiums, all in compliance with the Code as in effect for the
applicable year and other applicable Laws.
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(d) Except as set forth in Schedule 3.17(d), the income Tax Returns
filed by the Acquired Companies or (to the extent relevant to the Acquired
Companies) any Affiliated Group have never been examined by the IRS or other
applicable taxing authority. No federal, state, local or non-United States Tax
audits or other administrative proceedings, discussions or court proceedings are
presently pending (or threatened) with regard to any Taxes or Tax Returns of the
Acquired Companies or (to the extent relevant to the Acquired Companies) any
Affiliated Group.
(e) None of the Acquired Companies has entered into any contract,
agreement, plan or arrangement covering any employee or former employee or
independent contractor that, individually or collectively, could give rise to
the payment by an Acquired Company of any amount that would not be deductible by
reason of Code section 280G or would give rise to a payment that could subject
the recipient to excise tax imposed by Code section 4999.
(f) No asset of any Acquired Company is tax exempt use property under
Code Section 168(h).
(g) No portion of the cost of any asset of any Acquired Company has
been financed directly or indirectly from the proceeds of any tax-exempt state
or local government obligation described in Code section 103(a).
(h) None of the assets of any Acquired Company is property that such
Acquired Company is required to treat as being owned by any other Person
pursuant to the safe harbor lease provision of former Code section 168(f)(8).
(i) None of the Acquired Companies has (i) been a party to a
transaction that is reported to qualify as a reorganization within the meaning
of Code section 368, (ii) distributed an interest in a corporation in a
transaction that is reported to qualify under Code section 355, or (iii) been
distributed in a transaction that is reported to qualify under Code section 355.
Each of the Acquired Companies are, and have at all times been, in compliance
with the provisions of Code sections 6011, 6111 and 6112 relating to tax shelter
disclosure, registration, list maintenance and record keeping requirements. None
of the Acquired Companies has participated in a transaction (x) the "significant
purpose of which is the avoidance or evasion of United States Federal income
tax" within the meaning of Code section 6662(d)(2) and the Regulations
promulgated thereunder; or (y) that constitutes a "reportable transaction"
within the meaning of Regulations section 1.6011-4.
(j) None of the Shares constitute a United States real property
interest within the meaning of Code section 897(c). There are no outstanding
agreements or waivers extending or having the effect of extending the statutory
period of limitation for assessment, reassessment or collection of Tax
applicable to any Tax Returns required to be filed by the Acquired Companies or
(to the extent relevant to the Acquired Companies) any Affiliated Group. Except
as set forth on Schedule 3.17(j), none of the Acquired Companies or (to the
extent relevant to the Acquired Companies) any Affiliated Group has requested
any extension of time within which to file any Tax Return, which return has not
yet been filed. No power of attorney granted by any Acquired Company with
respect to Taxes is currently in force.
17
(k) Seller has made available to Purchaser correct and complete copies
of all federal, state, local and foreign income and franchise Tax Returns of the
Acquired Companies for periods through December 31, 2004, IRS revenue agent
reports and similar reports issued by any state, local or non-United States Tax
authority for such Tax Return, and statements of Tax deficiencies assessed
against or agreed to by any Acquired Company.
(l) Except as set forth in Schedule 3.17(l), no claim has been made in
the last five (5) years that any Acquired Company has not properly paid Taxes or
filed Tax Returns in a jurisdiction in which such Acquired Company does not file
a Tax Return.
(m) No debt of any Acquired Company is "corporate acquisition
indebtedness" within the meaning of Code section 279 or a "applicable high yield
debt obligation" within the meaning of Code section 163(e)(5). No interest
accrued or paid by any Acquired Company (whether as stated interest, imputed
interest, or original issue discount) on any debt obligation of such Acquired
Company is not deductible for federal, state, or local income tax purposes).
(n) None of the Acquired Companies has any private letter ruling,
technical advice, application for a change of any method of accounting, or other
similar requests presently pending with any taxing authority.
(o) Except as set forth in Schedule 3.17(o), each of the Acquired
Company's "nonqualified deferred compensation plans" within the meaning of Code
section 409A (and associated Treasury Department guidance) comply with Code
section 409A (and associated Treasury Department guidance), each such
"nonqualified deferred compensation plan" has been operated in compliance with
Code section 409A (and associated Treasury Department guidance), and no such
"nonqualified deferred compensation plan" has been materially modified within
the meaning of Code section 409A (and associated Treasury Department guidance).
(p) None of the Acquired Companies is required to include an item of
income, or exclude an item of deduction, for any period after the Closing Date
as a result of (i) an installment sale transaction occurring on or before the
Closing governed by Code section 453 (or any similar provision of foreign,
state, or local law); (ii) a transaction occurring on or before the Closing
reported as an open transaction for federal income tax purposes (or any similar
doctrine for foreign, state or local tax purposes); (iii) prepaid amounts
received on or prior to the Closing Date; (iv) a change in method of accounting
requested or occurring on or prior to the Closing Date, or (v) an agreement
entered into with any Taxing authority on or prior to the Closing Date. None of
the Acquired Companies has used the cash method of accounting for income Tax
purposes at any time in the last five years.
(q) Except as set forth in Schedule 3.17(q), none of the Acquired
Companies has (i) any "excess loss accounts" with respect to any Subsidiary or
(ii) any items of income, gain, loss, expense, or deduction deferred under the
intercompany transaction rules of Treasury Regulation section 1.1502-13 (or
similar provision of foreign, state, or local laws).
3.18 PRODUCT WARRANTY. All products developed, licensed, distributed,
shipped or sold by NextNet and its Subsidiaries and any services rendered by
them since the Seller Acquisition Date, and to Seller's Knowledge with respect
to the period prior to the Seller
18
Acquisition Date, have been in conformity with all applicable contractual
commitments and all expressed warranties, except to the extent the failure to so
comply would not have a Material Adverse Effect. To the Knowledge of Seller, no
liability exists or will arise for repair, replacement or damage in connection
with such sales or deliveries, in excess of the reserve therefor reflected in
the Financial Statements. Schedule 3.18 sets forth an accurate, correct and
complete statement of all written and, to the Knowledge of Seller, oral,
warranties, warranty policies, service and maintenance agreements of NextNet and
its Subsidiaries covering any of the products or services sold, licensed or
provided since the Seller Acquisition Date. No products manufactured, licensed,
processed, distributed, sold, delivered or leased by NextNet or one of its
Subsidiaries are now subject to any guarantee, warranty, claim for product
liability, or patent or other indemnity, other than those set forth in Schedule
3.18. The product warranty and return experience for the period commencing on
the Seller Acquisition Date and ending on May 31, 2006 is set forth in Schedule
3.18. The product warranty reserves on the Financial Statements were prepared in
accordance with GAAP and are adequate in light of the circumstances of which
Seller is now aware with respect to the period commencing on the Seller
Acquisition Date.
3.19 PRODUCT LIABILITY. Schedule 3.19 sets forth an accurate and complete
list of all existing claims, duties, responsibilities, liabilities or
obligations arising from or alleged to arise from any injury to person or
property or economic damage as a result of the ownership, license, possession or
use of any product licensed, marketed, distributed, shipped or sold prior to the
date hereof for which NextNet or Seller has received written notice. To Seller's
Knowledge, all such claims are fully covered by product liability insurance or
otherwise provided for. Except as set forth in Schedule 3.19 and other than
claims adequately covered by Seller's or NextNet's product liability insurance,
to the Knowledge of Seller, neither NextNet nor any of its Subsidiaries will be
subject to any claim, expense, liability or obligation arising from any injury
to person or property or economic damage as a result of ownership, license,
possession or use of any product licensed, marketed, distributed, shipped or
sold prior to the Closing Date. There have been no recalls, and none are pending
or, to Seller's Knowledge, threatened and no report has been filed by NextNet or
is required to have been filed by NextNet with respect to any products of
NextNet and its Subsidiaries under any Law. Except as set forth on Schedule
3.19, there are no, and within the last 12 months prior to the date of this
Agreement there have not been any, product liability Actions filed or, to
Seller's Knowledge, threatened against or involving NextNet or any of their
Subsidiaries or any of their products, and no such Actions have been settled,
adjudicated or otherwise disposed by NextNet within the last 12 months prior to
the date of this Agreement.
3.20 LEGAL PROCEEDINGS. Except as set forth in Schedule 3.20, neither
NextNet nor any of its Subsidiaries is engaged in or a party to or, to the
Knowledge of Seller, threatened with any Action. Neither NextNet nor any of its
Subsidiaries has received written notice of any investigation threatened or
contemplated by any Governmental Authority, including those involving the safety
of products, the working conditions of employees, the employment practices or
policies of NextNet and its Subsidiaries, or compliance with environmental
regulations, that has not been fully resolved or dismissed. Except as set forth
in Schedule 3.20, neither NextNet, its Subsidiaries nor any of its assets is
subject to any judgment, order, writ, injunction, stipulation or decree of any
court or any Governmental Authority or any arbitrator. There is no outstanding
order, writ, injunction, judgment or decree by any court or any Governmental
Authority or any Action pending or, to the Knowledge of Seller, threatened
against NextNet relating to the
19
transactions contemplated hereby or which seeks to prevent, restrict or delay
the consummation of the transactions contemplated hereby. To the Knowledge of
Seller, none of NextNet's current executive officers or directors has ever been
a defendant or other obligor under any judgment, injunction or other order or
ruling of or settlement approved by any Governmental Authority relating to
NextNet or the Business or any fraud, felony or similar offense.
3.21 ENVIRONMENTAL MATTERS.
(a) Since the Seller Acquisition Date, and to Seller's Knowledge with
respect to the period prior to the Seller Acquisition Date, NextNet and its
Subsidiaries have materially complied with and are in material compliance with
all applicable Environmental Laws. NextNet and its Subsidiaries are not subject
to any existing, pending or, to the Knowledge of Seller, threatened proceedings
under any Environmental Laws, and no material expenditures are or will be
required by NextNet or its Subsidiaries in order to comply with any existing
Environmental Law.
(b) To Seller's Knowledge, NextNet and its Subsidiaries have never
sent, arranged for disposal or treatment, arranged with a transporter for
transport for disposal or treatment, transported, or accepted for transport any
Hazardous Substance, Hazardous Materials, Hazardous Waste, Solid Waste or
petroleum, including crude oil or any fraction thereof, to a facility, site or
location, which, pursuant to CERCLA or any similar state or local Law, (i) has
been placed, or is proposed to be placed, on the National Priorities List or its
state equivalent or (ii) is subject to a claim, administrative order or other
request to effect Removal or take Remedial Action.
(c) NextNet and its Subsidiaries do not store, generate or produce any
Hazardous Substance or Hazardous Waste in quantities or in a manner which
violates any Environmental Law.
(d) There are no environmental reports, investigations or audits
possessed or controlled by NextNet (whether conducted by or on behalf of NextNet
or a Third Party, and whether done at the initiative of NextNet or directed by a
Governmental Authority or other Third Party) relating to premises currently or
previously owned, leased or operated by NextNet since the Seller Acquisition
Date, and to Seller's Knowledge with respect to the period prior to the Seller
Acquisition Date.
(e) Except as set forth in Schedule 3.21, neither Seller nor NextNet
has received written notice regarding, nor, to Seller's Knowledge, has there
been, any contamination of groundwaters, surface waters, soils or sediments as a
result of the manufacture, storage, processing, loss, leak, escape, spillage,
disposal or other handling or disposition by or on behalf of NextNet of any
Hazardous Substance on or prior to the Closing Date in violation of
Environmental Laws. As used in this Agreement, each of the terms "Removal,"
"Remedial Action," "Hazardous Substance," "Hazardous Materials," "National
Priorities List," "Hazardous Waste" and "Solid Waste" has the same meaning as
such term is given in Environmental Laws.
(f) To the Knowledge of Seller, there are no facts or circumstances
which are reasonably expected to prevent or delay the ability of NextNet or any
of its Subsidiaries to place
20
in the EU market products that comply in all material respects with the
Restrictions on the Use of Certain Hazardous Substances in Electrical and
Electronic Equipment (2002/95/EC) Directive after June 30, 2006 and the Waste
Electrical and Electronic Equipment (2002/96/EC) Directive, if and to the extent
the legislation which is enacted and implemented by applicable European Union
member nations is not materially different from such Directives in any respect.
3.22 COMPLIANCE WITH LAW. Since the Seller Acquisition Date, and to
Seller's Knowledge with respect to the period prior to the Seller Acquisition
Date, NextNet and its Subsidiaries have complied and are in compliance with, in
all material respects, all applicable Laws applicable to the Business or
operations. No written notice from any Governmental Authority or other Person of
any violation of any Law has been received by NextNet, and neither Seller nor
NextNet knows of any reasonable basis therefor.
3.23 INTELLECTUAL PROPERTY.
(a) Schedule 3.23(a) contains a complete list and description of all
registered Owned IP or applications pending therefor as of the date hereof
(collectively the "REGISTERED INTELLECTUAL PROPERTY"). All necessary
registrations, maintenance or annuity, and renewal, maintenance or other fees in
connection with such Registered Intellectual Property have been made for each
item of Registered Intellectual Property; all necessary documents and
certificates in connection with such Registered Intellectual Property have been
filed with and all relevant fees have been paid to the relevant patent,
copyright, trademark or other authorities in the United States or foreign
jurisdictions, as the case may be, for the purposes of maintaining such
Registered Intellectual Property; and all patent, trademark, service mark and
copyright applications set forth in Schedule 3.23(a) have been duly filed. All
payments due and payable in respect of such listed registrations, applications
and renewals have been paid as of the date hereof. There are no outstanding
deadlines of any patent, copyright or trademark office (or any analogous office
or registry anywhere in the world) in relation to such listed registrations or
applications that will expire within three months of the date hereof. No
settlements, consents, covenants not to sue or nonassertion assurances or
releases have been entered into by NextNet or one of its Subsidiaries or to
which NextNet or one of its Subsidiaries is bound that adversely affect their
right to own or use any Owned IP.
(b) Schedule 3.23(b) contains a list of Owned IP, other than
Registered Intellectual Property, that is significant to the conduct of the
Business as currently conducted by NextNet, consisting of: (i) disclosures on
inventions; and (ii) a description of trade secrets, documented know-how,
proprietary processes, and other documented proprietary information used in the
conduct of the Business as currently conducted by NextNet.
(c) NextNet or one of its Subsidiaries owns all right, title and
interest in all Owned IP free and clear of any Encumbrance except as set forth
on Schedule 3.23(c) and the Permitted Encumbrances, including ownership of
pending and accrued causes of action for patent, trademark, or copyright
infringement, misappropriation, and unfair business practices and has the sole
and exclusive right to bring actions for infringement and misappropriation of
such Owned IP.
21
(d) Each item of IP Assets owned or used by NextNet immediately prior
to the Closing will be owned or available for use, respectively, by NextNet
immediately subsequent to the Closing on identical terms and conditions as owned
or used by NextNet immediately prior to the Closing.
(e) Schedule 3.23(e) contains a list of all agreements to which the IP
Assets are bound and pursuant to which:
(i) NextNet is licensed, authorized or otherwise permitted to
use, distribute or otherwise exploit any Third Party Intellectual Property
Rights, including any agreement requiring royalties therefor (so called
"in-bound" licenses); or
(ii) NextNet has licensed, authorized or otherwise permitted any
Third Party to use, distribute or otherwise exploit Owned IP (so called
"out-bound" licenses).
(f) NextNet and its Subsidiaries have a policy requiring each employee
or contractor to execute confidentiality and invention assignment agreements.
Since the Seller Acquisition Date, and to the Knowledge of Seller with respect
to the period prior to the Seller Acquisition Date, all employees, agents,
consultants, contractors or other persons who have contributed to or
participated in the creation or development (on behalf of NextNet) of any Owned
IP included in the IP Assets have executed a confidentiality and invention
assignment agreement with NextNet and also either: (i) are a party to a
"work-for-hire" agreement under which NextNet is deemed to be the original
owner/author of the copyrights therein; (ii) are or were employees of NextNet
and created or developed such item within the scope of their employment, or
(iii) have executed an assignment or an agreement to assign in favor of NextNet
of all of their right, title and interest in their Intellectual Property Rights
in such item. To the Knowledge of Seller, no Acquired Employee has any
obligations to any prior employer that would violate or conflict with his or her
obligations to NextNet under such confidentiality and assignment agreements. To
Seller's Knowledge, no employee or contractor of NextNet or any of its
Subsidiaries has entered into any agreement, contract, obligation, promise or
undertaking (whether written or oral and whether express or implied) that
restricts or limits in any way the scope of the Owned IP or requires the
employee to transfer, assign or disclose information concerning his work to
anyone other than NextNet.
(g) To the Knowledge of Seller, neither Seller nor NextNet has
disclosed to a Third Party any Proprietary Information and Technology which is
Owned IP except pursuant to binding agreements containing confidentiality
provisions reasonably protecting such Proprietary Information and Technology. To
the Knowledge of Seller, there are no violations of its trade secret rights with
respect to Proprietary Information and Technology included in Owned IP.
(h) NextNet is in actual and sole possession of the complete source
code of the NextNet Software. To the Knowledge of Seller, no event has occurred,
and no circumstance or condition exists, that (with or without notice or lapse
of time) will, or could reasonably be expected to, result in the disclosure or
delivery to any Third Party of the complete source code for any NextNet
Software. There are no escrow agreements with third party escrow agents or with
Third Parties that would release the source code to such Third Party under
certain circumstances or conditions.
22
(i) Except as set forth in Schedule 3.23(i), to the Knowledge of
Seller, the NextNet Software does not contain any "back door," "time bomb,"
"Trojan horse," "worm," "drop dead device," "virus" (as these terms are commonly
used in the computer software industry), or other software routines or hardware
components intentionally designed to permit unauthorized access, to disable or
erase software, hardware, or data, or to perform any other similar type of
unauthorized activities.
(j) To the Knowledge of Seller, there are no restrictions on the
ability of NextNet to use or otherwise exploit the NextNet Software as used or
exploited in the conduct of the Business as currently conducted by NextNet, and
such use or exploitation of the NextNet Software does not and will not obligate
NextNet to pay any royalty, fee, or other compensation to any Person; and
neither NextNet nor its Affiliates have received any notice or have any
Knowledge of any complaint, assertion, threat, or allegation inconsistent with
the preceding statements in this paragraph.
(k) NextNet has not incorporated into the NextNet Software any
software code licensed under the Gnu General Public License (GPL) or the Gnu
Lesser General Public License (LGPL) or any other such open code or freeware
type license in a manner that would require NextNet to make the NextNet Software
available to others in source code form.
(l) Except as set forth in Schedule 3.23(l), no claims of any kind
have been made by NextNet against any Third Party that, and Seller has no
Knowledge that, any Third Party infringes, or has previously infringed,
misappropriates, or has previously misappropriated, any Owned IP.
(m) Except as set forth in Schedule 3.23(m), no claims of any kind
have been made or asserted by any party against Seller or NextNet or against, or
to, the employees, agents or contractors, customers, vendors, suppliers, or
distributors claiming or alleging that NextNet or any of its products (including
products currently under development), services or methods of operation
infringe, have infringed, contribute to infringement or induce the infringement
of, or misappropriate the Intellectual Property Rights or other proprietary
rights of any Third Party, violate the right of any Person (including rights to
privacy or publicity) or constitute unfair competition, nor is Seller or NextNet
aware of or on notice of any such infringement, misappropriation or violation.
To Seller's Knowledge, NextNet has not infringed any Intellectual Property
Rights or other proprietary rights of any Third Party or breached any obligation
of confidentiality owed to a Third Party, and the continued operation of
NextNet's business consistent with past practices will not infringe any
Intellectual Property Rights or other proprietary rights of a Third Party.
(n) No government, university or other Third Party funding, personnel,
students, resources or facilities were used in the development of any Owned IP
in a manner that would give any Governmental Authority, university or Third
Party any interest, direct or indirect, in the Owned IP.
(o) Except as set forth on Schedule 3.23(o), no Owned IP or product or
service of NextNet and its Subsidiaries is subject to any outstanding decrees,
order, judgment, or stipulation restricting in any manner the use or licensing
thereof by NextNet and its Subsidiaries.
23
(p) Except as set forth in Schedule 3.23(p), there are no contracts,
licenses, software escrows, and other agreements between NextNet or one of its
Subsidiaries and any other Person with respect to the Owned IP with respect to
which NextNet or one of its Subsidiaries has received notice or is aware of any
dispute that could reasonably be considered to be a dispute regarding the scope
of such agreement, or performance under such agreement including with respect to
any payments to be made or received by NextNet or one of its Subsidiaries
thereunder.
3.24 LIABILITIES. NextNet and its Subsidiaries do not have any Liabilities
of any nature whether or not any such Liability would have been required by GAAP
to be set forth on a consolidated balance sheet of NextNet or in the notes
thereto, other than (a) Liabilities set forth on the audited balance sheet of
NextNet as of December 31, 2005 or Liabilities reflected in the Most Recent
Balance Sheet, included in the Financial Statements, (b) Liabilities
specifically required to be incurred by NextNet pursuant to this Agreement or
any Ancillary Agreement, (c) Liabilities incurred since the date of the Most
Recent Balance Sheet in the ordinary course of business (none of which is a
material Liability) consistent with past practice, or (d) Liabilities
specifically identified on Schedule 3.24. Nothing in this Section 3.24 shall
give rise to an indemnification obligation of Seller under Article XI to the
extent the subject matter of such Liability is covered by the representations
and warranties set forth in Section 3.23.
3.25 EMPLOYEES AND SUBCONTRACTORS.
(a) Schedule 3.25(a) contains a list of all employees of Seller,
NextNet or their Affiliates who are engaged in the Business, along with the
position, date of hire, annual rate of base compensation, and the estimated or
target annual incentive compensation of each such person and any applicable
leave of absence information as of the date hereof, and which shall be updated
as of the Closing Date. Schedule 3.25(a) lists any contract or agreement that,
to the Knowledge of Seller, contains a covenant that limits or purports to limit
the ability of any Acquired Employee to compete in any line of business or with
any Person or in an geographic area or during any period of time. To the
Knowledge of Seller, no Acquired Employee or group of Acquired Employees has any
plans to terminate employment with Seller, NextNet or their Affiliates.
(b) Schedule 3.25(b) sets forth (i) a list of all independent
contractors currently performing services or under contract to perform future
services for NextNet and its Subsidiaries, and (ii) the start date, type of
services to be provided, estimated completion date and hourly or per diem pay
rate of such contractors. To the extent such independent contractors were
contracted with since the Seller Acquisition Date, all such individuals have
acknowledged in writing that they are not employees of NextNet or one of its
Subsidiaries and are not entitled to any employee compensation or benefits.
(c) Since the Seller Acquisition Date, and to Seller's Knowledge with
respect to the period prior to the Seller Acquisition Date, NextNet and its
Subsidiaries have complied and are currently in compliance in all material
respects with all applicable Laws respecting employment, immigration,
occupational health and safety, and wages and hours, in each case, with respect
to its current and former employees engaged in the Business. Since the Seller
Acquisition Date, there have been no union organizing, hand billing, picketing,
election
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petitions, applications for certification, or corporate campaigns involving
NextNet or the Business and no such activities are pending or, to Seller's
Knowledge, threatened or reasonably anticipated. Since the Seller Acquisition
Date, there have been no group work stoppages, walk outs, labor strikes,
slowdowns or other concerted action against of affecting NextNet and no such
activities are pending, or to Seller's Knowledge, threatened or reasonably
anticipated. NextNet is not a party to or bound by any collective bargaining
agreement or other agreement with a union, and no such agreement is currently
being negotiated. Neither Seller nor NextNet has received written notice of any
charges, complaints, lawsuits, or other administrative or judicial proceedings
pending or threatened, involving any employee, former employee, consultant, or
independent contractor. To Seller's Knowledge, except as set forth in Schedule
3.25(c), there have been no workplace accidents, injuries, or exposures in the
last twelve (12) months involving any employee engaged in the Business which are
likely to result in, but have not yet resulted in, a claim for worker's
compensation payments or benefits. Seller, NextNet or one of their Affiliates,
as applicable, (i) since the Seller Acquisition Date, has withheld and reported
all amounts required by Law or by contract to be withheld and reported with
respect to wages, salaries and other payments to employees and former employees
engaged in the Business, (ii) is not liable for any arrears of wages or any
taxes or any penalty for failure to comply with any of the foregoing and (iii)
is not liable for any payment to any trust or other fund governed by or
maintained by or on behalf of any Governmental Authority with respect to
unemployment compensation benefits or social security for employees or former
employees engaged in the Business. NextNet's balance sheet reflects appropriate
accruals for vacation days and bonuses that have been earned by employees but
not yet paid. To the extent applicable, NextNet and its Subsidiaries are in
material compliance with all rules and regulations of the OFCCP and similar
state and local agencies relating to affirmative action and equal employment
opportunity. Since the Seller Acquisition Date, Seller and NextNet have not
taken any action that would constitute a mass layoff, mass termination, or plant
closing within the meaning of the WARN Act or otherwise result in material
liability under any foreign, federal, state, or local plant closing or
collective dismissal Law.
(d) Schedule 3.25(d) lists the name and position or nature of services
provided by each employee at a manager level or higher, and each independent
contractor, whose service or engagement in the Business has terminated in the
past twenty-four (24) months, and the date of each termination.
(e) Schedule 3.25(e) lists the employees of Seller, NextNet and their
Affiliates engaged in the Business who will become Acquired Employees and who
are in nonimmigrant visa status or have applications for lawful permanent
residence pending with the relevant Governmental Authorities, in each case
designating whether such employee is sponsored by Seller, NextNet or their
Affiliates.
3.26 EMPLOYEE BENEFITS.
(a) Schedule 3.26(a) contains a complete and accurate list of all
NextNet Plans, as well as any Seller Plans in which the employees of Seller,
NextNet or their Affiliates who are engaged in the Business are eligible to
participate (collectively, the "PLANS"). Seller shall prepare and provide to
Purchaser an initial version of Schedule 3.26(a) on the date of this Agreement,
and an updated version thereof on the Closing Date. Complete and accurate copies
25
of each of the following documents have been delivered to Purchaser: (i) all
Plans that have been reduced to writing, (ii) written summaries of all unwritten
Plans, (iii) all related trust agreements, insurance contracts, third-party
administration contracts and summary plan descriptions, (iv) all annual reports
filed on IRS Form 5500 Series, with all schedules and attachments thereto, for
the last three plan years for each Plan, (v) all reports relating to compliance
with Sections 401(k), 401(m) and 410(b) of the Code for the last three plan
years, and (vi) all employee handbooks. Each Plan has been maintained and
administered at all times in all material respects in accordance with its terms
and with the currently applicable provisions of ERISA and the Code and other
applicable federal, state, local and foreign Laws and the regulations thereunder
(including, without limitation, Section 4980B of the Code, Subtitle K, Chapter
100 of the Code and Sections 601 through 608 and Section 701 et seq. of ERISA).
All filings and reports as to each Plan required to have been submitted to the
IRS or to the United States Department of Labor have been duly and timely
submitted. NextNet has made all required contributions and properly accrued all
liabilities relating to the NextNet Plans in accordance with GAAP.
(b) There are no inquiries or investigations by any Governmental
Authority, termination proceedings or other claims (except claims for benefits
payable in the normal operation of the Plans and proceedings with respect to
qualified domestic relations orders), suits or proceedings against or involving
any Plan or asserting any such claims under any Plan.
(c) Each Seller Plan that is intended to be qualified under Section
401(a) of the Code (i) has received a favorable determination letter from the
IRS to the effect that such Seller Plan is qualified under Section 401(a) of the
Code and the trust related thereto is exempt from federal income taxes under
Section 501(a) of the Code or (ii) is maintained under an IRS approved prototype
plan with respect to which Seller may reasonably rely on the opinion letter
issued to the prototype sponsor as to such Seller Plan's qualified status. No
such determination letter has been revoked and revocation has not been
threatened; and no such Seller Plan has been amended or operated since the date
of its most recent determination letter in any respect, and no act or omission
has occurred, that would adversely affect its qualification or increase its
cost. Each Seller Plan that is required to satisfy Section 401(k)(3) or Section
401(m)(2) of the Code has been tested for compliance with, and satisfies the
requirements of, Section 401(k)(3) and Section 401(m)(2) of the Code for each
plan year ending prior to the Closing Date. No NextNet Plan is intended to be
qualified under Section 401(a) of the Code.
(d) None of Seller, NextNet or any Affiliate thereof has ever
maintained a Plan subject to Section 412 of the Code or Title IV of ERISA.
(e) At no time has Seller, NextNet or any Affiliate thereof been
obligated to contribute to any "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA).
(f) No Plan provides benefits (whether or not insured) after
retirement or other termination of employment to any employee of Seller, NextNet
of any of their Affiliates who are engaged in the Business (or to any
beneficiary of any such employee), including, without limitation, retiree health
coverage and deferred compensation, but excluding continuation of health
coverage required to be continued under Section 4980B of the Code or any similar
state Law and insurance conversion privileges under state Law, and also
excluding any Plan that merely pays after retirement (or termination of
employment) those benefits (as
26
adjusted for earnings or losses, as applicable) that accrued prior to retirement
(or other termination of employment). The assets of each Plan that is funded are
reported at their fair market value on the books and records of such Plan.
(g) No act or omission has occurred and no condition exists with
respect to any Plan that would subject NextNet or its Affiliates to any (i)
fine, penalty, Tax or liability of any kind imposed under ERISA or the Code or
(ii) liability for any such penalty, Tax or liability under any contractual
indemnification or contribution obligation protecting any fiduciary, insurer or
service provider with respect to any Plan.
(h) No Plan is funded by, associated with, or related to a "voluntary
employee's beneficiary association" within the meaning of Section 501(c)(9) of
the Code.
(i) Each NextNet Plan and its related documentation or agreement,
summary plan description or other written communication distributed generally to
employees by its terms expressly and adequately reserves the right to amend and
terminate such NextNet Plan, and each NextNet Plan may be terminated without
liability to NextNet or Purchaser, except for vested benefits accrued through
the date of termination and the administrative and professional costs incurred
in such transaction. No Plan includes in its assets any securities issued by
NextNet. No Plan has been subject to Tax under Section 511 of the Code.
(j) Schedule 3.26(j) discloses each: (i) agreement with any director
or officer of any Acquired Company (A) the amount or timing of benefits of which
are contingent, or the terms of which are altered, upon the occurrence of a
transaction involving NextNet of the nature of any of the transactions
contemplated by this Agreement, (B) providing any term of employment or
compensation guarantee or (C) providing severance benefits or other benefits
after the termination of employment of such director or officer; (ii) agreement,
plan or arrangement under which any person may receive payments from any
Acquired Company that may be included in the determination of such person's
"parachute payment" under Section 280G of the Code; and (iii) agreement or plan
binding any Acquired Company including, without limitation, any Plan, stock
option plan, stock appreciation right plan, restricted stock plan, stock
purchase plan, or severance benefit plan, any of the benefits of which shall be
increased, or the vesting of the benefits of which shall be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which shall be calculated on the basis of any of
the transactions contemplated by this Agreement.
(k) Schedule 3.26(k) sets forth the policy of NextNet with respect to
accrued paid time off, accrued sick time and earned time-off, and the amount of
such liabilities as of the date of this Agreement.
(l) No third-party administration agreement or other agreement with
respect to any NextNet Plan shall terminate or otherwise be cancelled by either
party and no right shall accrue to the third party as a result of the
transactions contemplated herein. All such agreements are cancelable by NextNet
without cause and without penalty (including, without limitation, any penalties
related to the early termination or surrender of any investment contracts or
similar agreements under which any assets of NextNet Plans are held) on not more
than ninety (90) days advance notice.
27
3.27 IMPORT AND EXPORT CONTROL LAWS. NextNet and each of its Subsidiaries
has at all times since the Seller Acquisition Date, and to Seller's Knowledge
with respect to the period prior to the Seller Acquisition Date, as to which the
applicable statute of limitations has not yet expired, conducted its import and
export transactions materially in accordance with (x) all applicable U.S.
import, export and re-export controls, including the United States Export
Administration Act and Regulations and Foreign Assets Control Regulations and
(y) all other applicable import/export controls in other countries in which
NextNet and its Subsidiaries conducts business. Without limiting the foregoing:
(a) NextNet and each of its Subsidiaries has obtained, and is in
material compliance with, all export licenses, license exceptions and other
consents, notices, waivers, approvals, orders, authorizations, registrations,
declarations, classifications and filings with any Governmental Authority
required for (i) the export and re-export of products, services, software and
technologies and (ii) releases of technologies and software to foreign nationals
located in the United States and abroad ("EXPORT APPROVALS");
(b) there are no pending or, to the Knowledge of Seller, threatened
claims against NextNet or any of its Subsidiaries with respect to such Export
Approvals;
(c) no Export Approvals for the transfer of export licenses to
Purchaser are required, or such Export Approvals can be obtained in a reasonably
timely manner without material cost;
(d) except as set forth in Schedule 3.27(d), none of NextNet, its
Subsidiaries or any of their respective Affiliates is a party to any contract or
bid with, or has conducted business with (directly or, to the Knowledge of
Seller, indirectly), a Third Party located in, or otherwise has any operations
in, or sales to, Cuba, Iran, Syria or Sudan;
(e) since the Seller Acquisition Date, and to Seller's Knowledge with
respect to the period prior to the Seller Acquisition Date, neither NextNet nor
any of its Subsidiaries has received written notice to the effect that a
Governmental Authority claimed or alleged that NextNet or any of its
Subsidiaries was not in compliance in a material respect with any applicable
Laws relating to the export of goods and services to any foreign jurisdiction
against which the United States or the United Nations maintains sanctions or
export controls, including applicable regulations of the United States
Department of Commerce and the United States Department of State; and
(f) since the Seller Acquisition Date, and to Seller's Knowledge with
respect to the period prior to the Seller Acquisition Date, none of NextNet, its
Subsidiaries or any of their respective Affiliates has made any voluntary
disclosures to, or has been subject to any fines, penalties or sanctions from,
any Governmental Authority regarding any past import or export control
violations.
3.28 FOREIGN CORRUPT PRACTICES ACT. Since the Seller Acquisition Date, and
to Seller's Knowledge with respect to the period prior to the Seller Acquisition
Date, neither NextNet nor any of its Subsidiaries (including any of their
officers, directors, agents, distributors, employees or other Person associated
with or acting on their behalf) has, directly or indirectly,
28
taken any action which would cause it to be in material violation of the Foreign
Corrupt Practices Act of 1977, as amended, or any rules or regulations
thereunder or any similar anti-corruption or anti-bribery Laws applicable to
NextNet or any of its Subsidiaries in any jurisdiction other than the United
States (in each case, as in effect at the time of such action) (collectively,
the "FCPA"), or, to the Knowledge of Seller, used any corporate funds for
unlawful contributions, gifts, entertainment or other unlawful expenses relating
to political activity, made, offered or authorized any unlawful payment to
foreign or domestic government officials or employees, whether directly or
indirectly, or made, offered or authorized any unlawful bribe, rebate, payoff,
influence payment, kickback or other similar unlawful payment, whether directly
or indirectly, except for any of the foregoing which is no longer subject to
potential claims of violation as a result of the expiration of the applicable
statute of limitations. NextNet has established reasonable internal controls and
procedures intended to ensure compliance with the FCPA.
3.29 BROKERS AND CHANGE OF CONTROL PAYMENTS. Except as set forth in
Schedule 3.29, no broker, investment banker, financial advisor or other Person
is entitled, based on arrangements made by or on behalf of NextNet, to (a) any
broker's, finder's, financial advisor's or other similar fee or commission or
(b) any change of control, severance or similar payment, in each case in
connection with the transactions contemplated by this Agreement.
3.30 INVESTMENT COMPANY ACT. NextNet (i) is not an "investment company", or
a company "controlled" by, or an "affiliated company" with respect to, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended (the "INVESTMENT COMPANY ACT"), or (ii) satisfies all conditions for
an exemption from the Investment Company Act, and, accordingly, NextNet is not
required to be registered under the Investment Company Act.
3.31 FINANCIAL CONTROLS. NextNet maintains accurate books and records
reflecting its assets and liabilities and is developing and testing proper and
adequate internal accounting controls to provide assurance that (a) transactions
are executed with management's authorization; (b) transactions are recorded as
necessary to permit preparation of the consolidated financial statements of
Seller and to maintain accountability for NextNet's consolidated assets; (c)
access to NextNet's assets is permitted only in accordance with management's
authorization; (d) the reporting of NextNet's assets is compared with existing
assets at regular intervals; and (e) accounts, notes and other receivables and
inventory are recorded accurately, and proper and adequate procedures are
implemented to effect the collection thereof on a current and timely basis.
Seller, without any independent review of NextNet (other than by Seller's
independent outside auditors), has detected no material weaknesses specifically
at NextNet and therefor has issued no management comment letters on NextNet's
internal controls.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrant to Seller that the statements made in
this Article IX are true, correct and complete as of the date of this Agreement
(except to the extent expressly made as of an earlier date, in which case as of
such date):
29
4.1 AUTHORITY. Purchaser has full right, power and authority, without the
Consent of any other Person, to execute and deliver this Agreement and the
Ancillary Agreements to which it is a party and to consummate the transactions
contemplated hereby and thereby. All acts or proceedings required to be taken by
Purchaser to authorize the execution, delivery and performance of this
Agreement, the Ancillary Agreements to which it is a party and all transactions
contemplated hereby and thereby have been duly and properly taken.
4.2 VALIDITY. This Agreement and the Ancillary Agreements to which it is a
party have been (or, in the case of such agreements to be executed after the
date hereof and at or prior to Closing, will be), and the documents to be
delivered at Closing will be, duly executed and delivered and assuming the due
execution and delivery of the other Parties hereto and thereto, do constitute or
will constitute, as the case may be, valid and legally binding obligations of
Purchaser, enforceable in accordance with their respective terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles. The execution and delivery by Purchaser of
this Agreement and the Ancillary Agreements to which it is a party and the
consummation of the transactions contemplated hereby and thereby are not
prohibited by, do not violate or conflict with any provision of, and do not
constitute a default under or a breach of (a) the Certificate of Incorporation
or Bylaws of Purchaser, (b) any note, bond, indenture, contract, agreement,
permit, license or other instrument to which Purchaser is a party or by which
Purchaser or any of its assets is bound, (c) any order, writ, injunction, decree
or judgment of any Governmental Authority applicable to Purchaser, or (d) any
Law applicable to Purchaser. No Consent of any Person is required for the
execution and delivery by Purchaser of this Agreement, the Ancillary Agreements,
the documents to be delivered at Closing or the consummation by Purchaser of the
transactions contemplated hereby and thereby.
4.3 DUE ORGANIZATION. Purchaser is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware.
4.4 BROKERS. No broker, investment banker, financial advisor or other
Person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Purchaser.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 CONDUCT OF BUSINESS. From the date of this Agreement until the earlier
of the Closing or the termination of this Agreement pursuant to Section 10.1 and
subject to this Section 5.1, NextNet shall, and Seller shall cause NextNet to,
in all material respects, carry on Business in the ordinary course and in
compliance with applicable Laws and use its commercially reasonable efforts to
keep available the service of the current officers, key employees and
consultants of NextNet and to preserve the current relationships of NextNet with
those customers, licensees, suppliers, licensors and other Persons with which
NextNet has significant business relations as is necessary in order to preserve
substantially intact its business
30
organization. Without limiting the generality of the foregoing, and except as
otherwise contemplated by this Agreement and the Ancillary Agreements, during
such period, neither NextNet nor any of its Subsidiaries shall, without the
prior written consent of Purchaser:
(a) split, combine, subdivide or reclassify any shares of NextNet
Common Stock or declare, set aside for payment or pay any dividend, or make any
other actual, constructive or deemed distribution in respect of any shares of
NextNet Common Stock or otherwise make any payments to Seller in its capacity as
stockholder of NextNet; provided, however, nothing herein shall prohibit NextNet
from distributing to Seller immediately prior to the Closing the cash of
NextNet;
(b) issue, sell or dispose of, or agree to issue, sell or dispose of
(i) any additional shares of capital stock of any class (including shares of
NextNet Common Stock), or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for any shares of capital
stock, or any rights, warrants, options, calls, commitments or any other
agreements of any character to purchase or acquire any shares of capital stock
or any securities or rights convertible into, exchangeable for, or evidencing
the right to subscribe for, any shares of capital stock or (ii) any other
securities in respect of, in lieu of, or in substitution for, shares of NextNet
Common Stock outstanding on the date hereof;
(c) adopt any amendments to its Certificate of Incorporation or Bylaws
or alter through merger, liquidation, reorganization, restructuring or in any
other fashion the corporate structure or ownership of NextNet and its
Subsidiaries;
(d) acquire, or agree to acquire, in a single transaction or series of
related transactions, any business or assets having a value in excess of $50,000
individually or $100,000 in the aggregate, other than transactions that are in
the ordinary course of business;
(e) enter into any exclusive or sole licensing arrangement regarding
any Intellectual Property Rights of NextNet and its Subsidiaries or enter into
any non-exclusive licenses other than those non-exclusive use licenses for
NextNet's products and related Intellectual Property Rights of NextNet that are
entered into the ordinary course of business consistent with past practice;
(f) sell, pledge, dispose of, transfer, lease, license, guarantee,
subject to Encumbrance or otherwise dispose of or authorize the sale, pledge,
disposition, transfer, lease, license, guarantee or Encumbrance of any of its
assets, outside of the ordinary course of business;
(g) enter into any joint venture agreement, partnership agreement or
similar agreement;
(h) except as may be required as a result of a change in Law or GAAP,
make any material change in its method of accounting;
(i) make or change any election with respect to Taxes, change any Tax
accounting period, adopt or change any method of Tax accounting, file any
amended Tax return, enter into a closing agreement with any taxing authority,
surrender any right to claim a refund for
31
Taxes, consent to an extension of the statute of limitations applicable to any
Tax claim or assessment, or take any other similar action (or omit to take any
action), if such election, change, amendment, agreement, settlement, surrender,
consent or action or omission could have the effect of increasing the Tax
liability of Purchaser or any Acquired Company after the Closing Date;
(j)(i) incur any Indebtedness, other than in the ordinary course of
business consistent with past practice, or guarantee any Indebtedness of another
Person, issue or sell any debt securities or warrants or other rights to acquire
any debt securities of NextNet, or guarantee any debt securities of another
Person, or (ii) make any loans, advances or capital contributions to, or
investments in, any other Person other than the advancement of expenses to
employees and advancement of credit to customers in the ordinary course of
business consistent with past practice; provided, however, that no advancement
shall exceed $2,500 in the aggregate at any particular time with respect to any
employee;
(k) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of NextNet, or redeem, purchase or otherwise acquire, directly or indirectly,
any of its outstanding shares of NextNet Common Stock;
(l) (i) pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement or satisfaction of (A)
any liabilities or obligations in the ordinary course of business in accordance
with their terms, or (B) any claims and obligations on, or liabilities reflected
in or reserved against on the Most Recent Balance Sheet, (ii) waive any benefits
of, or agree to modify in any respect, any noncompetition or similar agreements
to which NextNet is a party or (iii) waive any attorney client privilege;
(m) modify or amend in any material respect or terminate any Material
Contract to which NextNet or any of its Subsidiaries is a party, or waive,
release or assign any material rights or material claims thereunder;
(n) enter into any contract or arrangement that, if it were effective
on the date of this Agreement, would constitute a Material Contract, except in
the ordinary course of business;
(o) except as required to comply with applicable Law, (i) adopt, enter
into, terminate or amend any NextNet Plans, (ii) increase in any manner the
compensation or fringe benefits of any director, officer, employee of Seller,
NextNet or any of their Affiliates who are engaged in the Business or consultant
to NextNet (except for normal increases to non-officers and non-directors in the
ordinary course of business and pursuant to the terms of agreements, policies or
programs in effect as of the date hereof), (iii) pay any benefit to any present
or former employees of Seller, NextNet or any of their Affiliates who are
engaged in the Business not provided for under any NextNet Plan in existence on
the date hereof, (iv) grant any equity-based awards under any NextNet Plan
(including the grant of stock options, stock appreciation rights, stock based or
stock related awards, performance units or restricted stock, or the voluntary
removal of existing restrictions in any NextNet Plans or agreement or awards
made thereunder),
32
(v) other than in the ordinary course of business, take any action to fund or in
any other way secure the payment of compensation or benefits under any NextNet
Plan or other employee plan, agreement, contract or arrangement, (vi) alter or
take any action to alter the composition of NextNet's Board of Directors or
change the title of, hire, terminate the employment of, modify the job
description or duties of, or waive any material right under any employment or
consulting agreement with, any member of senior management, consultant or
employee whose annual compensation rate exceeds $100,000, other than in the
ordinary course of business and consistent with past practice), (viii) award or
accrue any bonus for any director, officer, employee of Seller, NextNet or any
of their Affiliates who are engaged in the Business or consultant to NextNet or
one of its Subsidiaries, other than annual bonuses in the ordinary course of
business consistent with past practices and existing policies and programs or
(ix) alter or take any action to alter or waive any material right under any
employment or consulting agreement or NextNet Plan;
(p) consent to or take any action to allow any insurance policy naming
NextNet or one of its Subsidiaries as beneficiary or loss payee to be cancelled
or terminated, other than in the ordinary course, or cause or permit the
decrease in any current policy coverage limits;
(q) settle or compromise any pending or threatened litigation
involving NextNet or any NextNet Plan in an amount greater than $50,000;
(r) enter into any contract, agreement, arrangement or understanding
that materially limits or otherwise materially restricts NextNet or one of its
Subsidiaries from engaging in or competing in any line of business or in any
geographic area;
(s) modify, amend or terminate, or waive, release or assign any
material rights or claims with respect to any confidentiality or standstill
agreement to which NextNet or one of its Subsidiaries is a party;
(t) take any action to exempt or make not subject to any other state
takeover law or state law that purports to limit or restrict business
combinations or the ability to acquire or vote shares of any Person (other than
Purchaser or its Subsidiaries) or any action taken thereby, which Person or
action would have otherwise been subject to the restrictive provisions thereof
and not exempt therefrom; or
(u) enter into any contract, agreement, commitment or arrangement to
do any of the foregoing actions described in subsections (a) through (t).
5.2 EXCLUSIVITY. (a) From the date of this Agreement until the Closing or,
if earlier, the termination of this Agreement pursuant to Section 10.1 (i)
Seller and NextNet shall, and shall cause their respective Representatives to,
(1) immediately cease and terminate any existing solicitation, discussion or
negotiation with any Third Party with respect to any Acquisition Proposal and
(2) use its commercially reasonable efforts to recover or cause to be destroyed
all nonpublic information concerning NextNet and its Subsidiaries in the
possession of such Persons and their Representatives and advisors, and (ii)
Seller and NextNet shall not, nor shall they authorize or permit their
respective Representatives to, directly or indirectly, (1) solicit, encourage,
accept, entertain, facilitate, permit or initiate the submission of any
Acquisition
33
Proposal, (2) enter into any agreement requiring Seller to abandon or terminate
its participation in this Agreement, (3) participate in any discussions or
negotiations regarding, or furnish any nonpublic information relating to NextNet
to any Third Party with respect to, or take any other action to facilitate the
making of any proposal that constitutes or would reasonably be expected to lead
to any Acquisition Proposal, (4) grant any waiver or release under any
standstill or similar agreement with respect to any class of NextNet's equity
securities, or (5) enter into any letter of intent, agreement or similar
document relating to any Acquisition Proposal.
(b) Seller represents and warrants that it has the legal right to
terminate or suspend any such pending negotiations and Seller will indemnify the
Purchaser Indemnified Parties pursuant to Article XI from and against any Losses
arising from or caused by claims by any party to such negotiations based upon or
arising out of the discussion or any consummation of the transactions
contemplated in this Agreement.
(c) From the date of this Agreement until the Closing or, if earlier,
the termination of this Agreement pursuant to Section 10.1, Seller and NextNet
will promptly notify Purchaser of any inquiry received by it relating to an
Acquisition Proposal and the material terms of any proposal or inquiry,
including the identity of the Person and its Affiliates making the same, and
Seller will keep Purchaser fully informed on a prompt basis with respect to any
developments with respect to such proposal or inquiry.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 NOTICE OF DEVELOPMENTS. Prior to the Closing Date, Seller will give
prompt written notice to Purchaser of (a) any breach of any of Seller's
representations and warranties in Article III and (b) any failure of Seller or
NextNet to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder. No disclosure by Seller pursuant to
the preceding sentence, however, shall be deemed to amend or supplement the
schedules to this Agreement, or to prevent or cure any misrepresentation, breach
of warranty, or breach of covenant or to limit or otherwise affect the remedies
available hereunder to Purchaser.
6.2 ACCESS TO INFORMATION. Upon reasonable notice and subject to the terms
of the Non-Disclosure Agreement dated December 29, 2005 by and between Seller
and Purchaser (the "NDA"), Seller and NextNet shall afford to Purchaser and its
Representatives all reasonable access, during normal business hours during the
period prior to the earlier of the Closing and the termination of this Agreement
pursuant to Section 10.1, to all of the properties, books, contracts,
commitments and records of NextNet or any of its Subsidiaries as Purchaser may
reasonably request. During such period, Seller and NextNet shall make available
to Purchaser all other information concerning the Business and its properties
and personnel as Purchaser or its Representatives may reasonably request.
Without limiting the generality of the foregoing, Seller and NextNet shall use
commercially reasonable efforts to cooperate with Deloitte & Touche ("D&T")
prior to the Closing Date as reasonably requested to allow D&T to audit the
pricing terms with respect to Expedience, infrastructure, subscriber and all
related and ancillary products set forth in the Commercial Agreements.
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6.3 FURTHER ACTION. Each of the Parties hereto shall use commercially
reasonable efforts to take, or cause to be taken, all appropriate action, do or
cause to be done all things necessary, proper or advisable under applicable Law,
and execute and deliver such documents and other papers, as may reasonably be
required to carry out the provisions of this Agreement and consummate and make
effective the transactions contemplated hereby, and to vest in Purchaser good
and valid title to the Shares.
6.4 PUBLIC ANNOUNCEMENTS; CONFIDENTIALITY. Section 1 of that certain Side
Agreement between Seller and Purchaser dated as of even date herewith shall be
incorporated herein by reference and this Agreement shall be deemed
"Confidential Information" pursuant thereto.
6.5 APPROPRIATE ACTION; CONSENTS; FILINGS.
(a) Each of the Parties to this Agreement shall use commercially
reasonable efforts to (i) take, or cause to be taken, all appropriate action,
and do, or cause to be done, all things necessary, proper or advisable under
applicable Law or otherwise to consummate and make effective the transactions
contemplated by this Agreement and to satisfy each condition to the obligations
of the other Party hereto as promptly as practicable, including approving and
executing any resolutions, documents and instruments reasonably requested by the
other party to effectuate the transaction contemplated hereby, (ii) obtain from
any Governmental Authorities any Consents or Licenses and Permits required to be
obtained or made by Purchaser or Seller, or to avoid any action or proceeding by
any Governmental Authority, in connection with the authorization, execution and
delivery of this Agreement and the consummation of the transactions contemplated
herein, and (iii) make all necessary filings, and thereafter make any other
required submissions, with respect to this Agreement required under any
applicable Law, including the HSR Act and any foreign antitrust Laws; provided,
however, that Purchaser and Seller shall cooperate with each other in connection
with the making of all such filings, including providing copies of all such
non-proprietary documents to the non-filing Party and its advisors prior to
filing and, if requested, to accept all reasonable additions, deletions or
changes suggested in connection therewith and, provided, further, that nothing
in this Section 6.5(a) shall require Purchaser or any of its Affiliates to (1)
agree to sell, divest, license, dispose of or hold separate any assets or
businesses (including the Business), or otherwise take or commit to take any
action that could limit its freedom with respect to, or its ability to retain,
one or more of its businesses, product lines or assets (including the Business),
(2) agree to the requirement of expenditure of money by Purchaser or NextNet to
a Third Party in exchange for any Consent, or (3) except with respect to any
inquiries or requests for additional information from the United States Federal
Trade Commission and/or the United States Department of Justice or similar
requests from any other Governmental Authority with respect to any foreign
antitrust Laws, litigate, pursue or defend against any Action (including any
temporary restraining order or preliminary injunction) challenging the
transactions contemplated by this Agreement as violative of the HSR Act or any
applicable foreign antitrust Law. Seller and Purchaser shall promptly furnish to
each other all information required for any application or other filing to be
made by the other pursuant to the rules and regulations of any applicable Law in
connection with the transactions contemplated by this Agreement. Except as
specifically required by this Agreement, the Parties shall not take any action,
or refrain from taking any action, the effect of which would be to delay or
impede the ability of the Parties to consummate the transactions contemplated by
this Agreement.
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(b) Seller and Purchaser shall give any notices to Third Parties and
use all commercially reasonable efforts to obtain any Consents from the Third
Parties set forth in Schedule 6.5(b); provided, however, no party shall be
required to agree to the requirement of expenditure of money to a Third Party in
exchange for any Consent.
(c) From the date of this Agreement until the earlier of the Closing
Date or the termination of this Agreement pursuant to Section 10.1, Seller shall
promptly notify Purchaser in writing, or Purchaser shall notify Seller in
writing, as the case may be, of any pending or threatened action or suit,
arbitration or other proceeding or investigation by any Governmental Authority
or any other Person of which it becomes aware (i) challenging or seeking
material damages in connection with the transactions contemplated by this
Agreement or (ii) seeking to restrain or prohibit the consummation of the
transactions contemplated by this Agreement or otherwise limit the right of
Purchaser to own or operate all or any portion of the intangible assets of
NextNet or all or a material portion of the Business or tangible assets of
NextNet and its Subsidiaries, which in either case would reasonably be expected
to have a Material Adverse Effect.
6.6 NON-COMPETITION; NO-SOLICITATION.
(a) Subject to the terms of the Commercial Agreements, from and after
the Closing Date until the earlier of three (3) years and the termination of the
Commercial Agreements, Seller will not, and Seller will cause its Subsidiaries
not to, directly or indirectly, engage in, conduct, manage or operate any
business that engages in the sale of modems, base stations and other equipment
that enable deployment of non-line-of-sight, wireless broadband connectivity
(such activities collectively, the "RESTRICTED BUSINESS"), or acquire or own any
capital stock or other equity interest of any Person that engages in the
Restricted Business, in each case anywhere in the world; provided, however, that
nothing in this Section 6.6 shall be deemed to prohibit the acquisition or
holding of not more than five percent (5%) of the outstanding equity securities
of a publicly traded entity involved in such business; provided further, that
nothing in this Section 6.6(a) shall be deemed to prohibit the sale of modems or
base stations by Seller or any of its Subsidiaries to Seller's subscribers,
wholesalers and direct sales representatives in the ordinary course of business
as part of providing Seller's wireless broadband services. The foregoing shall
not prohibit Seller or its Subsidiaries from acquiring any business, the
revenues of which are comprised of less than 25% of Restricted Business, so long
as within six (6) months after the consummation of such acquisition, Seller or
such Subsidiary has completely disposed of (or permanently ceased operating) the
acquired business or portion thereof engaged in the Restricted Business.
(b) For a period of eighteen (18) months after the Closing Date,
Seller will not, and will not permit any of its Subsidiaries to, solicit or
induce any individual who is an employee of any Acquired Company to terminate
his or her employment with any Acquired Company; provided in each case that (i)
this Section 6.6(b) shall not apply to any employee if such employee's
employment has been terminated for a period of at least three (3) months and
(ii) non-directed newspaper or internet help wanted advertisements shall not be
considered solicitations under this Section 6.6(b); provided, further, it is
understood by the Parties that, immediately prior to the Closing, Seller will
hire the Chief Executive Officer of NextNet as of the date of this Agreement,
provided that the Chief Executive Officer shall have executed a non-
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competition, non-solicitation and confidentiality agreement with Purchaser in a
form and substance reasonably satisfactory to Purchaser (it being understood
that employment by Seller or any of its Affiliates shall not be prohibited by
the contemplated non-compete).
(c) It is expressly understood and agreed that, although Seller and
Purchaser consider the restrictions set forth in this Section 6.6 to be
reasonable, if a final judicial determination is made by a court having
jurisdiction that the time or territory or any other restriction set forth in
this Section 6.6 is an unreasonable or otherwise unenforceable restriction, the
Parties hereby authorize such court to revise and amend the provisions of this
Section 6.6 so as to produce legally enforceable restrictions, and, if the court
refuses to do so, the Parties hereto agree that the provisions of this Section
6.6, shall not be rendered void, but shall be deemed amended to apply as to such
maximum time and territory and to such other extent as such court may judicially
determine or indicate to be reasonable.
(d) The Parties acknowledge and agree that the remedy at law for a
breach or threatened breach of any of the provisions of this Section 6.6 would
be inadequate and, in recognition of that fact, in the event of a breach or
threatened breach of any of the provisions of this Section 6.6, it is agreed
that, in addition to its remedies at law, equitable relief in the form of
specific performance, temporary restraining order, temporary, preliminary, or
permanent injunction, and any other equitable remedy which may then be available
will be appropriate remedies to enforce this Section 6.6. Each Party agrees not
to oppose the other Party's request for any of the above relief on the grounds
that such Party has not been irreparably injured or that such Party has an
adequate remedy at law. Nothing set forth in this Section 6.6 shall be construed
as prohibiting a Party from pursuing any other rights and remedies available to
it for such breach or threatened breach under this Agreement.
6.7 TRANSITION.
(a) Seller acknowledges that its intent is to deliver the Business to
Purchaser as a stand-alone operation that will be able to conduct its business
immediately following the Closing as the Business is conducted on the date
hereof. Seller hereby agrees to cooperate with Purchaser in good faith and to
use commercially reasonable efforts as reasonably necessary and as requested by
Purchaser in order to transition the Business and ownership of NextNet to
Purchaser in a manner that minimizes any disruption to the operation of the
Business following the Closing.
(b) Without limiting the generality of subsection (a) above, Seller
hereby agrees, as requested by Purchaser for a period not to exceed five (5)
months following the Closing, to make available to Purchaser and NextNet the
services of the Chief Executive Officer of NextNet as of the date of this
Agreement; provided, however, that Purchaser shall reimburse Seller for the pro
rata portion of such individual's salary and reasonable business expenses in
connection with such services provided.
(c) Seller shall use commercially reasonable efforts to effect the
assignment, prior to the Closing, of that certain Master Hardware Purchase and
Support Agreement dated November 1, 2005 among 3082241 Nova Scotia Company,
Eagle River Canada, Inc. and
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NextNet (the "INUKSHUK AGREEMENT") from Eagle River Canada, Inc. to Purchaser,
and to obtain all necessary third party consents in connection therewith.
ARTICLE VII
ACQUIRED EMPLOYEE MATTERS
7.1 ACQUIRED EMPLOYEES. Subject to the provisions of Sections 7.3 and 7.4
below, all Acquired Employees shall remain or become at-will employees (subject
to any existing employment agreements or agreements to be entered into as a
condition to Closing or post-Closing that alter the nature of the at-will
employment) of NextNet or one of its Affiliates immediately following the
Closing with no break in service.
7.2 COMPENSATION. Subject to Section 7.1, for at least the one-year period
beginning on the Closing Date (but only while employed by NextNet, Purchaser or
another Affiliate of Purchaser), each Acquired Employee will receive a total
monetary compensation package (including base wages, salary, commission,
incentive compensation and bonus) that shall not be less than that received by
similarly situated employees of Purchaser serving in comparable positions;
provided, however, that each Acquired Employee who is employed in the United
States will be provided (i) during the same one-year period, a base salary or
base wage, as applicable, that shall not be less than that provided to such
Acquired Employee by NextNet, Seller or another Affiliate of Seller, as
applicable, immediately prior to the Closing, and (ii) for calendar year 2006,
the opportunity to receive commission at a rate, and incentive and bonus
compensation at a target level, that shall not be less than that provided to
such Acquired Employee by NextNet, Seller or another Affiliate of Seller, as
applicable, immediately prior to the Closing.
7.3 SEVERANCE. The Acquired Employees will participate in the Motorola,
Inc. Involuntary Severance Plan (the "PURCHASER SEVERANCE PLAN") as in effect
from time to time on the same basis as similarly situated employees of Purchaser
serving in comparable positions, and will be eligible to receive severance
benefits to the extent provided in the Purchaser Severance Plan for applicable
terminations of employment, with such severance benefits determined under the
Purchaser Severance Plan, in accordance with Section 7.5 below.
7.4 PAID TIME OFF. On and after the Closing Date, each Acquired Employees
who is employed in the United States will continue to accrue paid time off at a
rate that shall not be less than the rate at which such Acquired Employee
accrued paid time off under the paid time off policy of NextNet in effect as of
the Closing that covered such Acquired Employee (the "NEXTNET PTO POLICY")
whether such accrual is in accordance with the NextNet PTO Policy or Purchaser's
own paid time off policy applicable to similarly situated employees of Purchaser
serving in comparable positions (the "PURCHASER PTO POLICY"). In addition, each
Acquired Employee will be allowed to use and be paid for paid time off that is
accrued and available under the NextNet PTO Policy, but unused as of the Closing
Date, in accordance with the NextNet PTO Policy until the date that Purchaser
determines that such accrued and unused paid time off shall be either used or
paid only in accordance with the Purchaser PTO Policy, which date may be as of
the Closing Date or at any time thereafter.
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7.5 SERVICE CREDIT. Purchaser shall, and shall cause its Affiliates to,
provide each Acquired Employee with full credit for eligibility and vesting
purposes under the Purchaser Plans (excluding the Motorola, Inc. Pension Plan,
the Motorola Post-Employment Health Benefits Plan, and any other defined benefit
pension plan or retiree health plan maintained by Purchaser or any of its
Affiliates, and provided that no Acquired Employees shall be eligible to
participate in the Motorola, Inc. Pension Plan or the Motorola Post-Employment
Health Benefits Plan), for pre-Closing (i) service with NextNet or one of its
Affiliates, and (ii) service credited under the comparable NextNet Plans as of
the Closing for employment other than with NextNet or one of its Subsidiaries.
In addition, Purchaser shall, and shall cause its Affiliates to, provide each
Acquired Employee with credit for such service for purposes of benefit accrual
solely with respect to any Purchaser paid time off and severance plans and
policies, including the Purchaser Severance Plan. Notwithstanding anything in
this Agreement to the contrary, any benefits payable to any Acquired Employee
under any Purchaser Plans shall be offset by any similar benefits payable under
comparable NextNet Plans to the extent such benefits under the Purchaser Plans
are attributable to service with NextNet or one of its Subsidiaries prior to the
Closing.
7.6 401(K) PLAN. The Acquired Employees who participate in the Clearwire
Corporation 401(k) Plan and Trust (the "SELLER 401(K) PLAN") will incur a
severance from employment under the Seller 401(k) Plan on the Closing Date and
will be entitled to receive a distribution of their benefits under the Seller
401(k) Plan. After the Closing Date, and in accordance with current
administrative procedures of the Seller 401(k) Plan, Seller shall cause to be
distributed to each such Acquired Employee such notices and forms that are
provided to a participant who incurs a severance from employment so that such
Acquired Employee may elect to receive a distribution of his or her benefits
under the Seller 401(k) Plan. Such Acquired Employee may elect to make a
rollover contribution to the Motorola 401(k) Plan (the "PURCHASER 401(K) PLAN"),
and Purchaser shall cause, in accordance with current administrative procedures
of the Purchaser 401(k) Plan, such rollover contribution to be accepted by the
Purchaser 401(k) Plan. With respect to any Acquired Employee who has an
outstanding loan under the Seller 401(k) Plan as of the Closing Date, Seller
shall take all actions necessary to provide that such loan shall not be in
default as a result of the transactions contemplated by this Agreement and that
such Acquired Employee shall be able to continue repayment of such loan under
current terms.
7.7 OTHER EMPLOYEE BENEFIT PLANS. Seller and Purchaser acknowledge that (i)
the Acquired Employees shall no longer be eligible to participate in the Seller
Plans as of the Closing Date, and (ii) NextNet shall continue to maintain the
NextNet Plans for the benefit of eligible Acquired Employees until such date
that Purchaser determines that such NextNet Plans shall be terminated, which
termination may be effective as of the Closing Date or at any time thereafter
(the "PLAN TERMINATION DATE"). As of the Closing Date or the applicable Plan
Termination Date, Purchaser shall cooperate to cause those Acquired Employees to
become eligible to participate in the corresponding Purchaser Plan under the
same terms applicable to similarly situated employees of Purchaser serving in
comparable positions, if one exists. With respect to a Purchaser Plan that is a
medical or dental plan, Purchaser shall waive any waiting period, pre-existing
condition, evidence of insurability, continuing-course-of-treatment, and
actively-at-work requirements for each Acquired Employee to the same extent that
such period, conditions and/or requirements were not applicable to or had been
satisfied by the Acquired Employee immediately before the Closing under any Plan
that is a medical or dental plan.
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7.8 EMPLOYEE COMMUNICATIONS. The parties shall cooperate with respect to
any employee communications regarding any matters provided for herein, provided
that Purchaser shall retain the sole and absolute discretion to approve of, in
advance, any written employee communications relating to any compensation or
benefits to be provided by it or by NextNet or any other Purchaser Affiliate
under this Agreement. The parties further agree to coordinate in advance any
formal meetings or presentations between Acquired Employees and Purchaser
representatives and any Purchaser written employee communications.
ARTICLE VIII
TAX MATTERS
8.1 ALLOCATION OF LIABILITY FOR TAXES.
(a) Seller's Responsibility for Taxes. Seller shall be liable for and
indemnify the Purchaser Indemnified Parties against all Losses for Taxes imposed
on, allocated to, or incurred by any of the Acquired Companies for any
Pre-Closing Period, including, but not limited to, Taxes of any other Person
that any Acquired Company is liable for as a result of joint and several
liability, transferee liability, successor liability or a contractual obligation
and any Taxes imposed by virtue of (i) the inclusion of any of the Acquired
Companies in any consolidated return (including any liability imposed pursuant
to Regulations section 1.1502-6(a)), (ii) any deferred income triggered into
income under Regulations sections 1.1502-13 and 1.1502-14, (iii) any excess loss
accounts taken into income under Regulations section 1.1502-19, (iv) any breach
by Seller of the representations and warranties contained in Section 3.17, and
(v) any breach by Seller of its obligations under this Agreement with respect to
Taxes.
(b) Proration of Taxes.
(i) Seller and Purchaser shall, to the extent permitted by
applicable Law and except as otherwise provided herein, elect with the relevant
Governmental Authority to close the taxable period of each of the Acquired
Companies at the end of the day on the Closing Date.
(ii) In the case of any Tax for any Straddle Period imposed upon
or measured by income or receipts (including sales, use, transfer or assignment
of property, wages or any other similar Taxes), Taxes shall be apportioned
between Pre-Closing Periods and Post-Closing Periods in accordance with the
principles of Regulations section 1.1502-76(b) as reasonably interpreted and
applied by the Parties. No election shall be made under Regulations section
1.1502-76(b)(2)(ii) (relating to ratable allocation of a year's items) or any
comparable provision of foreign Law, and, for the avoidance of doubt, no
allocation of Taxes shall be made that is consistent with the principles of such
election.
(iii) In the case of any Tax for any Straddle Period which is not
imposed upon or measured by income or receipts, the amount of such Tax which is
allocable to a Pre-Closing Period shall be the amount of such Tax for the entire
taxable period multiplied by a fraction, the numerator of which is the number of
days in the portion of such taxable period ending on and including the Closing
Date and the denominator of which is the number of days in
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the entire taxable period. The amount of Tax which is allocable to a
Post-Closing Period shall be the amount of such Tax for the entire taxable
period less the amount of Tax which is allocable to a Pre-Closing Period.
(iv) Seller and Purchaser shall prepare all Tax Returns
consistent with the proration of Taxes set forth in this Section 8.1(b).
8.2 TAX RETURN FILING AND PAYMENT OF TAXES.
(a) Purchaser's Responsibility. Except as set forth in Section 8.2(b),
Purchaser shall prepare and file all Tax Returns relating to any of the Acquired
Companies for Tax periods ending after the Closing Date. Purchaser shall make
all payments required with respect to any such Tax Return.
(b) Seller's Responsibility. Seller shall prepare and file all Tax
Returns relating to any of the Acquired Companies for Tax periods ending on or
prior to the Closing Date, and any Affiliated Group Tax Return for any Straddle
Period. Seller will include the income of the Acquired Companies that were
members of the Affiliated Group (including any deferred income triggered into
income by Regulations section 1.1502-13 and 1.1502-14 and any excess loss
accounts taken into income under Regulations section 1.1502-19) on Seller's
consolidated federal income Tax Returns for all periods through the Closing Date
and pay any federal income Taxes attributable to such income. Seller will allow
Purchaser an opportunity to review and make reasonable comments upon such Tax
Returns (including any amended returns) to the extent that they relate to the
Acquired Companies. Seller will file all such Tax Returns consistent with past
practice; provided, however, that if the treatment of any item on any such Tax
Return or report has not been provided by prior practice, Seller shall not,
without the consent of Purchaser (which consent shall not be unreasonably
withheld, conditioned or delayed), report such item in a manner that would
adversely affect the Acquired Companies after the Closing Date.
(c) Reimbursement. In the event that Seller or Purchaser is liable for
any Taxes paid by the other Party with respect to any Tax Return, reimbursement
shall be made promptly, but no later than the later of (i) thirty (30) days
following written notice to the Person liable for the Tax from the Person that
shall pay the Tax, or (ii) the date such Tax is required to be paid.
(d) Seller shall provide Purchaser with any information that Purchaser
reasonably requests to allow Purchaser to comply with Code section 6043A or any
other information reporting requirements under the Code or other applicable law.
8.3 TAX CONTESTS; AUDIT RESPONSIBILITIES.
(a) General Rule. Except as otherwise provided in this Section 8.3,
the Party responsible for the Taxes under Section 8.1 shall control and bear the
cost of the conduct of any Tax Contest, including determining actions taken to
pay, compromise or settle such Taxes.
(b) Seller's Tax Returns. In no event will Seller settle any such Tax
Contest in a manner which would be reasonably expected to adversely affect
Purchaser (or its Affiliates)
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or any of the Acquired Companies after the Closing Date without Purchaser's
prior written consent (which shall not be unreasonably withheld, conditioned or
delayed).
(c) Straddle Periods. In the case of any Straddle Period, the Party
responsible for preparing and filing the affected Tax Return under Section 8.2
shall control the conduct of such Tax Contest, and the other Party shall have
the right to participate in such Tax Contest to the extent the proceedings
relate to any matter which may give rise to an indemnification payment by such
other Party under this Article VIII, or (with respect to the participation right
of Purchaser) to the extent the proceedings may adversely affect any of the
Acquired Companies in the Post-Closing Period. The Party receiving the notice of
such Tax Contest will provide the other Party with notice in writing of such Tax
Contest involving the Acquired Companies within thirty (30) days of receiving
such notice from the Governmental Authority. If the non-notifying Party does not
respond within thirty (30) days of any such notice, they will be deemed to not
participate in such Tax Contest. Neither Party may settle any such Tax Contest
in a manner that would be reasonably expected to materially adversely affect the
other without prior written consent (which shall not be unreasonably withheld).
Seller shall indemnify Purchaser for any Losses that result to any of the
Acquired Companies from the settlement by Seller of any Tax Contest for which
Purchaser's written consent was not sought. Purchaser shall indemnify Seller for
any Losses that result to Seller from the settlement by Purchaser of any Tax
Contest for which Seller's written consent was not sought. In any Tax Contest
where the non-notifying Party elects to participate, each Party shall bear its
own costs for participating in such Tax Contest, and both Parties agree to
cooperate in good faith.
8.4 CODE SECTION 338 ELECTION. Seller and Purchaser shall join in making an
election under Code section 338(h)(10) (and any corresponding elections under
state, local, or foreign tax Law, including any available election to avoid
treatment consistent with an election under Code section 338(h)(10))
(collectively, a "SECTION 338(H)(10) ELECTION") with respect to the purchase and
sale of the stock of any Acquired Companies for which the election can be made.
Seller agrees to cooperate with Purchaser to take all actions necessary or
appropriate to effect and preserve a timely Section 338(h)(10) Election with
respect to Purchaser's acquisition of the stock, including, but not limited to,
participating in the timely filing of IRS Form 8023 and 8883 and related or
comparable forms for state, local, or foreign law purposes. Purchaser shall
prepare all forms it reasonably believes are necessary or appropriate (including
preparing the IRS Form 8883) to make the Section 338(h)(10) Election and shall
provide them to Seller. Purchaser will allow Seller an opportunity to review and
make reasonable comments upon such forms. Seller shall, following agreement by
Purchaser and Seller regarding the content of such forms, promptly execute all
of the forms Purchaser provides and return the appropriate executed copies to
Purchaser for timely filing by Purchaser with the appropriate taxing
authorities.
8.5 COOPERATION.
(a) Each of Seller and Purchaser shall:
(i) provide assistance to each other Party as reasonably
requested in preparing and filing Tax Returns and responding to Tax audits or
Tax authority disputes;
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(ii) make available to each other Party as reasonably requested
all relevant information, records, and documents relating to Taxes for any of
the Acquired Companies; and
(iii) retain any books and records that could reasonably be
expected to be necessary or useful in connection with any preparation by any
other Party of any Tax Return, or for any audit, examination, or proceeding
relating to Taxes.
(b) Seller shall contact Purchaser prior the disposition of any books
and records as described in Section 8.5(a) and allow Purchaser to obtain such
books and records within thirty (30) days of such notice.
8.6 OPTION EXERCISES AFTER CLOSING. With respect to any Seller Plan that
permits an Acquired Employee to exercise options to acquire stock of Seller
after Closing:
(a) Seller will itself or will cause others to timely deliver all
shares of Seller stock acquired pursuant to such exercises directly to the
Acquired Employee.
(b) Seller and Purchaser acknowledge and agree that (i) Seller shall
claim all federal and state income Tax deductions associated with the exercise
by the Acquired Employees of options to acquire stock of Seller after Closing,
and (ii) Purchaser shall not claim any such deduction on its federal or state
income Tax Returns; provided that nothing set forth herein shall be construed as
a representation or warranty by Purchaser or NextNet as to any particular Tax
treatment resulting from the exercise of such options. Notwithstanding anything
to the contrary in the preceding sentence, if Seller notifies Purchaser that the
Internal Revenue Service or a state taxing authority has successfully challenged
Seller's entitlement to deduct amounts included in the Acquired Employees'
income as a result of the exercise of options to acquire stock of Seller after
Closing, Purchaser will, to the extent permitted by applicable Law, promptly
take all steps requested by Seller and reasonably necessary to claim or cause to
be claimed such deduction on its (or its Affiliates') federal or state income
Tax Returns, as applicable, including through the filing of amended Tax Returns
or refund claims. Seller will promptly reimburse Purchaser for any fees, costs
and expenses reasonably incurred by Purchaser in complying with the preceding
sentence. Purchaser will promptly pay to Seller any net Tax refund (or amount
equal to any net reduction in Tax liability) resulting from the claiming of such
deductions, when such refund or reduction is realized by Purchaser or its
Affiliates. If Purchaser or any of its Affiliates claims any deduction in
accordance with this Section 8.6(b) and such deduction is subsequently reduced
or disallowed, Seller shall repay to Purchaser the amount previously paid to
Purchaser (to the extent of such reduction or disallowance) plus any interest,
penalties and additions to tax imposed on Purchaser or any of its Affiliates as
a result of such reduction or disallowance.
(c) Seller shall pay and be responsible (i) for withholding the
applicable amounts of employee Taxes with respect to income recognized by the
Acquired Employees upon the exercise of options to acquire Seller stock after
Closing (the "EMPLOYEE WITHHOLDING TAXES") and for remitting such Employee
Withholding Taxes and the applicable amounts of employer Taxes to the applicable
Governmental Authority, and (ii) to report to the applicable taxing authorities
the income recognized by the Acquired Employees upon exercise of options to
acquire Seller stock after Closing as compensation paid by Seller or its
Affiliates to the holders
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of such options. Notwithstanding any other provision in this Agreement, Seller
shall indemnify and hold harmless Purchaser and its Affiliates in respect of any
Employee Withholding Taxes or employer Taxes resulting from the exercise of such
options.
(d) Prior to Closing, Seller may modify certain stock options held by
Acquired Employees to obtain Seller's stock, which modifications will (depending
on the particular optionee) accelerate vesting and/or extend the period after
Closing during which the options remain exercisable, provided that the
modifications will not cause the options to become subject to Code section 409A,
based on a reasonable good faith interpretation of regulatory guidance currently
available for Code section 409A. Other than the modifications described in the
preceding sentence, neither Seller nor, prior to Closing, NextNet shall cause or
permit any amendment, extension or other modification to be made to the terms of
any option that may be exercised by an Acquired Employee to acquire stock of
Seller after Closing, or to the terms of any Seller Plan affecting such an
option, that could cause the option to become subject to Code section 409A.
8.7 TAXES NOT SUBJECT TO LIMITATIONS. The provisions of this Article VIII
shall not be governed by the limitations contained in Section 11.3 and to the
extent of any inconsistency between this Article VIII and Article XI, the
provisions of this Article VIII shall control.
ARTICLE IX
CONDITIONS PRECEDENT
9.1 CONDITIONS TO OBLIGATIONS OF SELLER AND PURCHASER. The respective
obligations of each of Seller and Purchaser to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing of the following conditions:
(a) No Injunction or Restraint. There shall not be in effect any
temporary or permanent restraining order, decree, ruling or injunction or other
order of a court or other Governmental Authority of competent jurisdiction
directing that the transactions contemplated herein not be consummated, or
making such consummation unlawful, or otherwise materially limiting or
restricting ownership of NextNet or operation of the Business; provided,
however, that each of the Parties shall have used their reasonable commercial
efforts to prevent the entry of any such temporary or permanent restraining
order, injunction or other order.
(b) Regulatory Approvals. The waiting period applicable to the
consummation of the transactions contemplated by this Agreement and the
Subscription Agreement under the HSR Act shall have expired or been terminated,
any filings required to be made under any other applicable Antitrust Laws shall
have been made, and any approvals required to be obtained under any other
applicable Antitrust Laws shall have been obtained.
(c) No Action. No action, suit, proceeding or investigation before any
Governmental Authority shall be pending or threatened that (i) seeks to
prohibit, restrain or obtain damages or other relief in connection with the
consummation of the transactions contemplated by this Agreement or (ii) could
impair the ability of Purchaser to own or control NextNet, or operate the
Business, following the Closing Date.
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(d) Consents. All Consents by Third Parties set forth on Schedule
6.5(b), shall have been obtained.
(e) Equity Subscription. The conditions to the consummation of the
transactions contemplated by that certain Subscription Agreement, dated as of
the date hereof (the "SUBSCRIPTION AGREEMENT"), by and between Seller and
Purchaser, other than the condition set forth in Section 5(m) of such
Subscription Agreement, shall have been satisfied or waived.
9.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of
Purchaser to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction or waiver by Purchaser, at or prior to the Closing,
of the following conditions:
(a) Accuracy of Representations and Warranties and Performance of
Covenants. The representations and warranties of Seller contained in Article III
shall be true, correct and complete as if made on and as of the Closing Date,
other than changes specifically contemplated by this Agreement and
representations and warranties that are expressly made only as of a specific
date (in which case such representations and warranties shall be true, correct
and complete as of such date). For purposes of determining whether the condition
in this Section 9.2(a) is satisfied (and not for purposes of Article XI), all
such representations and warranties (x) shall be read without regard to any
materiality or Material Adverse Effect qualifiers contained therein and (y)
after taking clause (x) into account, shall be deemed to be true, correct and
complete unless breaches or inaccuracies thereof, individually or in the
aggregate, result or would reasonably be expected to result in a Material
Adverse Effect. Seller and NextNet shall have performed all of the obligations
and complied with all of the covenants, agreements and conditions set forth in
this Agreement or any Ancillary Agreement and required to be performed or
complied with by them on or prior to the Closing. At Closing, Seller shall
provide to Purchaser a certificate of an officer of Seller as to the foregoing
in form and substance reasonably acceptable to Purchaser, and Purchaser shall be
able to rely on such certificate for purposes of Article XI.
(b) No Material Adverse Effect. Since the date of this Agreement,
there shall not have occurred and be continuing any Material Adverse Effect, or
any fact, event, change, development or effect that is continuing that
individually or when taken together in combination with any other facts, events,
changes, developments or effects that are continuing, would reasonably be
expected to have a Material Adverse Effect.
(c) Employees.
(i) The employees listed on Schedule 9.2(c)(i) hereof (i) shall
have signed employment agreements, as applicable, with Purchaser in a form
satisfactory to Purchaser in its sole discretion (but in compliance with
Article VII hereof) (the "KEY EMPLOYEES") on or prior to the Closing Date
and such agreements shall be in full force and effect as of the Closing
Date and (ii) shall still be on the job and performing their usual and
customary duties for NextNet or one of its Subsidiaries immediately before
the Closing, subject to any leaves of absences required by Law to be
recognized by NextNet or any other leave of absence consented to by
Purchaser in its reasonable and good faith discretion.
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(ii) At least eighty percent (80%) of the employees of NextNet,
including Key Employees, who are engineers and who have been extended
offers of employment by Purchaser (x) shall have signed offer letters
accepting employment with Purchaser, on or prior to the Closing Date and
such offer letters shall be in full force and effect as of the Closing and
(y) shall still be on the job and performing their usual and customary
duties for NextNet or one of its Subsidiaries immediately before the
Closing.
(d) Ancillary Agreements. Each of the Ancillary Agreements will have
been executed and delivered by each of the other Parties thereto, and each such
Ancillary Agreement shall be in full force and effect.
(e) Required Deliveries. Seller shall have made each of the following
deliveries:
(i) an opinion of counsel to Seller in the form attached hereto
as Exhibit B;
(ii) a certificate executed by the Secretary or other appropriate
officer of Seller certifying as of the date of Closing (i) a true and correct
copy of the Certificate of Incorporation of NextNet, (ii) a true and correct
copy of the Bylaws of NextNet, (iii) a true and correct copy of the resolutions
of NextNet's Board of Directors and its sole stockholder, (iv) a true and
correct copy of the resolutions of Seller's Board of Directors and (v)
incumbency matters;
(iii) a certificate of the Secretary of State of Delaware or
other appropriate governmental official certifying the existence and/or good
standing of NextNet and each of its Subsidiaries in their jurisdictions of
organization;
(iv) a certificate of the Secretary of State of Delaware
certifying the good standing of Seller;
(v) physical possession of all original minute books, corporate
seals and stock or equity ownership records of NextNet and each of its
Subsidiaries;
(vi) resignations of each director and officer of NextNet and
each of its Subsidiaries as requested by Purchaser prior to Closing;
(vii) a release agreement in the form attached hereto as Exhibit
C;
(viii) the stock certificate(s) representing all of the Shares,
duly endorsed for transfer, or together with an assignment separate from
certificate executed by an authorized officer of Seller; and
(ix) payoff letters with respect to the Closing Indebtedness
Amount and all necessary UCC termination statements or other releases as may be
required to evidence the satisfaction of such Closing Indebtedness Amount.
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(f) Termination of Exclusive Arrangements.
(i) Except as set forth on Schedule 9.2(f)(i), all exclusive
rights granted by NextNet or one of its Subsidiaries to Seller or an
Affiliate of Seller shall have been terminated, and Seller shall have
provided to Purchaser evidence of such termination in a form and substance
reasonably satisfactory to Purchaser.
(ii) Without limiting the generality of subsection (i) above,
subject to subsection (iii) below, the Master Purchase Agreement, Support
Service Agreement and Escrow Agreement dated July 2003 between NextNet and
Eagle River Holdings (by assignment from Flux Fixed Wireless LLC) (the "ER
MASTER AGREEMENT") shall have been terminated in whole (including all
licenses and any manufacturing rights granted thereunder), and Seller shall
have provided to Purchaser evidence of such termination in a form and
substance reasonably satisfactory to Purchaser.
(iii) In the event the Inukshuk Agreement has not been assigned
by Eagle River Canada, Inc. to Purchaser as contemplated by Section 6.7(c),
(A) the ER Master Agreement shall not be terminated and (B) the ER Master
Agreement shall be amended such that all rights granted to Eagle River
Canada, Inc. thereunder, other than the right to buy product (but including
all rights to exclusivity and all licenses and any manufacturing rights
granted thereunder), shall have been terminated, and Seller shall have
provided to Purchaser evidence of such amendment in a form and substance
reasonably satisfactory to Purchaser.
(g) FIRPTA Certificates. Each Acquired Company and Seller shall have
delivered certificates, duly completed and executed by such person pursuant to
Section 1.1445- 2(b)(2) of the Regulations, certifying that such person is not a
"foreign person" within the meaning of Section 1445 of the Code.
(h) NextNet Guarantee Releases. Seller shall have provided to
Purchaser evidence, in form and substance reasonably satisfactory to Purchaser,
that NextNet and its Subsidiaries have been, or will be concurrent with the
Closing, released from any and all obligations (i) as a "Guarantor" under that
certain Indenture of Seller dated August 5, 2005 and (ii) as a guarantor under
any credit facility entered into by Seller, and shall have obtained releases of
all Encumbrances, including appropriate UCC termination statements, against the
property of NextNet and its Subsidiaries in connection therewith.
9.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of
Seller to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction or waiver by Seller, at or prior to the Closing, of
the following conditions:
(a) Accuracy of Representations and Warranties and Performance of
Covenants. The representations and warranties of Purchaser contained in Article
IV shall be true, correct and complete as if made on and as of the Closing Date,
other than changes specifically contemplated by this Agreement and
representations and warranties that are expressly made only as of a specific
date (in which case such representations and warranties shall be true, correct
and complete as of such date). For purposes of determining whether the
47
condition in this Section 9.3(a) is satisfied (and not for purposes of Article
XI), all such representations and warranties (x) shall be read without regard to
any materiality qualifiers contained therein and (y) after taking clause (x)
into account, shall be deemed to be true, correct and complete unless breaches
or inaccuracies thereof, individually or in the aggregate, result or would
reasonably be expected to result in a Material Adverse Effect. Purchaser shall
have performed all of the obligations and complied with all of the covenants,
agreements and conditions set forth in this Agreement and required to be
performed or complied with by it on or prior to the Closing. At Closing,
Purchaser shall provide to Seller a certificate of an officer of Purchaser as to
the foregoing in form and substance reasonably acceptable to Seller, and Seller
shall be able to rely on such certificate for purposes of Article XI.
(b) Ancillary Agreements. Each of the Ancillary Agreements will have
been executed and delivered by each of the other Parties thereto, and each such
Ancillary Agreement shall be in full force and effect.
ARTICLE X
TERMINATION AND AMENDMENT
10.1 TERMINATION. This Agreement may be terminated at any time prior to the
Closing:
(a) by mutual written consent of Purchaser and Seller;
(b) by either Purchaser or Seller, if:
(i) the Closing shall not have occurred on or before December 31,
2006 (the "OUTSIDE DATE"), unless the failure of the Closing to occur on or
prior to such date is the result of a breach of this Agreement by the Party
seeking to terminate this Agreement;
(ii) if there shall be any Law that makes consummation of the
transactions contemplated by this Agreement illegal or otherwise prohibited or
if any judgment, injunction, order or decree enjoining Purchaser or Seller from
consummating the transactions contemplated by this Agreement is entered and such
judgment, injunction, order or decree shall become final and nonappealable; or
(iii) either the Commercial Agreements or the Subscription
Agreement is terminated.
(c) by Seller (provided that it is not then in material breach of any
of its representations, warranties, covenants or agreements under this
Agreement), if Purchaser shall have breached any of its representations,
warranties, covenants, obligations or other agreements under this Agreement;
provided, however, that (x) the breach of the covenant, obligation, agreement,
representation or warranty is incapable of being or has not been cured by
Purchaser on or prior to the date which is fifteen (15) Business Days
immediately following written notice by Seller to Purchaser of such breach or
failure to perform and (y) such uncured breach or failure
48
would result in a condition to the obligations of Seller set forth in Section
9.1 and Section 9.3 not being satisfied;
(d) by Purchaser (provided that it is not then in material breach of
any of its representations, warranties, covenants or agreements under this
Agreement), if Seller or NextNet, as applicable, shall have breached any of its
representations, warranties, covenants, obligations or other agreements under
this Agreement; provided, however, that (x) the breach of the covenant,
obligation, agreement, representation or warranty is incapable of being or has
not been cured by Seller on or prior to the date which is fifteen (15) Business
Days immediately following written notice by Purchaser to Seller of such breach
or failure to perform and (y) such uncured breach or failure would result in a
condition to the obligations of Purchaser set forth in Section 9.1 and Section
9.2 not being satisfied.
(e) The Party desiring to terminate this Agreement pursuant to
Sections 10.1(b) through 10.1(d) shall give written notice of such termination
to the other Parties in accordance with Section 12.1.
10.2 EFFECT OF TERMINATION. In the event of a termination of this Agreement
by either Seller or Purchaser as provided in Section 10.1, this Agreement shall
forthwith become void, and there shall be no liability or obligation on the part
of Purchaser, NextNet or Seller, except with respect to Section 3.29 (Brokers),
Section 4.4 (Brokers), Section 6.4 (Public Announcements), this Article X,
Article XI (Survival and Indemnification) in so far as it relates solely to the
other provisions of this Agreement set forth in this Section 10.2 and Article
XII (General Provisions); provided, however, that nothing herein shall relieve
any Party from liability for any breach, default or failure to fulfill any
representation, warranty, covenant or agreement hereunder or pursuant to any
Ancillary Agreement on or prior to the date of such termination.
10.3 AMENDMENT. This Agreement may not be amended except by a written
instrument signed by each of the Parties.
10.4 FEES AND EXPENSES. Whether or not the transactions herein contemplated
shall be consummated, Purchaser shall pay the fees, expenses and disbursements
of Purchaser and its Representatives incurred in connection with the subject
matter of this Agreement and any Ancillary Agreement and any amendments hereto
or thereto and all other costs and expenses incurred in the performance and
compliance with all conditions to be performed by Purchaser under this Agreement
and any Ancillary Agreement. Whether or not the transactions herein contemplated
shall be consummated, Seller shall pay its own fees, expenses and disbursements
and those of NextNet and its Representatives incurred in connection with the
subject matter of this Agreement and any Ancillary Agreements and any amendments
hereto or thereto and all other costs and expenses related to or arising from
this Agreement, the Ancillary Agreements and the transactions contemplated
hereby and thereby and/or incurred in the performance and compliance with all
conditions to be performed by Seller and NextNet under this Agreement.
10.5 EXTENSION; WAIVER. At any time prior to the Closing, the Parties may,
to the extent permitted by applicable Law, (a) extend the time for the
performance of any of the obligations or other acts of the other Parties, (b)
waive any inaccuracies in the representations and warranties contained herein or
in any document delivered pursuant hereto or (c) waive
49
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a Party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such Party.
The failure of any Party to this Agreement to assert any of its rights under
this Agreement or under any Ancillary Agreement shall not constitute a waiver of
those rights.
ARTICLE XI
SURVIVAL AND INDEMNIFICATION
11.1 SURVIVAL. All covenants and agreements contained in this Agreement, or
in any document delivered pursuant hereto, shall survive the Closing until fully
performed. All representations and warranties contained in this Agreement, or in
any document delivered pursuant hereto, shall survive the Closing and shall
continue to be fully effective and enforceable for a period of eighteen (18)
months from the Closing Date; provided, however, that the representations and
warranties contained in (a) Section 3.17, Section 3.21 and Section 3.24 shall
survive the Closing and shall continue to be fully effective and enforceable for
a period of the later to occur of eighteen (18) months from the Closing Date and
thirty (30) days after the expiration of the applicable statute of limitations;
and (b) Section 3.5 shall survive indefinitely. The foregoing sentence
notwithstanding, any liability which results from fraud on the part of the other
Party or liability for claims relating to the representations and warranties
contained in Section 3.5, for which indemnity would otherwise be available under
Section 11.2, may be asserted at any time following Closing. Notwithstanding the
foregoing, any claim for indemnification under this Article XI (a "CLAIM") that
is asserted by written notice within the applicable survival period shall
survive until resolved by the Parties or pursuant to a final non-appealable
judicial determination. The representations and warranties contained in this
Agreement and Ancillary Agreements shall not be affected by any investigation,
verification or examination by any Party hereto or by anyone on behalf of any
such Party.
11.2 INDEMNIFICATION.
(a) Subject to Section 11.3(a), in the event the Closing occurs,
Seller will indemnify and hold harmless Purchaser and its Affiliates, including
NextNet, and their respective Representatives, heirs, executors, successors and
assigns (collectively, the "PURCHASER INDEMNIFIED PARTIES") from and against,
and the Purchaser Indemnified Parties shall be paid or reimbursed for, any and
all losses, damages, costs, expenses (including court costs, amounts paid in
settlement, judgments, reasonable attorneys' fees or other expenses, including
costs and expenses for investigating, defending and enforcing its rights under
this Article XI if such party is the prevailing party in any such proceeding),
suits, actions, claims, liabilities or obligations (collectively, "LOSSES"),
arising from, related to or caused by:
(i) any inaccuracy in or breach of any representation and
warranty made by Seller in this Agreement or in any document delivered with
respect hereto and thereto (including the certificate of officer delivered by
Seller pursuant to Section 9.2(a));
50
(ii) the nonfulfillment, nonperformance or other breach of any
covenant or agreement of Seller or NextNet set forth in this Agreement or in any
document delivered pursuant hereto or thereto;
(iii) any claim by any former stockholder of NextNet, or any
other Person, seeking to assert, or based upon (a) ownership or rights to
ownership of any shares of NextNet Common Stock or any other rights of
a holder of capital stock of NextNet, including any option, preemptive rights or
rights to notice or to vote, (b) any rights under NextNet's Certificate of
Incorporation or Bylaws, or (c) any claim that his, her or its shares of NextNet
Common Stock or other capital stock were wrongfully repurchased by NextNet or
issued or sold to such Person in violation of any securities Laws, whether or
not facts relating to any of the foregoing have been disclosed in the schedules
to this Agreement;
(iv) the failure to pay any Transaction Expenses prior to or at
the Closing; and
(v) the matter identified in paragraph 4 on Schedule 3.18.
The indemnity provided for in this Section 11.2(a) is not limited to matters
asserted by Third Parties against any Purchaser Indemnified Party, but includes
any Loss incurred or sustained by any Purchaser Indemnified Party in the absence
of Third Party Claims.
(b) Subject to Section 11.3(b), in the event the Closing occurs,
Purchaser will indemnify and hold harmless Seller, its Affiliates, each of their
respective Representatives, heirs, executors, successors and assigns
(collectively, the "SELLER INDEMNIFIED PARTIES") from and against, and the
Seller Indemnified Parties shall be paid or reimbursed for, any and all Losses
arising from, related to or caused by:
(i) any inaccuracy in or breach of any representation and
warranty made by Purchaser in this Agreement or in any document delivered with
respect hereto (including the certificate of officer delivered by Purchaser
pursuant to Section 9.3(a));
(ii) the nonfulfillment, nonperformance or other breach of any
covenant or agreement of Purchaser contained in this Agreement or in any
document delivered pursuant hereto or thereto.
The indemnity provided for in this Section 11.2(b) is not limited to matters
asserted by Third Parties against any Seller Indemnified Party, but includes any
Loss incurred or sustained by any Seller Indemnified Party in the absence of
Third Party Claims.
11.3 LIMITATIONS ON INDEMNIFICATION.
(a) Notwithstanding any other provision of this Article XI, Seller
shall not be liable under Section 11.2(a)(i) unless and until the aggregate
amount of all Losses pursuant to Section 5.2(b), Article VIII or Section 11.2(a)
exceeds $200,000 (the "THRESHOLD AMOUNT"); provided, however, the Threshold
Amount will not apply with respect to any Losses for which a Purchaser
Indemnified Party is entitled to indemnification pursuant to Section 11.2(a)(i)
arising from or caused by a breach of the representations or warranties set
forth in Section 3.5, Section
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3.7(b), Section 3.17 or Section 3.24. Upon reaching such amount, Seller shall be
liable to the Purchaser Indemnified Parties for all Losses under Section
11.2(a)(i) up to an aggregate amount equal to $13,000,000 (the "MAXIMUM
AMOUNT"); provided, however, the Maximum Amount will not apply with respect to
any Losses for which a Purchaser Indemnified Party is entitled to
indemnification pursuant to Section 11.2(a)(i) arising from or caused by a
breach of the representations or warranties set forth in Section 3.5, Section
3.7(b), Section 3.17 or Section 3.24, and none of such Losses shall count
towards satisfaction of the Maximum Amount; provided, further, in no event shall
Seller's liability under this Article XI exceed the Purchase Price.
(b) Notwithstanding any other provision of this Article XI, Purchaser
shall not be liable under Section 11.2(b)(i) unless and until the aggregate
amount of all Losses pursuant to Article VIII or Section 11.2(b) exceeds the
Threshold Amount. Upon reaching such amount, Seller shall be liable to the
Purchaser Indemnified Parties for all Losses under Section 11.2(b)(i) up to an
aggregate amount equal to the Maximum Amount; provided, however, in no event
shall Purchaser's liability under this Article XI exceed the Purchase Price.
(c) Liability of Seller for fraud or willful misrepresentation of
Seller or NextNet, and liability of Purchaser for fraud or willful
misrepresentation of Purchaser, shall not be limited by the provisions of
Section 11.1 or this Section 11.3.
11.4 MATTERS INVOLVING THIRD PARTIES.
(a) If any Third Party shall notify either Purchaser or Seller (the
"INDEMNIFIED PARTY") with respect to any matter (a "THIRD PARTY CLAIM") which
may give rise to a claim for indemnification against the other Party (the
"INDEMNIFYING PARTY") under this Article XI, then the Indemnified Party shall
promptly notify the Indemnifying Party thereof in writing; provided, however,
that no delay on the part of the Indemnified Party in notifying the Indemnifying
Party shall relieve the Indemnifying Party from any obligation hereunder unless
(and then solely to the extent) the Indemnifying Party is prejudiced thereby.
(b) Subject to Sections 11.4(d) and (e), the Indemnifying Party will
have the right to defend the Indemnified Party against the Third Party Claim
with counsel of its choice so long as (i) the Indemnifying Party notifies the
Indemnified Party in writing, within ten (10) Business Days after the
Indemnified Party has given notice of the Third Party Claim, that the
Indemnifying Party will assume the defense of the Third Party Claim, (ii) the
Third Party Claim involves only money damages and does not seek an injunction or
other equitable relief, and (iii) the Indemnifying Party conducts the defense of
the Third Party Claim actively and diligently. Notwithstanding the foregoing, if
the Indemnified Party reasonably determines that there may be a conflict between
the positions of the Indemnifying Party and the Indemnified Party in conducting
the defense of such action, suit, investigation, inquiry or proceeding or that
there may be legal defenses available to such Indemnified Party different from
or in addition to those available to the Indemnifying Party, then counsel for
the Indemnified Party shall be entitled to conduct the defense to the extent
reasonably determined by such counsel to be necessary to protect the interests
of the Indemnified Party, at the expense of the Indemnifying Party, provided
that (x) this Section 11.4(b) shall not apply to any Third Party IP Claim (as
52
hereinafter defined) and (y) the Indemnifying Party shall have no liability for
expenses for more than one outside counsel for all Indemnified Parties with
respect to a Third Party Claim.
(c) So long as the conditions set forth in Section 11.4(b) are
satisfied and the Indemnifying Party is conducting the defense of the Third
Party Claim in accordance with Section 11.4(b) above, (i) the Indemnified Party
may retain separate co-counsel at its sole cost and expense and participate in
(but not control) the defense of the Third Party Claim, (ii) the Indemnified
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld or delayed unreasonably), and (iii) the
Indemnifying Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnified Party (which will not be unreasonably withheld or
delayed); provided, however, that no consent of the Indemnified Party shall be
required for any judgment or settlement involving only money damages so long as
neither the Indemnified Party nor its Affiliates has any obligations,
restrictions or liabilities related to such judgment or settlement.
(d) In the event any of the conditions in Section 11.4(b) above is or
becomes unsatisfied, however, or in the event the Third Party Claim is a Third
Party IP Claim (i) the Indemnified Party shall have the right to control, defend
against, and consent to the entry of any judgment or enter into any settlement
with respect to, the Third Party Claim in any manner it reasonably may deem
appropriate (and the Indemnified Party need not consult with, or obtain written
consent from, the Indemnifying Party in connection therewith), (ii) the
Indemnifying Party will reimburse the Indemnified Party promptly and
periodically for the costs of defending against the Third Party Claim (including
reasonable attorneys' fees and expenses of one outside counsel), and (iii) the
Indemnifying Party will remain responsible for any Losses the Indemnified Party
may suffer resulting from, arising out of, relating to, or caused by the Third
Party Claim to the extent provided in this Article XI.
(e) Notwithstanding the foregoing, if, following the Closing, NextNet,
one of its Subsidiaries or Purchaser is named as a defendant or receives notice
of any Third Party Claim alleging that any of the IP Assets infringe any
Intellectual Property Rights of any Third Party (a "THIRD PARTY IP CLAIM"), then
Purchaser will give prompt written notice to Seller, even if such Third Party IP
Claim may not be the subject of a possible claim for indemnification under this
Agreement. Purchaser shall have the right to control the defense and settlement
of any such Third Party IP Claim in any manner it may reasonably deem
appropriate. In the event Purchaser does not assume control of the defense and
settlement of the Third Party IP Claim, Seller will not settle any such Third
Party IP Claim or pursue a defense strategy that is likely to establish a
precedential practice or position that is adverse to the continuing business
interests of Purchaser with respect to the IP Assets or Intellectual Property
Rights of NextNet or one of its Subsidiaries without first consulting with
Purchaser and giving Purchaser the opportunity, at Purchaser's election and
expense, to conduct any additional action or defense that is, in Purchaser's
opinion, necessary to protect Purchaser's on-going business interests.
(f) If an Indemnified Party should have a claim against any
Indemnifying Party that does not involve a Third Party Claim, then such
Indemnified Party shall deliver a notice to such Indemnifying Party as promptly
as practicable after becoming aware of a claim
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containing reasonable detail of the specific facts and circumstances pertaining
thereto; provided, however, that no delay on the part of such Indemnified Party
in notifying such Indemnifying Party will relieve such Indemnifying Party from
any obligation under this Article XI unless (and then solely to the extent) the
Indemnifying Party is prejudiced thereby.
(g) Authority to Settle or Pay Small Claims. Notwithstanding the other
provisions of this Section 11.4, if a Third Party asserts that a Purchaser
Indemnified Party is liable to such Third Party for a monetary or other
obligation which individually may constitute or result in Losses not to exceed
$50,000 for which such Purchaser Indemnified Party may be entitled to
indemnification pursuant to this Article XI, and such Purchaser Indemnified
Party reasonably determines that it has a valid business reason to fulfill such
obligation, then (i) such Purchaser Indemnified Party will be entitled to
satisfy such obligation, without prior notice to or consent from the
Indemnifying Party, (ii) such Purchaser Indemnified Party may subsequently make
a claim for indemnification in accordance with the provisions of this Article
XI, and (iii) such Purchaser Indemnified Party will be reimbursed, in accordance
with the provisions of this Article XI, for any such Losses for which it is
entitled to indemnification pursuant to this Article XI, subject to the right of
the Indemnifying Party to dispute the Purchaser Indemnified Party's entitlement
to indemnification, or the amount for which it is entitled to indemnification,
under the terms of this Article XI. This Section 11.4(g) will not be applicable
to payments which aggregate more than $150,000.
(h) All indemnification payments under this Article XI shall be deemed
adjustments to the Purchase Price and the Parties shall treat such payments as
such for Tax purposes.
11.5 OTHER INDEMNIFICATION PROVISIONS. Following the Closing, the foregoing
indemnification provisions under this Article XI are (x) the exclusive remedy
for claims in respect of any breach of representations or warranties or claims
made based on facts alleged that, if true, would have constituted any such
misrepresentation or breach and (y) in addition to, and not in derogation of,
any statutory, equitable or common law remedy any Party may have for a breach of
any covenant.
11.6 NO CIRCULAR RECOVERY. Seller shall not be entitled to make any claim
for indemnification or contribution or against NextNet, Purchaser or any of
their Affiliates whether such claim is (a) pursuant to any statute, charter,
bylaw, contractual obligation or otherwise or (b) by reason of the fact that
Seller was a controlling Person of NextNet, in each case, with respect to any
matter relating to or arising out of a matter which is subject to the provisions
of Section 11.2.
ARTICLE XII
GENERAL PROVISIONS
12.1 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if (i) delivered personally, (ii) sent by
facsimile, with confirming copy
54
sent as set forth in clause (iii), or (iii) sent by Federal Express, DHL, UPS or
overnight courier (providing proof of delivery) to the Parties, in each case at
the following addresses:
if to Purchaser, or NextNet following the Closing, to:
Motorola, Inc.
1475 W. Shure Drive
Arlington Heights, Illinois 60004
Attention: Kevin J. Gilbert
Facsimile No: 847.632.3020
with copies to:
Motorola, Inc.
Law Department
1303 E. Algonquin Road
Schaumburg, Illinois 60196
Attention: General Counsel
Facsimile No: 847.576.3750
and
Winston & Strawn LLP
35 West Wacker Drive
Chicago, Illinois 60606
Attention: Oscar A. David
Facsimile: 312.558.5700
if to Seller, or NextNet prior to Closing, to:
Clearwire Corporation
5808 Lake Washington Blvd. NE, Suite 300
Kirkland, Washington 98033
Attn: Broady Hodder, General Counsel
Facsimile: 425-216-7900
with a copy to:
Davis Wright Tremaine LLP
2600 Century Square
1501 Fourth Avenue
Seattle, Washington 98121
Attn: Julie A. Weston, Esq.
Facsimile: 206-628-7699
Unless otherwise specified herein, such notices or other communications shall be
deemed effective, (a) on the date received, if personally delivered or sent by
facsimile during normal business hours, or (b) if delivered by overnight
courier, on the date delivered as established by
55
return receipt or courier service confirmation or the date on which the return
receipt or courier service confirms that acceptance of delivery was returned by
the addressee. Each of the Parties hereto shall be entitled to specify a
different address by giving notice as aforesaid to each of the other Parties
hereto.
12.2 INTERPRETATION. When a reference is made in this Agreement to an
Article or a Section, such reference shall be to an Article or a Section of this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation."
12.3 COUNTERPARTS. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more counterparts have been signed by each of the Parties and
delivered to the other Parties, it being understood that all Parties need not
sign the same counterpart. Delivery of an executed counterpart by facsimile
shall be effective to the fullest extent permitted by applicable Law.
12.4 ENTIRE AGREEMENT, NO THIRD-PARTY BENEFICIARIES. This Agreement, the
NDA, the Ancillary Agreements and all exhibits and schedules hereto and thereto
and the documents delivered pursuant hereto or thereto, constitute the entire
agreement and supersede all prior agreements and understandings, both written
and oral, among the Parties with respect to the subject matter hereof. This
Agreement, except as specifically set forth in the provisions of Article X
(Termination and Amendment), Article XI (Survival and Indemnification) and
Article XII (General Provisions), is not intended to confer upon any Person
other than the Parties any rights or remedies.
12.5 GOVERNING LAW. This Agreement, and any disputes arising out of or
relating thereto, shall be governed by, and construed in accordance with, the
Laws of the State of Delaware, regardless of the Laws that might otherwise
govern under applicable principles of conflicts of Laws thereof.
12.6 ASSIGNMENT. Neither this Agreement nor any rights, interests or
obligations hereunder shall be assigned in whole or in part by any Party
(whether by operation of Law or otherwise) without the prior written consent of
the other Parties. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of, and be enforceable by, the Parties and
their respective successors and permitted assigns.
12.7 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of Law or public
policy, then all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any Party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the Parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the Parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated by this Agreement may be consummated as
originally contemplated to the fullest extent possible. If the
56
Parties (after negotiation in good faith) are unable to so agree, then each
Party hereto intends that such term of other provisions will be construed by
modifying or limiting it so as to be valid and enforceable to the maximum extent
compatible with, and possible under, applicable Law.
12.8 ENFORCEMENT OF THIS AGREEMENT. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that Purchaser shall be entitled to
an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, such remedy being in addition to any
other remedy to which Purchaser is entitled at Law or in equity. Each of the
Parties hereby irrevocably waives to the fullest extent permitted by applicable
Law any requirement that the other Party post a bond or other security in any
action to enforce its rights with respect to this Agreement.
12.9 EXTENSION; WAIVER. At any time prior to the Closing, either Seller or
Purchaser may, to the extent permitted by applicable Law (a) extend the time for
the performance of any of the obligations or other acts of the other Party (b)
waive a breach of a representation or warranty of such other Party contained
herein or in any Ancillary Agreement hereto or (c) waive compliance by such
other Party hereto with any of the agreements or conditions contained herein or
in any Ancillary Agreement. Any such extension or waiver shall be valid if set
forth in a written instrument signed by such Party or Parties giving the
extension or waiver. No waiver of any of the provisions of this Agreement or any
Ancillary Agreement shall be deemed or shall constitute a waiver of any other
provision hereof or thereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided. The failure
of any Party to this Agreement to assert any of its rights under this Agreement
or under any Ancillary Agreement shall not constitute a waiver of those rights.
12.10 DISPUTES.
(a) Purchaser and Seller agree to use reasonable efforts to resolve
between themselves any dispute they have with respect to the matters covered
hereby, pursuant to the Ancillary Agreements or any agreement or document
delivered pursuant hereto or thereto, including any amendments hereof and
thereof.
(b) (i) Except for disputes concerning Intellectual Property Rights of
NextNet and its Subsidiaries which must be submitted to a court of competent
jurisdiction, as determined pursuant to Section 12.11, to the extent that any
misunderstanding or dispute cannot be resolved agreeably in a friendly manner,
the dispute will be mediated by a mutually-acceptable mediator to be chosen by
Purchaser and Seller within forty-five (45) days after written notice by one of
the Parties is delivered to the other demanding mediation. Neither Party may
unreasonably withhold consent to the selection of a mediator; however, either
Party may request a postponement of the mediation until each Party has completed
specified but limited discovery with respect to a dispute. The Parties may also
agree to attempt to resolve their dispute by some other form of alternate
dispute resolution ("ADR") in lieu of mediation.
(ii) Any dispute, other than a dispute concerning Intellectual
Property Rights of NextNet and its Subsidiaries which must be submitted to a
court of competent
57
jurisdiction, as determined pursuant to Section 12.11, which the Parties cannot
resolve through negotiation, mediation or other form of ADR within three (3)
months of the date of the initial demand for it by one of the Parties may then
be submitted to a court of competent jurisdiction for resolution. The use of any
ADR procedures will not be construed under the doctrines of laches, waiver or
estoppel to affect adversely the rights of either Party. Nothing in this Section
12.10(b) will prevent either Party from resorting to judicial proceedings if (A)
good faith efforts to resolve the dispute under these procedures have been
unsuccessful or (B) interim relief from a court is necessary to prevent serious
and irreparable injury to one Party or to others.
Each of Purchaser and Seller shall bear its costs of mediation or ADR, but
Purchaser and Seller agree to share the costs of the mediation or ADR equally.
12.11 JURISDICTION. The Parties hereto irrevocably submit to the exclusive
jurisdiction of the courts of the State of Delaware and of the United States of
America located in Wilmington, Delaware over any dispute arising out of or
relating to this Agreement or any agreement or instrument contemplated hereby or
entered into in connection herewith or any of the transactions contemplated
hereby. Each Party hereby irrevocably agrees that all claims in respect of such
dispute or proceeding shall be heard and determined in such courts (and the
courts hearing appeals from such courts). The Parties hereby irrevocably waive,
to the fullest extent permitted by applicable Law, any objection which they may
now or hereafter have to the laying of venue of any such dispute brought in such
court or any defense of inconvenient forum in connection therewith. EACH OF THE
PARTIES HERETO WAIVES THE RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY SUIT,
ACTION OR PROCEEDING SEEKING ENFORCEMENT OF SUCH PARTY'S RIGHTS UNDER THIS
AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED
HEREBY OR THEREBY OR ENTERED INTO IN CONNECTION HEREWITH OR THEREWITH OR ANY OF
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
12.12 AUTHORSHIP. The Parties hereto agree that the terms and language of
this Agreement were the result of negotiations between the Parties and, as a
result, there shall be no presumption that any ambiguities in this Agreement
shall be resolved against any of the Parties. Any controversy over construction
of this Agreement shall be decided without regard to events of authorship or
negotiation.
12.13 NO JOINT VENTURE. Nothing in this Agreement creates a joint venture
or partnership between the Parties. This Agreement does not authorize any Party
(a) to bind or commit, or to act as an agent, employee or legal representative
of, another Party, except as may be specifically set forth in other provisions
of this Agreement, or (b) to have the power to control the activities and
operations of another Party. The Parties are independent contractors with
respect to each other under this Agreement. Each Party agrees not to hold itself
out as having any authority or relationship contrary to this Section 12.13.
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ARTICLE XIII
DEFINITIONS
As used in this Agreement, the following terms have the meanings specified
or referred to in this Article XIII and shall be equally applicable to both the
singular and plural forms. Any agreement referred to below shall mean such
agreement as amended, supplemented or modified from time to time to the extent
permitted by the applicable provisions thereof and by this Agreement. Any
reference to a statute refers to the statute, any amendments or successor
legislation, and all regulations promulgated under or implementing the statute,
as in effect at the relevant time.
"ACCOUNTS RECEIVABLE" has the meaning set forth in Section 3.9.
"ACQUIRED COMPANY" means NextNet or any of the Subsidiaries, and the
"ACQUIRED COMPANIES" means NextNet and all of the Subsidiaries.
"ACQUIRED EMPLOYEES" means those employees of Seller, NextNet or one of
their Affiliates immediately prior to the Closing who are identified as such on
Schedule 3.25(a) (which shall also identify any Acquired Employees who
immediately prior to the Closing are on a company-approved leave of absence, and
the type and duration of such approved leave applicable to each such Acquired
Employee). Seller shall prepare and provide to Purchaser an initial version of
Schedule 3.25(a) on the date of this Agreement, and an updated version thereof
on the Closing Date.
"ACQUISITION PROPOSAL" means any inquiry, offer, proposal or indication of
interest by a Third Party which relates to a transaction or series of
transactions (including any merger, consolidation, recapitalization,
liquidation, amalgamation or other direct or indirect business combination) to
acquire all or substantially all of the assets of NextNet, to exclusively
license all or substantially all of NextNet's Intellectual Property, or the
portion thereof necessary for the conduct of the Business, or the acquisition of
five percent (5%) or more of the outstanding shares of NextNet Common Stock or
any tender or exchange offer that, if consummated, would result in any Person,
together with all Affiliates thereof, becoming a "beneficial owner" (as defined
in Rule 13d-3 of the Exchange Act) of five percent (5%) or more of the
outstanding shares of NextNet Common Stock.
"ACTIONS" means any claim, action, suit, litigation, complaint, charge,
hearing, arbitration, mediation, inquiry, proceeding or investigation by or
before any Governmental Authority.
"ADR" has the meaning set forth in Section 12.10(b).
"AFFILIATE" means, with respect to any Person, any other Person, directly
or indirectly, controlling, controlled by, or under common control with, such
Person. For purposes of this definition, the term "control" (including the
correlative terms "controlling," "controlled by" and "under common control
with") means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership
59
of voting securities, by contract, or otherwise. For purposes of Section 3.26,
"Affiliate" shall include any entity described in the definition of "Seller
Plans."
"AFFILIATED GROUP" means a group of corporations (consisting of Seller
and/or any of its Subsidiaries) with which NextNet filed consolidated, combined,
unitary or similar Tax Returns.
"AGREEMENT" has the meaning set forth in the introductory paragraph of this
Agreement.
"ALLOCATION SCHEDULE" has the meaning set forth in Section 1.3.
"ANCILLARY AGREEMENTS" means the Commercial Agreements and any documents
and agreements delivered in connection therewith.
"ANTITRUST LAWS" means any federal, state or foreign Law, regulation or
decree designed to prohibit, restrict or regulate actions for the purpose or
effect of monopolization or restraint of trade.
"BUSINESS" has the meaning set forth in the Recitals to this Agreement.
"BUSINESS DAY" means any day, other than a Saturday, Sunday or one on which
banks are authorized to close in Chicago, Illinois.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act.
"CLAIM" has the meaning set forth in Section 11.1.
"CLOSING" has the meaning set forth in Section 1.4.
"CLOSING DATE" has the meaning set forth in Section 1.4.
"CLOSING INDEBTEDNESS AMOUNT" means the aggregate amount of the outstanding
balance of Indebtedness for Borrowed Money of NextNet and its Subsidiaries as of
the opening of business on the Closing Date; provided that for purposes of such
calculation, all interest, prepayment penalties, premiums, fees and expenses (if
any) which would be payable if such Indebtedness for Borrowed Money was paid in
full at the Closing shall be treated as part of the Closing Indebtedness Amount.
"CLOSING PAYMENT" has the meaning set forth in Section 1.2.
"CLOSING WORKING CAPITAL" means the Working Capital as of the Closing Date.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMERCIAL AGREEMENTS" means the Wireless Broadband System Services
Agreement, the Wireless Broadband System Infrastructure Agreement and the
Wireless Broadband CPE Supply Agreement, each dated as of the Closing Date by
and between Purchaser and Seller or one of its Affiliates in the form attached
hereto as Exhibit D.
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"CONSENTS" means, with respect to a Person, any consent, approval, waiver,
order or authorization of, or registration, declaration or other action or
filing with, or exemption by, such Person.
"COPYRIGHTS" means rights in: (a) all classes and types of copyrights, mask
work rights, the works covered thereby and any derivative works thereof
(including the exclusive right to use, make recordings of, reproduce, modify,
adapt, edit, enhance, maintain, support, market, sell, rent, sell for rental,
sublicense, distribute copies of, publicly and privately, display and publicly
and privately perform, exploit, and exhibit the copyrighted work and to prepare
derivative works); (b) copyright and mask work applications and registrations
including extensions and renewals thereof; and (c) foreign counterparts of any
of the foregoing anywhere in the world, and all rights therein and thereto.
"DIRECT CONTRACTS" has the meaning set forth in Section 3.16(c).
"DISPUTE NOTICE" has the meaning set forth in Section 2.3.
"EMPLOYEE BENEFIT PLAN" means:
(a) any plan, fund, agreement, arrangement or program, written or
oral, that provides health, medical, surgical, hospital or dental care or other
welfare benefits, or benefits in the event of sickness, accident or disability,
or death benefits, apprenticeship or other training programs, or day care
centers, scholarship funds, or prepaid legal services;
(b) any plan, fund, agreement, arrangement or program, written or
oral, that provides retirement income to employees or results in a deferral of
income by employees for periods extending to the termination of covered
employment or beyond;
(c) any plan, fund, agreement, arrangement or program, written or
oral, that provides severance, unemployment, paid time off or fringe benefits
(including dependent care and health care accounts);
(d) any incentive compensation plan, deferred compensation plan, stock
option, stock purchase or other stock-based incentive or compensation plan,
whether written or oral; or
(e) any other "employee pension benefit plan" (as defined in Section
3(2) of ERISA), any other "employee welfare benefit plan" (as defined in Section
3(1) of ERISA), and any other written or oral any plan, fund, agreement,
arrangement or program involving direct or indirect compensation including,
without limitation, insurance coverage, severance benefits, disability benefits,
fringe benefits, pension or retirement plans, profit sharing, deferred
compensation, bonuses, stock options, stock purchase, phantom stock, stock
appreciation or other forms of incentive compensation or post-retirement
compensation.
"EMPLOYEE WITHHOLDING TAXES" has the meaning set forth in Section 8.6(c).
"ENCUMBRANCE" means any claims, security interests, liens, pledges,
charges, escrows, options, proxies, rights of first refusal, preemptive rights,
mortgages, hypothecations, title
61
retention agreements, indentures, security agreements or any other similar
limitations, encumbrances or restrictions of any kind.
"ENVIRONMENTAL LAWS" means all federal, state and local Laws, regulations,
rules and ordinances relating to pollution or protection of the environment or
human health and safety, including Laws relating to releases or threatened
releases of Hazardous Substances into the indoor or outdoor environment
(including ambient air, surface water, groundwater, land, surface and subsurface
strata) or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, release, transport or handling of Hazardous Substances; all
Laws and regulations with regard to recordkeeping, notification, disclosure and
reporting requirements respecting Hazardous Substances; and all Laws relating to
endangered or threatened species of fish, wildlife and plants and the management
or use of natural resources.
"ER MASTER AGREEMENT" has the meaning set forth in Section 9.2(f)(ii).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations thereunder.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXPORT APPROVALS" has the meaning set forth in Section 3.27(a).
"FCPA" has the meaning set forth in Section 3.28.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 3.7(a).
"GAAP" means United States generally accepted accounting principles and
practices.
"GOVERNMENTAL AUTHORITY" means any federal, state, local, tribal or foreign
government or authority, or any court, tribunal, administrative agency or
commission or other governmental or other regulatory authority or agency.
"HAZARDOUS MATERIALS" has the same meaning as such term is given in
Environmental Laws.
"HAZARDOUS SUBSTANCE" has the same meaning as such term is given in
Environmental Laws.
"HAZARDOUS WASTE" has the same meaning as such term is given in
Environmental Laws.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"IMPROVEMENTS" has the meaning set forth in Section 3.12(d).
"INDEBTEDNESS" means, with respect to any Person, without duplication, (a)
obligations for borrowed money ("INDEBTEDNESS FOR BORROWED MONEY"), (b)
obligations evidenced by
62
bonds, debentures, notes or similar instruments, (c) letters of credit issued
for the account of such Person (excluding letters of credit issued for the
benefit of suppliers to support accounts payable to suppliers incurred in the
ordinary course of business), (d) capitalized lease obligations, and (e)
guarantees and arrangements having the economic effect of a guarantee of any
indebtedness of the type described in clauses (a) through (d) above of any other
Person.
"INDEMNIFIED PARTY" has the meaning set forth in Section 11.4(a).
"INDEMNIFYING PARTY" has the meaning set forth in Section 11.4(a).
"INDEPENDENT AUDITOR" has the meaning set forth in Section 2.3.
"INSURANCE" means binders, policies of insurance, self insurance programs
or fidelity bonds.
"INTELLECTUAL PROPERTY RIGHTS" means the following throughout the world,
whether registered or unregistered, as applicable: (i) Patent Rights; (ii)
Proprietary Rights; (iii) Copyrights; (iv) Trademarks; and (v) any similar
corresponding or equivalent intellectual property rights to any one of the
foregoing.
"INUKSHUK AGREEMENT" has the meaning set forth in Section 6.7(c).
"INVESTMENT COMPANY ACT" has the meaning set forth in Section 3.30.
"INVESTMENTS" has the meaning set forth in Section 3.4(d).
"IP ASSETS" means those Intellectual Property Rights and Proprietary
Information and Technology that are used in the conduct of the Business as
currently conducted by NextNet and its Subsidiaries.
"IRS" has the meaning set forth in Section 3.17(b).
"KEY EMPLOYEES" has the meaning set forth in Section 9.2(c)(i).
"KNOWLEDGE" means, with respect to Seller, the actual knowledge,
information and belief of the co-Chief Executive Officers, co-Presidents, Chief
Operating Officer and Chief Financial Officer of Seller and the Chief Executive
Officer, President, Chief Operating Officer and Chief Financial Officer of
NextNet, in each case after making reasonable inquiry of their respective direct
reports and other persons whom, by the nature of the normal duties of their
position, would reasonably be expected to know.
"LAW" means any law, rule, regulation, judgment, code, ruling, statute,
order, ordinance, decree or other requirement of, including the terms of any
license or permit issued by, any Governmental Authority.
"LEASES" has the meaning as set forth in Section 3.12(b).
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"LIABILITIES" means any and all debts, liabilities, guarantees, commitments
and obligations, whether fixed, contingent or absolute, asserted or unasserted,
matured or unmatured, liquidated or unliquidated, accrued or not accrued, known
or unknown, due or to become due, whenever or however arising (including whether
arising out of any contract or any tort based on negligence or strict liability)
and whether or not the same would be required by GAAP to be stated in financial
statements or disclosed in the notes thereto.
"LICENSES AND PERMITS" has the meaning set forth in Section 3.15.
"LOSSES" has the meaning set forth in Section 11.2(a).
"MAJOR CUSTOMER" has the meaning set forth in Section 3.16(a)(i).
"MAJOR CUSTOMER CONTRACT" has the meaning set forth in Section 3.16(a)(i).
"MAJOR SUPPLIER" has the meaning set forth in Section 3.16(a)(iii).
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, assets, liabilities, condition (financial or otherwise), operations or
revenues of NextNet and its Subsidiaries, taken as a whole or (b) the ability of
Seller to perform its obligations pursuant to this Agreement and to consummate
the transactions contemplated by this Agreement in accordance with the terms of
this Agreement; provided, however, that for purposes of clause (a) of this
definition neither of the following shall, in and of itself, constitute a
Material Adverse Effect: (i) any effect proximately caused by any action taken,
or failure to take action, by NextNet to which Purchaser has consented in
writing or (ii) any effect proximately caused by the compliance with the terms
contained herein or the performance of covenants provided herein.
"MATERIAL CONTRACTS" has the meaning set forth in Section 3.16(a).
"MAXIMUM AMOUNT" has the meaning set forth in Section 11.3(a).
"MOST RECENT BALANCE SHEET" has the meaning set forth in Section 3.7(a).
"NATIONAL PRIORITIES LIST" has the same meaning as such term is given in
Environmental Laws.
"NEXTNET" has the meaning set forth in the introductory paragraph of this
Agreement.
"NEXTNET COMMON STOCK" means the common stock, par value $0.0001 per share,
of NextNet.
"NEXTNET PLANS" means the Employee Benefit Plans that are or have been
maintained or contributed to by NextNet or under which NextNet has or may have
any liabilities.
"NEXTNET PTO POLICY" has the meaning set forth in Section 7.4.
"NEXTNET SOFTWARE" means the Software, regardless of the Software's stage
of development, and all enhancements, versions, releases and updates thereto and
derivatives
64
thereof existing as of the date hereof, in each case currently owned by NextNet
or any of its Subsidiaries.
"NEXTNET STATEMENTS" has the meaning set forth in Section 3.7(a)
"NDA" has the meaning set forth in Section 6.2.
"OFCCP" means the Office of Federal Contract Compliance Programs of the
U.S. Department of Labor's Employment Standards Administration.
"OUTSIDE DATE" has the meaning set forth in Section 10.l(b)(i).
"OWNED IP" means Intellectual Property Rights and Proprietary Information
and Technology that are currently owned by NextNet and its Subsidiaries.
"PARTY" means each of Seller, NextNet or Purchaser, individually, and
"PARTIES" means all of the foregoing collectively.
"PATENT RIGHTS" means right in all classes or types of patents and patent
applications, including utility models, provisional applications, petty patents,
design patents, registered industrial designs and all other similar protection
of inventions as recognized by applicable Law, in all countries of the world and
all continuations, continuations-in-part, divisions, or reissues.
"PERMITTED ENCUMBRANCES" means statutory liens for current Taxes, special
assessments or other governmental charges not yet due and payable.
"PERSON" means any individual, corporation, partnership, association,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity (including any Person as defined in Section
13(d)(3) of the Exchange Act) or Governmental Authority.
"PERSONAL PROPERTY LEASES" has the meaning set forth in Section 3.13.
"PLAN TERMINATION DATE" has the meaning set forth in Section 7.7
"POST-CLOSING BALANCE SHEET" has the meaning set forth in Section 2.2.
"POST-CLOSING PERIOD" means any taxable period or portion of a period that
begins after the Closing Date and the portion of any Straddle Period beginning
after the Closing Date.
"PRE-CLOSING BALANCE SHEET" has the meaning set forth in Section 2.1(a).
"PRE-CLOSING PERIOD" means any taxable period or portion of a period ending
on or before the Closing Date and the portion of the Straddle Period ending on
the Closing Date. The Closing Date is specifically included in any Pre-Closing
Period.
"PRELIMINARY WORKING CAPITAL" means the good faith estimate of the Working
Capital as of the Closing Date as determined in accordance with Section 2.1(a).
65
"PROPRIETARY INFORMATION AND TECHNOLOGY" means confidential ideas and
information, inventions (whether or not patentable), invention disclosures,
information maintained as trade secrets, know-how, concepts, processes,
formulae, patterns, molds, tooling, industrial models or designs, engineering
data, cost data, compilations of information, copyrightable material, reports,
databases and data collections, algorithms, Software, methods of manufacture,
methods of use, business methods, process flow sheets, customer lists, mailing
lists, plans and reports, or other similar confidential or proprietary data
and information.
"PROPRIETARY RIGHTS" means all trade secret rights and all other rights of
a proprietary nature (under the applicable Laws of applicable jurisdictions
anywhere in the world) relating to Proprietary Information and Technology.
"PURCHASE PRICE" has the meaning set forth in Section 1.2.
"PURCHASER" has the meaning set forth in the introductory paragraph of this
Agreement.
"PURCHASER 401(K) PLAN" has the meaning set forth in Section 7.6.
"PURCHASER INDEMNIFIED PARTIES" has the meaning set forth in Section
11.2(a).
"PURCHASER PLANS" means those Employee Benefit Plans maintained or
contributed to by Purchaser and under which the Acquired Employees will be
eligible to participate after the Closing.
"PURCHASER PTO POLICY" has the meaning set forth in Section 7.4.
"PURCHASER SEVERANCE PLAN" has the meaning set forth in Section 7.3.
"REGISTERED INTELLECTUAL PROPERTY" has the meaning set forth in Section
3.23(a).
"REGULATIONS" means the final and temporary (but not proposed) income tax
regulations promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
"REMEDIAL ACTION" has the same meaning as such term is given in
Environmental Laws.
"REMOVAL" has the same meaning as such term is given in Environmental Laws.
"REPRESENTATIVE" means, with respect to any Person, its officers,
directors, investment bankers, attorneys, accountants, consultants or other
agents, advisors or representatives.
"RESTRICTED BUSINESS" has the meaning set forth in Section 6.6(a).
"SECTION 338(H)(10) ELECTION" has the meaning set forth in Section 8.4.
"SELLER" has the meaning set forth in the introductory paragraph of this
Agreement.
"SELLER 401(K) PLAN" has the meaning set forth in Section 7.6.
66
"SELLER ACQUISITION DATE" has the meaning set forth in Section 3.3(b).
"SELLER INDEMNIFIED PARTIES" has the meaning set forth in Section 11.2(b).
"SELLER PLANS" means the Employee Benefit Plans that are or have been
maintained or contributed to by Seller or any other entity (other than NextNet)
that is aggregated with Seller under the provisions of Sections 414(b), (c), or
(m) of the Code or under which Seller (or any such entity) has or may have any
liabilities.
"SELLER STATEMENTS" has the meaning set forth in Section 3.7(a).
"SHARES" has the meaning set forth in the Recitals to this Agreement.
"SOFTWARE" means computer software programs, including software
compilations, software tool sets, compilers, higher level or "proprietary"
languages and all related programming and user documentation, whether in source
code, object code or human readable form, or any translation or modification
thereof that substantially preserves its original identity.
"SOLID WASTE" has the same meaning as such term is given in Environmental
Laws.
"STOCK EQUIVALENTS" has the meaning set forth in Section 3.5(a).
"STRADDLE PERIOD" means any taxable period that begins before and ends
after the Closing Date.
"SUBCONTRACTS" has the meaning set forth in Section 3.16(c).
"SUBSCRIPTION AGREEMENT" has the meaning set forth in Section 9.1(e).
"SUBSIDIARY" means, with respect to any Person, any other domestic or
foreign corporation, limited liability company, general or limited partnership,
unincorporated association or other business entity of which (i) if a
corporation, a majority of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof, or (ii) if a limited liability company,
partnership, association or other business entity, a majority of the partnership
or other similar ownership interest thereof is at the time owned or controlled,
directly or indirectly, by any Person or one or more Subsidiaries of that Person
or a combination thereof.
"TAX" and "TAXES" means (i) any federal, state, local or non-United States
net or gross income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium (including taxes under Code Section 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or National Insurance Contribution or similar), unemployment, disability, real
property, personal property, sales, use, transfer, gains, capital gains,
registration, goods and services, value added, alternative or add-on minimum,
windfall profits, estimated or other tax, governmental fee or like assessment or
charge of any kind whatsoever, including any interest, penalty or addition
thereto, whether disputed or not, imposed by any Governmental
67
Authority or other Tax authority or arising under any Tax Law; (ii) any
liability of any Acquired Company for payment of the amounts described in clause
(i) arising as a result of being (or ceasing to be) a member of an Affiliated
Group or being included in any Tax Return of any Affiliated Group; or (iii) any
liability of any Acquired Company for the payment of amounts described in clause
(i) as a result of transferee, successor, or contractual liability. For purposes
of the definition of "Tax", any interest, penalties, additions to tax or
additional amounts that relate to taxes for any period, or a portion of any
period, ended on or before the Closing Date shall include any interest,
penalties, additions to tax, or additional amounts relating to taxes for such
periods, regardless of whether such items are incurred, accrued, assessed or
similarly charged on, before or after the Closing Date.
"TAX CONTEST" means any examination, investigation, audit, or other
proceeding in respect of any Tax Return or Taxes relating to any Acquired
Company.
"TAX RETURN" means any return, declaration, report, claim for refund, form,
information statement, or similar statement (including any related or supporting
information) including any schedule or attachment thereto relating to Taxes,
including any amended return or declaration of estimated Tax.
"THIRD PARTY" means any Person (or group of Persons) other than Purchaser
and its Affiliates and Seller and its Affiliates.
"THIRD PARTY CLAIM" has the meaning set forth in Section 11.4(a).
"THIRD PARTY IP CLAIM" has the meaning set forth in Section 11.4(e).
"THRESHOLD AMOUNT" has the meaning set forth in Section 11.3(a).
"TINA" has the meaning set forth in Section 3.16(c).
"TRADEMARKS" means rights in trademarks, service marks, logos, trade dress
and trade names, and web addresses and domain names, whether registered or
unregistered, and registrations and pending applications to register the
foregoing in the United States and its territories and in all other countries of
the world, and all goodwill associated with the foregoing.
"TRANSACTION EXPENSES" means all legal, accounting, tax, financial advisory
and other professional or transaction expenses incurred by NextNet and its
Subsidiaries in connection with this Agreement, the Ancillary Agreements and the
transactions contemplated hereby and thereby, and any change of control
obligations.
"WORKING CAPITAL" has the meaning set forth in Section 2.2.
[signature page follows]
68
IN WITNESS WHEREOF, each of Seller, NextNet and Purchaser have caused this
Stock Purchase Agreement to be signed as of the date first written above.
CLEARWIRE CORPORATION
/s/ Benjamin G. Wolff
----------------------------------------
Name: Benjamin G. Wolff
Its: Co-Chief Executive Officer
NEXTNET WIRELESS, INC.
/s/ Benjamin G. Wolff
----------------------------------------
Name: Benjamin G. Wolff
Its: Executive Vice-President
MOTOROLA, INC.
/s/ Donald F. Mcclellan
----------------------------------------
Name: Donald F. Mcclellan
Its: Corporate Vice President
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
EXHIBIT A
SAMPLE WORKING CAPITAL CALCULATION AS OF APRIL 30, 2006
<TABLE>
<S> <C>
Assets:
Accounts and other receivables, net $14,215,092
Inventories 5,634,625
Prepaid expenses and other current assets 222,774
-----------
$20,072,491
Liabilities:
Accounts Payable $ 7,535,234
Accrued Expenses 1,951,993
Accrued Warranty 320,082
Other customer deposits 688,405
Current portion of deferred revenue 2,222,215
-----------
$12,717,929
WORKING CAPITAL: $ 7,354,562
</TABLE>
EXHIBIT B
FORM OF OPINION OF COUNSEL TO SELLER AND NEXTNET
Capitalized terms used herein and not defined herein shall have the meanings
ascribed thereto in the Stock Purchase Agreement.
1. Seller and NextNet are corporations duly incorporated and validly
existing and in good standing under the laws of the State of Delaware.
2. Each Subsidiary of NextNet is a corporation duly incorporated and
validly existing and in good standing under the laws of the
jurisdiction of its incorporation.
3. NextNet is duly qualified to do business as a foreign corporation in
the jurisdictions identified on Schedule 3.3. Each Subsidiary of
NextNet is duly qualified to do business as a foreign corporation in
the jurisdictions identified on Schedule 3.4.
4. Seller and NextNet each have corporate power and authority to enter
into, and to perform their respective obligations under, the Agreement
and the other agreements to be delivered at the Closing to which
Seller or NextNet is a party (the "Transaction Agreements"). To our
knowledge, NextNet has all necessary power and authority to conduct
its business in the manner in which, and at the locations where, it is
presently conducted.
5. Each of Seller and NextNet has authorized, by all necessary corporate
action, the execution and delivery of each of the Transaction
Agreements and the performance of each of the Transaction Agreements
and the transactions contemplated by the Agreement, and Seller and
NextNet have executed and delivered each of the Transaction Agreements
to which it is a party.
6. The Agreement constitutes the legal, valid and binding obligation of
Seller and NextNet, enforceable against Seller and NextNet in
accordance with its terms.
7. The execution and delivery by Seller and NextNet of and the
performance of the transactions contemplated by the Agreement do not
(i) violate the certificate of incorporation or bylaws of Seller or
NextNet, (ii) violate or conflict with or constitute a default under,
or require any notice, consent or approval under, any of the
agreements or obligations specifically identified in the schedules to
this Agreement, except to the extent that any such violation or
contravention of which would not have a Material Adverse Effect, (iii)
violate the federal law of the United States of America or the law of
the states of Washington or New York or the General Corporation Law of
the State of Delaware, or (iv) result in the imposition of any
Encumbrance upon the Shares or any asset of NextNet.
8. Immediately prior to the Closing, the duly authorized capital stock of
NextNet consisted of 1,000 shares of common stock, par value $0.0001
per share. The Shares represent the only issued and outstanding shares
of capital stock of NextNet. All of the Shares have
been duly and validly authorized and issued and are fully paid and
nonassessable and free of all preemptive rights.
9. To our knowledge, there are no outstanding or authorized
subscriptions, options, rights, warrants, puts, calls or other
agreements or commitments of any type (a) obligating Seller or NextNet
to issue, sell or transfer any shares of NextNet's capital stock, any
securities convertible into shares of capital stock of NextNet, or any
other rights to acquire capital stock of NextNet, (b) obligating
Seller or NextNet to grant, offer or enter into any of the foregoing,
(c) relating to the voting or control of any shares of capital stock
of NextNet or (d) subjecting NextNet to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of
its capital stock.
10. To our knowledge, there are no actions, proceedings or governmental
investigations pending, or threatened in writing, against or affecting
NextNet or any of its assets, or against or affecting Seller or
NextNet which questions the validity of the Transaction Agreements or
the consummation of the transactions contemplated thereby, or the
right of Seller or NextNet to execute, deliver and perform the
Transaction Agreements.
EXHIBIT C
FORM OF RELEASE AGREEMENT
THIS RELEASE AGREEMENT (this "Release") is dated effective as of
[__________], 2006 by Clearwire Corporation, a Delaware corporation ("Seller"),
in its capacity as the sole shareholder NextNet Wireless, Inc., a Delaware
corporation ("NextNet"), and on behalf of itself and its Affiliates.
RECITALS
A. Seller has heretofore been the sole shareholder of NextNet.
B. Seller, NextNet and Motorola, Inc., a Delaware corporation
("Purchaser"), have entered into a Stock Purchase Agreement dated as of June 30,
2006 (the "Purchase Agreement"), pursuant to which Seller is selling to
Purchaser, and Purchaser is purchasing from Seller, all outstanding shares of
capital stock of NextNet.
C. Seller will derive substantial benefits from the consummation of the
transactions contemplated by the Purchase Agreement.
D. The execution, delivery and continued existence and enforceability of
this Release is a material inducement to the willingness of Purchaser to enter
into the Purchase Agreement.
E. Any capitalized terms or phrases used herein and not otherwise defined
herein shall have the meaning set forth in the Purchase Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals, the mutual
covenants and agreements set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
intending to be legally bound, Seller hereby agrees as follows:
1. Release. From and after the Closing Date:
(a) Seller and each of its Affiliates hereby releases and forever
discharges NextNet, Purchaser and all of their respective current and former
members, directors, officers, employees, agents and Affiliates (each, a
"Released Party") from any and all liability whatsoever (whether known or
unknown, asserted or unasserted, direct or indirect, absolute or contingent,
accrued or unaccrued and whether due or to become due) ("Liability") that the
Released Parties may have to Seller or one of its Affiliates in its capacity as
a shareholder of NextNet or otherwise, arising contemporaneously with or prior
to the date hereof, or on account of or arising out of any act, omission,
transaction, matter, cause or event occurring contemporaneously with or up to
and including the date of this Release. Nothing in this Release shall limit in
any manner any rights to (i) warranty claims or other contractual rights with
respect to the sale of products from NextNet to Seller or one of its Affiliates,
(ii) payment of consideration pursuant to the
terms of the Purchase Agreement, and (iii) indemnification the Seller
Indemnified Parties may be entitled to pursuant to Article XI of the Purchase
Agreement or any other rights of Seller under the Purchase Agreement.
(b) Seller, on behalf of itself and its Affiliates, expressly waives
the benefit of any statute or rule of law, which, if applied to this Release,
would otherwise exclude from its binding effect any claim not known by the
Released Parties on the date of execution of this Release to exist.
(c) Seller, on behalf of itself and its Affiliates, hereby irrevocably
covenants to refrain from, directly or indirectly through NextNet or otherwise,
asserting any claim or demand, or commencing, instituting or causing to be
commenced, any claim or legal proceeding of any kind against any Released Party
before any court, administrative agency or other forum by reason of any matters
released hereby or that might reasonably be expected to result in any Liability.
(d) Seller, on behalf of itself and its Affiliates, represents to the
Released Parties that they have not assigned or transferred or purported to
assign or transfer to any person or entity all or any part of, or any interest
in, any claim, contention, demand, cause of action (at law or in equity) or
Liability of any nature, character or description whatsoever, which is or which
purports to be released or discharged by this Release.
2. Scope of Release. Seller, on behalf of itself and its Affiliates, hereby
represents that it understands and acknowledges that it may hereafter discover
facts and legal theories concerning this Release and the subject matter hereof
in addition to or different from those of which it now believes to be true.
Seller understands and hereby agrees that this Release shall remain effective in
all respects notwithstanding those additional or different facts and legal
theories or the discovery of those additional or different facts or legal
theories. Seller assumes the risk of any mistake of fact or law with regard to
any potential claim or with regard to any of the facts which are now unknown to
it relating thereto. Notwithstanding the release set forth herein, this Release
and all obligations assumed hereunder shall remain binding on Seller.
3. Severability. In the event that any provision of this Release is held
invalid, unenforceable or void to any extent by a court of competent
jurisdiction, such provision shall be modified, if possible, by reducing its
duration and scope to allow enforcement of the maximum permissible duration and
scope. In any event, such declaration shall not affect the remaining provisions
of this Release, and this Release shall be enforced as modified, or if no
modification is enforceable, as if such invalid clause had not been included.
4. Successors and Assigns. This Release shall be binding upon and inure to
the benefit of each of the Released Parties and their respective heirs,
successors, assigns, representatives, Affiliates and agents.
5. Headings. The section headings of this Release are for convenience of
reference only and shall not be deemed to alter or affect any provisions of this
Release.
6. Governing Law. This Release shall be governed by and construed under the
internal laws of the State of Delaware without reference to such state's
principles of conflicts of law.
7. Termination. This Release shall automatically terminate upon the
termination of the Purchase Agreement in accordance with the provisions of
Article X thereof.
[signature page follows]
IN WITNESS WHEREOF, Seller has executed and delivered this Release as of
the date set forth above on behalf of itself and each of its Affiliates.
SELLER:
CLEARWIRE CORPORATION
By:
------------------------------------
Name:
----------------------------------
Its:
-----------------------------------
EXHIBIT D
COMMERCIAL AGREEMENTS
See attached.
Exhibit 10.55
WIRELESS BROADBAND SYSTEM
SERVICES AGREEMENT
BETWEEN
MOTOROLA, INC.
AND
CLEARWIRE US LLC
MOTOROLA/CLEARWIRE CONFIDENTIAL
WIRELESS BROADBAND SYSTEM
SERVICES AGREEMENT
This Wireless Broadband System Services Agreement ("Services Agreement") is
between Motorola, Inc., a Delaware corporation, ("Motorola", which term
will also mean, where the context requires, Motorola subsidiaries or
subcontractors involved in providing services or materials for this
Purchase Agreement) and Clearwire US LLC, a Nevada limited liability
company ("Clearwire" which term will also mean, where the context requires,
"Clearwire Affiliates").
RECITALS:
1. Clearwire has obtained or will obtain a license to operate wireless
broadband communications systems in the United States and other countries.
2. Motorola desires to sell and Clearwire may choose to purchase services for
Clearwire's (and Clearwire's Affiliates) Wireless Broadband Infrastructure
System (as hereinafter defined) as set forth in this Services Agreement and
in the attached Exhibits, all of which are incorporated herein.
AGREEMENT:
The parties agree as follows:
1. DEFINITIONS (capitalized terms used within a definition are defined in this
Section in alphabetical order). Defined terms will be capitalized
throughout this Services Agreement and will be read in the singular, plural
or the tense as the context requires. Definitions are contained in Exhibit
"D".
2. SCOPE OF AGREEMENT
2.1 Motorola will furnish to Clearwire (or Clearwire Affiliates, as
applicable), and Clearwire may purchase from Motorola the Services as
defined herein and listed within Exhibit "A".
2.2 This Services Agreement may be canceled only upon the terms and
conditions contained herein.
2.3 Affiliates of Clearwire may also purchase Services from Motorola under
this Services Agreement and Clearwire will guarantee payment for any
Services Motorola provides.
2.4 Examples of potential Services are contained in Exhibit "B",
Deployment Program examples, and the following listing of Services:
- Planning and Design of Network, including capacity and
coverage considerations
- Site selection
- Installation and commissioning of network elements
- Integration of Network Elements into network
- Acceptance testing of network
- Program management and project administration
- Design, provision and integration of Network Management
System to manage network from a single NOC
- Custom OSS Integration to interface to existing (or supply
new) CRM, Order Manager, Subscriber provisioning and
Activation, Network Inventory, Performance and SLA
Monitoring, Service Assurance solutions
1
- Billing integration
- Over-the-air Provisioning of hand sets and CPE
- Network Performance and Optimization including SLA and QoS
management
- Network Security design, including provision of appropriate
firewalls and intrusion detection and prevention devices
- Security vulnerability assessment and remediation services
- Security monitoring and management
- Network operations and maintenance
- Spares management
2.5 [***]
3. OBLIGATIONS OF CLEARWIRE
Clearwire will:
3.1 Make the payments according to the schedule set forth in Section 5 of
this Services Agreement.
3.2 Perform all of its other obligations set out in this Services
Agreement and the Exhibits attached hereto.
4. OBLIGATIONS AND REPRESENTATIONS OF MOTOROLA
With regard to providing Services, Motorola will:
4.1 Comply with the SOW for the specific project agreed between the
parties.
4.2 Otherwise perform all of its obligations under this Agreement and
Exhibits for the particular Service to be provided.
5. PAYMENT AND PRICING
Clearwire will pay to Motorola the price for the particular Services, as
set forth in Exhibit "A", in U.S. dollars (except as may be specifically
set forth below) and according to the following terms and payment
schedules:
5.1 General Payment Terms
5.1.1 Clearwire will be invoiced [***] for installation or training
Services rendered upon their completion. Payment for other
Services are as mutually agreed in writing or as listed in
Exhibit "A".
5.1.2 Payment for all service and related materials will be net [***]
from invoice date.
5.1.3 Clearwire will be responsible for the payment of all applicable
sales, use, retailers occupation, excise, property and other
assessments in the nature of taxes however designated, on the
Products and Services provided to Clearwire pursuant to this
Agreement, exclusive however, of any taxes measured by
[*** Confidential Treatment Requested]
2
Motorola's net income or based on Motorola's franchise. Personal
property taxes assessable on the Products will be the
responsibility of Clearwire. To the extent Motorola is required
by law to collect such taxes (state or local), one hundred
percent (100%) thereof will be added to invoices as separately
stated charges and paid in full by Clearwire, unless the
Clearwire is exempt from such taxes and furnishes Motorola with a
certificate of exemption in a form reasonably acceptable to
Motorola. In the event Clearwire claims exemption from sales, use
or other such taxes under this Agreement, Clearwire will hold
Motorola harmless from any and all subsequent assessments levied
by a proper taxing authority for such taxes, including interest,
penalties and late charges.
5.1.4 Clearwire will use commercially reasonable efforts to notify
Motorola of any disputed amounts under any invoice in writing
prior to the invoice due date; provided that Clearwire shall pay
to Motorola the undisputed portion of any invoice within the time
frame set forth in Section 5.1.1. Clearwire's failure to notify
Motorola of any disputed amount prior to the invoice due date
will not constitute a waiver by Clearwire of any dispute
regarding any previously paid invoice; provided that, in no event
shall Clearwire dispute any invoice submitted by Motorola
hereunder more than [***] after the date of such invoice. For any
undisputed amount due hereunder which remains unpaid, Clearwire
will pay Motorola a service fee at the rate of [***] of the
amount due for each month or portion thereof that the amount
remains unpaid.
6. WARRANTIES
6.1 SERVICES WARRANTY
Motorola represents and warrants that all Services provided hereunder
will be performed in a good and workmanlike manner and in accordance
with Motorola's specifications. In the event that Clearwire reasonably
determines that any work has not been performed in a good and
workmanlike manner or in accordance with the specifications, Clearwire
will promptly notify Motorola. If Motorola determines that the
Services were defective, then Motorola will take prompt remedial
action to repair or replace the defective Services at Motorola's cost
and expense.
6.2 THE WARRANTIES IN THIS AGREEMENT ARE GIVEN IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, WHICH ARE SPECIFICALLY EXCLUDED,
INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE. FURTHERMORE, BECAUSE EACH WIRELESS
RADIOTELEPHONE SYSTEM IS UNIQUE, MOTOROLA DISCLAIMS LIABILITY FOR
RANGE, COVERAGE, SUBSCRIBER CAPACITY, SERVICE LEVEL OR OPERATION OF
THE SYSTEM, AS A WHOLE, EXCEPT AS SPECIFICALLY SET FORTH IN THE
WARRANTIES CONTAINED IN THIS AGREEMENT.
7. CONFIDENTIALITY
During the entire term of this Agreement, Section 1 of the Side Agreement
between Clearwire and Motorola, dated June 28, 2006, applies to define
Confidential Information, each party's use of the other's Confidential
Information, and dissemination of information about this Agreement to third
parties in any form.
8. TRADEMARK AND PUBLICITY
Nothing contained in this Services Agreement will be construed as
conferring any right to use any name, trademark or other designation of
either party hereto, including any contraction, abbreviation or simulation
of any of the foregoing, in advertising, publicity or marketing activities.
[*** Confidential Treatment Requested]
3
Any publicity, advertising, etc. with regard to this Services Agreement or
the System which mentions the other party will be mutually agreed upon
prior to use.
9. FORCE MAJEURE
Except for payment due, neither party will be liable for any delay or
failure to perform due to any cause beyond its reasonable control. Causes
include strikes, acts of God, interruptions of transportation. The delivery
schedule will be considered extended by a period of time equal to the time
lost because of any excusable delay.
10. TERMINATION
10.1 Either party may terminate this Services Agreement without liability
by notice pursuant to Section 18 if the other makes a general
assignment for the benefit of creditors, or if a petition in
bankruptcy or under any insolvency law is filed by or against the
other and such petition is not dismissed within [***] after it has
been filed or the other commits a material breach of its obligations
hereunder. However, in the case of any such breach which is capable of
being cured, neither party will terminate this Services Agreement
unless and until the other will have failed to make good such default
within [***] after it will have been served with a notice requiring
that such default be made good and stating its intention to terminate
the Services Agreement if compliance with the notice is not met.
10.2 The termination of this Services Agreement will not affect or
prejudice any provisions of this Services Agreement, which are
expressly or by implication provided to continue in effect after such
termination.
11. INDEMNIFICATION; LIMITATION OF LIABILITY
During the term of this Services Agreement, the parties will indemnify and
hold harmless each other together with their officers, agents and employees
from any and all loss, damage, expense, judgment, lien, suit, cause of
action, demand or liability for personal injury, including death and
tangible property damage, which may be imposed on or incurred by one party
arising directly out of the negligent acts or omissions of the other, its
agents, subcontractors, or employees during the performance of any work
hereunder. The offending party will, at its sole expense, defend any suit
based upon a claim or cause of action and satisfy any judgment that may be
rendered against the other resulting therefrom, provided that the offending
party will be given (i) prompt notice of any such claim or suit; and (ii)
full opportunity to defend such suit The offended party may, at its
election, participate in the defense and will cooperate fully in defending
any claim or suits. The offending party will pay all costs, expenses, and
reasonable attorney's fees incurred by the offended party in connection
with any such claim or suit or in enforcing this indemnity provision,
provided a valid claim is presented.
EXCEPT AS PROVIDED IN THIS SECTION 11 AND BREACHES OF CONFIDENTIALITY,
NEITHER PARTY, WHETHER AS A RESULT OF BREACH OF CONTRACT, WARRANTY, TORT
(INCLUDING NEGLIGENCE), PATENT INFRINGEMENT, COPYRIGHT INFRINGEMENT OR
OTHERWISE, WILL HAVE ANY LIABILITY FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES,
INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFIT OR REVENUES, LOSS OF USE OF
THE PRODUCTS OR ANY ASSOCIATED EQUIPMENT, COST OF CAPITAL, COST OF
SUBSTITUTE PRODUCTS, FACILITIES OR SERVICE, OR DOWNTIME COSTS. EXCEPT FOR
THE INDEMNITY OBLIGATION IN THIS SECTION 11, BREACHES OF CONFIDENTIALITY
AND FOR PAYMENTS DUE, A PARTY'S TOTAL LIABILITY TO THE OTHER FOR ANY BREACH
OF THIS SERVICES AGREEMENT WILL IN NO EVENT EXCEED THE GREATER OF [***] OR
THE TOTAL VALUE OF. SERVICES INVOICED BY MOTOROLA TO CLEAR WIRE IN THE
PRIOR [***]
[*** Confidential Treatment Requested]
4
12. CHANGES
Certain changes may be made within the scope of this Services Agreement
without formal amendment thereto by written "Change Orders" signed by
duly-authorized representatives of both parties.
Within ten (10) days of the signing of this Services Agreement, the parties
will agree, in writing, on the authority of their respective duly
authorized representatives, to sign such Change Orders on their behalf.
13. ASSIGNMENT
The Services Agreement will accrue to the benefit of and be binding upon
the parties hereto and any successor entity into which either party will
have been merged or consolidated or to which either party will have sold or
transferred all or substantially all its assets, but it will not be
otherwise assigned by either party (other than an assignment by operation
of law), without the prior written consent of the other party. It is the
intention of the parties that the exclusive and preferred supplier
commitments survive any change of control of Clearwire. The parties agree
that any consent to a requested assignment will not be unreasonably
withheld or delayed.
14. GOVERNING LAW
The laws of the State of New York, USA, will govern the validity,
performance and all matters relating to the effect of this Services
Agreement and any amendment hereto.
15. EXPORT CONTROLS
15.1 If, at the time or times of Motorola's performance hereunder, a
validated export license is required for Motorola, or its
subcontractor, to lawfully export the goods or technical data from the
United States of America or the such other country of origin, then the
issuance of such license to Motorola, or its subcontractor in
accordance with the rules and regulations of the applicable
country(ies), will constitute a condition precedent to Motorola's
performance of its obligations hereunder. Motorola will apply for the
export license for the products supplied hereunder based upon
information timely supplied by the Clearwire. Clearwire is responsible
for any applicable import license requirements. Clearwire and Motorola
acknowledge and agree that any delay in the grant of such licenses
and/or approvals may impact the schedule of performance.
15.2 If, at the time or times of Motorola's performance hereunder,
regulatory approval is required for the provision of Services or any
part thereof, then such approval will constitute a condition precedent
to Motorola's performance of its obligations hereunder.
15.3 Clearwire and Motorola agree to comply with all applicable export laws
and regulations of the United States of America or such other country
of origin.
16. ORDER OF PRECEDENCE
IN the event of an inconsistency in this Services Agreement, the
inconsistency will be resolved by giving precedence in the following order:
16.1 Exhibit "A" and all duly executed amendments to Exhibit "A";
16.2 All other Exhibits and all duly executed amendments to said Exhibits
(provided, however, that Exhibit "B" is a list of examples of possible
areas of Service); and
16.3 This Services Agreement and duly executed amendments to this Services
Agreement, with the latest amendment taking precedence over earlier
amendments.
5
17. LANGUAGE OF AGREEMENT
In the event that this Services Agreement is translated into any other
language, the English language version hereof will take precedence and
govern.
18. NOTICE
18.1 Notices required to be given by one party to another will be in the
English language unless expressly agreed otherwise. Said notices will
be deemed properly given if reduced to writing and personally
delivered or transmitted by registered or certified post to the
address below, postage prepaid, and will be effective upon receipt.
18.1.1 Motorola will send notices as follows:
Clearwire US LLC
5808 Lake Washington Blvd. NE, Suite 300
Kirkland, WA 98033
Attention: Chief Executive Officer
With a copy to:
Clearwire US LLC
5808 Lake Washington Blvd. NE, Suite 300
Kirkland, WA 98033
Attention: Legal Department
And with a copy to:
Davis Wright Tremaine LLP
2600 Century Square
1501 Fourth Avenue
Seattle, WA 98101
Attention: Julie Weston
18.1.2 Clearwire will send notices as follows:
Motorola, Inc.
1501 W. Shure Drive
Arlington Heights, II. 60004
Fax 847-632-2683
Attention: Clearwire Program Management
CC: Senior Commercial Attorney, Law Department
18.2 Either party may change the addresses for giving notice from time to
time by written instructions to the other of such change of address.
19. SURVIVAL OF PROVISIONS
The parties agree that where the context of any provision indicates an
intent that it will survive the term of this Services Agreement then it
will survive.
20. WAIVER
Failure or delay on the part of Motorola or Clearwire to exercise any
right, power or privilege hereunder will not operate as a waiver thereof.
6
21. SEVERABIL1TY
In the event any one or more of the provisions of this Services Agreement
is held to be unenforceable under applicable law, (a) such unenforceability
will not affect any other provision of this Services Agreement; (b) this
Services Agreement will be construed as if said unenforceable provision had
not been contained therein; and (c) the parties will negotiate in good
faith to replace the unenforceable provision by such as has the effect
nearest to that of the provision being replaced.
22. AUTHORITY
Each party hereto represents and warrants that (i) it has obtained all
necessary approvals, consents and authorizations of third parties and
governmental authorities to enter into this Services Agreement and to
perform and carry out its obligations hereunder; (ii) the persons executing
this Agreement on its behalf have express authority to do so, and, in so
doing, to bind the party thereto; (iii) the execution, delivery and
performance of this Services Agreement does not violate any provision of
any bylaw, charter, regulation or any other governing authority of the
party; and (iv) the execution, delivery and performance of this Services
Agreement has been duly authorized by all necessary partnership or
corporate action and this Services Agreement is a valid and binding
obligation of such party, enforceable in accordance with its terms.
23. TERM
The initial term of this Agreement will be for eight (8) years from the
Effective Date. This Agreement will be automatically renewed for
consecutive one (1) year terms unless either party notifies the other party
in writing of its intent to terminate the Agreement at least 120 days prior
to the expiration of the initial term or any renewal thereof.
24. COVENANT NOT TO EMPLOY
During the period of time beginning with the execution of this Agreement
and ending at the conclusion of the initial term, Clearwire will not employ
or offer employment to any employee formerly employed by NextNet Wireless,
Inc. and who became an employee of Motorola on the Effective Date who is
involved in the performance of Services to Clearwire. If at any time this
provision is found to be overly broad under the laws of an applicable
jurisdiction, then this provision will be modified as necessary to conform
to such laws rather than be stricken.
25. UNITED STATES OF AMERICA ("U.S.") - GOVERNMENT COMPLIANCE
This Agreement is a commercial contract and is governed by the terms and
conditions negotiated by the parties. Clearwire represents and warrants
that: (i) it is not a governmental entity; (ii) it is not owned in whole or
in part, directly or indirectly, by any governmental entity; (iii) the
purchases contemplated under this Agreement will not be financed using any
funds obtained from any government entity (including, without limitation,
OPIC, Eximbank or other similar agencies); and (iv) there is no other basis
on which any regulations, decrees or laws applicable to sales to a
governmental entity could be deemed applicable to this Agreement. The term
"governmental entity," as used herein, will include agencies and
instrumentalities of U.S. federal, state and local governments as well as
of governments outside of the U.S.
In the event that Clearwire elects to sell the products to a governmental
entity, Motorola makes no representations with respect to the ability of
its goods, services, or prices to satisfy any statutes, regulations or
provisions relating to such governmental sales.
26. ENTIRE AGREEMENT
This Services Agreement and the Exhibits hereto, together with Section 1 of
the Side Agreement referred to in Section 7, constitute the entire
understanding between the parties concerning the provision of Services to
Clearwire and supersede all prior discussions, agreements and
7
representations, whether oral or written and whether or not executed by
Motorola and Clearwire. No modification, amendment or other change may be
made to this Services Agreement or any part thereof unless reduced to
writing and executed by authorized representatives of both parties.
The terms and conditions of this Services Agreement will prevail
notwithstanding any variance with the terms and conditions of any order
submitted by Clearwire following execution of this Services Agreement. In
no event will the preprinted terms and conditions found on any Clearwire
purchase order, acknowledgment or other form be considered an amendment or
modification of this Services Agreement, even if such documents are signed
by representatives of both parties; such preprinted terms and conditions
will be null and void and of no force and effect
27. COUNTERPARTS
This Services Agreement may be executed in multiple counterparts, each of
which will be deemed an original and all of which taken together will
constitute one and the same instrument. Facsimile or digital signatures
will be treated as originals.
[Signature page follows]
8
Executed as of this 29th day of August, 2006 ("Effective Date").
MOTOROLA, INC. CLEARWIRE US LLC
By: /s/ C. F. WRIGHT By:
--------------------------------- ------------------------------------
(Signature) (Signature)
Name: C. F. WRIGHT Name:
(Print - Block Letters) ----------------------------------
(Print - Block Letters)
Title: SENIOR VICE-PRESIDENT Title:
(Print - Block Letters) ---------------------------------
(Print - Block Letters)
Date: 8/29/06 Date:
----------------------------------
Clearwire Corporation hereby guarantees payment of the purchase price for any
Services purchased by Clearwire or any Clearwire Affiliate under this Agreement,
subject to the exercise of any rights of Clearwire or such Clearwire Affiliate
with respect to such payment. Motorola need not exhaust remedies against
Clearwire and Clearwire Affiliates (other than to demand payment and to allow
for the passage of the applicable cure period) prior to pursuing this guarantee
of Clearwire Corporation.
CLEARWIRE CORPORATION
By:
---------------------------------
(Signature)
Name:
-------------------------------
(Print - Block Letters)
Title:
------------------------------
(Print - Block Letters)
Date:
-------------------------------
Executed as of this 29th day of August, 2006 ("Effective Date").
MOTOROLA, INC. CLEARWIRE US LLC
By: By: /s/ Benjamin G. Wolff
--------------------------------- ------------------------------------
(Signature) (Signature)
Name: Name: Benjamin G. Wolff
------------------------------- (Print - Block Letters)
(Print - Block Letters) Title: Co-President & Co-CEO
Title: (Print - Block Letters)
------------------------------ Date: 8/29/06
(Print - Block Letters)
Date:
-------------------------------
Clearwire Corporation hereby guarantees payment of the purchase price for any
Services purchased by Clearwire or any Clearwire Affiliate under this Agreement,
subject to the exercise of any rights of Clearwire or such Clearwire Affiliate
with respect to such payment. Motorola need not exhaust remedies against
Clearwire and Clearwire Affiliates (other than to demand payment and to allow
for the passage of the applicable cure period) prior to pursuing this guarantee
of Clearwire Corporation.
CLEARWIRE CORPORATION
By: /s/ Benjamin G. Wolff
---------------------------------
(Signature)
Name: Benjamin G. Wolff
(Print - Block Letters)
Title: Co-President & Co-CEO
(Print-Block Letters)
Date: 8/29/06
EXHIBIT "A"
TO THE
WIRELESS BROADBAND SYSTEM
SERVICES AGREEMENT
SERVICES AND PRICE LIST
1. TBD based on quotes for specific Services.
2. Other Services or Training may be added by mutual agreement of the parties
and Motorola may provide quotes for specific Services for Clearwire's
consideration.
A-1
EXHIBIT "B"
TO THE
WIRELESS BROADBAND SYSTEM
SERVICES AGREEMENT
[***]
[*** Confidential Treatment Requested]
B-1
[***]
[*** Confidential Treatment Requested]
B-2
[***]
[*** Confidential Treatment Requested]
B-3
[***]
[*** Confidential Treatment Requested]
B-4
[***]
[*** Confidential Treatment Requested]
B-5
[***]
[*** Confidential Treatment Requested]
B-6
EXHIBIT "C"
TO THE
WIRELESS BROADBAND SYSTEM
SERVICES AGREEMENT
RESERVED
C-1
EXHIBIT "D"
TO THE
WIRELESS BROADBAND SYSTEM
SERVICES AGREEMENT
DEFINITIONS
ACCEPTANCE TEST PLAN
The agreed-upon testing described and administered after installation services.
CLEARWIRE AFFILIATES
Entities which are controlled with greater than 50% ownership by Clearwire.
EQUIPMENT
The Motorola-supplied hardware for the System, but excluding Subscriber
Equipment.
PRODUCT
All Equipment and Software purchased for use in Clearwire's wireless broadband
network.
SERVICES
Those Motorola functions included in this Services Agreement including, but not
limited to, the listing of functions in Section 2.4, and such other functions as
may be more fully set forth in Exhibit "A" or an individual SOW.
SOFTWARE
The object-code computer programs, including Firmware object code, licensed by
Motorola for use solely in conjunction with the Equipment, which enables the
Equipment to perform their functions and procedures. Any reference to Software
being "sold" or "purchased" is understood in fact to be a reference in fact to
the Software being licensed.
SUBSCRIBER EQUIPMENT
Any device or portable radiotelephone equipment intended for System use, whether
or not in actual use.
D-1
Exhibit 10.56
WIRELESS BROADBAND SYSTEM
INFRASTRUCTURE AGREEMENT
BETWEEN
MOTOROLA, INC.
AND
CLEARWIRE US LLC
WIRELESS BROADBAND SYSTEM
INFRASTRUCTURE AGREEMENT
This Wireless Broadband System Infrastructure Agreement ("Infrastructure
Agreement") is between Motorola, Inc., a Delaware corporation ("Motorola", which
term also means, where the context requires, Motorola subsidiaries involved in
providing services or materials for this Infrastructure Agreement) and Clearwire
US LLC, a Nevada limited liability company ("Clearwire, which term also means,
where the context requires, "Clearwire Affiliate(s)".
RECITALS:
1. Motorola and Clearwire share a vision of the opportunity for mobile
broadband services both in the U.S. and Worldwide, progressing from
Clearwire's current fixed/portable services to new and unique mobile
broadband services. Clearwire currently has operations in the United States
and select foreign countries.
2. Motorola believes Clearwire is best positioned by virtue of sponsorship,
management and spectrum assets to capitalize on this opportunity.
3. This Infrastructure Agreement, as well as companion agreements concurrently
executed regarding the purchase by Motorola of Clearwire's subsidiary
NextNet Wireless, Inc. ("NextNet"), an investment by Motorola in Clearwire
Corporation, and separate agreements for Motorola's supply of wireless
broadband subscriber products and designated services to Clearwire, form
the relevant commercial documentation of this collaborative engagement.
4. Motorola desires to sell and Clearwire desires to purchase the
Infrastructure for a wireless broadband System (as hereinafter defined) as
set forth in this Infrastructure Agreement and in the attached Exhibits,
all of which are incorporated herein.
AGREEMENT:
The parties agree as follows:
1. DEFINITIONS (capitalized terms used within a definition are defined in this
Section in alphabetical order). Defined terms will be capitalized
throughout this Infrastructure Agreement and will be read in the singular,
plural or the tense as the context requires. Definitions are contained in
Exhibit "E".
2. SCOPE OF AGREEMENT: IMPLEMENTATION
2.1 Motorola will furnish to Clearwire and Clearwire will purchase from
Motorola the Infrastructure Products for the System. Affiliates of
Clearwire will also have the right to purchase under this Agreement
Clearwire Corporation will guarantee payment for any Infrastructure
Products Motorola provides to Clearwire and Clearwire Affiliates.
Clearwire will also have the right to purchase, and the definition of
"Infrastructure Products" will be deemed to include any other products
that are listed on Exhibit "A", and any Wireless Broadband
Infrastructure Products that Motorola makes available to another
wireless broadband service provider customer operating on licensed
spectrum with channel widths of not less than 5 MHz, on terms and
conditions, (including, but not limited to, financial terms and terms
regarding the availability of such products) that are no less
favorable to Clearwire than those agreed by another customer of
Motorola, for similar purchase commitments.
Motorola will make each Infrastructure Product available to Clearwire
on the earlier of (a) the date specified in Exhibit "A", Schedule 2,
or (b) the date on which Motorola makes that
1
Infrastructure Product available to any third party, provided that in
the case where Wireless Broadband Infrastructure Products are uniquely
developed for and funded by another customer, such Wireless Broadband
Infrastructure Products will not be made available to Clearwire until
such time as they are made commercially available to third parties
other than the entity paying for development.
If there is an insufficient supply of Infrastructure Product to
satisfy unfulfilled purchase orders of Clearwire and other purchasers
of the same Infrastructure Product, Motorola agrees not to
disadvantage Clearwire compared to the other purchasers.
2.2 This Infrastructure Agreement may be canceled only upon the terms and
conditions contained herein.
2.3 Except as provided elsewhere in this Section 2.3, Clearwire (and
Clearwire Affiliates) agree to purchase 100% of their Wireless
Broadband Infrastructure Products (excluding products purchased for
non-commercial use, such as for purposes of internal testing)
requirements from Motorola during the term of this Agreement.
Exceptions to the foregoing purchase commitment:
2.3.1 Starting on the 5th anniversary of the Effective Date, the
Section 2.3 purchase commitment percentage drop's from 100% to
51% of the Wireless Broadband Infrastructure Products.
2.3.2 If any Infrastructure Product supplied by Motorola materially
fails to meet the performance specifications and such material
deficiencies are not remedied by Motorola within [***] days of
written notice to Motorola, or if Motorola's production and
delivery of any Infrastructure Product fails in any material
respects to meet the requirements of this Agreement, which
failures have not been cured in the 90 days after written notice
to Motorola, then Clearwire will be released from its exclusive
purchase commitment only for that specific Infrastructure Product
Once Motorola cures the breach, the exclusive purchase
requirement again covers that Infrastructure Product. For
purposes of this Agreement, a material breach does not include
the situation where Motorola, with Clearwire's consent,
substitutes a substantially similar or comparable product at a
similar price.
2.3.3 If Clearwire identifies a Wireless Broadband Infrastructure
Product need, and Motorola decides not to supply that product,
Motorola will allow Clearwire to purchase that specific product
from an agreed to ODM supplier (approval will not be unreasonably
withheld), subject to a licensing agreement from Motorola to that
ODM supplier on commercially reasonable terms. However, if such
Wireless Broadband Infrastructure Product need is based on an
industry-recognized public standard, and if Motorola decides not
to supply that product, Motorola will have the right to OEM such
product itself and sell it to Clearwire under the terms of this
Agreement. If Motorola decides not to do so, Clearwire will be
relieved of its exclusive purchase obligations under this Section
2.3 with respect to such product only.
2.3.4 Clearwire may terminate the exclusivity requirements under this
Agreement if there are [***] uncured Infrastructure Product
material breaches in any [***] month period.
2.4 Except as contained in this Section 2.4, the aggregate price to
Clearwire for Infrastructure Products purchased in any calendar year
will be no less favorable than the aggregate price paid by other
customers contemporaneously buying similar or lesser aggregate
purchases of Infrastructure Products within the same country during
such calendar year. The foregoing price level commitment 1) excludes
unique Infrastructure Product sales
[*** Confidential Treatment Requested]
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that are directly related to funded development programs, and any one
time per customer initial promotional offer (not to exceed [***] units
of Infrastructure Product), and 2) is given in consideration of the
minimum purchase commitments by Clearwire (and Clearwire's Affiliates)
in this Agreement. For avoidance of doubt, purchase Volumes of CDMA,
GSM, UMTS and iDEN infrastructure and/or devices can not be considered
for purposes of establishing MFN pricing comparisons between
customers.
2.5 Exhibit "B" sets forth Infrastructure Products and technical
specifications therefor which Clearwire desires to purchase. Once
mutually agreed upon by the parties, Exhibit "B" will be amended
accordingly and Motorola will agree to deliver Infrastructure Products
in accordance with the specifications and features described in such
amended Exhibit "B". Motorola and Clearwire will use commercially
reasonable efforts to achieve the objectives stated in Exhibit "B" by
the dates specified in Exhibit "B" or elsewhere in this Agreement,
including identifying those provisions of Exhibit "B", the breach of
which will be mutually agreed upon to constitute a material breach for
purposes of Section 2.3.4.
2.6 In the two (2) years after the Effective Date, and in consideration of
Motorola's obligations under this Agreement, Clearwire and its
Affiliates will purchase no less than $150,000,000 in Infrastructure
Products and Subscriber Products from Motorola.
2.7 Infrastructure Products: Expedience
2.7.1 Expedience Infrastructure Products. During the term of this
Agreement, senior technical representatives of both Motorola and
Clearwire shall meet quarterly to review system performance,
coordinate on standards and technology evolution, and agree on
the potential development and delivery of additional or modified
features and functions that are not already specified in an
Exhibit to this Agreement. If there is a technology improvement
related to Expedience Infrastructure Products requested by and
funded by Clearwire, Motorola will not sell any Expedience
Infrastructure Product activating such improvement to other
customers for a [***] period after such improvement is made
commercially available to Clearwire, absent Clearwire's written
consent. If there is a technology improvement related to
Expedience Infrastructure Products conceptualized by Clearwire,
but the implementation of the improvement is funded by Motorola,
Motorola will not sell any Expedience Infrastructure Product
activating such improvement to other customers for a [***] period
after such improvement is made commercially available to
Clearwire, absent Clearwire's written consent. If a particular
technology improvement is described on the agreed upon product
roadmap or such improvement is part of another standards-based
technology, however, Clearwire is not entitled to exclusive
availability of that improvement. Exhibit "B", Schedule 4
(Expedience ICQ Requirements) outlines the Expedience interfaces
and tools that must be maintained in order to allow the continued
operation of the Clearwire network.
2.7.2 Expedience Software. Motorola will offer an optional NSP Program
as set forth in Exhibit "D". Should Clearwire elect to purchase
NSP, Motorola will make available two Releases of Expedience
Software each calendar year. The pricing for the NSP Program is
set forth in Exhibit "A".
2.8 WiMax Infrastructure Products
2.8.1 Clearwire Network Transition Requirements. Motorola recognizes
that Clearwire will, for some indefinite period of time, operate
both Expedience-based networks and WiMax-based networks. Further,
Clearwire may decide to initiate transition of Expedience
Infrastructure to WiMAX Infrastructure in certain existing
markets, while causing as little disruption to the existing
Clearwire customer base as
[*** Confidential Treatment Requested]
3
possible; such Infrastructure Product modifications may require
Custom Development. To this end:
2.8.1.1 Motorola will, in as much as technically possible, work
closely with Clearwire to develop and modify WiMAX
Infrastructure equipment that will enable a seamless
transition of Expedience equipment to WiMAX equipment. The
transition equipment will include agreed to base station
configurations, power schemes, cabling assemblies, equipment
packaging, sizes and footprints.
2.8.1.2 Clearwire has developed an architecture based on a
particular WiMax Forum ASN Profile which maps elements in
Expedience networks to elements in that profile as
illustrated in Exhibit "B", Schedule 1 "Clearwire
Expedience/WiMAX Architecture". Motorola will, in as much as
technically possible, supply Mobile WiMax Infrastructure
that is interoperable and compatible with Clearwire's
Exhibit "B", Schedule 1 specifications, based on
jointly-developed specifications that will be developed and
appended to this Agreement as Exhibit "B", Schedule 2
"Clearwire WiMAX ASN-GW Requirements". Motorola acknowledges
that, to some extent, Exhibit "B", Schedule 2 may deviate
from the WiMax Forum adopted profiles. Motorola will fully
cooperate with Clearwire, in joint agreement with Motorola,
to support adoption of the identified profile variant(s) to
the WiMax Forum.
2.8.1.3 Motorola will cooperate with Clearwire to provide network
management interfaces on all supplied Network Infrastructure
that are compatible with Clearwire's deployed back office
(OSS), AAA and network management systems. Those existing
interfaces are specified in Exhibit "B", Schedule 3
"Clearwire WiMAX ICD Requirements".
2.8.1.4 Motorola will, in as much as technically possible, equip
their WiMAX Infrastructure Products with the craft
interfaces and diagnostic providing metrics as jointly
defined in Exhibit "B", Schedule 3 and Schedule 5 "Clearwire
WiMAX Systems Validation Plan".
2.8.1.5 All Infrastructure supplied by Motorola to Clearwire will
conform to the Mobile WiMax Certification Profiles
illustrated in Exhibit "B", Schedule 6 "WiMAX Certification
Profiles". Motorola acknowledges that, in some cases,
Exhibit "B", Schedule 6 may deviate from the 802.16e adopted
profiles and will fully cooperate with Clearwire and others
that Clearwire, in joint agreement with Motorola, may
identify to support adoption of the identified profile
variant(s) to the 802.16e profiles in the appropriate forum.
2.8.2 WiMAX Infrastructure Products. In accordance with Exhibit "B",
Motorola will supply base stations in various agreed
configurations to Clearwire at the prices reflected in Exhibit
"A". Features and functionality of each WMX configuration
corresponding to the above Exhibits are detailed in Exhibit "B",
Schedule 7 "Motorola WiMAX Infrastructure Product
Specifications". WiMax base stations must meet performance
requirements specified in Exhibit "B", Schedules 5, 8, 9 and 10.
Motorola acknowledges that technology deployed by Clearwire is
crucial to Clearwire's business success. During the term of this
Agreement senior technical representatives of both Motorola and
Clearwire shall meet quarterly to review System performance,
coordinate on standards and technology evolution, and agree on
development and delivery of new features and functions.
4
2.8.3 WiMAX Software. Motorola may supply and Clearwire may purchase
from Motorola other optional software that is listed on Exhibit
"A", as amended from time to time. Any such optional software
purchased by Clearwire is an "Infrastructure Product". Motorola
will offer an optional NSP Program as set forth in Exhibit "D".
Should Clearwire elect to purchase NSP, Motorola will make
available two Releases of WiMAX Software each calendar year. The
pricing for the NSP Program is set forth in Exhibit "A".
2.8.4 WiMAX Acceptance Tests. Motorola acknowledges that Clearwire
intends to run acceptance tests for various WiMAX product
versions and configurations as part of its lab, field trial, beta
trial and wave 2 equipment tests. The agreed plan and schedule
for testing these WiMAX products is contained in Exhibit "B",
Schedule 5, Schedule 8 "Clearwire WiMAX Alpha Field Trial Test
Plan", Schedule 9 "Clearwire WiMAX Beta Market Test Plan" and
Schedule 10 "Clearwire WiMAX Wave 2 Test Plan".
2.8.5 Clearwire Test Lab. For the term of this Agreement Motorola
shall supply to Clearwire sufficient quantities of Infrastructure
Products (at no charge) to support operation of a test
environment similar to the test facilities maintained by NextNet
up to a maximum value of $[***] per annum. This test lab must be
capable of testing new Equipment and Software releases prior to
field testing. Motorola will maintain a lab configuration such
that lab-to-lab collaboration can utilize identical test
scenarios.
2.9 Network Elements. Motorola may supply and Clearwire may purchase from
Motorola other Network Elements. Motorola will be Clearwire's
Preferred Vendor on all Network Element wireless products (i.e.
wireless backhaul, etc.). This provision does not imply that Clearwire
will not seek to source Network Elements competitively.
2.10 Wi-Max Acceptance Test and Timing. The agreed plan for testing Wi-Max
Infrastructure Products is contained in Exhibit "B", Schedule 5, 8, 9
and 10 to this Infrastructure Agreement.
2.11 In consideration of the commitments made by Motorola in this
Agreement, Clearwire will purchase no less than 25% of its WiMax
subscriber handsets from Motorola so long as the capabilities and
costs of the handsets (and the availability of such handsets) are
equal for a given product in similar quantities or service offered by
Motorola and another supplier or suppliers.
2.12 Except as provided in this Section, and except for Clearwire's
purchase commitments in Sections 2.3 and 2.11, this Infrastructure
Agreement is non-exclusive and Motorola may sell Infrastructure
Products, directly or indirectly, to any customer worldwide. Motorola
hereby appoints Clearwire as Motorola's exclusive distributor of the
Expedience Infrastructure Products in China only to a single operator
for a period of [***] from the Effective Date of this Agreement.
Should Clearwire not conclude a [***] agreement within the [***]
period with the China operator (the [***], the exclusive distribution
right will terminate. If the [***] agreement is executed within the
[***] period, Clearwire will use its commercially reasonable efforts
to bring an Expedience wireless broadband system into commercial
service as soon as possible. Clearwire and Motorola agree to revisit
the pricing for Expedience Infrastructure Products described above for
units that ship during the 12 month period after the first shipment
date should the total volume of such units exceed [***]
Notwithstanding the foregoing, Motorola shall be free to market,
distribute and sell Expedience products to any other China customer.
[*** Confidential Treatment Requested]
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Motorola will sell all Expedience Infrastructure Products for delivery
to the JV a [***] pricing until [***] after commercial service of the
first System. From the [***] through the [***] after commercial
service of the first System, Clearwire will pay to Motorola the agreed
to Clearwire purchase price, plus an additional [***] of the
difference between the Clearwire purchase price from Motorola and the
Clearwire resell price to the [***]. After the [***] Clearwire will
pay to Motorola [***] of the resale price to the [***] and will use
its commercially reasonable efforts to cause the [***] to purchase
Expedience Infrastructure Products directly from Motorola.
2.13 If Clearwire informs Motorola that Clearwire desires to pursue Other
Technology for Infrastructure Products, Motorola will use commercially
reasonable efforts to supply Clearwire with an Other Technology
solution under the terms of this Agreement.
3. OBLIGATIONS OF CLEARWIRE
Clearwire will:
3.1 Bear the costs of its own legal fees, telephone and utility charges
and other services and items being supplied by Clearwire under this
Infrastructure Agreement.
3.2 Make the payments according to the schedule set forth in Section 5 of
this Infrastructure Agreement.
3.3 Perform all other of its obligations set out in this Infrastructure
Agreement and the Exhibits attached hereto.
4. OBLIGATIONS AND REPRESENTATIONS OF MOTOROLA
Motorola will:
4.1 Adhere to the schedule for performance of the responsibilities set
forth in the Exhibits and Schedules to this Agreement.
4.2 Negotiate in good faith a Punchlist as part of the acceptance process,
if Motorola performs installation.
4.3 Supply replacement and expansion parts, subsequent Equipment revisions
and Software upgrades to Clearwire on the terms and price as contained
in this Infrastructure Agreement.
4.4 Bear the costs of its own legal fees, telephone and utility charges
and other services and items being supplied by Motorola under this
Infrastructure Agreement.
4.5 Perform all other of its obligations set out in this Infrastructure
Agreement and the Exhibits attached hereto.
4.6 At the time or times contemplated herein for the transfer of title to
any equipment included in the System, Motorola will convey to
Clearwire all right in and good title to such equipment by appropriate
title documents. However, title to Software will not be conveyed to
Clearwire at any time but will instead be licensed to Clearwire in
accordance with the terms of Exhibit "C". Motorola will deliver the
Infrastructure Products to Clearwire free and clear of all liens,
security interests or encumbrances of any type.
[*** Confidential Treatment Requested]
6
FURTHER, Motorola represents to Clearwire that:
4.7 Unless agreed to the contrary, all equipment sold to Clearwire
hereunder is new and Motorola will provide any documents, which may be
reasonably requested by Clearwire evidencing this fact.
5. PAYMENT AND PRICING
Clearwire will pay to Motorola the price of Infrastructure Products, as set
forth in Exhibit "A", in U.S. dollars (except as specifically set forth
below) and according to the following terms and payment schedules:
5.1 General Payment Terms
5.1.1 Payment for all Infrastructure Products will be net [***] from
date of invoice, provided that Motorola will not invoice
Clearwire prior to the date of shipment of Infrastructure
Products to Clearwire.
5.1.2 Clearwire will be responsible for the payment of all applicable
sales, use, retailers occupation, excise, property, and other
assessments in the nature of taxes however designated, on the
Infrastructure Products and Services provided to Clearwire
pursuant to this Agreement, exclusive however, of any taxes
measured by Motorola's net income or based on Motorola's
franchise. Personal property taxes assessable on the
Infrastructure Products will be the responsibility of Clearwire.
To the extent Motorola is required by law to collect such taxes
(state or local), one hundred percent (100%) thereof will be
added to invoices as separately stated charges and paid in full
by Clearwire, unless Clearwire is exempt from such taxes and
furnishes Motorola with a certificate of exemption in a form
reasonably acceptable to Motorola. In the event Clearwire claims
exemption from sales, use or other such taxes under this
Agreement, Clearwire will hold Motorola harmless from any and all
subsequent assessments levied by a proper taxing authority for
such taxes, including interest, penalties and late charges.
5.1.3 Clearwire will pay [***] costs from [***] and all applicable
[***] and similar charges.
5.1.4 Clearwire will use commercially reasonable efforts to notify
Motorola of any disputed amounts under any invoice in writing
prior to the invoice due date; but provided that Clearwire shall
pay to Motorola the undisputed portion of any invoice within the
time frame set forth in Section 5.1.1. Clearwire's failure to
notify Motorola of any disputed amount prior to the invoice due
date will not constitute a waiver by Clearwire of any dispute
regarding any previously paid invoice; provided that, in no event
shall Clearwire dispute any invoice submitted by Motorola
hereunder more than [***] days after the date of such invoice.
For any undisputed amount due hereunder which remains unpaid,
Clearwire will pay Motorola a service fee at the rate of [***] of
the amount due for each month or portion thereof that the amount
remains unpaid.
5.2 Infrastructure Product Purchases
5.2.1 For Equipment and Software, Clearwire will be invoiced no
earlier than the shipment date [***] of the total for the
infrastructure products.
[*** Confidential Treatment Requested]
7
6. WARRANTIES
The following warranties will be applicable to Infrastructure Products
supplied under this Infrastructure Agreement.
6.1 Equipment Warranty
6.1.1 Motorola-manufactured or supplied Equipment will be warranted to
be free from defects in material and workmanship for a period of
[***] from the date of shipment. Parts will be replaced free of
charge for the full warranty period. For Infrastructure Products
manufactured by a third-party, Motorola will assign to Clearwire
Equipment warranties received from such third-party manufacturers
and will act in a commercially reasonable manner to pursue and
coordinate warranty claims at Clearwire's request. For a fee,
Motorola will provide warranty service for Expedience base
stations deployed before the Effective Date.
6.1.2 Clearwire will be responsible for the initial level of diagnosis
(i.e. for identification and isolation of Equipment problems to
the board level), for hardware, firmware and Software removal and
replacement, and for sending the malfunctioning product, packed
in a manner to prevent damage, to the designated Motorola repair
depot. Motorola will provide Clearwire access to self test
diagnostics, documentation detailing Motorola's factory equipment
test software, and can supply unique, non-commercial interface
elements. Subsequent sets of test tools are available for
purchase, at the pricing summarized in Exhibit "A".
6.1.3 Labor at the Motorola-designated repair depot to repair or
replace defective Equipment will be provided without charge for
the full warranty period.
6.1.4 Postage, freight or other such transportation charges for
shipping defective products to an authorized Motorola repair
depot will be borne by Clearwire; when such products or their
replacements are being returned to Clearwire, Motorola will bear
such charges.
6.1.5 In the event a defect occurs during the warranty period shown,
Motorola, at its option, will either repair or replace the
product. Any item so repaired or replaced will be warranted for
the longer of [***] or balance of the warranty period. Any item
retained by Motorola through replacement will become the property
of Motorola. Except as specifically provided in this Agreement,
such action on the part of Motorola will be the full extent of
Motorola's liability and Clearwire's exclusive remedy hereunder.
6.1.6 THIS EQUIPMENT WARRANTY DOES NOT COVER:
Defects, damage or malfunctions resulting from:
6.1.6.1 Use of the Equipment in other than their normal and
customary manner.
6.1.6.2 Misuse, accident, neglect, improper storage or
environmental or Site conditions not conforming to the
specifications for the Infrastructure Product, to the extent
not caused by Motorola or its agents.
6.1.6.3 Unauthorized alterations or repairs, use of unapproved
parts in the products or the combination or interfacing of
the products, in each case in a manner not approved by
Motorola.
6.1.6.4 An event of Force Majeure.
[*** Confidential Treatment Requested]
8
6.1.6.5 Installation, optimization, movement or use of products
by anyone not authorized by Motorola and/or not in
accordance with commercially reasonable Motorola standards
and guidelines.
6.1.6.6 Failure of antennas lines, or any part of the
Interconnection Facilities, unless such antennae are
internally integrated into the Infrastructure Product.
6.1.6.7 Failure of Clearwire to maintain the Equipment
substantially in accordance with the Documentation.
6.1.6.8 Damage which occurs during shipment of the product from
Clearwire to Motorola.
6.1.7 This express warranty is extended by Motorola, Inc. to Clearwire
only and is valid only in the country where the Equipment is
first put into Commercial Service, except that Clearwire may
assign this warranty in connection with any assignment of this
Agreement that is permitted pursuant to Section 18.1.
6.2 Software Warranty
6.2.1 For the [***] following shipment after acceptance pursuant to
the protocol set forth in Section 2.1, Motorola warrants that
each Standard Software Release, as delivered, will perform
substantially in accordance with Motorola's then-current user
manual in all material respects: however, Motorola does not
warrant that the Software will meet Clearwire's needs, be
error-free, or operate without interruption.
6.2.2 Motorola makes no warranties whatsoever regarding any software
not supplied by Motorola. For software supplied by a third-party,
Motorola will assign to Clearwire the warranties received from
such third-party and will act in a commercially reasonable manner
to pursue and coordinate warranty claims at Clearwire's request.
6.3 THE WARRANTIES IN THIS AGREEMENT ARE GIVEN IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, WHICH ARE SPECIFICALLY EXCLUDED,
INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE. FURTHERMORE, BECAUSE EACH WIRELESS
BROADBAND SYSTEM IS UNIQUE, MOTOROLA DISCLAIMS LIABILITY FOR RANGE,
COVERAGE, SUBSCRIBER CAPACITY, SERVICE LEVEL OR OPERATION OF THE
SYSTEM, AS A WHOLE, EXCEPT AS SPECIFICALLY SET FORTH IN THE WARRANTIES
CONTAINED IN THIS AGREEMENT.
[*** Confidential Treatment Requested]
9
7. PRODUCT DISCONTINUANCE
Motorola may from time to time cease the supply of then existing versions
of Infrastructure Product (the "Discontinued Product"), provided that a
suitable replacement product is available. If Motorola does discontinue
Product, it will notify Clearwire promptly in writing at least [***] before
discontinuance ("Discontinuance Notice") and Clearwire, up to the date
provided on the Discontinuance Notice, may place a final lifetime order for
Discontinued Product. A shipping schedule for quantities ordered in any
final lifetime order will be mutually agreed to between Clearwire and
Motorola, but in any event will not exceed [***] from the date of the
Discontinuance Notice. All final lifetime orders for Discontinued Product
are non-cancelable.
8. DISCLAIMER OF PATENT LICENSE
Nothing contained in this Infrastructure Agreement will be deemed to grant,
either directly or by implication, any license under any patents or patent
applications of Motorola, except that Clearwire will have the normal
non-exclusive (except as provided otherwise in this Agreement),
royalty-free license to use that which is implied, or otherwise arises by
operation of law, in the sale of an Infrastructure Product.
9. PATENT AND COPYRIGHT INDEMNITY
Excluding any intellectual property rights obtained through acquisition of
NextNet, Motorola agrees to indemnify Clearwire against and to defend
Clearwire, at Motorola's expense, for any claims, suits, arbitration or
other disputes brought against Clearwire based upon a claim that any
Infrastructure Product furnished hereunder by Motorola infringes a patent
or copyright or misappropriates a trade secret in any country worldwide
where Motorola sells such Infrastructure Product and to pay costs and
damages awarded based upon such claim in any such suit, provided that
Motorola is: (1) promptly notified by Clearwire in writing within [***] of
the date on which Clearwire first received written notice of such claim;
and (2) at Motorola's request and expense is given sole control of the suit
and all reasonably requested assistance for defense of the claim. Motorola
shall not be relieved of its indemnification obligation as a result of
delays in notifying Motorola of the claim except to the extent the amount
of the claim is increased as a result of such delay. Motorola will not be
liable for any settlement made without its written consent If the use or
sale of any Infrastructure Product furnished under this Agreement is
enjoined as a result of such suit, Motorola at its option and at no expense
to Clearwire, will: (1) obtain for Clearwire the right to use or sell such
Infrastructure Products; (2) substitute a functionally equivalent product
with the same or similar features reasonably acceptable to Clearwire and
extend this indemnity to the substitute products, or; (3) accept the return
of the Infrastructure Products and reimburse Clearwire the purchase price
therefore, less a reasonable charge for prior use, if any, of the
Infrastructure Products. If the claim is alleged prior to completion of
delivery of the Infrastructure Products, Motorola has the right to decline
to make further shipments without being in breach of contract
This indemnity does not extend to any suit based upon any infringement or
alleged infringement arising from Infrastructure Products furnished by
Motorola that are: (1) altered in any way by Clearwire or any third party
if the alleged infringement would not have occurred but for such
alteration; (2) combined with any other products or elements not furnished
or approved in writing by Motorola if the alleged infringement would not
have occurred but for such combination; or (3) claims arising out of
Clearwire's unique specifications or instructions, if the alleged
infringement would not have occurred but for such unique specifications or
instructions.
The indemnity provided in this section is the sole, exclusive, and entire
liability of Motorola and the remedies provided in this section are
Clearwire's exclusive remedies against Motorola for patent, copyright
infringement or trade secret misappropriation, whether direct or
contributory and is provided in lieu of all warranties, express, implied or
statutory in regard to these potential liabilities, including the warranty
against infringement specified in the Uniform Commercial Code.
[*** Confidential Treatment Requested]
10
Should any intellectual property right obtained through the acquisition of
NextNet be subject to an infringement or other claim and, in order to
continue to supply Infrastructure Products which contain those intellectual
property rights, Motorola settles the claim, or is subject to a judgment,
requiring the payment of any royalty, then Clearwire agrees Motorola may
add that royalty fee, on a pass-through basis, to the Exhibit "A" price of
the affected Infrastructure Products.
10. CONFIDENTIALITY
During the entire term of this Agreement, Section 1 of the Side Agreement
between Clearwire and Motorola, dated June 28, 2006, applies to define
Confidential Information, each party's use of the other's Confidential
Information, and dissemination of information about this Agreement to third
parties in any form.
11. TRADEMARK AND PUBLICITY
Nothing contained in this Infrastructure Agreement will be construed as
conferring any right to use any name, trademark or other designation of
either party hereto, including any contraction, abbreviation, or simulation
of any of the foregoing, in advertising, publicity or marketing activities.
12. FORECASTS, SHIPMENT, DELIVERY, OFF-LOADING AND WAREHOUSING
12.1 Clearwire will provide to Motorola on a monthly basis a rolling [***]
forecast of Clearwire's estimated Infrastructure Product purchases
(the "Forecasts"). Each such Forecast will be delivered to Motorola
not less than [***] days prior to the start of the next calendar
month. All Forecasts are non-binding.
12.2 All orders for Infrastructure Products by Clearwire will be submitted
to Motorola in the form of electronic data interchange ("EDI") or
other method as mutually agreed. Clearwire must provide firm,
non-cancellable, purchase orders [***] prior to requested ship date.
The only effect of any terms and conditions in Clearwire's purchase
orders or any other documentation not signed by the parties shall be
to request the time and place of delivery, and the number and models
of Infrastructure Products to be delivered (provided that the time
requested is not binding on Motorola unless the requested ship date is
in accordance with this Section).
12.3 New Motorola Infrastructure Products must be qualified and tested in
Clearwire Alpha and Beta field tests, using processes and tests as
outlined in Exhibit "B" Schedule 8 and Schedule 9 mutually agreed
acceptance plans. Clearwire may choose to waive these tests on an
individual case basis.
12.4 No shipment of Infrastructure Products in the three weeks prior to the
anticipated ship date will be considered early for purposes of
invoicing.
12.5 Motorola will ship Infrastructure Products directly to the Site where
it will be permanently installed, or to such other location as
Clearwire may specify.
12.6 In the event that the Site is not available to receive the
Infrastructure Products when shipped, Motorola, at its option, may
ship said Infrastructure Products to a warehouse designated by
Clearwire, and Clearwire will bear the costs of warehousing,
reloading, transporting, off-loading and moving the Infrastructure
Products into the warehouse.
13. TITLE, RISK OF LOSS AND INDEMNITY
13.1 Title to and risk of loss for all Equipment supplied hereunder will
pass to Clearwire upon delivery to a carrier or to Clearwire at point
of shipment. Motorola will deliver the
[*** Confidential Treatment Requested]
11
Infrastructure Products to Clearwire free and clear of all liens,
security interests or encumbrances of any type.
13.2 The above notwithstanding, title to Software will not pass to
Clearwire at any time.
13.3 During the term of this Infrastructure Agreement, the parties will
indemnify and hold harmless each other together with their officers,
agents and employees from any and all loss, damage, expense, judgment,
lien, suit, cause of action, demand or liability for personal injury,
including death and tangible property damage, which may be imposed on
or incurred by one party arising directly out of the negligent acts or
omissions of the other, its agents, subcontractors, or employees
during the performance of any work hereunder. The offending party
will, at its sole expense, defend any suit based upon a claim or cause
of action and satisfy any judgment that may be rendered against the
other resulting therefrom, provided that the offending party will be
given (i) prompt notice of any such claim or suit; and (ii) full
opportunity to defend such suit. The offended party may, at its
election, participate in the defense and will cooperate fully in
defending any claim or suits. The offending party will pay all costs,
expenses, and reasonable attorney's fees incurred by the offended
party in connection with any such claim or suit or in enforcing this
indemnity provision, provided a valid claim is presented.
14. FORCE MAJEURE
Except for payment due, neither party will be liable for any delay or
failure to perform due to any cause beyond its reasonable control. Causes
include strikes, acts of God and interruptions of transportation. The
delivery schedule will be considered extended by a period of time equal to
the time lost because of any excusable delay.
15. TERMINATION
15.1 The initial term of this Agreement will be for a period of eight(8)
years following the Effective Date. Unless notice of termination is
given by either party at least 120 days prior to the scheduled
termination date, this Agreement will continue in effect beyond the
initial term, in successive one-year terms. Notwithstanding any number
of renewals, this Agreement is a fixed term agreement and not an
agreement of indefinite term. Nothing contained in this Agreement
creates any express or implied obligation on either party to renew or
extend this Agreement or to create any right to continue this
Agreement on the same terms and conditions.
15.2 Either party may terminate this Agreement without liability by written
notice to the other if the other makes a general assignment for the
benefit of creditors, or if a petition in bankruptcy or under any
insolvency law is filed by or against the other and such petition is
not dismissed within sixty (60) days after it has been filed or the
other commits a material breach of its obligations hereunder. However,
in the case of any such breach which is capable of being cured,
neither party will terminate this Agreement unless and until the other
will have failed to make good such default within ninety (90) days
after it will have been served with a written notice requiring that
such default be made good and stating its intention to terminate the
Agreement if compliance with the notice is not met; provided, however,
that Infrastructure Product deficiencies described in Section 2.3.2
will not give rise to the termination remedy in this Section 15.2. The
termination of this Agreement will not affect or prejudice any
provisions of this Agreement, which are expressly or by implication
provided to continue in effect after such termination.
15.3 Upon termination of this Agreement as a result of a material, uncured
breach by Clearwire: (i) Motorola is relieved of any obligations to
make any additional shipments and may cancel all of Clearwire's
unshipped orders for Infrastructure Products, regardless of previous
acceptance by Motorola of those orders, and Motorola has no obligation
or
12
liability to Clearwire or any other party in connection with such
cancellations; (ii) all outstanding invoices to Clearwire and other
amounts due to Motorola from Clearwire become immediately due and
payable, and each invoice not yet submitted to Clearwire for
Infrastructure Products shipped prior to termination will be due and
payable immediately upon submission of the invoice to Clearwire; (iii)
Clearwire will immediately discontinue any further use of all Motorola
names and trademarks in association with the Infrastructure Products,
as well as any other combination of words, designs, trademarks or
trade names that would indicate that Clearwire is or was an authorized
distributor of the Infrastructure Products; and (iv) within 30 working
days after termination, Clearwire will deliver to a location Motorola
will specify all Motorola property, including all equipment, customer
data, software items, catalogs, drawings, designs, engineering
photographs, samples, literature, sales aids and any confidential
business information and trade secrets of Motorola in Clearwire's
possession, along with all copies of these items. Motorola's
acceptance of any order by Clearwire for Infrastructure Products after
the termination of this Agreement will not be construed as a renewal
or extension of this Agreement, nor as a waiver of termination of this
Agreement.
15.4 The terms, provisions, representations and warranties contained in
this Agreement that by their sense and context are intended to survive
the performance by either or both parties will so survive the
completion of performances and termination of this Agreement,
including the making of any and all payments due under this Agreement.
15.5 On or after January 1, 2009, Motorola may terminate this Agreement
upon one year's prior written notice to Clearwire with continued
supply of Infrastructure Products to Clearwire for a two year period
commencing on the termination notice date under the terms of this
Agreement.
15.6 Motorola will place the source code for current versions of the
Expedience Infrastructure Product software owned by Motorola, as well
as a copy of the software itself, in escrow, at Clearwire's cost,
under terms and conditions that are mutually agreeable to the Parties.
The parties agree to promptly enter into good faith, commercially
reasonable negotiations in an effort to conclude a software escrow
agreement within forty-five (45) days after the Effective Date.
16. [RESERVED]
17. LIMITATION OF LIABILITY
EXCEPT FOR THE INDEMNITY OBLIGATIONS IN SECTIONS 9 AND 13, AND BREACHES OF
CONFIDENTIALITY, NEITHER PARTY, WHETHER AS A RESULT OF BREACH OF CONTRACT.
WARRANTY, TORT (INCLUDING NEGLIGENCE), PATENT INFRINGEMENT, COPYRIGHT
INFRINGEMENT OR OTHERWISE, WILL HAVE ANY LIABILITY FOR INCIDENTAL OR
CONSEQUENTIAL DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFIT OR
REVENUES, LOSS OF USE OF THE INFRASTRUCTURE PRODUCTS OR ANY ASSOCIATED
EQUIPMENT, COST OF CAPITAL, COST OF SUBSTITUTE INFRASTRUCTURE PRODUCTS,
FACILITIES OR SERVICE, OR DOWNTIME COSTS. EXCEPT FOR THE INDEMNITY
OBLIGATIONS IN SECTIONS 9 AND 13, AND FOR PAYMENTS DUE, AND BREACHES OF
CONFIDENTIALITY OBLIGATIONS, A PARTY'S TOTAL LIABILITY TO THE OTHER FOR ANY
BREACH OF THIS INFRASTRUCTURE AGREEMENT WILL IN NO EVENT EXCEED THE TOTAL
VALUE OF SERVICES INVOICED BY MOTOROLA TO CLEARWIRE IN THE PRIOR [***]
PROVIDED, HOWEVER, THAT DURING THE FIRST [***] OF THE TERM OF THIS
AGREEMENT, THE CAP ON LIABILITY WILL BE THE GREATER OF [***] OR THE
AGGREGATE AMOUNT PAID BY CLEARWlRE TO MOTOROLA UNDER THIS AGREEMENT IN THE
PRIOR [***]
[*** Confidential Treatment Requested]
13
18. ASSIGNMENT AND EQUIPMENT RESALE
18.1 The Infrastructure Agreement will accrue to the benefit of and be
binding upon the parties hereto and any successor entity into which
either party will have been merged or consolidated or to which either
party will have sold or transferred all or substantially ail its
assets, but it will not be otherwise assigned by either party (other
than for security purposes to a bona fide lender to the assigning
party) without the prior written consent of the other party. It is the
intention of the parties that the exclusive and preferred supplier
commitments survive any change of control of Clearwire. The parties
agree that any consent to a requested assignment will not be
unreasonably withheld or delayed.
18.2 Notwithstanding any other provision of this Infrastructure Agreement,
the Software license granted to Clearwire in the form of Exhibit "C",
may not be sublicensed, assigned or otherwise transferred by
Clearwire, except when Clearwire transfers Infrastructure Products for
inventory balancing purposes with its Affiliates. In the event
Clearwire subsequently elects to sell to a third party the equipment
purchased by Clearwire hereunder, Motorola agrees to relicense the
Software to such third party in accordance with the then current terms
of Motorola's Relicensing Policy.
19. GOVERNING LAW
The laws of the State of New York, USA, will govern the validity,
performance, and all matters relating to the effect of this Infrastructure
Agreement and any amendment hereto.
20. EXPORT CONTROLS
20.1 If, at the time or times of Motorola's performance hereunder, a
validated export license is required for Motorola, or its
subcontractor, to lawfully export the goods or technical data from the
United States of America, or the such other country of origin, then
the issuance of such license to Motorola, or its subcontractor in
accordance with the rules and regulations of the applicable
country(ies), will constitute a condition precedent to Motorola's
performance of its obligations hereunder. Motorola will apply for the
export license for the products supplied hereunder based upon
information timely supplied by Clearwire. Clearwire is responsible for
any applicable import license requirements. Clearwire acknowledges
that it may be required to obtain additional approvals to implement
certain features of the System, including without limitation,
encryption or authentication algorithms. Clearwire and Motorola
acknowledge and agree that any delay in the grant of such licenses
and/or approvals may impact the schedule of performance.
20.2 If, at time or times of Motorola's performance hereunder, approval by
a regulatory body is required under applicable law, then such approval
will constitute a condition precedent to Motorola's performance of its
obligations hereunder (but only to the extent Motorola would be in
violation of applicable law without such approval) and Motorola will
use commercially reasonable efforts to obtain such approval.
20.3 Clearwire and Motorola agree to comply with all applicable export laws
and regulations of the United States of America or such other country
of origin. Specifically, but without limitation, Clearwire agrees that
it will not resell or re-export Motorola Infrastructure Products or
technical data in any form Without obtaining appropriate export or
re-export licenses from the respective governmental authority of the
United States of America or other country of origin.
21. ORDER OF PRECEDENCE
In the event of an inconsistency in this Infrastructure Agreement, the
inconsistency will be resolved by giving precedence in the following order:
14
21.1 Exhibit "A" and all duly executed amendments to Exhibit "A";
21.2 All other Exhibits and all duly executed amendments to said Exhibits;
and
21.3 This Infrastructure Agreement and duly executed amendments to this
Infrastructure Agreement, with the latest amendment taking precedence
over earlier amendments.
22. LANGUAGE OF AGREEMENT
In the event that this Infrastructure Agreement is translated into any
other language, the English language version hereof will take precedence
and govern.
23. NOTICE
23.1 Notices required to be given by one party to another will be in the
English language unless expressly agreed otherwise, and will be deemed
properly given if reduced to writing and personally delivered or
transmitted by registered or certified post to the address below,
postage prepaid, and will be effective upon receipt.
23.1.1 Motorola will send notices as follows:
Clearwire US LLC
5808 Lake Washington Blvd. NE, Suite 300
Kirkland, WA 98033
Attention: Chief Executive Officer
And with a copy to Legal Department
With a copy to:
Davis Wright Tremaine LLP
2600 Century Square
1501 Fourth Avenue
Seattle, WA 98101
Attention: Julie Weston
23.1.2 Clearwire will send notices as follows:
Motorola, Inc.
1501 W. Shure Drive
Arlington Heights, II 60004
Fax 847-632-2683
Attention: Clearwire Program Management
CC: Senior Commercial Counsel, Law Department
23.2 Either party may change the addresses for giving notice from time to
time by written instructions to the other of such change of address.
24. SURVIVAL OF PROVISIONS
The parties agree that where the context of any provision indicates an
intent that it will survive the term of this Infrastructure Agreement then
it will survive.
15
25. WAIVER
Failure or delay on the part of Motorola or Clearwire to exercise any
right, power or privilege hereunder will not operate as a waiver thereof.
26. SEVERABILITY
In the event any one or more of the provisions of this Infrastructure
Agreement is held to be unenforceable under applicable law, (a) such
unenforceability will not affect any other provision of this Infrastructure
Agreement; (b) this Infrastructure Agreement will be construed as if said
unenforceable provision had not been contained therein; and (c) the parties
will negotiate in good faith to replace the unenforceable provision by such
as has the effect nearest to that of the provision being replaced.
27. AUTHORITY
Each party hereto represents and warrants that (i) it has obtained all
necessary approvals, consents and authorizations of third parties and
governmental authorities to enter into this Infrastructure Agreement and to
perform and carry out its obligations hereunder; (ii) the persons executing
this agreement on its behalf have express authority to do so, and, in so
doing, to bind the party thereto; (iii) the execution, delivery, and
performance of this Infrastructure Agreement does not violate any provision
of any bylaw, charter, regulation, or any other governing authority of the
party; and (iv) the execution, delivery and performance of this
Infrastructure Agreement has been duly authorized by all necessary
partnership or corporate action and this Infrastructure Agreement is a
valid and binding obligation of such party, enforceable in accordance with
its terms.
28. TERM
The initial term of this Infrastructure Agreement will be for eight (8)
years from the Effective Date. This Infrastructure Agreement will be
automatically renewed for consecutive one (1) year terms unless either
party notifies the other party in writing of its intent to terminate the
Infrastructure Agreement at least one hundred and twenty (120) days prior
to the expiration of the initial term or any renewal thereof.
29. UNITED STATES OF AMERICA ("U.S.") - GOVERNMENT COMPLIANCE
This Agreement is a commercial contract and is governed by the terms and
conditions negotiated by the parties. Clearwire represents and warrants
that: (i) it is not a governmental entity; (ii) it is not owned in whole or
in part, directly or indirectly, by any governmental entity; (iii) the
purchases contemplated under this Agreement will not be financed using any
funds obtained from any government entity (including, without limitation,
OPIC, Eximbank or other similar agencies); and (iv) there is no other basis
on which any regulations, decrees or laws applicable to sales to a
governmental entity could be deemed applicable to this Agreement. The term
"governmental entity," as used herein, will include agencies and
instrumentalities of U.S. federal, state and local governments as well as
of governments outside of the U.S.
In the event that Clearwire elects to sell the products to a governmental
entity, Motorola makes no representations with respect to the ability of
its goods, services, or prices to satisfy any statues, regulations or
provisions relating to such governmental sales.
30. ENTIRE AGREEMENT
This Infrastructure Agreement and the Exhibits hereto, together with
Section 1 of the Side Agreement referred to in Section 10, constitute the
entire understanding between the parties concerning Infrastructure Products
and supersede all prior discussions, agreements and
16
representations, whether oral or written and whether or not executed by
Motorola and Clearwire with respect to the subject matter of this
Agreement. No modification, amendment or other change may be made to this
Infrastructure Agreement or any part thereof unless reduced to writing and
executed by authorized representatives of both parties.
The terms and conditions of this Infrastructure Agreement will prevail
notwithstanding any variance with the terms and conditions of any order
submitted by Clearwire following execution of this Infrastructure
Agreement. In no event will the preprinted terms and conditions found on
any Clearwire purchase order, acknowledgment or other form, or on any
Motorola invoice, be considered an amendment or modification of this
Infrastructure Agreement, even if such documents are signed by
representatives of both parties; such preprinted terms and conditions will
be null and void and of no force and effect.
31. COUNTERPARTS
This Infrastructure Agreement may be executed in multiple counterparts,
each of which will be deemed an original and all of which taken together
will constitute one and the same instrument. Facsimile or digital
signatures will be treated as originals.
[Signature page follows]
17
Executed as of this 29th day of August, 2006 ("Effective Date").
MOTOROLA, INC. CLEARWIRE US LLC
/s/ C. F. WRIGHT /s/ Benjamin G. Wolff
------------------------------------- ----------------------------------------
Signature Signature
C. F. WRIGHT Benjamin G. Wolff
Printed/Typed Name Printed/Typed Name
SENIOR VICE-PRESIDENT Co-President & Co-CEO
Title Title
8/29/06 8/29/06
Date Date
Clearwire Corporation guarantees payment of the purchase price for any
Infrastructure Products or services purchased by Clearwire or any Clearwire
Affiliate under this Wireless Broadband System Infrastructure Agreement, subject
to the exercise of any rights of Clearwire or such Clearwire Affiliate with
respect to such payment. Motorola need not exhaust remedies against Clearwire
and Clearwire Affiliates(other than to demand payment and to allow for the
passage of the applicable cure period) prior to pursuing this guarantee of
Clearwire Corporation.
CLEARWIRE CORPORATION
/s/ Benjamin G. Wolff
-------------------------------------
Signature
Benjamin G. Wolff
Printed/Typed Name
Co-President & Co-CEO
Title
8/29/06
Date
EXHIBIT "A"
SCHEDULE 1
TO THE
WIRELESS BROADBAND SYSTEM
INFRASTRUCTURE AGREEMENT
EXPEDIENCE AND WI-MAX INFRASTRUCTURE PRODUCTS AND PRICING
The pricing stated in this Exhibit A, Schedule 1 is the [***] pricing to be
charged by Motorola under this Agreement. Throughout the term of this Agreement,
Motorola will use commercially reasonable efforts to [***] for the
Infrastructure Products specifically listed in this Exhibit A, Schedule 1;
provided, however that all Expedience Infrastructure Product pricing shall [***]
by [***] on [***].
SEE ATTACHED
[*** Confidential Treatment Requested]
A-1
2006 EXPEDIENCE INFRASTRUCTURE EQUIPMENT
<TABLE>
<CAPTION>
TOTAL (I)NFRA/
ITEM DESCRIPTION PRICE (C)PE
---- ----------- ----- --------
<S> <C> <C> <C>
123-0350-1002 ANTENNA BRACKET INEGRAL BASE ASSEM. [***] I
123-0350-1010 INTEGRAL BASE POLE MOUNTING KIT [***] I
250-0100-0010 GPS SYSTEM 10 FT [***] I
250-0100-0025 GPS SYSTEM 25 FT [***] I
250-0100-0050 GPS SYSTEM 50 FT [***] I
250-0100-0100 GPS SYSTEM 100 FT [***] I
250-0100-0132 BTS OUTDOOR MOUNTING KIT [***] I
250-0100-0200 GPS SYSTEM 200 FT [***] I
250-0150-0001 DEUTSCH TOOL KIT [***] I
250-0150-0010 GPS RECEIVER KIT (INCL 10' CABLE, BRACKETS, TERM) [***] I
250-0150-0025 GPS RECEIVER KIT (INCL 25' CABLE, BRACKETS, TERM) [***] I
250-0150-0050 GPS RECEIVER KIT (INCL 5' CABLE, BRACKETS, TERM) [***] I
250-0150-0100 GPS RECEIVER KIT (INCL 100' CABLE, BRACKETS, TERM) [***] I
250-0150-0101 GPS SYSTEM 100 FT(AMOD) SPECIFIC TO CLEARWIRE [***] I
250-0150-0200 GPS RECEIVER KIT (INCL 200' CABLE, BRACKETS, TERM) [***] I
250-0150-0202 GPS SYSTEM 200 FT(AMOD) SPECIFIC TO CLEARWIRE [***] I
301-0015-0001 COMMAND ADHESIVE STRIPS [***] I
350-0100-0002 BTS WALLMOUNT BRACKETS [***] I
350-0100-0025 5 ALUMINUM CABLE MOUNT FOR 7' RACK [***] I
350-0100-0101 BTS 1U 19 RACK MTG BRACKET (2 REQD/BTS) [***] I
350-0200-0001 PIVOT BRACKET [***] I
350-0200-0002 SWING BRACKET [***] I
350-0200-0003 BRACKET HINGE PIECE TOP [***] I
350-0200-0004 BRACKET HINGE PIECE BOTTOM [***] I
350-0200-0005 WALL MOUNTING BRACKET INTEGRAL BASE [***] I
350-0200-0016 SHORT TOOTH BRACKET WITH BOLT LIP [***] I
350-0200-0017 SMALL TOOTH BRACKET NO BOLT LIP [***] I
350-0200-0101 BRACKET FOR STANDARD RACK [***] I
370-0200-0001 DE-MATING TOOL FOR CPP SERIES, SIZE 02 DEUTSCH CON [***] I
420-0060-0010 16.9 WATT WALL MOUNT ADAPTER [***] I
420-0060-0020 16.9 WATT WALL MOUNT ADAPTER (UK) [***] I
420-0060-0030 16.9 WATT WALL MOUNT ADAPTER (EU) [***] I
420-0060-0040 16.9 WATT WALL MOUNT ADAPTER (AUS) [***] I
440-0101-0060 INTERFACE CONNECTOR BD ASSM. A-MOD [***] I
440-0200-0060 INTERFACE CONNECTOR BOARD ASSM. [***] I
450-0010-2000 GPS, TRIMBLE ACUTIME 2000 (P/N 39091-00) [***] I
450-0010-2001 Trimble Acutime 2000 Lightning Protector [***] I
450-0010-2002 ACCUTIME 2000 SYNCHRONIZATION KIT (WITH 100" CABLE [***] I
501-0350-1011 STELLA DORADUS ANTENNA MOUNTING KIT [***] I
501-1002-2701 DIRECTIONAL ANTENNA 2.6 V, 15dBi 120 X 7 DEG, NF [***] I
501-1002-3401 STELLA DORADUS 3.3-3.6 GHZ V POL 120 X 7 ANTENNA [***] I
501-1002-3701 ANTENNA 3.7 V. 15DBI 120X7 DEG NF(LESS MTG BKT) [***] I
501-1006-2701 DIRECTIONAL ANTENNA 2.6 V, 15dBi 60 X 7 DEG, NF [***] I
501-1006-3401 ANTENNA, 3.4 V 18DBI, 60 X 7 DEG,NF [***] I
501-1009-2301 ANTENNA 2.3-2.5V 16dBi 90X7 DEG NF [***] I
501-1009-2701 ANTENNA, 2.6 V, 16dBi, 90x7 DEG, NF [***] I
501-1009-2791 ANTENNA, 2.6V 16DBI, 90X9 DEG 1EDT [***] I
</TABLE>
[*** Confidential Treatment Requested]
A-2
<TABLE>
<CAPTION>
TOTAL (I)NFRA/
ITEM DESCRIPTION PRICE (C)PE
---- ----------- ----- --------
<S> <C> <C> <C>
501-1009-2792 ANTENNA, 2.6V 16DBI, 90X7 DEG 2EDT [***] I
501-1009-2793 ANTENNA, 2.6V 16DBI, 90X9 DEG 3EDT [***] I
501-1009-2794 ANTENNA, 2.6V 16DBI, 90X8DEG 4EDT [***] I
501-1009-2795 ANTENNA, 2.6V 15DBI, 90X9 DEG 5EDT [***] I
501-1009-3401 ANTENNA 3.4, V, 16DBI, 90X7 DEG, NF [***] I
501-1009-3701 ANTENNA 3.7 V. 16DBI 90X7 DEG NF(LESS MTG BKT) [***] I
501-3002-2601 ANTENNA =, 2.6V. 13DBI, 360 X 7 DEG [***] I
501-3004-2601 ANTENNA, 2.6V. 10DBI, 360 X 10 DEGREE [***] I
501-3004-3301 ANTENNA 3.3 V. 13DBI 360 X 5 DEG [***] I
501-3004-3601 OMNI-DIRECTIONAL ANTNNA 360 3.4-3.6GHZ [***] I
501-3004-3701 ANTENNA 3.7 V. 13BDI 360 X5 DEG [***] I
515-1005-0002 2 POS, HIGH CURRENT, SCREW TERM CONN. FOR TVS [***] I
515-1012-0202 DC PWR JACK W/SWT [***] I
515-2015-0004 4-PIN TERMINAL BLOCK 5.08 MM PITCH [***] I
515-2016-0004 4 PIN CONN TERMINAL BLOCK 3.81 MM PITCH [***] I
515-6005-0002 BASE STATION ii IMPEDANCE TERMINATOR PLUG 100 OHM [***] I
597-0160-0002 INDB CABLE HARNESS [***] I
597-0160-0005 INDOOR BASE PWR EXTENDED CABLE [***] I
597-1162-0500 500' ROLL 16/2 DC POWER CABLE [***] I
597-5001-0100 BASE FILTER CABLE ASSEMBLY, MCX (JCI 416-8813-001) [***] I
597-5001-0105 BASE FILTER CABLE ASSEMBLY, MCX 4" [***] I
597-5001-0110 3.3/3.5 GHZ LIGHTNING PROTECTOR CABLE ASSM. [***] I
597-5001-0403 RF JUMPER CABLE, TYPE N ST/90 DEG, 3FT [***] I
597-5001-0404 RF JUMPER CABLE, TYPE N ST/90 DEG, 4FT [***] I
597-5001-0406 RF JUMPER CABLE, TYPE N ST/90 DEG, 6FT [***] I
597-5001-0408 RF JUMPER CABLE, TYPE N ST/90 DEG, 8FT [***] I
597-5001-0410 RF JUMPER CABLE, TYPE N ST/90 DEG, 10FT [***] I
597-5001-0412 RF JUMPER CABLE, TYPE N ST/90 DEG, 12FT [***] I
597-5120-0207 BRITISH NON-DETACHABLE [***] I
597-5120-0507 7' THREE- WIRE POWER CORD (CHINA/ AUSTRALIA) [***] I
597-5212-0004 4 FT JUMPER [***] I
597-5212-0006 6 FT TOP JUMPER CABLE [***] I
597-5212-0008 8 FT 1/2" HELIAX CABLE ASSEMBLY [***] I
597-5212-0012 12 FT 1/2" HELIAX CABLE ASSEMBLY [***] I
597-6011-0010 BASE STATION TO GPS CABLE, 10 FT [***] I
597-6011-0025 BASE STATION TO GPS CABLE, 25 FT [***] I
597-6011-0050 BASE STATION TO GPS CABLE, 50 FT [***] I
597-6011-0100 BASE STATION TO GPS CABLE, 100 FT [***] I
597-6011-0200 BASE STATION TO GPS CABLE 200 FT [***] I
597-6012-0003 BASE TO BASE DAISY CHAIN CABLE-GPS CABLE 3 FT [***] I
597-6012-0004 BASE TO BASE DAISY CHAIN CABLE-GPS CABLE 4 FT [***] I
597-6012-0010 BASE TO BASE DAISY CHAIN CABLE-GPS CABLE 10 FT [***] I
597-6012-0025 BASE TO BASE DAISY CHAIN CABLE-GPS CABLE 25 FT [***] I
597-6012-0050 BASE TO BASE DAISY CHAIN CABLE-GPS CABLE 50 FT [***] I
597-6012-0100 BASE TO BASE DAISY CHAIN CABLE-GPS CABLE 100 FT [***] I
597-6012-0200 BASE TO BASE DAISY CHAIN CABLE-GPS CABLE 200 FT [***] I
597-6013-0001 BASE STATION TO TVS POWER/ETHERNET CABLE, 1 FT [***] I
597-6013-0002 BASE STATION TO TVS POWER/ETHERNET CABLE, 2 FT [***] I
597-6013-0004 BASE STATION TO TVS POWER/ETHERNET CABLE, 4 FT [***] I
</TABLE>
[*** Confidential Treatment Requested]
A-3
<TABLE>
<CAPTION>
TOTAL (I)NFRA/
ITEM DESCRIPTION PRICE (C)PE
---- ----------- ----- --------
<S> <C> <C> <C>
597-6013-0006 BASE STATION TO TVS POWER/ETHERNET CABLE, 6 FT [***] I
597-6013-0010 BASE STATION TO TVS POWER/ETHERNET CABLE, 10 FT [***] I
597-6013-0025 BASE STATION TO TVS POWER/ETHERNET CABLE, 25 FT [***] I
597-6013-0050 BASE STATION TO TVS POWER/ETHERNET CABLE, 50 FT [***] I
597-6013-0100 BASE STATION TO TVS POWER/ETHERNET CABLE, 100 FT [***] I
597-6013-0200 BASE STATION TO TVS POWER/ETHERNET CABLE, 200 FT [***] I
597-6013-0300 BASE STATION TO TVS POWER/ETHERNET CABLE, 300 FT [***] I
597-6014-0010 BASE STATION PROGRAMMING CABLE, 10 FT [***] I
597-6025-0010 CABLE GPS-TO-BTS 10' DEUTSCH CONN [***] I
597-6025-0025 CABLE GPS-TO-BTS 25' DEUTSCH CONN [***] I
597-6025-0050 CABLE GPS-TO-BTS 50' DEUTSCH CONN [***] I
597-6025-0100 CABLE GPS-TO-BTS 100' DEUTSCH CONN [***] I
597-6025-0200 CABLE GPS-TO-BTS 200' DEUTSCH CONN [***] I
597-6025-0300 NEXTNET EXPEDIENCE BASE STATION II TO GPS 300FT [***] I
597-6026-0004 STATION II RS442/1 PPS DAISY CHAIN ASSY (4FT) [***] I
597-6026-0010 BASE STATION II RS442/1 PPS DAISY CHAIN ASSY (10) [***] I
597-6026-0025 RS442/1 PPS DAISY CHAIN ASSY [***] I
597-6026-0050 STATION II RS442/1 PPS DAISY CHAIN ASSY (50FT) [***] I
597-6026-0100 BASE STATION II RS442/1 PPS DAISY CHAIN ASSY (100) [***] I
597-6026-0200 BASE STATION II RS442/1 PPS DAISY CHAIN ASSY (200) [***] I
597-6027-0002 BASE STATION II TO TVS MODULE CABLE 2 FT [***] I
597-6027-0004 BASE STATION II TO TVS MODULE CABLE 4 FT [***] I
597-6027-0006 BASE STATION II TO TVS MODULE CABLE 6 FT [***] I
597-6027-0010 BASE STATION II TO TVS MODULE CABLE 10 FT [***] I
597-6027-0025 BASE STATION II TO TVS MODULE CABLE 25 FT [***] I
597-6027-0050 BASE STATION II TO TVS MODULE CABLE 50 FT [***] I
597-6027-0100 BASE STATION II TO TVS MODULE CABLE 100 FT [***] I
597-6027-0200 BASE STATION II TO TVS MODULE CABLE 200 FT [***] I
597-6027-0300 BASE STATION II TO TVS MODULE CABLE 300 FT [***] I
597-6028-0010 BASE STATION RS232 PROGRAMMING CABLE [***] I
597-6125-0010 CABLE GPS-TO-BTS 10' DEUTSCH CONN INTENSE WEATHER [***] I
597-6125-0025 CABLE GPS-TO-BTS 25' DEUTSCH CONN INTENSE WEATHER [***] I
597-6125-0050 CABLE GPS-TO-BTS 50' DEUTSCH CONN INTENSE WEATHER [***] I
597-6125-0100 CABLE GPS-TO-BTS 100' DEUTSCH CONN INTENSE WEATHER [***] I
597-6125-0200 CABLE GPS-TO-BTS 200' DEUTSCH CONN INTENSE WEATHER [***] I
597-6125-0300 CABLE GPS-TO-BTS 300' DEUTSCH CONN INTENSE WEATHER [***] I
597-6126-0004 BASE RS442/1 PPS DAISY CHAIN ASSY 4' INT WEATHER [***] I
597-6126-0010 BASE RS442/1 PPS DAISY CHAIN ASSY 10' INT WEATHER [***] I
597-6126-0025 BASE RS442/1 PPS DAISY CHAIN ASSY 25' INT WEATHER [***] I
597-6126-0050 BASE RS442/1 PPS DAISY CHAIN ASSY 50' INT WEATHER [***] I
597-6126-0100 BASE RS442/1 PPS DAISY CHAIN ASM 100' INT WEATHER [***] I
597-6126-0200 BASE RS442/1 PPS DAISY CHAIN ASM 200' INT WEATHER [***] I
597-6127-0002 BASE STATION II TO TVS MOD CABLE 2 FT INT WEATHER [***] I
597-6127-0004 BASE STATION II TO TVS MOD CABLE 4 FT INT WEATHER [***] I
597-6127-0006 BASE STATION II TO TVS MOD CABLE 6 FT INT WEATHER [***] I
597-6127-0010 BASE STATION II TO TVS MOD CABLE 10FT INT WEATHER [***] I
597-6127-0025 CABLE GPS-TO-BTS 25' DEUTSCH CONN INTENSE WEATHER [***] I
</TABLE>
[*** Confidential Treatment Requested]
A-4
<TABLE>
<CAPTION>
ITEM DESCRIPTION TOTAL PRICE (I)NFRA/(C)PE
---- ----------- ----------- -------------
<S> <C> <C> <C>
597-6127-0050 CABLE GPS-TO-BTS 50' DEUTSCH CONN INTENSE WEATHER [***] I
597-6127-0100 CABLE GPS-TO-BTS 100' DEUTSCH CONN INTENSE WEATHER [***] I
597-6127-0200 CABLE GPS-TO-BTS 200' DEUTSCH CONN INTENSE WEATHER [***] I
597-6127-0300 CABLE GPS-TO-BTS 300' DEUTSCH CONN INTENSE WEATHER [***] I
598-0002-0002 2FT X 3/4" OD MOUNTING PIPE [***] I
598-0002-0004 4FT X 3/4" OD MOUNTING PIPE [***] I
598-0002-0100 COPPER SET SCREW LUG, STRAIGHT TONGUE, 14-4 AWG, [***] I
598-0160-0001 GUIDE PINS BASE UNIT [***] I
598-0160-0040 STRAP STR RELIEF FOR DIP 40 CONN [***] I
598-1000-0001 HINGE, LIFT-OFF / WITH PIN [***] I
598-1000-0002 HINGE, LIFT-OFF / WITHOUT PIN [***] I
598-1000-0010 U-TYPE FASTENER [***] I
700-0150-0001 DMC CRIMP TOOL, MH860 [***] I
700-0150-0002 DMC CRIMP TOOL, AF-8 [***] I
700-0150-0003 DMC POSITIONER TOOL, # 86-7 [***] I
700-0150-0004 DMC POSITIONER TOOL, # TH163 [***] I
700-1100-2001 GREEN / WHITE INSERTION / EXTRACTION TOOL [***] I
700-1100-2201 RED / ORANGE INSERTION / EXTRACTION TOOL [***] I
900-0009-0055 NETWORK INTERFACE MODULE KIT [***] I
900-0100-0125 TVS MODULE BOX [***] I
900-0323-1000 BTS-2300-A, ISPOOO, CHP DIECAST [***] I
900-0337-1000 BTS-3700-C. DIECAST ISPOOO. CHPL-3-7030 [***] I
900-0337-9100 3.7 ROHS NON-ENHANCED BTS-3700-C ISPOOO CHPL-3-7010 [***] I
900-0350-1000 BTS-2500-C ISPOOO, CHPL -2-6010 DIECAST [***] I
900-0350-9100 2.6 ROHS NON-ENHANCED BTS-2500-C ISPOOO CHPL-2-6010 [***] I
900-0352-1000 BTS-3300-C, ISPOOO, CHPL-3-3010 DIECAST [***] I
900-0354-1000 BTS-3500-C, ISPOOO, CHPL-3-5030 DIECAST [***] I
900-0354-9100 3.5 ROHS NON-ENHANCED BTS-3500-C ISPOOO CHPL-3-5030 [***] I
900-0360-1000 BTS-2500-E, ISPOOO, CHPL-2-6010 [***] I
</TABLE>
[*** Confidential Treatment Requested]
A-5
WIMAX- CLEARWIRE PRICING
PRODUCT/DESCRIPTION
Diversity Access Point-2006 (non-Redundant) 4 Sector integrated base site.
Includes antennas, 2.5 GHz RF modules, GPS, modem, fiber optic and power cables,
power supplies and mounting brackets. Includes any necessary hardware upgrades,
if any, from Wave 1 to Wave 2 if originally purchased as Wave
1. Channelization is 5 and 10 MHz.
Tiers Measured on CUMULATIVE Lifetime purchases of both 4 Sector and 3
Sector products for the DAP 2006 products
Available [***]
<TABLE>
<CAPTION>
[***] 2008 2009 2010 2011
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
[***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***]
</TABLE>
Diversity Access Point - 2006 (non-Redundant) 3 Sector integrated base site.
Includes antennas, 2.5 GHz RF modules, GPS, modem, fiber optic and power cables,
power supplies and mounting brackets. Includes any necessary hardware upgrades,
if any, from Wave 1 to Wave 2 if originally purchased as Wave
1. Channelization is 5 and 10 MHz.
Tiers Measured on CUMULATIVE Lifetime purchases of both 4 Sector and 3
Sector products for the DAP 2006 products
Available [***]
<TABLE>
<CAPTION>
2007 2008 2009 2010 2011
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
[***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***]
</TABLE>
WIMAX Network Support (Including Software Maintenance)
WIMAX NSP per Sector & per CAP Controller per year. Starts January 1st in
the year after shipment. Does not include Extended Hardware Maintenance
[***] per Sector per year [***] per CAP controller per year.
- capped at the lesser of 1) [***] per year or 2 [***] per Subscriber per year.
CAP Controller - 1000 Site Configuration
Hardware includes redundant ATA shelf and access point controller cards for
up to 1,000 sites and 1,000,000 users. One(1) is required per access point
network.
[***] Available [***]
Portal Element Management System
Central Server Software per workstation. Excludes PC Hardware License Keys,
one required per DAP
[***] Available [***]
[***] Available [***]
Notes - all pricing quoted is for the 2.5 Ghz products in US Dollars - Taxes,
Insurance & Freight will be added as applicable 3.5 Ghz DAP products (5
and 7 mhz chnl only) are offered at [***] price as above 3.5 Ghz CPE/PC
Cards (5 and 7 mhz chnl only) are offered at [***] to prices shown above
Expedience - Clearwire Pricing
<TABLE>
<CAPTION>
2007 2008 2009 2010
----- ----- ----- -----
<S> <C> <C> <C> <C>
Expendience Network [***] [***] [***] [***]
Support (Including
Software Maintenance)
</TABLE>
Experience NSP per sector per year. Starts January 1st in the year after
shipment. Does not include Extended Hardware Maintenance
- capped at the lesser of 1) [***] per year or [***] per Subscriber per year
[*** Confidential Treatment Requested]
A-6
EXHIBIT "A"
SCHEDULE 2
TO THE
WIRELESS BROADBAND SYSTEM
INFRASTRUCTURE AGREEMENT
TARGETED EQUIPMENT AVAILABILITY DATES
<TABLE>
<CAPTION>
MILESTONE # DATE 2.5 GHZ NETWORK MILESTONES
----------- ----- --------------------------
<S> <C> <C>
N1 [***] [***]
N2 [***] [***]
N3 [***] [***]
N4 [***] [***]
N5 [***] [***]
N6 [***] [***]
N7 [***] [***]
</TABLE>
This Schedule sets forth Infrastructure Products and target availability dates
therefor which Clearwire desires to purchase. Once mutually agreed upon by the
parties, this Schedule will be amended accordingly and Motorola will agree to
deliver Infrastructure Products in accordance with the target availability dates
described in such amended Schedule. Motorola and Clearwire will use commercially
reasonable efforts to achieve the objectives stated in this Schedule by the
dates specified above or elsewhere in this Agreement, including identifying
those provisions of this Schedule the breach of which will be mutually agreed
upon to constitute a material breach for purposes of Section 2.3.4 of this
Agreement.
[*** Confidential Treatment Requested]
A-7
EXHIBIT "B"
TO THE
WIRELESS BROADBAND SYSTEM
INFRASTRUCTURE AGREEMENT
TECHNICAL SPECIFICATIONS
<TABLE>
<CAPTION>
TARGETED DISCUSSION
DURATION PERIOD FROM
EXHIBIT B SCHEDULE PERMITTED START DATES*
------------------ ----------------------
<S> <C>
Exhibit B-Schedule 1 - Clearwire Expedience WiMAX N/A
Ntw.doc
Exhibit B-Schedule 2 - ASN requirements vO.5.doc 60
Exhibit B-Schedule 3 - WiMAX ICD requirements vO.3.doc 60
Exhibit B-Schedule 4 - Expedience ICD requirements 120
vG.3.doc
Exhibit B-Schedule 5 - System validation plan_vO.2.doc 60
Exhibit B-Schedule 6 - Wimax cert profiles vO.2.doc 120
Exhibit B-Schedule 7 - DAP CAP Product 120
Description1.2a.pdf
Exhibit B-Schedule 8 - Alpha field testplan vO.2.doc 60
Exhibit B-Schedule 9 - Beta market testplan vO.3.doc 180
Exhibit B-Schedule 10 - Wave2 testplan vO.3.doc 180
*TO the extent the discussions involve third parties
other than Motorola and Clearwire, start date will not
begin prior to closing.
</TABLE>
SEE SCHEDULES 1-10 ATTACHED
THIS EXHIBIT "B" SETS FORTH INFRASTRUCTURE PRODUCTS AND TECHNICAL SPECIFICATIONS
THEREFOR WHICH CLEARWIRE DESIRES TO PURCHASE. ONCE MUTUALLY AGREED UPON BY THE
PARTIES, THIS EXHIBIT "B" WILL BE AMENDED ACCORDINGLY AND MOTOROLA WILL AGREE TO
DELIVER INFRASTRUCTURE PRODUCTS IN ACCORDANCE WITH THE SPECIFICATIONS AND
FEATURES DESCRIBED IN SUCH AMENDED EXHIBIT "B". MOTOROLA AND CLEARWIRE WILL USE
COMMERCIALLY REASONABLE EFFORTS TO ACHIEVE THE OBJECTIVES STATED IN THIS EXHIBIT
"B" BY THE DATES SPECIFIED ABOVE OR ELSEWHERE IN THIS AGREEMENT, INCLUDING
IDENTIFYING THOSE PROVISIONS OF THIS EXHIBIT "B" THE BREACH OF WHICH WILL BE
MUTUALLY AGREED UPON TO CONSTITUTE A MATERIAL BREACH FOR PURPOSES OF SECTION
2.3.4 OF THIS AGREEMENT.
[*** Confidential Treatment Requested]
B-1
INFRASTRUCTURE AGREEMENT
EXHIBIT B
SCHEDULE 1
Clearwire Expedience/WiMAX Network Architecture
- THIS DIAGRAM OUTLINES A STANDARD WIMAX ARCHITECTURE AS PROPOSED IN NWG
STAGE 2 DESIGN.
- [***]
- [***]
- THE COLORED BOXES ILLUSTRATE THE NETWORK FUNCTIONS THAT NEED TO EXIST IN
THE FUNCTIONAL NETWORK ELEMENTS
[***]
This Schedule sets forth Infrastructure Products and technical specifications
therefor which Clearwire desires to purchase. Once mutually agreed upon by the
parties, this Schedule will be amended accordingly and Motorola will agree to
deliver Infrastructure Products in accordance with the specifications and
features described in such amended Schedule. Motorola and Clearwire will use
commercially reasonable efforts to achieve the objectives stated in this
Schedule by the dates specified in Exhibit "B" or elsewhere in this Agreement,
including identifying those provisions of this Schedule the breach of which will
be mutually agreed upon to constitute a material breach for purposes of Section
2.3.4 of this Agreement.
[*** Confidential Treatment Requested]
CLEARWIRE WIMAX NETWORK
[***]
[*** Confidential Treatment Requested]
2
INFRASTRUCTURE AGREEMENT
EXHIBIT B
SCHEDULE 2
WIMAX ASN-GW REQUIREMENTS
DOCUMENT NUMBER: CLROOX
RELEASE: 0.5
JUNE, 2006
This Schedule sets forth Infrastructure Products and technical specifications
therefor which Clearwire desires to purchase. Once mutually agreed upon by the
parties, this Schedule will be amended accordingly and Motorola will agree to
deliver Infrastructure Products in accordance with the specifications and
features described in such amended Schedule. Motorola and Clearwire will use
commercially reasonable efforts to achieve the objectives stated in this
Schedule by the dates specified in Exhibit "B" or elsewhere in this Agreement,
including identifying those provisions of this Schedule the breach of which will
be mutually agreed upon to constitute a material breach for purposes of Section
2.3.4 of this Agreement.
1
DOCUMENT HISTORY
<TABLE>
<CAPTION>
NUMBER DATE AUTHOR DESCRIPTION
------ ------------- ------------------------ ----------------------
<S> <C> <C> <C>
0.4 June 14, 2006 Mark Winter/Pete Gelbman Initial version
..05 June 21, 2006 Pete Gelbman Joint CW/MOT edits for
clarification
</TABLE>
2
CONTENTS
<TABLE>
<S> <C>
1. ASN PROFILE REQUIREMENTS ................................................ 5
1.1. PMIP ............................................................... 5
1.2. R6 Tunnel .......................................................... 5
1.3. RRM and R8 Interface ............................................... 5
2. PLATFORM ARCHITECTURE ................................................... 5
2.1. High Availability .................................................. 5
2.2. Scalability ........................................................ 6
2.3. Access Control ..................................................... 6
2.4. Interface Support .................................................. 6
2.5. Protocols .......................................................... 6
2.6. Latency Performance ................................................ 6
2.7. Server support ..................................................... 6
3. ASN BILLING ............................................................. 6
4. QOS ..................................................................... 7
5. MANAGEMENT .............................................................. 7
5.1. Security ........................................................... 7
5.2. Command Line Interface (CLI) ....................................... 7
5.3. Network communications (remote) .................................... 7
5.4. Serial Communications (local console port) ......................... 7
5.5. Debugging .......................................................... 7
5.6. Dedicated Management Port .......................................... 7
5.7. Reporting .......................................................... 8
5.8. Configuration Management ........................................... 8
5.9. Storage ............................................................ 8
</TABLE>
3
1. ASN PROFILE REQUIREMENTS
ASN PROFILE C is required, including all functional entities, protocols, and
interfaces as defined by the WiMAX Forum Network Working Group (NWG) in current
and future versions of WiMAX End-to-End Network System Architecture, Stage 2 and
Stage 3 reference documentation, dated 2006.04.17. At the time these
requirements are being written, NWG Stage 3 (Detailed protocols and procedures)
are still under development. The following sections clarify specific functional
requirements in certain areas where necessary.
1.1. PMIP
ASN must support Proxy Mobile IP.
1.2. R6 TUNNEL
R6 must support GRE tunneling protocol between BTS and ASN-GW.
1.3. RRM AND R8 INTERFACE
Within ASN profile C, RRM (including RRA and RRC) and related mobility HO
functions are defined to reside in the BS. Separation of BS and ASN-GW functions
in this manner is generally in line with Clearwire ASN requirements. However,
having all RRM functions reside only in BS may preclude or make it difficult to
implement optimized soft handover or network managed mobility handovers. This
issue has been recognized within the WiMAX NWG and proposals for using R8
interface (inter-BS communications) to resolve this issue. To date, these
strategies have not been defined within NWG stage 2 or 3 documentation. Even
within the context of an R8 solution there may be significant implementation
challenges, that may requires proprietary BS RRM solutions, or necessitate
revisiting the split of RRM functions between BS/ASN within profile C.
Since this issue is currently under investigation in NWG, there is no specific
requirement that Clearwire can articulate other than to require that both ASN
and BS vendors recognize that this issue exists and commit to the joint
development of a comprehensive solution that meets Clearwire mobility
requirements.
2. PLATFORM ARCHITECTURE
2.1. HIGH AVAILABILITY
The ASN-GW should have the following HA features:
- System should be designed to provide carrier class with 99.999%
availability
- No Single Point of failure.
- Hitless software upgrades.
- Hitless failover for non-stop forwarding.
- ASN-GW should have messaging if a connection limit has been reached to
communicate to the BS to contact another ASN-GW.
4
2.2. SCALABILITY
- ASN-GW platform should be scalable enough to support cost effective,
flexible hardware deployments of both large and small markets, while
maintaining common software functionality & configuration.
[***]
2.3. ACCESS CONTROL
ASN-GW should support Access Control Lists
2.4. INTERFACE SUPPORT
The system must support the following standard network interfaces:
[***]
2.5. PROTOCOLS
ASN-GW must support the following protocols:
[***]
2.6. LATENCY PERFORMANCE
System should introduce minimal latency as traffic flows through it.
2.7. SERVER SUPPORT
Any server based application must run on major open source Linux distribution
such as CentOS, RedHat Enterprise Linux, etc.
3. ASN BILLING
ASN platform must provide billing function to CRM. It's expected that this will
occur via industry standard AAA/RADIUS interface from ASN elements; however
WiMAX has not fully defined these requirements.
Issues to be jointly worked out:
- Per current WiMAX stage 2/3 docs, AAA lives in CSN. Its recognized
that having AAA/Proxy live within ASN may be a good thing.
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- Another complexity is that CW USA is actually a ASN & CSN so these
boundaries do not currently directly align with overall sys-arch.
4. QOS
ASN-GW should support [***] techniques. These should facilitate QoS policy
definition, classification, and enforcement.
5. MANAGEMENT
ASN-GW Management details shall be specified in detail under general Clearwire
OAM&P requirements. The following sections provide specific additional
requirement.
5.1. SECURITY
ASN-GW operator security authentication should be capable of supporting RADIUS
AAA. NOTE: this is not WIMAX SS authentication - this is management login
authentication.
5.2. COMMAND LINE INTERFACE (CLI)
ASN must provide a terminal CLI access to operating system commands. UNIX shell
characteristics with hierarchical menu structure with the common function [arg1]
[arg2] format, context help, and tab-completion is preferred. The shell CLI
should be common to various access methods such as network, or serial. The
well-known Cisco router IOS provides a good example of an engineering-friendly
CLI.
5.3. NETWORK COMMUNICATIONS (REMOTE)
A method for logging into a remote target and for executing commands over a
TCP/IP network is required. Industry standard tools such as Telnet and SSH are
preferred. For file transfer, SCP, TFTP, and FTP are preferred. These protocols
have client programs available on all popular operating systems and API's are
available in many programming languages.
5.4. SERIAL COMMUNICATIONS (LOCAL CONSOLE PORT)
A dedicated local RS-232 interface is required for initial configuration and
reliable access to the target shell when the network may not be functional.
5.5. DEBUGGING
ASN software should provide module/function level debug and data logging
capabilities. Since such functions significantly impact MIPS and system
performance, each module should provide its own ability to enable/disable
debug/logging and discreet levels of verbosity.
5.6. DEDICATED MANAGEMENT PORT
A dedicated management Ethernet port is required for out of band management of
the system.
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5.7. REPORTING
System should support the following event, fault, and troubleshooting features
at a minimum:
[***]
- All these functions should be designed with performance impact
considerations.
5.8. CONFIGURATION MANAGEMENT
- ASN devices must provide following functionality:
[***]
- ASN-GW software configuration shall be provided via a single text file
than can be edited and saved locally or remotely and transferred to
and from the device via TFTP/SCP network protocols.
5.9. STORAGE
The platform should have flash based storage where backup code images and files
can be stored.
Todo:
- Need to add Acronym def
[***]
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[***]
- It's recognized that there are many approaches to these issues with various
complex pros/cons that need to be addressed jointly.
[***]
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INFRASTRUCTURE AGREEMENT
EXHIBIT B
SCHEDULE 3
WIMAX ICD REQUIREMENTS
DOCUMENT NUMBER: CLR00X
RELEASE: 0.3
JUNE, 2006
This Schedule sets forth Infrastructure Products and technical specifications
therefor which Clearwire desires to purchase. Once mutually agreed upon by the
parties, this Schedule will be amended accordingly and Motorola will agree to
deliver Infrastructure Products in accordance with the specifications and
features described in such amended Schedule. Motorola and Clearwire will use
commercially reasonable efforts to achieve the objectives stated in this
Schedule by the dates specified in Exhibit "B" or elsewhere in this Agreement,
including identifying those provisions of this Schedule the breach of which will
be mutually agreed upon to constitute a material breach for purposes of Section
2.3.4 of this Agreement.
1
DOCUMENT HISTORY
<TABLE>
<CAPTION>
NUMBER DATE AUTHOR DESCRIPTION
------ ------------- ------------ -----------------------------------
<S> <C> <C> <C>
0.1 June 13, 2006 Scott Jacka Initial version
0.3 June 21, 2006 Pete Gelbman Join CW/MOT edits for clarification
</TABLE>
2
CONTENTS
<TABLE>
<S> <C>
1. INTRODUCTION.......................................................... 4
2. INTERFACE DESCRIPTIONS................................................ 5
2.1. AAA to ASN Interface............................................. 5
2.1.1. Network Connectivity...................................... 5
2.2. EMS to BS Interface.............................................. 5
2.2.1. Network Connectivity...................................... 5
2.2.2. Management and Monitoring................................. 5
2.3. EMS to ASN Interface............................................. 5
2.3.1. Network Communications.................................... 5
2.3.2. Management and Monitoring................................. 5
2.4. EMS to SS/MS Interface........................................... 6
2.5. EMS to NMS/CRM Interface......................................... 6
3. EMS REQUIREMENTS...................................................... 7
3.1. General EMS Requirements......................................... 7
3.2. Tiered Access and Logging........................................ 8
3.3. Command Line Interface........................................... 8
4. CENTRAL SOFTWARE, INVENTORY, AND CONFIGURATION REPOSITORY............. 10
5. SS TROUBLESHOOTING API................................................ 12
6. NETWORK SUPPORT TOOLS................................................. 13
6.1. Drive test application software.................................. 13
6.2. SS/MS Test Tool.................................................. 13
</TABLE>
3
1. INTRODUCTION
This ICD provides the framework for the interfaces to be supported within the
WiMAX network. These functions can be classified into the following categories:
Operations, Maintenance and Provisioning and will be vital to the Clearwire
network deployment. The high level interfaces to be included in this appendix
are shown in Figure A.2.1 -ICD High Level Diagram. The blue shaded blocks in the
diagram are vendor provided elements while the green shaded items are
implemented and provided by Clearwire.
[***]
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2. INTERFACE DESCRIPTIONS
2.1. AAA TO ASN INTERFACE
2.1.1. NETWORK CONNECTIVITY
The interface between the ASN and the AAA server should support RADIUS, or
DIAMETER via a TCP/IP network connection.
2.2. EMS TO BS INTERFACE
2.2.1. NETWORK CONNECTIVITY
It is required that the BS be reachable via a [***]
2.2.2. MANAGEMENT AND MONITORING
The management and monitoring of the ASN by the EMS should be completed through
widely accepted industry standard interfaces. Specifically the ASN to EMS
interface should support [***]
2.3. EMS TO ASN INTERFACE
The EMS to ASN interface must support the management of the ASN. The functions
associated with this management are specified in this section of the appendix.
2.3.1. NETWORK COMMUNICATIONS
It is required that the ASN be reachable via a [***]
2.3.2. MANAGEMENT AND MONITORING
The management and monitoring of the ASN by the EMS should be completed through
widely accepted industry standard interfaces. Specifically the ASN to EMS
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interface should support [***]
2.4. EMS TO SS/MS INTERFACE
The EMS to SS interface is unique in the network [***]
The services relative to the EMS to SS interface are specified in section 3.0
EMS Requirements section of the appendix. A summary of these functions to be
supported via the EMS to SS interface are as follows:
[***]
Any information exchanged between the SS/MS and the network should be done in a
safe manner and minimizing risks networking security. For example the BS and
associated management network should not be directly accessible through the air
interface of the SS.
2.5. EMS TO NMS/CRM INTERFACE
EMS must support industry standard interfaces to 3rd party NMS and CRM
platforms. The definition of industry standard may vary, currently its felt that
[***]
Specific capabilities of the EMS which may impact the information exchanged on
this interface are further outlined in the 3.0 EMS Requirements section of this
document and ASN requirements doc.
An API should be provided on the EMS using industry standard interfaces to
facilitate the integration between CRM and the EMS. This connection is required
to facilitate management and troubleshooting of subscriber issues.
Specific capabilities related to the EMS to CRM Interface are further outlined
in section 3.0 EMS
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3. EMS REQUIREMENTS
The EMS is a key focal point of the WiMAX network which allows for the
operation, maintenance, and provisioning of the network. The WiMAX SPWG team is
still in the process of developing requirements of the EMS as of Release 1.5 of
the document "Recommendations and Requirements for Networks based on WiMAX Forum
Certified Products".
3.1. GENERAL EMS REQUIREMENTS
Many specific requirements of the EMS will require [***]. However, capabilities
[***] follows:
[***]
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3.2. TIERED ACCESS AND LOGGING
Applications within the EMS should support tiered access levels. The
tiered-access levels should be configurable by Clearwire on a per-user basis.
The included capability should also allow for the viewing of capability to be
removed from users where access permissions are not allowed.
All login attempts (failed and successful), executed user commands, and command
results should be logged in a human readable log file. Entries should include
the user performing each action as well as the date and timestamp the action was
performed.
The management of user passwords should either be stand alone within the
application or via the use of RADIUS.
3.3. COMMAND LINE INTERFACE
Clearwire views CLI as [***] and would like to submit the following as initial
input towards a MOI MRD:
The WiMAX system should contain a Command Line Interface (CLI) for each device
where appropriate (examples: ASN, BS, SS/MS). This Interface will be used for
executing operating system commands from direct or remote locations. The
following requirements are placed on the CLI:
[***]
The CLI should allow for basic and advanced troubleshooting of the network
element. Key functionality which should be available via the CLI are as follows:
[***]
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[***]
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4. CENTRAL SOFTWARE, INVENTORY, AND CONFIGURATION REPOSITORY
The WiMAX system must offer a central, or regionally, located service which
performs software management and element configuration. The preliminary list of
requirements generic to each tool are as follows:
- This core functionality should be part of a delivered EMS package.
- The application should allow for authenticated and tiered access as
described elsewhere in this document.
- All login attempts (failed and successful), executed user commands,
and command results should be logged in a human readable log file.
Entries should include the user performing each action as well as the
date and timestamp the action was performed.
The preliminary list of requirements for the software upgrade aspect of the tool
are as follows:
- Upgrades of the BS or SS/MS can be performed on a scheduled, ad-hoc,
or automatic basis for the BS and SS/MS software updates.
- Delivery of the software should be performed in a reliable and
efficient manner, particularly with respect to the SS/MS.
- Application software should be delivered to an inactive software
partition on the BS and SS/MS in order to minimize the chance of
having a defective unit as the result of the upgrade process.
[***]
- The software update application should provide detailed reports on the
SS upgrade process (ie units successfully upgraded, units that failed,
units that were last known on each software revision).
The preliminary list of requirements for the inventory configuration management
tool are as follows:
[***]
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[***]
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5. SS TROUBLESHOOTING API
The EMS interface should contain the capability to support subscriber
diagnostics. This API should allow for remote diagnostics to be performed on a
specified SS/MS in order to support the customer care process.
At a minimum, the information provided by this interface should contain the
following types of information:
- Device status (enabled, disabled)
- Device state (registered - provide BTS information, not registered -
provide last registration time and location)
- Running software version
- CPE type and model information
[***]
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6. NETWORK SUPPORT TOOLS
There are additional network support tools required to be provided by the
equipment vendor. These tools will have specific interfaces to the hardware
being provided.
6.1. DRIVE TEST APPLICATION SOFTWARE
A drive test application will required in order to capture the performance of
the [***]
6.2. SS/MS TEST TOOL
Clearwire is requesting that a tool be provided to test field returns in order
to quantify if a device is defective, or if the issue for return could be
related to user error. This tool should exercise as much of the SS/MS as is
practical without requiring disassembly of the device.
The exact specifications of this tool should be defined as a part of further
technical discussions with the vendor with an intention to provide a tool for
use prior to a general-availability release of the WiMAX network. The
expectation is that discussions would lead to an MRD resulting in an available
tool.
NOTES:
In reference to section 2.1 (AAA interface), its jointly recognized that RADIUS
solution is fine. Ref to Diameter is supplied due to WiMAX ref document
compliance.
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INFRASTRUCTURE AGREEMENT
EXHIBIT B
SCHEDULE 4
EXPEDIENCE ICD REQUIREMENTS
DOCUMENT NUMBER: CLROOX
RELEASE: 0.1
JUNE, 2006
This Schedule sets forth Infrastructure Products and technical specifications
therefor which Clearwire desires to purchase. Once mutually agreed upon by the
parties, this Schedule will be amended accordingly and Motorola will agree to
deliver Infrastructure Products in accordance with the specifications and
features described in such amended Schedule. Motorola and Clearwire will use
commercially reasonable efforts to achieve the objectives stated in this
Schedule by the dates specified in Exhibit "B" or elsewhere in this Agreement,
including identifying those provisions of this Schedule the breach of which will
be mutually agreed upon to constitute a material breach for purposes of Section
2.3.4 of this Agreement.
1
DOCUMENT HISTORY
<TABLE>
<CAPTION>
NUMBER DATE AUTHOR DESCRIPTION
------ ------------- ----------- ---------------
<S> <C> <C> <C>
0.1 June 13, 2006 Scott Jacka Initial version
0.2 June 16, 2006 JS
0.3 June 21, 2006 Scott Jacka
</TABLE>
2
CONTENTS
<TABLE>
<S> <C>
1. NEXTNET EXPEDIENCE OPERATIONS AND SYSTEM MAINTENANCE .................... 4
1.1. NextNet Provided Applications -ISP/AP/PLADMIN ...................... 4
1.2. Clearwire Cheetah Application ...................................... 4
1.3. NextNet Expedience Syslog .......................................... 4
1.4. NextNet Command Line Interface ..................................... 5
1.5. NextNet SNMP MIB ................................................... 5
1.6. NextNet BTS Software Upgrade Tool .................................. 5
1.7. NextNet Expedience Field Test ...................................... 6
1.8. NextNet Expedience Load Master ..................................... 6
1.9. NextNet Link Monitor ............................................... 6
2. NEXTNET EXPEDIENCE SUBSCRIBER PROVISIONING .............................. 6
2.1. Clearwire BOSS to NextNet Expedience Interface...................... 6
2.2. Support for clustering ............................................. 6
2.3. Roaming Requirements ............................................... 6
</TABLE>
3
1. NEXTNET EXPEDIENCE OPERATIONS AND SYSTEM MAINTENANCE
The existing NextNet Expedience interfaces and tools must be maintained in order
to allow the continued operation of the Clearwire network. These applicable
interfaces and tools are described in this appendix of the document.
Actual deliverable dates and commitments associated with changes or new
requirements will be involved in a 3-way discussion between Clearwire, NextNet,
and Motorola. Deliverables are also dependent upon adequate project funding.
1.1. NEXTNET PROVIDED APPLICATIONS -ISP/AP/PLADMIN
The NextNet Expedience system must maintain the existing web page functionality
for the ISP server, AP server, and pladmin applications which exist today.
Future application enhancements and tool capability are anticipated with the
expectation that these changes do not remove existing functionality and all
modifications should be fully documented.
[***]
The existing NextNet Expedience architecture requires [***]
1.2. CLEARWIRE CHEETAH APPLICATION
The Clearwire Cheetah application is an internal Clearwire tool used by customer
care, the NOC, and engineering to investigate the current status of a CPE on the
Clearwire network. This CPE diagnostics tool leverages [***] to enhance the
Cheetah support as required.
1.3. NEXTNET EXPEDIENCE SYSLOG
The NextNet Expedience BTS generates a number of [***]
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[***]
1.4. NEXTNET COMMAND LINE INTERFACE
The NextNet Operating System (NNOS) command line is the [***]
1.5. NEXTNET SNMP MIB
The NextNet Expedience system offers a variety of [***]
1.6. NEXTNET BTS SOFTWARE UPGRADE TOOL
NextNet must maintain a BTS upgrade tool with as much, or more, capability then
the existing tool. Full documentation from NextNet should be produced at the
time the any new software is released to Clearwire in a Beta stage.
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1.7. NEXTNET EXPEDIENCE FIELD TEST
NextNet must maintain a Field Test application with as much, or more, capability
then the existing tool. Full documentation from NextNet should be produced at
the time the any new software is released to Clearwire in a Beta stage.
1.8. NEXTNET EXPEDIENCE LOAD MASTER
NextNet must maintain a LoadMaster application with as much, or more, capability
then the existing tool. Full documentation from NextNet should be produced at
the time the any new software is released to Clearwire in a Beta stage.
1.9. NEXTNET LINK MONITOR
NextNet must maintain a Link Monitor application with as much, or more,
capability then the existing [***] application. Full documentation from NextNet
should be produced at the time the any new software is released to Clearwire in
a Beta stage.
2. NEXTNET EXPEDIENCE SUBSCRIBER PROVISIONING
2.1. CLEARWIRE BOSS TO NEXTNET EXPEDIENCE INTERFACE
The inserted document [***]
2.2. SUPPORT FOR CLUSTERING
Clearwire has a need to create a [***]
2.3. ROAMING REQUIREMENTS
There is an operational requirement that [***]
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[***]
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INFRASTRUCTURE AGREEMENT
EXHIBIT B
SCHEDULE 5
WIMAX SYSTEMS VALIDATION PLAN
DOCUMENT NUMBER: CLR00X
RELEASE: 0.2
JUNE, 2006
This Schedule sets forth Infrastructure Products and technical specifications
therefor which Clearwire desires to purchase. Once mutually agreed upon by the
parties, this Schedule will be amended accordingly and Motorola will agree to
deliver Infrastructure Products in accordance with the specifications and
features described in such amended Schedule. Motorola and Clearwire will use
commercially reasonable efforts to achieve the objectives stated in this
Schedule by the dates specified in Exhibit "B" or elsewhere in this Agreement,
including identifying those provisions of this Schedule the breach of which will
be mutually agreed upon to constitute a material breach for purposes of Section
2.3.4 of this Agreement.
1
DOCUMENT HISTORY
<TABLE>
<CAPTION>
NUMBER DATE AUTHOR DESCRIPTION
------ ------------- ----------- ---------------
<S> <C> <C> <C>
0.1 June 15, 2006 Scott Initial version
Jacka/Pete
Gelbman
0.2 June 21, 2006 Scott Jacka Joint updates
</TABLE>
2
CONTENTS
<TABLE>
<S> <C>
1. INTRODUCTION ........................................................... 5
2. VALIDATION TEST PLATFORM REQUIREMENTS .................................. 5
2.1. Test Platform Configurations ...................................... 5
2.2. Network Configuration ............................................. 6
2.3. Network Test Tools - Chariot ...................................... 6
3. SOFTWARE VERIFICATION INTERFACE REQUIREMENTS ........................... 6
3.1. RF performance metrics (BS/SS) .................................... 6
3.2. Frame counters and modulation class statistics (BS/SS) ............ 6
3.3. System and session status/reports (BS) ............................ 7
3.4. Radio Resource Control (BS) ....................................... 7
3.5. Radio/Antenna hardware control (BS) ............................... 7
3.6. Power Control and Link Adaptation (BS) ............................ 7
3.7. Test data (BS/SS) ................................................. 7
3.8. Data logging (BS) ................................................. 7
3.9. Processor and Memory Status (BS/SS) ............................... 8
3.10. Test Client Requirement .......................................... 8
4. CWG AND SPWG 802.16E PROTOCOL AND PROFILE REQUIREMENTS ................. 8
5. ASN TESTING ............................................................ 8
5.1. ASN-GW failover ................................................... 9
5.2. ASN-GW under load ................................................. 9
5.3. General Testing ................................................... 9
6. SECURITY VALIDATION .................................................... 9
7. NETWORK IP VALIDATION .................................................. 9
8. PHY/RF TESTS ........................................................... 9
8.1. RF Testing Overview ............................................... 9
8.2. Hardware RF Performance ........................................... 10
8.2.1. Transmitter .................................................. 10
8.2.2. Receiver ..................................................... 10
8.3. Mobility/Fading Tests ............................................. 10
8.4. WiMAX Wave 2 PHY Validation ....................................... 10
8.4.1. Calibration Tests ............................................ 10
8.4.2. Maximum Ratio Combining ...................................... 10
8.4.3. MIMO Processing/Multiplexing ................................. 11
8.4.4. AAS Spatial Processing ....................................... 11
8.5. Additional RF Requirements ........................................ 11
8.5.1. Interference Rejection ....................................... 11
9. MAC VALIDATION (LAB TESTING, CABLED RF) ................................ 11
9.1. Resource Allocation/QoS ........................................... 11
9.2. Oversubscription .................................................. 11
9.3. Transmission Latency .............................................. 11
10. MANAGEMENT VERIFICATION ............................................... 12
10.1. Command Line Interface ........................................... 12
10.2. SNMP MIB ......................................................... 12
</TABLE>
3
<TABLE>
<S> <C>
10.3. Alarm Traps ...................................................... 12
10.4. Exception Testing ................................................ 12
</TABLE>
4
1. INTRODUCTION
System Validation testing will be conducted in a controlled lab environment
prior to, and in parallel with, the radiated field testing. The testing in the
laboratory environment is intended to occur over a conducted airlink. Laboratory
testing will be used to establish that the system meets minimum performance
criteria before the commencement of more complex and involved radiated field
testing. The laboratory environment can also be used for problem replication of
field issues where applicable.
The system validation stage is also intended to allow for Clearwire to become
familiar with the hardware, software, and operational requirements of the WiMAX
platform. As new hardware and software releases are introduced the laboratory
environment this allows for a controlled exercise of the network and its
elements. Major issues encountered during the laboratory validation should be
resolved prior to the introduction of the software into the radiated Alpha field
trial system.
Many of the test scenarios in this document are capable of being executed in the
Motorola or Clearwire test labs and network. More detailed work to complete the
scope and requirements of the testing and where it is appropriate to complete
the test program. Any, or all, of the test cases outline may be satisfied
through the existing Motorola test program subject to review by Clearwire.
Clearwire believes that it is critical that the performance metrics outlined in
Section 3 of this document be supported in the platform, [***]
2. VALIDATION TEST PLATFORM REQUIREMENTS
A large scale laboratory test bed will be created that will constantly exercise
the ASN, BS, and SS capabilities in controlled environment. This testing will
include a mix of data traffic types, VoIP traffic, airlink conditions, and
management traffic.
These test beds shall be available for the purposes of the test cases called out
in the remainder of the document.
2.1. TEST PLATFORM CONFIGURATIONS
[***] test beds are being requested at this time in order to support the
project.
They are described as follows:
[***]
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Each test bed should contain a mixture of SS variants that will be deployed into
the Clearwire network. The exact type of SS for each test bed will be determined
at a later date. Five SS and one BTS sector worth of spare parts should also be
provided.
2.2. NETWORK CONFIGURATION
(TBD) Basically all basic network infrastructure required; switches, routers,
etc
2.3. NETWORK TEST TOOLS - CHARIOT
In order to concentrate on the RF system performance alone, a test tool called
[***] that allows a tester to emulate and model a wide variety or end-to-end
application layer traffic across the radio network while avoiding the logistical
nightmares associated with executing such large scale tests with real
client/server network infrastructure.
[***]
3. SOFTWARE VERIFICATION INTERFACE REQUIREMENTS
System integration and validation testing requires significant software support
for test interfaces, functions and reporting. The following sections describe
the software test requirements for both BS and SS.
3.1. RF PERFORMANCE METRICS (BS/SS)
The following radio measurements are required for both [***]
[***]
3.2. FRAME COUNTERS AND MODULATION CLASS STATISTICS (BS/SS)
[***]
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[***]
3.3. SYSTEM AND SESSION STATUS/REPORTS (BS)
[***]
3.4. RADIO RESOURCE CONTROL (BS)
[***]
3.5. RADIO/ANTENNA HARDWARE CONTROL (BS)
[***]
3.6. POWER CONTROL AND LINK ADAPTATION (BS)
[***]
3.7. TEST DATA (BS/SS)
The BS/SS should have some method of generating continuous test data in a
fashion representative of end-user data sessions.[***]
3.8. DATA LOGGING (BS)
During development and debug and later validation phases it is [***]
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3.9. PROCESSOR AND MEMORY STATUS (BS/SS)
The processor utilization, at a per task level, and memory consumption for each
processor task should be [***]
3.10. CAPC TEST TOOL REQUIREMENT
It is required that a software test tool be included in the test program which,
at a minimum, has the following capabilities:
[***]
This tool will be maintained by Motorola and the testing program will be
subject to review by Clearwire.
4. CWG AND SPWG 802.16E PROTOCOL AND PROFILE REQUIREMENTS
The work of the WiMAX Certification Working Group (CWG) is considered within the
scope of the lab phase of qualification testing. The work of the CWG is still in
draft form and the applicable document is the "Test Suite Structure and test
Purposes (TSS&TP) for testing the Interoperability between WiMAX devices in
WiMAX Forum Plugfest #3". The work of the CWG team will continue to be monitored
and it is expected that the provided WiMAX platform will be able to successfully
pass all applicable tests.
The WiMAX Service Providers Working Group (SPWG) is creating a set of
requirements for certified WiMAX products. The output of this work will provide
additional guidance into the required performance of the delivered WiMAX
solution. The work of the SPWG is captured in the "Recommendations and
Requirements for Network based on WiMAX Forum Certified Products". This document
is still in draft form at this time.
5. ASN TESTING
All interfaces and functionality of ASN-GW and BS interoperation must be
validated in accordance with the requirements of their individual WiMAX and
vendor specifications.
The following are performance tests that will be exercised in controlled lab
environment.
It should be noted that the ASN testing requirements were drafted without
considering the existing Motorola CAPC architecture. Therefore the specific test
cases in this section will be modified, but the generic failover scenarios will
apply. Actual test cases to be updated pending further discussions between
Motorola and Clearwire. Please reference the ASN notes section in the ASN
appendix document.
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5.1. ASN-GW FAILOVER
Verify the following when an ASN-GW fails (for instance loss of power):
[***]
5.2. ASN-GW UNDER LOAD
Generate load on the ASN. Ideally get it [***] an 'Internet' mix of packet
sizes.
[***]
5.3. GENERAL TESTING
[***]
6. SECURITY VALIDATION
Validate complete WiMAX end-2-end IP assignment flow [***]
7. NETWORK IP VALIDATION
Validate complete WiMAX end-2-end IP assignment flow [***]
8. PHY/RF TESTS
8.1. RF TESTING, OVERVIEW
RF testing is accomplished in [***] phases:
[***] This typically means testing the radio channels in a cabled lab
environment with [***]
[***] This is the next level of RF testing, where channel conditions such
[***] as they are in a real world wireless environment. This exercises the
radio system's full functionality and [***]
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[***]
8.2. HARDWARE RF PERFORMANCE
Prior to radiated testing the BS/SS hardware must meet established RF
performance specifications. Detailed specs will be derived from WiMAX Mobility
and Certification Profiles, as well as vendor specifications. The following
items are representative of the basic radio hardware performance criteria areas
that will be tested:
8.2.1. TRANSMITTER
[***]
8.2.2 RECEIVER
[***]
8.3 SYSTEM
[***]
8.4. WIMAX WAVE 2 PHY VALIDATION
The following sections outline lab tests to be performed in a conducted cabled
RF environment to validate the [***]
8.4.1. CALIBRATION TESTS
[***]
8.4.2. MAXIMUM RATIO COMBINING
[***]
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8.4.3. MIMO PROCESSING/MULTIPLEXING
(TBD)
8.4.4. AAS SPATIAL PROCESSING
[***]
8.5. ADDITIONAL RF REQUIREMENTS
8.5.1. INTERFERENCE REJECTION
[***]
9. MAC VALIDATION (LAB TESTING, CABLED RF)
The performance of the MAC is [***] to the overall success of the deployed WiMAX
solution. It is important to stress the MAC is [***] The testing related to the
MAC is specified in this section.
9.1. RESOURCE ALLOCATION/QOS
Measure performance with multiple SS utilizing the same channel resources for
data transmission. At maximum load, users should [***]
[***]
9.2. OVERSUBSCRIPTION
Measure performance with multiple SS utilizing the same channel resources for
data transmission [***]
9.3. TRANSMISSION LATENCY
Verify performance of uplink and downlink transmission latency for various
packet sizes under [***]
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10. MANAGEMENT VERIFICATION
10.1. COMMAND LINE INTERFACE
Verify that the command line functions within provided guidelines and that the
level of debugging and troubleshooting interfaces is sufficient.
10.2. SNMP MIB
Verify that the SNMP MIB can compile and that the MIB is functional and provides
sufficient information to operate and maintain the network.
10.3. ALARM TRAPS
Verify that the equipment generates alarms and SNMP traps in accordance with the
manufacturer specifications.
10.4. EXCEPTION TESTING
Verify that when interface cables are removed that the system performs as
anticipated. Verify that given the failure of one sector that the remaining
sectors continue to process traffic normally.
12
INFRASTRUCTURE AGREEMENT
EXHIBIT B
SCHEDULE 6
WIMAX CERTIFICATION PROFILES
DOCUMENT NUMBER: CLR00X
RELEASE: 0.2
JUNE, 2006
This Schedule sets forth Infrastructure Products and technical specifications
therefor which Clearwire desires to purchase. Once mutually agreed upon by the
parties, this Schedule will be amended accordingly and Motorola will agree to
deliver Infrastructure Products in accordance with the specifications and
features described in such amended Schedule. Motorola and Clearwire will use
commercially reasonable efforts to achieve the objectives stated in this
Schedule by the dates specified in Exhibit "B" or elsewhere in this Agreement,
including identifying those provisions of this Schedule the breach of which will
be mutually agreed upon to constitute a material breach for purposes of Section
2.3.4 of this Agreement.
1
DOCUMENT HISTORY
<TABLE>
<CAPTION>
NUMBER DATE AUTHOR DESCRIPTION
------ ------------- ------------ --------------------------------------
<S> <C> <C> <C>
0.1 June 14, 2006 David Holmes Initial version
0.2 June 21, 2006 Scott Jacka Updates from the joint review session.
</TABLE>
2
CONTENTS
<TABLE>
<S> <C>
1. FREQUENCY BANDS & CHANNEL SPACING ....................................... 4
2. OTHER PHYSICAL LAYER PARAMETERS ......................................... 4
3. CERTIFICATION PROFILE REQUIREMENTS ...................................... 4
3.1. Certification profile features ..................................... 4
3.2. Exceptions ......................................................... 4
</TABLE>
3
1. FREQUENCY BANDS & CHANNEL SPACING
WIMAX BANDCLASS: [***]
FREQUENCY COVERAGE: 2496-2680MHz
CHANNEL RASTER: [***]
CHANNEL BANDWIDTHS:
- 5MHz (512 FFT, 5.6MHz sample rate),
- 10MHz (1024 FFT, 11.2MHz sample rate).
Note: This does not include requirements for international roaming (e.g.
Clearwire US to Clearwire Europe).
2. OTHER PHYSICAL LAYER PARAMETERS
[***]
3. CERTIFICATION PROFILE REQUIREMENTS
Due to the developmental nature of the WiMAX Mobile Certification profiles at
this time (June 2006), these are included by reference in this appendix.
Specific versions to be used for certification of products covered by this
contract will be agreed between Clearwire & XYZCo as they are approved by the
WiMAX Forum. Exceptions to the agreed WiMAX profiles are (or will be) as noted
below.
3.1. CERTIFICATION PROFILE FEATURES
Refer to "WiMAX Forum6:41:59 PM(TM) Mobile Certification Waves System Profile
Features" v1.0.0. 04/06 as applicable (i.e. to base stations). This may be found
at http://www.wimaxforum.org/apps/org/workgroup/211ghz/download.php/7281
/WiMAX%20Forum%20System%20Profile%20Certification%20Wave%20Recommendation%20XX
%20xxx%20xxx%2Ov1.0.0.pdf.
3.2. EXCEPTIONS
No exceptions are noted at this time.
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4
INFRASTRUCTURE AGREEMENT
EXHIBIT B
SCHEDULE 7
MOTOWI4
WMX1.0/2.0
DIVERSITY ACCESS POINT (DAP)/ CAPC
PRELIMINARY PRODUCT DESCRIPTION
INFORMATION CONTAINED WITHIN THIS PRELIMINARY PRODUCT DESCRIPTION IS SUBJECT TO
CHANGE
[ ] Initial Draft Version: 1.2
[ ] Working Draft Date: 2006-06-2
[ ] Pilot
[ ] Released
[X] Revision to Released
THIS SCHEDULE SETS FORTH INFRASTRUCTURE PRODUCTS AND TECHNICAL SPECIFICATIONS
THEREFOR WHICH CLEARWIRE DESIRES TO PURCHASE. ONCE MUTUALLY AGREED UPON BY THE
PARTIES, THIS SCHEDULE WILL BE AMENDED ACCORDINGLY AND MOTOROLA WILL AGREE TO
DELIVER INFRASTRUCTURE PRODUCTS IN ACCORDANCE WITH THE SPECIFICATIONS AND
FEATURES DESCRIBED IN SUCH AMENDED SCHEDULE. MOTOROLA AND CLEARWIRE WILL USE
COMMERCIALLY REASONABLE EFFORTS TO ACHIEVE THE OBJECTIVES STATED IN THIS
SCHEDULE BY THE DATES SPECIFIED IN EXHIBIT "B" OR ELSEWHERE IN THIS AGREEMENT,
INCLUDING IDENTIFYING THOSE PROVISIONS OF THIS SCHEDULE THE BREACH OF WHICH WILL
BE MUTUALLY AGREED UPON TO CONSTITUTE A MATERIAL BREACH FOR PURPOSES OF SECTION
2.3.4 OF THIS AGREEMENT.
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TABLE OF CONTENTS
<TABLE>
<S> <C>
1. Introduction ........................................................... 4
1.1 Broadband Wireless Access .......................................... 4
1.2 MotoWi4 based on 802.16e ........................................... 4
2. Diversity Access Point (DAP) ........................................... 6
2.1 Base Control Unit (BCU) ............................................ 7
2.1.1 Site Controller ............................................... 7
2.1.2 Modem ......................................................... 7
2.1.3 Alarm/IO ...................................................... 8
2.1.4 Medium Stability Oscillator ................................... 8
2.1.5 Power Supply .................................................. 8
2.1.6 Fans .......................................................... 8
2.1.7 Backplane ..................................................... 8
2.1.8 Surge Protector ............................................... 9
2.2 Diversity RF Module ................................................ 9
2.3 DAP Redundancy ..................................................... 10
2.4 DAP Capacity ....................................................... 11
2.5 Interfaces ......................................................... 12
2.5.1 Physical Interfaces ........................................... 12
2.5.2 Logical Interfaces ............................................ 12
2.6 Summary Spec Sheet ................................................. 12
3 DAP in a Distributed Network Architecture ............................... 14
4 Network Implementation .................................................. 15
4.1 Wimax Forum Defined Architecture ................................... 15
4.2 Mapping of Motorola Architecture to the Wimax Reference
Architecture ....................................................... 18
4.3 CAPC Details ....................................................... 19
4.3.1 CAPC platform ................................................. 20
4.3.2 CAPC Redundancy ............................................... 21
4.3.3 CAPC Capacity ................................................. 21
4.3.4 CAPC Interfaces ............................................... 21
4.4 QoS ................................................................ 22
4.5 Security ........................................................... 22
5 Feature Set ............................................................. 23
5.1 IMS based features and services .................................... 24
6 Backhaul ................................................................ 25
7 Standards Compliance .................................................... 26
Appendix A - Abbreviations ................................................ 28
</TABLE>
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Document is subject to change
TABLE OF FIGURES
<TABLE>
<S> <C>
Figure 1: DAP view ........................................................ 7
Figure 2: BCU Layout ...................................................... 8
Figure 3: DAP RF Integrated Module ........................................ 9
Figure 4: Diversity Access Point Architecture ............................. 10
Figure 5: Wimax Distributed Architecture .................................. 14
Figure 6: Wimax Forum Network Reference Architecture ...................... 16
Figure 7: Motorola's implementation of the Wimax Architecture ............. 17
Figure 8: ASN Decomposition ............................................... 19
Figure 9: CAPC Platform ................................................... 21
</TABLE>
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4
1 INTRODUCTION
1.1 Broadband Wireless Access
Networks including wireless and wireline are converging towards mobile broadband
allowing for greater mobility providing user experience similar to what a user
would have in an office LAN environment. The technology that offers both
mobility and broadband wireless access is the 802.16e based Wimax technology
offering significant benefits over other technologies.
Wimax networks are geared to support deployments that range from fixed to
nomadic to fully mobile solutions. Motorola provides an end to end solution
combining it's Wimax products with commercial off the shelf equipment for either
a fixed or mobile solution.
1.2 MotoWi4 based on 802.16e
Motorola is already a leader in Broadband Wireless Access through the Canopy(TM)
product line, a low cost solution primarily used for unlicensed fixed
applications. Governments (municipalities) and enterprises use Canopy for voice,
video and data backhaul, while many carriers use Canopy for Wireless Internet
service, primarily in rural and developing areas. Canopy's excellent RF
interference rejection characteristics make it an ideal solution for unlicensed
bands at 900MHz, 2.4GHz, and 5.2 to 5.7GHz. Motorola's first Wimax product Ultra
Light Access Point leverages heavily on the success of the canopy product line
and offers a Wimax 802.16e based solution for early fixed deployments.
Motorola decided to adopt the 802.16e specification after carefully weighing the
benefits of 802.16e over 802.16d. There are significant benefits in using
802.16e over 802.16d even for fixed deployments. These benefits are listed
below.
[***]
The "MotoWi4" is an umbrella marketing term encompassing Motorola Wimax products
addressing the broadband wireless access including both fixed and mobile
segments. The following segments are the target markets for MotoWi4 solutions.
[***]
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[***]
The product line includes the Ultra Light Access Point (ULAP), Diversity Access
Point (DAP), a range of Subscriber Devices - portable and mobile handset
solutions, and multi-mode terminals to support other 2G/3G cellular technologies
simultaneously, and other supporting network elements such as the CAPC. This
document focuses on the DAP in light of "Mobile" broadband wireless access.
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2 DIVERSITY ACCESS POINT (DAP)
Diversity Access Point provides an operator the capability to provide fully
mobile broadband wireless access coverage similar to coverage provided by 2G and
3G low speed cellular data networks. This document covers in detail the DAP
product itself in addition to providing some high level details on network
implementation utilizing DAPs to provide service to end users.
Fully compliant to the IEEE 802.16e specification the DAP solution has the
following features
[***]
Figure 1 shows the layout of the DAP. As shown the DAP consists of two major
subsystems: the base control unit (BCU) and the RF sections or heads (one per
sector). The BCU cabinet resides at the bottom of the antenna tower containing
hot-pluggable slots for up to two site controllers and up to four modem boards.
It also contains an Alarm/IO board, fans, and the power distribution system for
the entire site. The Diversity Access Point has a 2-antenna RF section that is a
single self-contained field replaceable unit (FRU).
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(FIGURE 1: DAP VIEW)
The DAP major subsystems are further broken down into specific modules.
2.1 Base Control Unit (BCU)
The following modules are part of the BCU as illustrated in Figure 2:
2.1.1 SITE CONTROLLER
[***]
2.1.2 MODEM
[***]
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(FIGURE 2: BCU LAYOUT)
2.1.3 ALARM/IO
[***]
2.1.4 MEDIUM STABILITY OSCILLATOR
[***]
2.1.5 POWER SUPPLY
[***]
2.1.6 FANS
[***]
2.1.7 BACKPLANE
[***]
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2.1.8 SURGE PROTECTOR
[***]
2.2 Diversity RF Module
[***]
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[***]
2.3 DAP Redundancy
Motorola's M0T0Wi4 products are designed to achieve high availability and can be
configured to support redundancy options.
[***]
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[***]
2.4 DAP Capacity
The DAP RF capacity will vary significantly based on the terrain where the DAP
is deployed and the subscriber density. The table below shows some sample values
for throughput and range for the DAP based on the following assumptions.
- Capacity Driven Scenario
[***]
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[***]
Table 1: DAP Capacity
The DAP is designed to support up to [***] users (combination of active, idle,
and sleeping users) with up to [***] active users per sector.
2.5 Interfaces
2.5.1 Physical Interfaces
The over the air interface between the DAP and the subscriber device (CPE, MSS,
PCMCIA, etc.) is per the 802.16e specification. The air interface covers both
the physical and the MAC layers. The DAP provides an RJ-45 port for connectivity
to the network allowing for the base stations to connect to a layer 2 backbone
enabling faster handoff times.
2.5.2 Logical Interfaces
The DAP base stations form a part of the [***] (please refer to Section 4 for
details). As shown in Figure 6, the interfaces that are considered to be
external to the [***] are the [***] and [***] interfaces as defined by the Wimax
forum. Per Wimax forum stage 2 definition, the [***] interface is defined to
consist of the set of control plane protocols between the [***] and the [***] to
support [***]policy enforcement and mobility management capabilities. It also
encompasses the bearer plane methods (e.g., tunneling) to transfer user data
between the [***] and the [***]. The [***] interface consists of the set of
control and bearer plane protocols originating/terminating in various functional
entities of an [***] that coordinate [***] mobility between [***] and [***]
2.6 Summary Spec Sheet
Table 2 summarizes the preliminary set of specifications of the Diversity Access
Point.
Air Interface
[***]
Duplex Mode
[***]
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[***]
Table 2: DAP Specifications
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3 DAP IN A DISTRIBUTED NETWORK ARCHITECTURE
[***]
Figure 5: Wimax Distributed Architecture
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4 NETWORK IMPLEMENTATION
4.1 Wimax Forum Defined Architecture
The Wimax forum (http://www.wimaxforum.org) defines the reference architecture
for solutions utilizing Wimax products providing full mobility similar to
today's cellular network deployments. The reference architecture also defines
the interface between the different logical entities [***]
Figure 6 below shows the definition of the Wimax forum defined reference
architecture followed by Figure 7 showing a representation of Motorola
embodiment of the reference architecture.
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(FIGURE 6: WIMAX FORUM NETWORK REFERENCE ARCHITECTURE)
[***]
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(FIGURE 7: MOTOROLA'S IMPLEMENTATION OF THE WIMAX ARCHITECTURE)
[***]
Figure 7: Motorola's implementation of the Wimax Architecture
A brief description of the various entities is provided below.
[***]
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[***]
4.2 Mapping of Motorola Architecture to the Wimax Reference Architecture
[***]
The [***] and [***] interfaces as shown in Figure 8 below are considered to be
Motorola internal interfaces with only the [***] and [***] interface exposed for
interoperability with other vendor equipment. Connectivity to the [***] as well
as [***] domains is done over the [***] interfaces.
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[***]
4.3 CAPC Details
The [***] as shown in Figure 8 contains [***] divided into two parts called the
[***] shown below.
[***]
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4.3.1 CAPC PLATFORM
[***]
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(FIGURE 9: CAPC PLATFORM)
4.3.2 CAPC REDUNDANCY
[***]
4.3.3 CAPC CAPACITY
[***]
4.3.4 CAPC INTERFACES
[***]
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[***]
4.4 QOS
The 802.16e specification defines a set of scheduling classes at the MAC level
that making a range of services possible. The five classes that are spelled out
in the 802.16e specification and supported by Motorola are UGS, rtPS, ertPS,
nrtPS, and BE enabling realtime as well as non-realtime services. 802.16e
definition, however, is not enough to satisfy the end to end QoS implementation.
Motorola's solution provides an end to end capable QoS framework.
Each user is provisioned with a set of service flows which map to different
services that are offered. For example, VoIP and best effort data services may
be defined as two distinct service flows for a user with each service flow being
associated with QoS related parameters including the 802.16e defined scheduling
class, DiffServ CodePoint (DSCP), minimum and maximum data rates, etc. These
parameters are utilized at different points in the network providing proper
handling of the service flow.
4.5 SECURITY
[***]
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5 FEATURE SET
The following is a list of high level features that are supported as part of the
Motorola Wi4 architecture
[***]
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[***]
5.1 IMS based features and services
The Motorola Wimax when combined with the Motorola IMS solution can provide a
compelling array of features and services. These services may include, but are
not limited to the following.
- VoIP
- Seamless Mobility (WiFi/Cellular)
- Seamless Mobility (Common Service Profile)
- Presence
- Common Address Book
- Location
- Video Call Video Streaming (Advertising, TV, VOD, etc.)
- Audio Streaming (Advertising, Radio, MOD, etc.)
- Audio/Video File Download
- Machine to Machine Solutions (e.g., Vending Machines)
- Prepaid Push To X (Talk, View, Video)
- Instant Messaging (Picture or Video Component)
- Instant Voice Message
- Unified Messaging
- Text Messaging (Alerts, Notifications)
- Conferencing (Audio/Video)
- Find Me/Follow Me
- Multi-Player Gaming
- IVR
- Ring Back Tones
- Splatt
The standard interface between the IMS domain and the Wimax network is being
defined within the Wimax Forum and Motorola will comply with the specification
when it becomes available. The connectivity is possible already using standard
IP connectivity.
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6 BACKHAUL
Motorola's DAP and CAPC can be connected to an operator's existing network
through L2 as connectivity from the DAP and the CAPC can be provided using
Ethernet. Motorola's Wimax products are being tested against multiple vendors'
L2 and L3 equipment to ensure interoperability. Motorola can work with
greenfield operators in case they need help setting up an end to end network.
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7 STANDARDS COMPLIANCE
Motorola's proposal is based on the IEEE 802.16e (2005) specification; thus
conformant to an international standard. In addition, the Wimax Forum has
defined an architecture based on the 802.16e specification that allows for
standardized interfaces between different network elements which Motorola
complies with. Motorola is a principal member of the Wimax forum actively
participating in working groups defining profiles that vendors must support for
compliance.
Interoperability with third party infrastructure and CPE will be assured through
Wimax certification and interoperability testing. Motorola will go through the
certification process and will ensure that its products meet the
interoperability criteria set forth by the Wimax forum. Prior to Wimax
certification Motorola has plans to conduct thorough product testing for all its
Wimax products for interoperability with each other. Some of this verification
will also be done as part of our forthcoming customer trials.
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APPENDIX A - ABBREVIATIONS
<TABLE>
<S> <C>
2G 2nd Generation
3G 3rd Generation
AAA Authorization, Authentication, Accounting.
AEMS Advanced EMS
A-GPS Assisted GPS
AP Access Point
ASN Access Service Network
ASN-GW ASN-gateway
BCU Base Control Unit
BEMS Basic EMS
BTS Base Transceiver Station
CAPC Carrier Access Point Controller
CGL Carrier Grade Linux
CPE Customer Premise Equipment
CPRI Common Public Radio Interface
CSN Core Service Network
DAP Diversity Access Point
DC Direct Current
DL Downlink
DSCP Diffserv Code Point
DSP Digital Signal Processor
EAP Extensible Authentication Protocol
EIRP Effective Isotropic Radiated Power
EMS Element Management System
FRU Field Replaceable Unit
GHz Gigahertz
GPS Global Positioning System
I/O Input/output
IDS Intrusion Detection System
IMS Internet Multimedia System
IP Internet Protocol
IPSec IP Security
IPv6 IP Version 6
IVR Interactive Voice Response
LAN Local Area Network
MAC Media Access Control
MBS Multicast Broadcast Service
MHz Megahertz
MIMO Multiple Input Multiple Output
MIP Mobile IP
MOD Music On Demand
MSO Medium Stability Oscillator
MSS Mobile Subscriber Station
OFDMA Orthogonal Frequency Division Multiple Access
PHS Payload Header Suppression
PHY Physical
PTT Push to Talk
PUSC Partial Usage Subchannelization
QAM Quadrature Amplitude Modulation
QoS Quality of Service
QPSK Quadrature Phase Shift Keying
</TABLE>
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<TABLE>
<S> <C>
RF Radio Frequency
RoHC Robust Header Compression
SNMP Simple Network Management Protocol
TDD Time Division Duplex
TLS Transport Layer Security
TRX Transceiver
UL Uplink
ULAP Ultra Light Access Point
VAC Volts Alternating Current
VDC Volts Direct Current
VOD Video On Demand
VoIP Voice Over Ip.
VPN Virtual Private Network
WiFi Wireless Fidelity
WIMAX Worldwide Interoperability for Microwave Access
</TABLE>
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INFRASTRUCTURE AGREEMENT
EXHIBIT B
SCHEDULE 8
WIMAX ALPHA FIELD TEST PLAN
DOCUMENT NUMBER: CLR00X
RELEASE: 0.2
JUNE, 2006
This Schedule sets forth Infrastructure Products and technical specifications
therefor which Clearwire desires to purchase. Once mutually agreed upon by the
parties, this Schedule will be amended accordingly and Motorola will agree to
deliver Infrastructure Products in accordance with the specifications and
features described in such amended Schedule. Motorola and Clearwire will use
commercially reasonable efforts to achieve the objectives stated in this
Schedule by the dates specified in Exhibit "B" or elsewhere in this Agreement,
including identifying those provisions of this Schedule the breach of which will
be mutually agreed upon to constitute a material breach for purposes of Section
2.3.4 of this Agreement.
1
DOCUMENT HISTORY
<TABLE>
<CAPTION>
NUMBER DATE AUTHOR DESCRIPTION
------ ------------- ---------------- ----------------------
<S> <C> <C> <C>
0.1 June 15, 2006 Scott Jacka/Pete Initial version
Gelbman
0.2 June 21, 2006 Pete Gelbman Joint CW/MOT edits for
clarification
</TABLE>
2
CONTENTS
<TABLE>
<S> <C>
1. INTRODUCTION......................................................... 4
2. CELL SITE REQUIREMENTS............................................... 4
2.1. Cell Site Preparation........................................... 5
3. PRELIMINARY EQUIPMENT REQUIREMENTS................................... 5
4. SERVICE PROVIDERS WORKING GROUP (SPWG)............................... 5
5. RF CONFIGURATION..................................................... 5
6. EQUIPMENT INSTALLATION............................................... 5
7. NETWORK TRAFFIC GENERATION/MEASURERMENT.............................. 5
8. RF COVERAGE VERIFICATION............................................. 6
9. WIFI CO-EXISTENCE TEST............................................... 6
10. MOBILITY/HANDOVER.................................................... 6
10.1. Performance at Mobile rates..................................... 6
10.2. OFDMA Uplink SER/ICI under load, under motion................... 6
10.3. Handover........................................................ 7
11. VOIP................................................................. 8
12. THROUGHPUT TEST...................................................... 8
13. NEXTNET EXPEDIENCE CO-EXISTENCE...................................... 9
14. DETAILED SYSTEM PERFORMANCE TESTS.................................... 9
14.1. Throughput/Capacity Tests....................................... 9
14,1.1. Maximum User Data Rate..................................... 9
14.1.2. Sector Data Rate........................................... 9
14.1.3. Sector Edge Boundary Data Rate............................. 9
14.2. MAC Performance................................................. 10
14.3. Coverage Tests.................................................. 10
14.4. Mobility/Handover............................................... 10
</TABLE>
3
1. INTRODUCTION
This document describes a basic field network configuration required to perform
field test measurements and validation of a WiMAX system. This document does not
provide test procedures or detailed software/hardware configuration parameters -
it is meant to provide only a high-level overview of basic network
configuration issues and test methodology, sufficient to guide and initiate
future detailed planning phases.
The initial radiated trial systems will consist of [***]. The four sites
selected should be located in close geographic/coverage proximity in order to
allow for the simulation of various real-world deployment scenarios. WiMAX
system performance will be characterized through a variety of throughput,
range, mobility, and capacity oriented tests, across a range of noise and
interference limited scenarios to simulate commercial deployment conditions.
Formal criteria for the testing in this plan are under development. A formal
go/no-go meeting should be scheduled between the vendor at Clearwire at the end
of the testing process to review any outstanding issues and ensure that an
appropriate action plan is in place to address documented problems.
NOTE: It is understood that performance requirements specified in this document
are can only be met under the overall requirements provided by Wavel/Wave2
802.16e/WiMAX specs.
NOTE: Clearwire has requirements for WiMAX system to support both 5 and 10 MHz
RF channel BW, For early prototype equipment Motorola BS support [***].
NOTE: Due to NOTE above, this means in order to facilitate Expedience vs.
Motorola WiMAX comparisons, obviously both systems needs to support [***] in
field trial timeframe.
NOTE: Both Clearwire & Motorola need to jointly agree on resource requirements
(staff, equipment, etc) in order to execute this test plan.
2. CELL SITE REQUIREMENTS
[***]
[*** Confidential Treatment Requested]
4
2.1 CELL SITE PREPARATION
- RF Spectrum survey to ensure the spectrum used by BS/CPE equipment is
free and clear of external interference.
- Identification and verification of SS/CPE locations and drive routes
3. PRELIMINARY EQUIPMENT REQUIREMENTS
The preliminary list of equipment required for the four radiated site is
described as follows:
[***]
[***] and based upon equipment availability; In addition to the above
equipment, one full BS site and 10 spare SS/MS should be provided.
4. SERVICE PROVIDERS WORKING GROUP (SPWG)
The WiMAX Service Providers Working Group (SPWG) is creating a set of
requirements for certified WiMAX products. The output of this work will provide
additional guidance into the required performance of the delivered WiMAX
solution. The work of the SPWG is captured in the "Recommendations and
Requirements for Network based on WiMAX Forum Certified Products". This document
is still in draft form at this time.
5. RF CONFIGURATION
As a part of the trial the WiMAX solution will be evaluated using the [***]
6. EQUIPMENT INSTALLATION
It is important that the delivered WiMAX solution does not require an overly
complex and burdensome installation procedure. It will be verified that the
system is easy to install in accordance with the manufacturer specified
recommendations.
7. NETWORK TRAFFIC GENERATION/MEASUREMENT
All testing will be end-to-end TCP/IP network traffic using [***]
[*** Confidential Treatment Requested]
5
8. RF COVERAGE VERIFICATION
RF Coverage drive testing will be performed using the provided RF drive test
tools. This purpose of this testing is to directly compare the coverage of the
[***] to ensure that an appropriate network planning infrastructure is in place.
[ref drive test tool notes from WiMAX ICD doc].
9. WIFI CO-EXISTENCE TEST
Each of an [***] Both the test units and the aceess points will be on a standard
height desktop.
WiFi access points will be placed [***] from the access point.
This test will then be repeated with an [***]
Note: Antenna configuration options and specifications will need to be
re-visited and validated prior to the implementation of this test. There are
recognized equipment variances that should be considered in order to make this
an apples-to-apples comparison.
10. MOBILITY/HANDOVER
10.1. PERFORMANCE AT MOBILE RATES
Measure performance degradation at various mobility rates in various system
configurations.
10.2. OFDMA UPLINK SER/ICI UNDER LOAD, UNDER MOTION
[***]
[*** Confidential Treatment Requested]
6
10.3. HANDOVER
Perform drive testing using a single SS and verify that the units will handover
in accordance with the published specifications of the SPWG forum in the
"Recommendations and Requirements for Networks based on WiMAX Forum Certified
Products".
[***]
[*** Confidential Treatment Requested]
7
11. VOIP
System must support [***] decrease of total aggregate BS capacity. The [***] for
all call scenarios.
12. THROUGHPUT TEST
Throughput testing will be performed in a number of scenarios and traffic types
to ensure system integrity is maintained in a dynamic real world environment.
In general the performance of the WiMAX solution is expected to be at least
equivalent and hopefully better in "user bits" throughput, as measured in Mbps
for both the uplink and downlink channels.
The first test scenario is as follows:
[***]
The second test scenario is as follows:
[***]
The third test scenario is as follows:
[***]
[*** Confidential Treatment Requested]
8
[***]
The remaining testing scenarios repeat the scenarios listed above, but with a
[***]
13. NEXTNET EXPEDIENCE CO-EXISTENCE
It is anticipated that the NextNet Expedience and the provided WiMAX solution
will be [***]. Any impairment detected will need to be mitigated in order to
successfully transition Clearwire markets.
14. DETAILED SYSTEM PERFORMANCE TESTS
The following sections provide a preliminary list of tests that will be further
developed. All tests will be performed under various BTS and channel
configurations as supported by the Motorola platform. Example of this would be
[***] required for the Clearwire network.
14.1. THROUGHPUT/CAPACITY TESTS
14.1.1. MAXIMUM USER DATA RATE
[***]
14.1.2. SECTOR DATA RATE
[***]
14.1.3. SECTOR EDGE BOUNDARY DATA RATE
[***]
[*** Confidential Treatment Requested]
9
14.2. MAC PERFORMANCE
[***]
14.3. COVERAGE TESTS
[***]
14.4. MOBILITY/HANDOVER
[***]
[*** Confidential Treatment Requested]
10
INFRASTRUCTURE AGREEMENT
EXHIBIT B
SCHEDULE 9
WIMAX BETA MARKET TEST PLAN
DOCUMENT NUMBER: CLR00X
RELEASE: 0.3
JUNE, 2006
This Schedule sets forth Infrastructure Products and technical specifications
therefor which Clearwire desires to purchase. Once mutually agreed upon by the
parties, this Schedule will be amended accordingly and Motorola will agree to
deliver Infrastructure Products in accordance with the specifications and
features described In such amended Schedule. Motorola and Clearwire will use
commercially reasonable efforts to achieve the objectives stated in this
Schedule by the dates specified in Exhibit "B" or elsewhere in this Agreement,
including identifying those provisions of this Schedule the breach of which will
be mutually agreed upon to constitute a material breach for purposes of Section
2.3.4 of this Agreement.
1
DOCUMENT HISTORY
<TABLE>
<CAPTION>
NUMBER DATE AUTHOR DESCRIPTION
------ ---- ------ -----------
<S> <C> <C> <C>
0.1 June 15, 2006 Scott Jacka Initial version
0.2 June 16, 2006 JS
0.3 June 21, 2006 Pete Gelbman Joint CS/MOT edits for clarification
</TABLE>
2
CONTENTS
<TABLE>
<S> <C>
1. INTRODUCTION......................................................... 4
1.1 Preliminary [***] Site Equipment Requirements.................... 4
1.2 Service Providers Working Group (SPWG)........................... 5
1.3 Beta Test Process and Exit Criteria.............................. 5
1.4 RF Configuration................................................. 5
1.5 RF Coverage Verification......................................... 6
1.6 Handover Performance............................................. 6
1.7 Throughput Test.................................................. 6
</TABLE>
[*** Confidential Treatment Requested]
3
1. INTRODUCTION
The WiMAX beta system will consist of [***] sites. The [***] sites selected
should be located in close geographic/coverage proximity and allow for
verification in diverse RF conditions.
Formal criteria for the testing in this plan are under development. The purpose
of this system is to allow clearwire to work out deployment issues of a WiMAX
network in a [***] and to perform some benchmark testing of the WiMAX network
under reasonable subscriber loads.
A formal go/no-go meeting should be scheduled between the vendor and Clearwire
at the end of the testing process to review outstanding issues and ensure that
an appropriate action plan is in place to address documented problems.
NOTE: It is understood that performance requirements specified in this document
are can only be met under the overall requirements provided by Wavel/Wave2
802.16e/WiMAX specs.
NOTE: Clearwire has requirements for WiMAX system to support both 5 and 10 MHz
RF channel BW. For early prototype equipment Motorola BS support [***]
NOTE: Due to NOTE above, this means in order to facilitate Expedience vs.
Motorola WiMAX comparisons, obviously both systems needs to support [***]
NOTE: Both Clearwire & Motorola need to jointly agree on resource requirements
(staff, equipment, etc) in order to execute this test plan.
1.1 PRELIMINARY [***] SITE EQUIPMENT REQUIREMENTS
The preliminary list of equipment required for the radiated sites is described
as follows:
- [***] fully populated 3 and 4 sector BS sites and associated hardware.
- Minimum [***] SS/MS SISO units to kickstart NRT/ORT tests
This should include a mixture of MS/SS variants once it has been determined what
equipment types will be deployed into the Clearwire network and based upon
equipment availability. In addition to the above equipment, two full BS site and
fifty spare SS/MS should be provided.
The Beta test will start using [***]
[*** Confidential Treatment Requested]
4
1.2 SERVICE PROVIDERS WORKING GROUP (SPWG)
The WiMAX Service Providers Working Group (SPWG) is creating a set of
requirements for certified WiMAX products. The output of this work will provide
additional guidance into the required performance of the delivered WiMAX
solution. The work of the SPWG is captured in the "Recommendations and
Requirements for Network based on WiMAX Forum Certified Products". This document
is still in draft form at this time.
1.3 BETA TEST PROCESS AND EXIT CRITERIA
In order for the Beta test to be considered successful the final measured
performance results should be within 10% of the mutually defined and agreed upon
test plan and criteria. The test criteria will be jointly defined between
Clearwire and the WiMAX vendor. The detail test plan will be agreed upon between
parties involved in this agreement with the purpose of establishing that the
WiMAX network is ready for commercial deployment.
Areas to be considered as a part of the Beta exit criteria are as follows:
[***]
Clearwire will jointly conduct the tests, along with the WiMAX equipment vendor.
Unacceptable test results will be repeated until performance objectives are met.
Remediation of test failures is the responsibility of the infrastructure vendor.
All tests performed should collect a statistically relevant number of samples
and under similar test conditions as prior stages of testing.
Latency for the purposes of this test plan is defined as the round trip time
from the subscriber unit to a single defined point in the Clearwire network.
This will be measured in all cases and should not be greater that the NextNet
expedience platform.
Tests have been defined at stages prior to this set of tests such that system
performance issues may be detected and remediated as early as possible in the
schedule.
1.4 RF CONFIGURATION
As an early stage of the trial process the WiMAX network will be evaluated using
various [***] scenarios.
[*** Confidential Treatment Requested]
5
1.5 RF COVERAGE VERIFICATION
RF Coverage drive testing will be performed using the vendor provided RF drive
test tools with minimum capabilities as specified in the ICD. This purpose of
this testing is to directly compare the coverage of the WiMAX system against the
predicted model to ensure that an appropriate network planning infrastructure is
in place.
The RF coverage validation should be performed for both the [***] ons after the
bulk of the system has been built our in order to measure the coverage and
Interference of the WiMAX network.
1.6 HANDOVER PERFORMANCE
Perform drive testing using a single MS and verify that the units will handover
within the [***] site coverage area in accordance with the published
specifications of the SPWG forum in the "Recommendations and Requirements for
Networks based on WiMAX Forum Certified Products".
1.7 THROUGHPUT TEST
Throughput testing will be performed in a number of scenarios and traffic types
to ensure system integrity is maintained in a dynamic real world environment.
The performance of the Wave 1 mobile WiMAX solution is expected to perform equal
to or better in "user bits" throughput as measured in Mbps for both the uplink
and downlink channels.
The first test scenario is as follows:
[***]
The second test scenario is as follows:
[***]
[*** Confidential Treatment Requested]
6
The third test scenario is as follows:
[***]
The fourth test scenario is as follows:
[***]
The fifth test scenario is as follows:
[***]
The sixth test scenario is as follows:
[***]
The seventh test scenario is as follows:
[*** Confidential Treatment Requested]
7
[***]
The eighth test scenario is as follows:
[***]
The ninth test scenario is as follows:
[***]
[*** Confidential Treatment Requested]
8
INFRASTRUCTURE AGREEMENT
EXHIBIT B
SCHEDULE 10
WIMAX WAVE-2 TEST PLAN
DOCUMENT NUMBER: CLR00X
RELEASE: 0.3
JUNE, 2006
This Schedule sets forth Infrastructure Products and technical specifications
therefor which Clearwire desires to purchase. Once mutually agreed upon by the
parties, this Schedule will be amended accordingly and Motorola will agree to
deliver Infrastructure Products in accordance with the specifications and
features described in such amended Schedule. Motorola and Clearwire will use
commercially reasonable efforts to achieve the objectives stated in this
Schedule by the dates specified in Exhibit "B" or elsewhere in this Agreement,
including identifying those provisions of this Schedule the breach of which will
be mutually agreed upon to constitute a material breach for purposes of Section
2.3.4 of this Agreement.
1
DOCUMENT HISTORY
<TABLE>
<CAPTION>
NUMBER DATE AUTHOR DESCRIPTION
------ ---- ------ -----------
<S> <C> <C> <C>
0.1 June 15, 2006 Scott Jacka Initial version
0.2 Jun 17 JS
0.3 June 21, 2006 Pete Gelbman Joint CW/MOT edits for clarification.
</TABLE>
2
CONTENTS
<TABLE>
<S> <C>
1. INTRODUCTION........................................................ 4
1.0 Preliminary [***] Site Equipment Requirements.................... 4
1.1 Service Providers Working Group (SPWG)........................... 4
1.2 Wave-2 Test Process and Exit Criteria............................ 5
1.3 RF Configuration................................................. 5
1.4 RF Coverage Verification......................................... 6
1.5 Handover Performance............................................. 6
1.6 Throughput Test.................................................. 6
1.7 Beta Network Tests & Expected Performance Over Time.............. 8
</TABLE>
[*** Confidential Treatment Requested]
3
1. INTRODUCTION
The WiMAX Wave 2 system will consist of [***] sites. The [***] sites selected
should be located in close geographic/coverage proximity and allow for
verification in diverse RF conditions.
Formal criteria for the testing in this plan are under development. The purpose
of this system is to allow the vendor and Clearwire to find tune the WiMAX
system and optimize the network in preparation for larger system qualification
testing.
A formal go/no-go meeting should be scheduled between the vendor and Clearwire
at the end of the testing process to review outstanding issues and ensure that
an appropriate action plan is in place to address documented problems.
NOTE: It is understood that performance requirements specified in this document
are can only be met under the overall requirements provided by Wave1/Wave2
802.16e/WiMAX specs.
NOTE: Clearwire has requirements for WiMAX system to support both 5 and 10 MHz
RF channel BW. For early prototype equipment Motorola BS support [***]
NOTE: Due to NOTE above, this means in order to facilitate Expedience vs.
Motorola WiMAX comparisons, obviously both systems needs to support [***] in
field trial time frame.
NOTE: Both Clearwire & Motorola need to jointly agree on resource requirements
(staff, equipment, etc) in order to execute this test plan.
1.0 PRELIMINARY [***] SITE EQUIPMENT REQUIREMENTS
The preliminary list of equipment required for the four radiated site is
described as follows:
- [***] fully populated three or four sector BS sites and associated
Wave 2 hardware.
- Minimum [***] SS/MS SISO Wave 2 units
This should include a mixture of MS/SS variants once it has been determined what
equipment types will be deployed into the Clearwire network and based upon
equipment availability. In addition to the above equipment, two full BS site and
fifty spare SS/MS should be provided.
The provided system should be Wave 2 capable/compliant (TBD).
1.1 SERVICE PROVIDERS WORKING GROUP (SPWG)
The WiMAX Service Providers Working Group (SPWG) is creating a set of
requirements for certified WiMAX products. The output of this work will provide
[*** Confidential Treatment Requested]
4
additional guidance into the required performance of the delivered WiMAX
solution. The work of the SPWG is captured in the "Recommendations and
Requirements for Network based on WiMAX Forum Certified Products". This document
is still in draft form at this time.
1.2 WAVE-2 TEST PROCESS AND EXIT CRITERIA
In order for the Wave-2 test to be considered successful the final measured
performance results should be within 10% of the mutually defined and agreed upon
test plan and criteria. The test criteria will be jointly defined between
Clearwire and the WiMAX vendor. The detail test plan will be agreed upon between
parties involved in this agreement with the purpose of establishing that the
WiMAX network is ready for commercial deployment.
Areas to be considered as a part of the Wave-2 exit criteria are as follows:
[***]
Clearwire will jointly conduct the tests, along with the WiMAX equipment vendor.
Unacceptable test results will be repeated until performance objectives are met.
Remediation of test failures is the responsibility of the infrastructure vendor.
All tests performed should collect a statistically relevant number of samples
and under similar test conditions as prior stages of testing.
Latency for the purposes of this test plan is defined as the round trip time
from the subscriber unit to a single defined point in the Clearwire network.
This will be measured in all cases and should not be greater that the NextNet
expedience platform.
Tests have been defined at stages prior to this set of tests such that system
performance issues may be detected and remediated as early as possible in the
schedule.
1.3 RF CONFIGURATION
As an early stage of the trial process the WiMAX network will be evaluated using
various [***] scenarios.
[*** Confidential Treatment Requested]
5
1.4 RF COVERAGE VERIFICATION
RF Coverage drive testing will be performed using the vendor provided RF drive
test tools with minimum capabilities as specified in the ICD. This purpose of
this testing is to directly compare the coverage of the WiMAX system against the
predicted model to ensure that an appropriate network planning infrastructure is
in place.
The Wave-2 testing will also [***]
The RF coverage validation should be performed for both the [***] options after
the bulk of the system has been built out in order to measure the coverage and
interference of the WiMAX network.
1.5 HANDOVER PERFORMANCE
Perform drive testing using a single MS and verify that the units will handover
within the [***] site coverage area in accordance with the published
specifications of the SPWG forum in the "Recommendations and Requirements for
Networks based on WiMAX Forum Certified Products".
1.6 THROUGHPUT TEST
Throughput testing will be performed in a number of scenarios and traffic types
to ensure system integrity is maintained in a dynamic real world environment.
The performance of the Wave 2 mobile WiMAX solution is expected to perform as
described below both the uplink and downlink channels.
The first test scenario is as follows:
[***]
The second test scenario is as follows:
[***]
The third test scenario is as follows:
[*** Confidential Treatment Requested]
6
[***]
The fourth test scenario is as follows:
[***]
The fifth test scenario is as follows:
[***]
The sixth test scenario is as follows:
[***]
[*** Confidential Treatment Requested]
7
[***]
The seventh test scenario is as follows:
[***]
The eighth test scenario is as follows:
[***]
The ninth test scenario is as follows:
1.7 BETA NETWORK TESTS & EXPECTED PERFORMANCE OVER TIME
No later than [***] after successful completion of the first Wave 2 tests as
defined above, we will [***] the above mentioned tests. It is expected that with
[*** Confidential Treatment Requested]
8
additional time for network optimization and equipment fixes, the overall
spectral efficiency of the beta network will deliver [***] given a mix of
traffic, devices and services on a loaded network when compared to an [***]
[*** Confidential Treatment Requested]
9
EXHIBIT "C"
TO THE WIRELESS BROADBAND SYSTEM
INFRASTRUCTURE AGREEMENT
SOFTWARE LICENSE AND FEES
For purposes of uniformity and brevity, references to Agreement or to an Exhibit
shall refer to the Infrastructure Agreement to which this document is Exhibit
"C" and to the other Exhibits to that Agreement, except as otherwise stated
herein. All definitions set forth in the Agreement shall apply hereto except as
otherwise expressly defined herein.
1. DEFINITIONS
Annual Software License (ASL). The Annual Software License contains the
right-to-use the Operating System Software (O/SS) and all Standard Features for
the applicable period purchased. This license also contains the right to receive
all Software-Release Upgrades available during the applicable period.
Annual Software License Fee. This license fee is charged [***] and is renewable
[***] the initial purchase of the ASL requires Clearwire to make a [***]
commitment. This license fee does not cover the use of any Optional Features.
This license fee does cover the use of Software on expansion equipment
associated with specific Network Elements for the relevant period.
Features. Features include Optional Features and Standard Features.
Initial Program Load (IPL). The Initial Program Load contains the Operating
System Software (O/SS) and the Standard Features of the current Software Release
at the time the initial System Configuration is provided to Clearwire.
Initial License Fee (ILF). The Initial License Fee is the License Fee for
perpetual use of the O/SS, and all Standard Features included in the IPL
received. This fee does not cover the use of any Optional Features. This fee
also does not cover the use of Software on expansion equipment associated with
Network Elements. For expansion equipment associated with Network Elements,
additional Initial License Fees are due in order to license the use of Software
on that expansion equipment.
License Fee. License Fee means the fee paid by Clearwire for the right to use
Software in accordance with the terms of this Exhibit.
Network Elements. Network Elements refer to the network Infrastructure
components. Network Elements may be either manufactured or supplied by Motorola
or by third parties.
Network Features. Network Features allow specialized communication between any
Network Elements.
Operating System Software (O/SS). The O/SS brings the hardware platform to a
state of readiness that allows Standard and Optional Features to run.
Operational Features. Operational Features improve the overall non-call
performance of the network. Non-call performance includes increased call
quality, increased availability and decreased cost of ownership. Examples of
Operational Features include Billing Features, CAMP Terminal Expansions,
Interference Cancellation, and Multiple Alarm Expansions.
Optional Features. Optional Features provide incremental functionality beyond
the Standard Features and require the purchase of individual feature licenses.
Optional Feature categories include Subscriber Features, Network Features and
Operational Features.
[*** Confidential Treatment Requested]
C-1
Software. Software is any computer program in object code form, including the
O/SS, the Features and any other computer program, whole or partial copies of a
computer program, adaptations, derivative works, modifications, translations,
updates or enhancements of all or part of a computer program, documentation
associated with a computer program, and the techniques and ideas embodied and
expressed in a computer program (including but not limited to the structure,
sequence and organization of a computer program.) A computer program comprising
Software under this Agreement is in any medium (including but not limited to all
types of permanent or semi-permanent memory or storage devices, in hardwired
logic instructions, or in any electronic medium), that is furnished directly or
indirectly by Motorola to Clearwire, or, to the extent permitted under this
Agreement is a Clearwire's copy, adaptation, derivative work, modification,
translation, update or enhancement of a computer program furnished directly or
indirectly by Motorola to Clearwire. The computer programs comprising Software
may be used solely in conjunction with the System Configuration. NOTWITHSTANDING
THE FOREGOING, THE TERM SOFTWARE SHALL NOT INCLUDE THIRD PARTY COMPUTER PROGRAMS
PROVIDED UNDER SEPARATE LICENSE AGREEMENTS SUCH AS SHRINK-WRAP LICENSE
AGREEMENTS, OR THIRD PARTY COMPUTER PROGRAMS NOT LICENSABLE UNDER THE TERMS OF
THIS AGREEMENT, SUCH AS THIRD PARTY COMPUTER PROGRAMS PROVIDED UNDER THE FREE
SOFTWARE FOUNDATION'S GENERAL PUBLIC LICENSE. Any reference herein to Software
being "sold" or "purchased" shall in fact be deemed to be a reference to
Software being "licensed."
Software Release. A Software Release is a new version of Software that contains
new Standard Features, O/SS upgrades, and those Optional Features that have been
licensed separately and individually by Clearwire.
Standard Features. Standard Features are included in the current Software
Release at no additional charge. Included in the Standard Features is the Call
Processing functionality that allows the Network Elements to operate as a
wireless communications system.
Subscriber Features. Subscriber Features are those that can either be offered on
a per-subscriber or per-traffic channel basis and/or which are apparent as
features to the subscriber. Examples of Subscriber Features include Caller
Preview Service, Message Waiting Notification and Authentication.
System Configuration. System Configuration means the combination of Software and
Network Elements installed in the System for which the most recent License Fees
due under the terms of this Agreement have been paid by Clearwire. (For the
purposes of this definition, a Network Element does not include that expansion
equipment associated with such Network Elements if such expansion equipment has
not yet been installed.)
2. LICENSE GRANT
2.1 Concurrent with the execution of the Infrastructure Agreement and payment of
applicable License Fees hereunder, Motorola grants to Clearwire a non-exclusive
license under applicable copyrights and trade secret rights to use Software in
connection with the System Configuration. This license, if perpetual (based on
payment of the ILF), shall be revocable by Motorola only pursuant to the
provisions of Section 6.2 of this Agreement. This license is non-transferable
and non-sublicenseable, except as expressly permitted by this Agreement. The
term "use" means to load, execute, store or display the Software as part of the
System Configuration, for the purpose of operating or maintaining the System.
The term "maintain" means performing diagnostic and testing functions necessary
to fulfill its obligation to provide first eschelon diagnosis under the Software
warranty, and to sustain the operation of the System following termination or
expiration of this Agreement.
2.2 The following License Fees for the use of Software on the initial System
Configuration are set forth in Exhibit "A" of the Agreement (i) ILF or ASL; and
(ii) License Fees for specified Optional Features.
C-2
2.3 Changes to System Configuration and/or additional use of existing Software
(by Network Elements or subscribers) may require payment of additional License
Fees. Examples of changes to System Configuration and/or additional Software
uses include, but are not limited to, the following:
(i) use of additional Optional Features;
(ii) increased capacity of Optional Features;
(iii) increased call processing capacity;
(iv) expansion of Network Elements (e.g. increase in the number of trunk
shelves);
(v) addition of Network Elements.
3. LIMITATIONS ON USE OF SOFTWARE
3.1 The Software may contain Confidential Information of Motorola or its
licensors. Clearwire agrees to keep confidential, in accordance with the terms
of the Agreement, and not use, provide or otherwise make available in any form
any Software or its contents, or any portion thereof, to any third party, except
as an integrated component of Infrastructure Products that are delivered to
System subscribers.
3.2 Clearwire shall not translate, modify, merge, adapt, de-compile,
disassemble, or reverse engineer the Software or any portion thereof.
3.3 In the event of subsequent sale of Network Elements by Clearwire, Clearwire
shall not transfer the Software for such Network Elements. Any purchaser of the
Network Elements must obtain a Software license from Motorola. Motorola's
granting of such license shall be within the sole discretion of Motorola and its
licensors, who shall not unreasonably withhold consent to entering into such
license. In the event that Clearwire wishes to sell Network Elements, (i)
Clearwire shall notify Motorola in writing prior to any such sale of the
identity of the purchaser and the Network Elements to be sold, (ii) Clearwire
shall notify the purchaser in writing that a license agreement with Motorola is
required for the use of the Software on such Network Elements, and (iii) the
purchaser shall enter into a license agreement with Motorola for such Software
prior to delivery of the Network Elements to the purchaser by Clearwire.
4. RIGHT TO COPY, PROTECTION AND SECURITY
4.1 Software provided hereunder may be copied (for back-up purposes only) in
whole or in part, in machine-readable form for Clearwire's internal use only,
provided, however, that no more than two (2) printed copies and two (2)
machine-readable copies will be in existence at any one time without the prior
written consent of Motorola, other than copies resident in the System
Configuration.
4.2 With reference to any copyright notice of Motorola associated with Software,
Clearwire agrees to include the same on all copies it makes in whole or in part.
Motorola's copyright notice may appear in any of several forms, including
machine-readable form. Use of a copyright notice on the Software does not imply
that such has been published or otherwise made generally available to the
public.
4.3 Software and any copy of Software is the sole and exclusive property of
Motorola or its licensors and no title or ownership rights to the Software or
any of its parts is transferred to Clearwire.
5. REMEDIES
Clearwire acknowledges that violation of the terms of this Exhibit or the
Agreement may cause Motorola irreparable harm for which monetary damages may be
inadequate, and Clearwire agrees that Motorola may seek temporary or permanent
injunctive relief without the need to prove actual harm in order to protect
Motorola's interests.
C-3
6. TERMINATION
6.1 Any license granted hereunder may be terminated by Clearwire upon one (1)
month's prior written notice.
6.2 Motorola may revoke any license granted hereunder if Clearwire is in
material default of Section 3 of this Agreement, and such revocation shall be
effective if Clearwire fails to correct such default within ninety (90) days
after written notice thereof by Motorola.
6.3 Within one (1) month after termination or revocation of any license,
Clearwire shall furnish to Motorola a document certifying, through its best
efforts and to the best of its knowledge, the original and all copies in whole
or in part of all Software, in any form, including any copy in an updated work,
have been returned to Motorola or destroyed.
7. LICENSEE RIGHTS
7.1 Nothing contained herein shall be deemed to grant either directly or by
implication, estoppel, or otherwise, any license under any patents or patent
applications of Motorola or Motorola's licensors, except where an license may
arise by operation of law, and only to the extent that such license is necessary
to operate the System.
7.2 Clearwire acknowledges that the provisions of this Exhibit are intended to
inure to the benefit of Motorola and its licensors. Clearwire acknowledges that
Motorola or its licensors have the right to enforce these provisions against
Clearwire, whether in Motorola's or its licensor's name.
7.3 Motorola MAY PROVIDE TO Clearwire UNDER THE ORIGINAL LICENSOR'S LICENSE
CERTAIN THIRD PARTY COMPUTER PROGRAMS NOT LICENSABLE UNDER THE TERMS OF THIS
AGREEMENT, SUCH AS THIRD PARTY COMPUTER PROGRAMS PROVIDED AS OPEN SOURCE
SOFTWARE PROGRAMS SUBJECT TO PUBLIC LICENSES (GENERALLY ALLOWING FREE
DISTRIBUTION AND ACCESS TO SOURCE CODE) DISTRIBUTED ON A FREE BASIS BY A NUMBER
OF SOFTWARE ORGANIZATIONS SUCH AS, BUT NOT LIMITED TO, CERTAIN UNIVERSITIES,
NOT-FOR-PROFIT COMPANIES, CORPORATIONS, FOUNDATIONS, INDIVIDUALS, THE OPEN
SOURCE INITIATIVE AND THE FREE SOFTWARE FOUNDATION ("FREEWARE PROGRAMS'). THE
FREEWARE PROGRAMS ARE SUBJECT TO THE TERMS AND CONDITIONS OF THE ORIGINAL
LICENSOR'S LICENSE AND THE AGREEMENT. THEY ARE ONLY LICENSED UNDER AND TO THE
EXTENT ALLOWED BY THE ORIGINAL LICENSOR'S LICENSE, BUT ARE NOT SUBJECT TO THE
TERMS AND CONDITIONS OF THIS EXHIBIT.
IF REQUESTED BY Clearwire, (i) SUCH FREEWARE PROGRAMS SHALL BE IDENTIFIED BY
Motorola, USING COMMERCIALLY REASONABLE EFFORTS AND (ii) FOR A PERIOD OF THREE
YEARS AFTER RECEIPT OF SUCH FREEWARE PROGRAMS, A COPY OF THE ORIGINAL LICENSOR'S
PUBLIC LICENSE AND A FREE COPY OF THE SOURCE CODE OF SUCH FREEWARE PROGRAMS IN
MACHINE-READABLE FORM SHALL BE PROVIDED BY Motorola (ALTHOUGH DISTRIBUTION FEES
MAY BE APPLICABLE).
8. SOFTWARE FEES AND CHARGES
8.1 Charges for the ILF or ASL are billed when the equipment (including
expansion equipment) on which the Software resides is invoiced, with payment due
30 days from the invoice date.
8.2 Charges for Optional Features are invoiced upon installation of the Optional
Features, with payment due 30 days from the invoice date.
C-4
9. ENTIRE UNDERSTANDING
Notwithstanding anything to the contrary in other agreements, purchase orders or
order acknowledgments, the Infrastructure Agreement and this Exhibit set forth
the entire understanding and obligations regarding use of Software, implied or
expressed.
C-5
EXHIBIT "D"
TO THE
WIRELESS BROADBAND SYSTEM
INFRASTRUCTURE AGREEMENT
NETWORK SUPPORT PROGRAM
For purposes of uniformity and brevity, references to Agreement or to an Exhibit
shall refer to that Services Agreement to which this document is Exhibit - and
to the other Exhibits to that Agreement, except as otherwise stated herein. This
Agreement covers technical support and software maintenance programs.
1.0 DEFINITIONS. All definitions set forth in the Services Agreement shall
apply hereto, except as otherwise expressly defined herein, and all such
defined terms will be capitalized throughout this Exhibit and shall be read
in the singular, plural or the tense as the context requires.
<TABLE>
<S> <C>
CLEARWIRE NETWORK means Motorola's Clearwire support centre which shall serve
RESOLUTION CENTRE Clearwire from a location notified by Motorola to
("CNRC") Clearwire.
CLEARWIRE SERVICE means the telephone support operation in place to enable
Desk Clearwire to solicit help with technical issues.
FIELD REPLACEABLE means a distinctly separate component that has been
UNIT("FRU") designed so that it may be exchanged at its site of use for
the purpose of maintenance or service adjustment. An
example of an FRU is a plug-in circuit board. In some
instances, a field replaceable unit may contain other field
replaceable units, for example, a circuit board or power
supply.
FIX AVAILABLE Applies to Service Requests with associated Product Change
Requests. The release containing the fix to the problem
documented in the Product Change Request is available for
Clearwire to order.
FIX DEFERRED Used where Clearwire does not want Motorola to provide a
patch or tape but would prefer that the repair be released
in a future release. In such cases Clearwire is to provide
Motorola with a waiver not to claim Motorola's support for
new events caused due to the lack of the patch or fix.
MANAGEMENT REPORTS means the reports to be prepared and presented by Motorola
in accordance with the NSP Specification.
NON PRODUCT CHANGE A system problem or query that can be resolved without the
need for a change to the product to effect a final solution
E.g. changes to parameter settings or configurations,
general technical questions, questions regarding documented
procedures.
PRODUCT CHANGE A system problem that can only be resolved with a change to
the product E.g. software fixes or documentation errors.
NSP PROGRAM means the Network Support Program, which includes 7x24
technical support and software maintenance.
NSP SPECIFICATION Shall mean the detailed description of the Support Services
described and set forth in Appendix A to this Exhibit
</TABLE>
D-1
<TABLE>
<S> <C>
PREMISES means each of the locations comprising the Network,
including the location that houses the System.
GRADE OF Service With respect to the delivery of the Support Services in any
(GOS) Year, GoS means the standard of performance actually
achieved by Motorola in providing the NSP Specification in
that Year (calculated and expressed as a ratio and set out
in the NSP Specification).
RECOVERY means the implementation of a temporary solution to
immediately restore the System to a default condition.
RECOVERY TIME means the elapsed time between receiving first escalation
call from Clearwire and achieving Recovery.
RESOLVED A resolution for the problem has been presented to
Clearwire and the CNRC is awaiting confirmation that the
resolution was successful.
RESOLUTION TIME means the elapsed time between being granted access to the
network (either remotely or, where required by Motorola, on
arrival on-site) and making available to Clearwire a patch
or software release that resolves the problem. Resolution
time for Product Change is measured to "fix available",
"resolved not fixed" or "fix deferred". Resolution time for
Non-Product Change is measured to "Resolution" status.
RESPONSE TIME means the elapsed time between the Clearwire Service Desk
acknowledges receipt of a Clearwire request for assistance
and the time work is commenced on the request, during
Clearwire's coverage hours, as described in the NSP
Specification.
SUPPORT FEES means the total net sum for the Support Services, net of
all purchase tax, Value Added Tax and all other similar
governmental charges which shall be additional thereto.
SUPPORT SERVICES means those Motorola functions as set forth in this Exhibit
"D", including, but not limited to, ongoing support,
technical advice, resolution of identified problems,
provision of technical bulletins, and software updates to
provide consolidated bug fixes and such other functions as
may be more fully described in this Exhibit "D". Support
Services exclude post warranty hardware repairs.
WORKAROUND means short term temporary fix or recommended action
provided in order to prevent the reoccurrence of a
Clearwire issue.
YEAR means any successive period of 12 calendar months measured
from the Effective Date.
</TABLE>
2.0 SCOPE
2.1 This Exhibit is for the purpose of defining the Network Support
Program and the conditions applicable to the provision of the Support
Services to be provided by Motorola and/or its authorised affiliates
and subcontractors, which has the objective of supporting the
performance of the System.
2.2 The NSP covers equipment manufactured or supplied through Motorola and
software supplied by Motorola, both integrated into the Network and
accepted into live service by Clearwire.
2.3 The Warranty coverage will be provided during the warranty period as
defined in the Agreement. This NSP or similar program commences when
warraty coverage ends.
D-2
3.0 SERVICE LEVELS
Where any Support Service is stated in the NSP Specification to be subject
to a specific Service Level, Motorola shall provide that Support Service in
such a manner as to ensure that the Grade of Service with respect to that
Service is equal to or higher than such specific Service Level, as follows:
3.1 First Line maintenance - First Line Maintenance is defined as the day
to day monitoring and maintenance of the communications system using
procedures outlined in the Documentation and available under one of
the Motorola provided technical training courses. This would include,
but not be limited to (i) accurate diagnosis, identification and
isolation of FNE malfunctions to the FRU level, (ii) removal and
replacement of faulty FRU's, (iii) carrying out preventative
maintenance activities, and (iv) sending the malfunctioning product,
packed in a manner to prevent damage, to the Motorola designated
repair depot.
3.2 Second Line Maintenance - Second Line Maintenance is defined as the
investigation of system level faults that cannot be resolved under
First Line Maintenance. Resolution for system level problems/issues is
falls under Second Line Maintenance where a change of the Software is
not required. Where a change in the Software is required (a product
change), Second Line Maintenance is limited to investigation, data
gathering and fault analysis.
3.3 Third Line Maintenance - Third Line Maintenance is defined as the
techniques and procedures used to resolve issues/problems which cannot
be resolved using First Line Maintenance or Second Line Maintenance
techniques, and includes the provision of Hardware repair or
replacement services. These problems typically require a product
change to resolve. Hardware repair also comes under third line
support.
4.0 SOFTWARE MAINTENANCE AND TECHNICAL SUPPORT
4.1 Motorola will offer optional Software Maintenance Program, providing
CNRC support and bug fixes for the current and immediately preceding
Software Release.
4.2 Prices for new Software releases with no increase in features or
functionality are included in this program; new feature releases and
increased Software capabilities are separately offered and charged.
The price for Software Maintenance Program is contained in Exhibit
"A".
5.0 GENERAL
5.1 Services will be provided strictly in accordance with the NSP
Specification. Any amendment, modification or expansion of the
responsibilities set forth in the Specification will be subject to the
written agreement of the parties.
5.2 Motorola reserves the right to subcontract, in whole or in part,
Support Services. The subcontractors must be certified by Motorola.
5.3 All Motorola personnel providing onsite services as part of this
Exhibit will be under the direct control of Motorola and at all time
are considered Motorola employees. Motorola will be liable for any
damages caused by Motorola personnel or subcontractors operating on a
Clearwire Network or within a Clearwire facility.
D-3
6.0 OBLIGATIONS OF MOTOROLA
6.1 Motorola will:
6.1.1 Deliver the Support Services to Clearwire in accordance with the
obligations, Service Levels and conditions of the NSP
Specification or other Service provided, such as Software
Maintenance Services or extended Hardware Maintenance Services,
but subject to the provisions of this Exhibit;
6.1.2 Ensure that its employees, agents and sub-contractors comply
with all of Clearwire's reasonable requests, directions or
regulations made known to Motorola or its employees, agents or
sub-contractors in relation to the safety and security of
Clearwire's Premises, property or personnel; and
6.1.3 Monitor hardware failures and identify any fault trends
indicating a potential hardware design fault. Motorola shall
deliver to Clearwire electronically a monthly report in an agreed
format that summarizes all field returns, root cause analyses and
paretos of all fault trends identified.
6.1.4 If Motorola is unable to resolve an issue through immediate
telephone assistance, Motorola will provide Clearwire with a
Response Time and Resolution Time in accordance with the detailed
criteria and Service Levels set forth in the NSP Specification.
7.0 CLEARWIRE RESPONSIBILITIES
7.1 Subject to any provision of the NSP Specification to the contrary, and
depending on the Service taken, Clearwire will:
7.1.1 Be responsible for the first level of maintenance, including but
not limited to diagnosis and (i) identification and isolation of
Equipment malfunctions to the FRU level and reproducible software
malfunctions; (ii) hardware, firmware and software, removal and
replacement, (iii) isolation of reproducible Software
malfunctions, and (iv) sending the malfunctioning product, packed
in a manner to prevent damage, to the Motorola designated repair
depot, provided, however, that such first level of maintenance
shall be required only to the extent Clearwire can reasonably be
expected to perform given its Documentation and the training
available to Clearwire's personnel. Motorola will provide
Clearwire with any reasonably requested aid in performing such
diagnosis, provided Motorola may charge for such aid if it
constitutes first echelon diagnosis that is Clearwire's
responsibility. In the event of Software malfunction, Clearwire
will notify Motorola promptly of the failure through the
Clearwire Service Desk, followed by written confirmation of such
notice. Motorola will acknowledge receipt of notice of verified
Software malfunctions.
7.1.2 All escalations and communications with the Motorola CNRC will
be conducted through the Clearwire Network Operations Center
(NOC) and/or Clearwire Engineering.
7.1.3 Supply the requested data in a timely manner as required by
Motorola. The time during which data is not available, for any
reason whatsoever that is not within Motorola's sole control,
will not be included in any calculation of timescales or service
levels set out in this Exhibit.
7.1.4 If, having no internal closure policy, agree with Motorola the
following policy regarding the closure of Service Requests: If no
response has been received
D-4
after seventy two (72) hours following a request from Motorola,
then Motorola shall contact Clearwire and request closure of the
relevant Service Request. If no response is received after a
further seventy two (72) hours, Motorola shall be entitled to
close the relevant Service Request.
7.1.5 Bear the costs of its own telephone and utility charges and
other services and items being supplied by Clearwire under this
Exhibit.
7.1.6 Make the payments according to the schedule set forth in Clause
10 of this Exhibit.
7.1.7 Perform all other of its obligations set out in this Exhibit and
Appendices attached hereto.
7.1.8 Appoint a System Manager for the System and supply Motorola with
the name, address and telephone number of the System Manager. The
System Manager is responsible for coordination with Motorola
personnel and will, at the option of the Clearwire System
Manager, make available a Clearwire Representative during
Motorola performance of Support Services.
7.1.9 [RESERVED]
7.1.10 Provide reasonable facilities including, but not limited to,
secure storage space, a designated workspace with adequate
temperature control and light, and use of all System and
communications facilities, including access to a telephone line.
7.1.11 Supervise and perform all normal day-to-day System operational
activities.
7.1.12 Perform System restarts or other maintenance or
trouble-shooting activity as directed by the Documentation prior
to initiating a service call for any System problem, unless
previously instructed otherwise by a Motorola representative.
7.1.13 Assist and cooperate with Motorola in the diagnosis of
reproducible Software malfunctions and provide such information
as may be reasonably requested by remote and local personnel as
they provide technical supervision and support to Clearwire's
maintenance technicians.
7.1.14 Furnish, maintain and repair equipment, products and services
supplied by:
7.1.14.1 Vendors other than Motorola; and
7.1.14.2 Vendors of mobile and/or other portable subscriber
units.
7.1.15 Supervise, manage and control its use of the Software,
including, but not limited to:
7.1.15.1 Assuring proper machine configuration, program
installation, audit controls and operating methods;
7.1.15.2 Implementing adequate backup plans, based on alternate
procedures to diagnose, patch and repair Software defects in
the event of a Software malfunction; and
7.1.15.3 Implementing sufficient procedures and checkpoints to
satisfy Clearwire's requirements for security and accuracy
of input and
D-5
output. Such procedures and checkpoints will be provided to
and followed by Motorola.
7.1.16 Perform and comply with all available Motorola maintenance
procedures covering all routine system administration and
maintenance tasks which Clearwire will be required to perform on
a regular basis in order to ensure the integrity of operation of
the System. To the extent that such procedures need to be
developed, they shall be mutually agreed to by Clearwire and
Motorola.
7.1.17 Clearwire will allow persons duly authorised by Motorola such
access to the Premises as is reasonably required for the purpose
of providing the Support Services. Authorisation procedures will
be agreed upon by Clearwire and Motorola from time to time.
Motorola will use such rights of access for the purpose of
providing the Support Services only. Motorola's right of access
will end upon termination of this Exhibit
7.1.18 Any delays associated with the performance of any of
Clearwire's obligations shall serve to extend any time periods
within which Motorola is obliged to carry out its
responsibilities and obligations hereunder.
7.1.19 For Priority 1 cases, Clearwire must support Motorola with
appropriate on-site resources to support system Recovery.
8.0 PRIORITY CLASSIFICATION FOR SUPPORT DELIVERY
8.1 In order to classify the urgency to be attributed to a problem
Motorola will classify the each Service Request as a priority P-1
through to P-4 according to the following guidelines:
8.2 Motorola Service Request Designators and Definitions:
8.2.1 PRIORITY 1 (P1) Critical (Target Recovery Time: 24 hours from
time of escalation)-This is the maximum level of urgency assigned
to Service Requests based on one or more of the following
conditions:
- More than 10% of the call or data processing capability of a
major Network Element is affected. Eg. Site controller
- Significant ongoing loss of critical functionality of a
revenue-generating feature.
- inability of the network management product(s) to provide
critical operations and maintenance (O&M) functionality.
- Billing is out of service, or there is a significant ongoing
loss of billing information, if provided by Motorola.
- Clearwire has declared an emergency with the concurrence of
Clearwire and Motorola management.
- Any conditions that may affect safety.
- Problems with a planned activity on previously operational
equipment (such as a software upgrade roll-out) that
requires the installation of the previous software load.
- inability to process emergency calls.
D-6
8.2.2 PRIORITY 2 (P2) Major (Target Recovery Time: 48 hours from time
of escalation) - This is normally the urgency assigned to Service
Requests based on one or more of the following conditions:
- Major impact on the functionality of the Network but it does
not prevent the System from meeting its primary requirements
- Failures in operational and system performance information
that require additional dedicated resources in order to
maintain core System operations
- Failures in the ability to add, delete or reconfigure any
in-service Network Element
- Failure in the ability to provision subscribers
- Errors in procedures where service risks are involved
- Less than 10% of the call or data processing capability of a
major Network Element is affected. E.g. Site controller
- A revenue-generating feature is out of service.
- Total outage of a Network Element that is determined to be a
high profile site by Clearwire and Motorola.
- Clearwire-declared major issue with the concurrence
Motorola.
- A redundant device on a major Network Element is lost.
- Failure of any portion of a duplex operation for periods of
excess of 30 seconds.
8.2.3 PRIORITY 3 (P3) Minor (Target Recovery Time: 5 days from time of
escalation) - Minor problems are classified based on one or more
of the following conditions:
- Loss of administrative capabilities (not classified as
Priority 1 or Priority 2)
- Loss of feature functionality (not classified as Priority 1
or Priority 2)
- Configuration discrepancies or questions related to error
messages or alarms that are being generated on the system.
- Other equipment or software issues that are not service
affecting.
- Follow-up cases for Priority 1 or Priority 2 cases.
8.2.4 PRIORITY 4 (P4) Low Impact (Target Recovery Time: ICB or next
software release)- Priority assigned to a case type of
information. This is normally the urgency assigned to Service
Requests with low impact and is based on one or more of the
following conditions:
- Basic questions
- Cosmetic problems
- Documentation errors
- Remote support of software load (scheduled maintenance)
- System probe requests for upcoming installations, upgrades
etc.
- Other
D-7
9.0 RISK OF LOSS
Risk of Loss for equipment shipped by Clearwire to Motorola under this
Exhibit shall pass to Motorola upon receipt at a designated Motorola repair
facility. Risk of Loss for equipment shipped by Motorola to Clearwire under
this Exhibit shall pass to Clearwire upon receipt by Clearwire.
10.0 WARRANTY RELATED TO REPAIRS OR REPLACEMENTS
Repairs performed under this Exhibit are warranted under the same terms and
conditions as the Agreement, with the exception of the Warranty term, which
shall be for (i) a period of ninety (90) days from the date of Motorola's
return shipment to Clearwire; or (ii) the balance of the remaining Warranty
term under the Agreement, whichever is longer. Typical warranty repairs are
thirty (30) days from receipt to dispatch.
11.0 PAYMENT
11.1 Clearwire will be invoiced annually, in advance, for the Support Fee.
Payment shall be made within thirty (30) days from the invoice date
and otherwise in accordance with the payment terms set forth below.
11.2 The Support Fee covers all travel, accommodation, time and other
expenses incurred by Motorola or any of its employees, agents or
sub-contractors in providing the Support Services (with the exception
of such expenses and taxes described in Clauses 11.4 and 11.5 below)
other than where such costs have been incurred as a result of errors
or misuse attributable to Clearwire.
11.3 In the event that any payment is delayed by Clearwire, an interest
charge shall be payable equivalent to two (2) percent above the
Barclays Bank base rate prevailing at the time that payment should
have been made.
11.4 Postage, freight or other such transportation charges for shipping
defective products to an authorized Motorola Repair Depot will be
borne in accordance with the NSP Specification; when such products or
their replacements are being returned to Clearwire, Motorola shall
bear such charges.
11.5 Clearwire is responsible for the payment of all applicable import,
sales. Value Added Tax, use, retailers occupation, excise, property
and other duties and assessments in the nature of taxes, however
designated, on the Support Services provided to Clearwire pursuant to
this Exhibit, exclusive however, of any taxes measured by Motorola's
net income or based on Motorola's franchise. To the extent Motorola is
required by law to collect such taxes, one hundred percent (100%) of
such taxes, etc. shall be added to invoices as separately stated
charges and paid in full by Clearwire, unless Clearwire is exempt from
such taxes and furnishes Motorola with a certificate of exemption in a
form reasonably acceptable to Motorola. In the event Clearwire claims
exemption from sales, use or other such taxes under this Exhibit,
Clearwire shall hold Motorola harmless from any and all subsequent
assessments levied by a proper taxing authority for such taxes,
including interest, penalties and late charges.
12.0 EXCLUSIONS
12.1 The Software support provisions set forth in this Exhibit apply only
to the Software as supplied or modified by Motorola. Modifications,
attempted modifications or additions to the Software by Clearwire or
by any party other than Motorola is a breach of the Software License
and will void all obligations of Motorola included herein.
D-8
12.2 This Exhibit shall not apply to any specific item of Equipment that
has attained the fifth anniversary of the date that Motorola (or
authorized Motorola third-party manufacturers) ceases manufacture of
such specific items. To the extent that Clearwire expects it will
require support beyond such five-year period, extended end-of-life
support may be purchased from Motorola, but only at the time of
entering into this Exhibit and prior to the date of cessation of
manufacture.
12.3 Support Services do not include the repair of any transmission line,
antenna, tower, tower lighting, racks, cabinets, defective or
phosphor-burned cathode ray tubes (CRTs), consumables, including but
not limited to, cables, connectors, batteries, duplexers, circulators,
printers, keyboards and frames, and their installation.
12.4 The NSP Specification will apply to all software released by Motorola
to Clearwire.
12.5 The Support Services to be provided by Motorola will exclude all work
necessary to restore or rebuild lost or destroyed data or any part
thereof consequent upon corruption by Equipment failure, incorrect use
of the System or any upgrade to the Equipment Systems not approved by
Motorola. If undertaken, such work will be charged at Motorola's
normal daily fee rate for the time being in force, in addition to
travel and accommodation costs.
12.6 Service does not include installation of System hardware expansions
requested by Clearwire.
12.7 Service does not include normal system operating responsibilities, the
provision of operating supplies or replacement of consumable supplies,
electrical work external to the System or any other functions not
required under this Exhibit.
12.8 Service does not include maintenance or repair of any equipment and
software not provided by Motorola.
12.9 Movement of equipment and reinstallation by anyone not authorized by
Motorola may void any obligation or warranty by Motorola. Such
authorization by Motorola will not be unreasonably withheld. Motorola
will publish commercially reasonable documents and standards on how it
authorizes third parties.
12.10 Clearwire will not modify, remove or obliterate the bar code, serial
number or any other identifying mark(s) on System components. Any
System component so altered and in need of repair will be repaired at
the sole discretion of Motorola.
12.11 Motorola has no obligation to repair or replace items when such
repair or replacement is caused by the following:
12.11.1 An event of Force Majeure. However, Motorola agrees, upon
Clearwire's request, to participate with Clearwire and make an
assessment with respect to any damage as a result of such event
and to provide a quotation with respect to the repair and/or
replacement of the items damaged.
12.11.2 Acts of vandalism
12.11.3 Attempts by other than personnel authorized by Motorola to
repair, maintain, install or modify the System, or if the System
is used in other than its normal and customary manner
12.11.4 Clearwire's failure to maintain prescribed environmental
conditions or external electrical tolerances
D-9
12.11.5 Damage that occurs during shipment from Clearwire to Motorola
12.11.6 Damage due to misuse
12.11.7 Replacement or malfunction of consumable items such as
printing ribbons
12.11.8 Failure of any part of the Interconnected Carrier equipment
12.12 Motorola will provide Clearwire with any reasonably requested aid in
performing Clearwire's responsibly hereunder, provided Motorola may
charge for such aid if it constitutes activities that are within
Clearwire's responsibility. Clearwire's Travel expenses related to
site visits, which are expressly excluded from coverage.
13.0 RE-CERTIFICATION
Except for the Clearwire network as of the Effective Date of this
Agreement, if the System or a part of the System is not covered by Warranty
or a previous Motorola Network Support Program, or similar Motorola support
agreement, Motorola is entitled to inspect the System to determine its
qualification for Support Services. The inspection and any repairs,
adjustments or upgrades deemed necessary by as a precondition for Support
Services shall be made by Motorola and paid for by Clearwire at Motorola's
time and material rates then in effect and will be made prior to
commencement of Support Services for the relevant part of the System.
D-10
EXHIBIT "E"
TO THE
WIRELESS BROADBAND SYSTEM
INFRASTRUCTURE AGREEMENT
DEFINITIONS
ACCEPTANCE TEST PLAN
The testing described and administered as set forth in Exhibit "C".
CLEARWIRE AFFILIATES
Entities which are controlled with greater than 50% ownership by Clearwire
Corporation.
CUSTOM DEVELOPMENT
Features, functions or capabilities in Equipment or Software for which Clearwire
funds Motorola's development activity.
DOCUMENTATION
The documentation described in Exhibit "B" or which is included with the
Infrastructure Products.
DUAL MODE PRODUCTS
The base station/access point unit with the capability to operate (but not
seamlessly between) the Expedience and 802.16e technologies.
EQUIPMENT
The Motorola-supplied hardware for the System, but excluding Subscriber
Products.
EXPEDIENCE INFRASTRUCTURE PRODUCTS
The access point/base stations using Expedience technology.
INFRASTRUCTURE AGREEMENT
This Infrastructure Agreement and the accompanying Exhibits.
INFRASTRUCTURE PRODUCTS
All Equipment and Software purchased for use in the System which are listed on
Exhibit "A".
OTHER TECHNOLOGY
Any other standards-based, alternative wireless broadband Infrastructure
technology deployed by Clearwire.
E-1
NETWORK ELEMENTS
Infrastructure equipment and related software for the System other than
Equipment, Software and Subscriber Product. Examples include wireless backhaul
equipment, ethernet switches, IP routers, etc.
PREFERRED VENDOR
A status that means Clearwire will, when capabilities, costs and availability
are equal for a given product or service offered by Motorola and another
supplier or suppliers, purchase the product or service from Motorola in
preference to the other supplier or suppliers.
SERVICES
Those Motorola functions included in the concurrently signed Services Agreement.
SITE
Each of the site locations comprising the System, including the location that
houses the core.
SOFTWARE
See Exhibit "C".
SUBSCRIBER
A person who uses the System and, thereby, entitling Clearwire to revenue.
SUBSCRIBER PRODUCT
Any device or portable radiotelephone equipment intended for System use, whether
or not in actual use.
SYSTEM
The wireless radiotelephone system comprised of the Infrastructure Products and
other Clearwire-supplied products.
WI-MAX INFRASTRUCTURE PRODUCTS
The access point/base station or equivalent using 802.16e technology.
WIRELESS BROADBAND INFRASTRUCTURE PRODUCTS
Wireless broadband base station/access point infrastructure products operating
on licensed spectrum, including Other Technology infrastructure products.
E-2
Exhibit 10.57
WIRELESS BROADBAND CPE SUPPLY AGREEMENT
Between: and:
Motorola, Inc. Clearwire US LLC
1501 W. Shure Drive 5808 Lake Washington Blvd. NE, Suite 300
Arlington Heights, IL 60004 Kirkland, WA 98033
(Motorola) (Clearwire)
EFFECTIVE DATE: August 29, 2006
This Wireless Broadband CPE Supply Agreement (Agreement) is entered into between
Motorola and Clearwire as of the Effective Date. Clearwire will purchase and
Motorola agrees to sell Wireless Broadband Subscriber Products (as defined in
Exhibit "B"), support, accessories and related equipment, all as listed in
Exhibit A, Schedule 1 at the prices listed in Exhibit A and on the terms and
conditions in this Agreement, Exhibits and Schedules. The Exhibits and Schedules
attached in this Agreement, as such Exhibits A-C and Schedules may be amended by
agreement of the parties from time to time, are incorporated into this
Agreement. Affiliates of Clearwire, as defined in Exhibit A, also have the right
to directly purchase under this Agreement, on the terms and conditions stated in
this Agreement and Clearwire and Clearwire Corporation will guarantee payment
for any Subscriber Products Motorola provides to Clearwire and Clearwire
Affiliates.
This Agreement and attached Exhibits and Schedules constitute the entire and
final expression of agreement between the parties, and supersede all other
communications between the parties, pertaining to the subject matter of this
Agreement. This Agreement may be executed in multiple counterparts, each of
which will be deemed an original and all of which taken together will constitute
one and the same instrument. Facsimile or digital signatures will be treated as
originals.
[Signature pages follows]
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives.
MOTOROLA INC. CLEARWIRE US LLC
By: /s/ C. F. WRIGHT By: /s/ Benjamin G. Wolff
--------------------------------- ------------------------------------
(signature) (signature)
Name: C. F. WRIGHT Name: Benjamin G. Wolff
Title: SENIOR VICE-PRESIDENT Title: Co-President & Co-CEO
Date: 8/29/06 Date: 8/29/06
Clearwire Corporation hereby guarantees payment of the purchase price for any
Subscriber Products purchased by Clearwire or any Clearwire Affiliate under this
Agreement, subject to the exercise of any rights of Clearwire or such Clearwire
Affiliate with respect to such payment Motorola need not exhaust remedies
against Clearwire and Clearwire Affiliates (other than to demand payment and to
allow for the passage of the applicable cure period) prior to pursuing this
guarantee of Clearwire Corporation.
CLEARWIRE CORPORATION
By: /s/ Benjamin G. Wolff
---------------------------------
(signature)
Name: Benjamin G. Wolff
Title: Co-President & Co-CEO
Date: 8/29/06
EXHIBIT A
PRODUCTS AND PRICES
A. Under the terms of this Agreement, Motorola will offer the specific
Wireless Broadband Subscriber Products contained in Exhibit A, Schedule I
("Subscriber Products").
B. Certain technical specifications and features for Subscriber Products are
contained in Exhibit A, Schedule 2.
C. Targeted availability dates for Subscriber Products are contained in
Exhibit A, Schedule 3.
D. Exhibit A, Schedule 4 "Expedience CPE Feature Roadmap" highlights the
features that Clearwire needs for the Expedience CPE family.
A-1
EXHIBIT A
SCHEDULE 1
SUBSCRIBER PRODUCTS AND PRICING
The pricing stated in this Exhibit A, Schedule 1 is the [***] pricing to be
charged by Motorola under this Agreement. Throughout the term of this Agreement,
Motorola will use commercially reasonable efforts to [***] for the Subscriber
Products specifically listed in this Exhibit A, Schedule 1.
SEE ATTACHED
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A-2
2006 CPE EXPEDIENCE EQUIPMENT
<TABLE>
<CAPTION>
ITEM DESCRIPTION TOTAL PRICE (I)NFRA / (C)PE
---- ----------- ----------- ---------------
<S> <C> <C> <C>
022-0009-0001 BOX OSU (OUTDOOR CPE) SINGLE [***] C
022-0015-0001 BOX FOR SLIMLINE SINGLE [***] C
022-0050-0004 BOX SLEEVE A-MOD SLIMLINE W/BARCODE GENERIC [***] C
022-0050-0101 CLEARWIRE BOX SLEEVE [***] C
022-0055-0001 BOX OSU SINGLE [***] C
250-1055-1903 CLEARWIRE OSU KIT 10OFT CABLE [***] C
250-1155-1000 2.5GHZ OSU KIT WITH EURO CORD, 100 FT CABLE [***] C
250-1157-1000 OSU3310 AV CPE KIT W/900-0009-9100 EUROINSTALL KIT [***] C
250-1159-1000 OSU3510 AV CPE KIT W/900-0009-9101 EURO NSTLKIT [***] C
250-1255-1000 OSU 2510-AV OUTDOOR CPE KIT INCLUDING UK CORD [***] C
250-1257-1000 OSU 3310 AV CPE KIT W/900-0009-9102 UK [***] C
250-1259-1000 OSU 3510 AV CPE KIT W/900-0009-9102 UK [***] C
250-1357-1000 OSU 3310 AV CPE KIT W/900-0009-9103 CHINA/AUS [***] C
250-1359-1000 OSU 3510 AV CPE KIT W/900-0009-9103 CHINA/AUS [***] C
250-5055-1000 2.6GHZ OSU KIT [***] C
250-5055-1903 CLEARWIRE OSU KIT 50FT CABLE [***] C
250-5155-1000 2.6GHZ OSU KIT W/EURO CORDS 50 FT CABLE [***] C
250-5157-1000 3.3 GHZ OSU KIT [***] C
250-5159-1000 3.5 GHZ OSU KIT [***] C
250-5159-1761 OSU 3510-A OUTDOOR CPE KIT BELGIUM [***] C
250-5255-1000 OSU 2510-AV OUTDOOR CPE KIT INCLUDING UK CORD [***] C
250-5259-1777 OSU 3510-A V CLEARWIRE IRELAND CPE KIT [***] C
250-5357-7001 OSU 3310-A OUTDOOR CPE KIT [***] C
250-5557-7001 OSU 3310-A OUTDOOR CPE KIT [***] C
350-0255-0001 COVER/MOUNTING PLATE, MSU [***] C
370-0015-0001 SLIMLINE COVER ASSEMBLY-CPE [***] C
370-0015-0002 SLIMLINE BASE ASSEMBLY-CPE [***] C
370-0015-0005 WINDOW MOUNT BRACKET [***] C
370-0015-0101 SLIMLINE COVER ASSEMBLY-RSU [***] C
420-0050-1000 POWER SUPPLY 15V 1.66A 25W [***] C
420-0050-9000 SWITCHING POWER SUPPLY OSU 19.5V 2.5A RJ45 [***] C
470-0100-5676 OMNI ANTENNA MOUNTING KIT [***] C
501-3101-2701 MAGNETIC MOUNT MOBILE ANTENNA 2.4-2.7GHZ [***] C
501-3101-3701 3.3-3.6GHZ MOBILE MAGMOUNT ANTENNA [***] C
501-3103-2701 THROUGH HOLE MOBILE ANTENNA 2.4-2.7GHZ [***] C
501-3103-3701 3.3-3.6GHZ MOBILE T/H ANTENNA [***] C
501-3107-2701 2.5GHZ MOBILE MAGMOUNT ANTENNA [***] C
559-0050-0503 CLEARWIRE RSU OVAL COVER LABEL [***] C
597-0255-0001 MSU POWER/COMM CABLE HARNESS [***] C
597-5001-0001 CPE ANT-RF CABLE [***] C
597-5001-0002 OSU, ANT-RF CABLE [***] C
597-5001-0003 SLIMLINE CPE ANT-RF CABLE ASSM [***] C
</TABLE>
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<TABLE>
<CAPTION>
ITEM DESCRIPTION TOTAL PRICE (I)NFRA / (C)PE
---- ----------- ----------- ---------------
<S> <C> <C> <C>
597-5001-0004 OSU-S.L. SERIES ANT-RF CABLE ASSM. [***] C
597-5001-0201 MSU INTERNAL RF CABLE TNC [***] C
597-5120-0107 PWR CORD 7FT NORTH AMERICA DETACHABLE [***] C
597-5120-0108 PWR CORD 8FT 2 INCH NORTH AMERICA DETACHABLE [***] C
597-5120-0307 EUROPEAN POWER CORDSET [***] C
597-5121-0104 USA A/C POWER CORD 4 FT [***] C
597-5121-0204 UK 4 FT POWER CORD [***] C
597-5121-0304 EURO POWER CORD 4 FOOT [***] C
597-6010-0001 CPE UTP ETHERNET CABLE ASSEMBLY [***] C
597-6015-0001 CPE PROGRAMMING CABLE [***] C
597-6020-0050 DC/SIGNAL CABLE, OSU, 50FT [***] C
597-6020-0075 DC/SIGNAL CABLE, OSU, 75 FT [***] C
597-6020-0100 DC/SIGNAL CABLE, OSU, 100 FT [***] C
597-6021-0050 OSU DC PWR / ENET RJ45 TO CONXALL (50FT) [***] C
597-6021-0100 OSU DC PWR / ENET RJ45 TO CONXALL (100FT) [***] C
900-0009-9050 OSU NORTH AMERICAN INSTALL KIT [***] C
900-0009-9051 OSU EURO INSTALL KIT 50' CABLE [***] C
900-0009-9052 OSU UK INSTALL KIT 50' CABLE [***] C
900-0009-9053 OSU CHINA/ AUSTRALIA INSTALL KIT 50' CABLE [***] C
900-0009-9100 OSU NORTH AMERICAN INSTALLATION KIT 100' CABLE [***] C
900-0009-9101 OSU EURO INSTALLATION KIT 100' CABLE [***] C
900-0009-9102 OSU UK INSTALLATION KIT 100' CABLE [***] C
900-0015-0005 RSU BRACKET ACC. [***] C
900-0054-1220 RSU-3510-AV, ISP220, CHPL-3-5120, CLEARWIRE SPAIN [***] C
900-0054-1230 RSU-3510-AV, ISP230,CHPL-3-5080, DANSKE [***] C
900-0054-1760 RSU-351O-AV, ISP760, CHPL-3-5060, MAC TELECOM [***] C
900-0054-1761 RSU-3510-AV, ISP761, CHPL-3-5060, CLEARWIRE BELGIUM [***] C
900-0054-1777 RSU-3510-AV, ISP777, CHPL-3-5050, IRELAND [***] C
900-0055-1903 OSU-2510-AV, ISP903, CHPL-2-6030 CLEARWIRE [***] C
900-0055-9903 OSU-2510-AV ISP903, CHPL-2-6030, CLEARWIRE W/50' [***] C
900-0059-1220 OSU-3510-AV, ISP220, CHPL-3-5120, CLEARWIRE SPAIN [***] C
900-0059-1230 OSU-3510-AV, ISP230, CHPL-3-5080, DANSKE [***] C
900-0059-1761 OSU-3510-AV, ISP761, CHPL-3-5060, BELGIUM [***] C
900-0059-1777 OSU-3510-AV, ISP777, CHPL-3-5050, IRELAND [***] C
900-0060-1903 RSU-2510-FV, ISP903, CHPL-2-6030 CLEARWIRE [***] C
900-0060-1970 RSU-2510-FV ISP970 CHPL-2-6030 CLEARWIRE-EARTH [***] C
900-0060-1971 RSU-2510-FV ISP971 CHPL-2-6030 CLEARWIRE-WIND [***] C
900-0060-1972 RSU-2510-FV ISP972 CHPL-2-6030 CLEARWIRE-FIRE [***] C
900-0060-2903 RSU-2510-FH, ISP903, CHPL-2-6030, CLEARWIRE [***] C
900-0071-1903 RSU-2510-SV ISP903 CHPL-2-6030 CLEARWIRE [***] C
900-0071-1970 RSU-2510-SV ISP970 CHPL-2-6030 CLEARWIRE AOL [***] C
</TABLE>
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<TABLE>
<CAPTION>
ITEM DESCRIPTION TOTAL PRICE (I)NFRA / (C)PE
---- ----------- ----------- ---------------
<S> <C> <C> <C>
900-0071-1971 RSU-2510-SV ISP1971 CHPL-2-6030 CLEARWIRE-W1ND [***] C
900-0071-1972 RSU-2510-SV ISP972 CHPL-2-6030 CLEARWIRE-FIRE [***] C
900-0071-2903 RSU-2510-SH ISP903 CHPL-2-6030 CLEARWIRE [***] C
900-0225-1000 MSU-2300-A ISP000, CHPL-2-3020 [***] C
900-0238-1000 MSU-3710-AV, ISP000, CHPL-3-7030 [***] C
900-0255-1903 MSU-2510-AV, ISP903, CHPL-2-6030 CLEARWIRE [***] C
900-0255-9001 ETSI MSU-2510-A, ISPOOO, CHPL-2-6010 [***] C
900-0257-1000 MSU-3310-A, ISP000, ChPI-3-3010 [***] C
900-0259-1000 MSU-3510-A, ISP000, ChPI-3-5030 [***] C
</TABLE>
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A-5
WIMAX-CLEARWIRE PRICING
PRODUCT/DESCRIPTION
<TABLE>
<CAPTION>
DESKTOP CPE 4-PORT ETHERNET HUB (NON-ATA) AVAILABLE [***]
TIERS MEASURED ON ANNUAL PURCHASES OF BOTH ATA & NON-ATA 4 PORT -------------------------------------
CPES. TABLE IS STARSTEP WITH INITIAL UNITS AT HIGHER PRICE. 2007 2008 2009 2010 2011
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
[***] and above [***] [***] [***] [***] [***]
</TABLE>
<TABLE>
<CAPTION>
DESKTOP CPE 4 PORT ETHERNET HUB (WITH ATA) AVAILABLE [***]
TIERS MEASURED ON ANNUAL PURCHASES OF BOTH ATA & NON-ATA 4 PORT -------------------------------------
CPES. TABLE IS STARSTEP WITH INITIAL UNITS AT HIGHER PRICE. 2007 2008 2009 2010 2011
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
[***] and above [***] [***] [***] [***] [***]
</TABLE>
<TABLE>
<CAPTION>
DESKTOP CPE 1 PORT ETHERNET .5 WATT NON-MMO, NON-ATA AVAILABLE [***]
TIERS MEASURED ON ANNUAL PURCHASES OF THIS MODEL ONLY. TABEL IS -------------------------------------
STARSTEP WITH INITIAL UNITS AT HIGHER PRICE. 2007 2008 2009 2010 2011
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
[***] and above [***] [***] [***] [***] [***]
</TABLE>
<TABLE>
<CAPTION>
PC CARD (WIMAX LAPTOP CAMPUTER CARD) AVAILABLE [***]
TIERS MEASURED ON ANNUAL PURCHASES OF THIS MODEL ONLY.TABLE IS -------------------------------------
STAIRSTEP WITH INITIAL UNITS AT HIGHER PRICE. 2007 2008 2009 2010 2011
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
[***] and above [***] [***] [***] [***] [***]
</TABLE>
NOTES- ALL PRICING QUOTED IS FOR THE 25 GHZ PRODUCTS IN US DOLLARS - TAXES
INSURANCE, & FRIEGHT WILL BE ADDED AS APPLICABLE
3.5GHZ DAP PRODUCTS (5 AND 7 MHZ CHNL ONLY) ARE OFFERED [***] PRICE AS ABOVE
3.5GHZ CPE/PC CARDS (5 AND 7 MHZ CHNL ONLY) ARE OFFERED [***] TO PRICES SHOWN
ABOVE
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EXHIBIT A
SCHEDULE 2
SUBSCRIBER PRODUCTS SPECIFICATIONS AND FEATURES
SEE ATTACHED
A-7
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[***]
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EXHIBIT A
SCHEDULE 3
SUBSCRIBER PRODUCTS TARGET AVAILABILITY DATES
<TABLE>
<CAPTION>
MILESTONE # DATE 2.5 GHZ NETWORK MILESTONES
----------- ----- --------------------------
<S> <C> <C>
D1 [***] [***]
D2 [***] [***]
D3 [***] [***]
D4 [***] [***]
D5 [***] [***]
D6 [***] [***]
</TABLE>
This Schedule sets forth Subscriber Products and target availability dates
therefor which Clearwire desires to purchase. Once mutually agreed upon by the
Parties, this Schedule will be amended accordingly and Motorola will agree to
deliver Subscriber Products in accordance with the target availability dates
described in such amended schedule. Motorola and Clearwire will use commercially
reasonable efforts to achieve the objectives stated in this Schedule by the
dates specified above or elsewhere in this Agreement, including identifying
those provisions of this Schedule the breach of which will be mutually agreed
upon to constitute a material breach for purposes of Section 4.a.(iv) of this
Agreement.
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A-8
EXHIBIT A
SCHEDULE 4
EXPEDIENCE CPE FEATURE ROADMAP
SEE ATTACHED
A-9
EXHIBIT A
SCHEDULE 4
EXPEDIENCE CPE FEATURE ROADMAP
revision 0.04
<TABLE>
<S> <C>
RSU [***]
WiMax/Expedience Dual Operation [***]
Improved CHNL Estimation [***]
Enhanced Pwr Control [***]
Paging/Sleep Mode [***]
Stearable Antenna [***]
Diversity [***]
Enhanced MAC Efficient [***]
Spatial Processing (e.g. Mode) [***]
OSU [***]
WiMax/Expedience Dual Operation [***]
Improved CHNL Estimation [***]
Enhanced Pwr Control [***]
Paging/Sleep Mode [***]
Stearable Antenna [***]
Diversity [***]
Enhanced MAC Efficient [***]
Spatial Processing (e.g. Mode) [***]
MSU [***]
WiMax/Expedience Dual Operation [***]
Improved CHNL Estimation [***]
Enhanced Pwr Control [***]
Paging/Sleep Mode [***]
Stearable Antenna [***]
Diversity [***]
Enhanced MAC Efficient [***]
Spatial Processing (e.g. Mode) [***]
PC CARD [***]
WiMax/Expedience Dual Operation [***]
Improved CHNL Estimation [***]
Enhanced Pwr Control [***]
Paging/Sleep Mode [***]
Stearable Antenna [***]
Diversity [***]
Enhanced MAC Efficient [***]
Spatial Processing (e.g. Mode) [***]
</TABLE>
<TABLE>
<CAPTION>
Key
---
<S> <C>
Not Applicable [***]
General Availability [***]
</TABLE>
This Schedule sets forth Subscriber Products and target availability dates
therefor which Clearwire desires to purchase. Once mutually agreed upon by the
parties, this Schedule will be amended accordingly and Motorola will agree to
deliver Subscriber Products in accordance with the target availability dates
described in such amended Schedule. Motorola and Clearwire will use commercially
reasonable efforts to achieve the objectives stated in this Schedule by the
dates specified above or elsewhere in this Agreement, including identifying
those provisions of this Schedule the breach of which will be mutually agreed
upon to constitute a material breach for purposes of Section 4.a.(iv) of this
Agreement
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A-10
EXHIBIT B
TERMS AND CONDITIONS
1. Subscriber Products Lead-Time. and Prices, For purposes of this Agreement,
"Wireless Broadband Subscriber Products" means Expedience Subscriber
Products, Dual Mode Subscriber Products, Wi-Max Subscriber Products and
Other Technology subscriber product, all as defined in Section 4b, below,
but excluding wireless broadband handsets. The Subscriber Products,
lead-time, and prices for the Subscriber Products, as of the date of this
Agreement, are listed in Exhibit A. Motorola may add Subscriber Products
to, and revise price levels in, Exhibit A, Schedule 1, from time to time
with the prior written consent of Clearwire. This Agreement is for sales of
Subscriber Products only and, other than for warranty claims, does not
create any obligation on Motorola with respect to any other products or
services of Motorola, Inc.
Clearwire will also have the right to purchase, and the definition of
"Subscriber Products" will be deemed to include any other products that are
listed on Exhibit A, and any Wireless Broadband Subscriber Products that
Motorola makes available to another wireless broadband service provider
customer operating on licensed spectrum with channel widths of not less
than 5 MHz, on terms and conditions, (including, but not limited to,
financial terms and terms regarding the availability of such products) that
are no less favorable to Clearwire than those agreed by another customer of
Motorola, for similar purchase commitments.
Exhibit "A", Schedule 2 sets forth certain technical specifications and
features for Subscriber Products which Clearwire desires to purchase. Once
mutually agreed upon by the parties, Exhibit "A", Schedule 2 will be
amended accordingly and Motorola will agree to deliver Subscriber Products
in accordance with the specifications and features described in such
amended Exhibit "A", Schedule 2. Motorola and Clearwire will use
commercially reasonable efforts to achieve the objectives stated in Exhibit
"A", Schedule 2 by the dates specified in Exhibit "A", Schedule 3 or
elsewhere in this Agreement, including identifying those provisions of
Exhibit "A", Schedule 2 the breach of which will be mutually agreed upon to
constitute a material breach for purposes of Section 4.a.(iv).
Motorola will make each Subscriber Product available to Clearwire on the
earlier of (a) the date specified in Exhibit A, Schedule 3, or (b) the date
on which Motorola makes that Subscriber Product available to any third
party, provided that in the case where Wireless Broadband Subscriber
Products are uniquely developed for and funded by another customer, such
Wireless Broadband Subscriber Products will not be made available to
Clearwire until such time as they are made commercially available to third
parties other than the entity paying for development.
If there is an insufficient supply of Subscriber Product to satisfy
unfulfilled purchase orders of Clearwire and other purchasers of the same
Subscriber Product, Motorola agrees not to disadvantage Clearwire compared
to the other purchasers.
2. Forecasts. Clearwire will provide to Motorola on a monthly basis a rolling
[***] forecast of Clearwire's estimated Subscriber Product purchases (the
"Forecasts"). Each such Forecast will be delivered to Motorola not less
than [***] prior to the start of [***] All Forecasts are non-binding.
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B-1
3. Purchase Order and Payment Terms.
a. All orders for Subscriber Products by Clearwire will be submitted to
Motorola in the form of electronic data interchange ("EDI") or other
method as mutually agreed. Clearwire must provide firm,
non-cancellable, purchase orders [***] prior to requested ship date.
The only effect of any terms and conditions in Clearwire's purchase
orders or any other documentation not signed by the patties shall be
to request the time and place of delivery, and the number and models
of Subscriber Products to be delivered (provided that the time
requested is not binding on Motorola unless the requested ship date is
in accordance with this Section). Motorola's invoice also will not
change the terms and conditions of this Agreement. Clearwire's payment
in US Dollars is due [***] after shipment.
b. Clearwire will use commercially reasonable efforts to notify Motorola
of any disputed amounts under any invoice in writing prior to the
invoice due date; but provided that Clearwire shall pay to Motorola
the undisputed portion of any invoice within the time frame set forth
in Section 3a. Clearwire's failure to notify Motorola of any disputed
amount prior to the invoice due date will not constitute a waiver by
Clearwire of any dispute regarding any previously paid invoice;
provided that, in no event shall Clearwire dispute any invoice
submitted by Motorola hereunder more than [***] after the date
of such invoice. For any undisputed amount due hereunder which remains
unpaid, Clearwire will pay Motorola a service fee at the rate of [***]
of the amount due for each month or portion thereof that the
amount remains unpaid.
4. Exclusive Purchase Commitment and Other Matters.
a. Except as provided elsewhere in this Section 4, Clearwire (and
Clearwire Affiliates) agree to purchase 100% of their Wireless
Broadband Subscriber Products (excluding products purchased for
non-commercial use, such as for purposes of internal testing)
requirements from Motorola during the term of this Agreement.
Exceptions to the foregoing purchase commitment:
(i) Starting on the 5th anniversary of the Effective Date, the
Section 4a purchase commitment percentage drops from 100% to 51%
of the Wireless Broadband Subscriber Products.
(ii) If any Subscriber Product supplied by Motorola materially fails
to meet the performance specifications and such material
deficiencies are not remedied by Motorola within [***] of written
notice to Motorola, or if Motorola's production and delivery of
any Subscriber Product fails in any material respects to meet the
requirements of this Agreement, which failures have not been
cured in the [***] after written notice to Motorola, then
Clearwire will be released from its exclusive purchase commitment
only for that specific Subscriber Product. Once Motorola cures
the breach, the exclusive purchase requirement again covers that
Subscriber Product. For purposes of this Agreement, a material
breach does not include the situation where Motorola, with
Clearwire's consent, substitutes a substantially similar or
comparable product at a similar price.
(iii) If Clearwire identifies a Wireless Broadband Subscriber Product
need, and Motorola decides not to supply that product, Motorola
will allow Clearwire to
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B-2
purchase that specific product from an agreed to ODM supplier
(approval will not be unreasonably withheld), subject to a
licensing agreement from Motorola to that ODM supplier on
commercially reasonable terms. However, if such Wireless
Broadband Subscriber Product need is based on an
industry-recognized public standard, and if Motorola decides not
to supply that product, Motorola will have the right to OEM such
product itself and sell it to Clearwire under the terms of this
Agreement. If Motorola decides not to do so, Clearwire will be
relieved of its exclusive purchase obligations under this Section
4.a with respect to such product only.
(iv) Clearwire may terminate the exclusivity requirements under this
Agreement if there are [***] uncured Subscriber Product material
breaches in any [***] period.
b. For purposes of this Agreement, the following terms shall have the
following meanings: "Clearwire Affiliates" means entities which are
controlled with greater than 50% ownership by Clearwire Corporation.
"Expedience Subscriber Products" means the RSU, OSU, MSU and PC cards
using Expedience technology, plus any accessories and related
equipment "Wi-Max Subscriber Products" means the RSU, OSU, MSU and PC
cards or equivalent using 802.16e technology, plus any accessories and
related equipment. "Dual Mode Subscriber Products" means a device,
plus any accessories and related equipment, with the capability to
operate (but not seamlessly between) the Expedience and 802.16e
technologies. "Other Technology" means any other standards-based,
alternative wireless broadband technology deployed by Clearwire.
c. Except as contained in this Section 4c, the unit price to Clearwire
for individual Subscriber Products purchased in any calendar year will
be no less favorable than the unit price paid by other customers
contemporaneously buying similar or lesser quantities of the same
individual Subscriber Products within the same country during such
calendar year. The foregoing price level commitment 1) excludes unique
Subscriber Product sales that are directly related to funded
development programs, one time per customer initial promotional offer
(not to exceed [***] of Subscriber Product), and 2) is given in
consideration of the minimum purchase commitments by Clearwire (and
Clearwire's Affiliates) in this Agreement. For avoidance of doubt,
purchase volumes of CDMA, GSM, UMTS and iDEN infrastructure and/or
devices can not be considered for purposes of establishing MFN pricing
comparisons between customers.
d. Motorola will supply Residential Subscriber Units, Outdoor Subscriber
Units, Mobile Subscriber Units and PC cards or equivalent in
accordance with the specification and features mutually agreed between
Motorola and Clearwire and attached to this Agreement as Exhibit "A",
Schedule 2.
e. In the 2 years after the Effective Date, and in consideration of
Motorola's obligations under this Agreement, Clearwire and its
Affiliates will purchase from Motorola no less than $150,000,000 in
Subscriber Products under this Agreement and Infrastructure Products
under and as defined in the Wireless Broadband System Infrastructure
Agreement of even date herewith between Motorola and Clearwire.
f. Motorola will provide ISPID administration.
[*** Confidential Treatment Requested]
B-3
g. Motorola will support efforts to produce Dual Mode Subscriber Products
either internally or in conjunction with a third party providing
discrete, NextNet approved, mobile Wi-Max silicon.
h. Motorola may from time to time cease the supply of then existing
versions of Subscriber Product (the "Discontinued Product"), provided
that a suitable replacement product is available. If Motorola does
discontinue Product, it will notify Clearwire promptly in writing at
least [***] before discontinuance ("Discontinuance Notice") and
Clearwire, up to the date provided on the Discontinuance Notice, may
place a final lifetime order for Discontinued Product. A shipping
schedule for quantities ordered in any final lifetime order will be
mutually agreed to between Clearwire and Motorola, but in any event
will not exceed [***] from the date of the Discontinuance
Notice. All final lifetime orders for Discontinued Product are
non-cancelable.
i. NextNet Wireless, Inc., a subsidiary of Clearwire being acquired by
Motorola on the date hereof ("NextNet"), may be a party to one or more
take or pay contracts (including with Mitsubishi, and Maxim) for the
purchase of parts required in the operation of NextNet's business. The
parties acknowledge that any such take or pay contracts may continue
in effect following the Effective Date. As a result, the parties agree
that Motorola will (i) act in good faith to consume as many of such
parts subject to the take or pay as is reasonably possible in the
operation of its business in the normal course, and (ii) use
commercially reasonable efforts to renegotiate such take or pay
contracts to eliminate or reduce the take or pay obligations. If
despite such actions by Motorola, there are parts remaining in
Motorola's inventory that were purchased as a result of any such
NextNet take or pay contract, or Motorola is obligated to make penalty
payments to make the vendor whole, and that are not usable by Motorola
in the operation of its business in the normal course, Clearwire shall
purchase such parts from Motorola at Motorola's cost, or Clearwire
shall pay or reimburse Motorola for such penalty payments.
j. If Clearwire informs Motorola that Clearwire desires to pursue Other
Technology for Subscriber Products, Motorola will use commercially
reasonable efforts to supply Clearwire with an Other Technology
solution under the terms of this Agreement.
5. Deliveries. The delivery terms for all sales of Subscriber Products are
[***]. Clearwire will pay [***] costs from [***] basis and all
applicable [***] and similar charges. Title to the Subscriber Products
and risk of loss will pass to Clearwire [***]. Title to Software on
Subscriber Products remains with Motorola at all times. Motorola will
deliver the Subscriber Products to Clearwire free and clear of all liens,
security interests or encumbrances of any type. Clearwire hereby grants to
Motorola a purchase money security interest on all of the Subscriber
Products that have not resold by Clearwire and that have not been paid for
by Clearwire. Clearwire agrees to cooperate in whatever manner requested by
Motorola that is reasonably necessary to assist in perfecting and recording
the security interest.
6. Distribution. Except as provided elsewhere in this Agreement, Clearwire
will not transship, sell, or otherwise transfer Subscriber Products outside
of its wireless broadband systems ("Territory"), other than for inventory
balancing purposes with its Affiliates. Clearwire will incorporate this
limitation into all of Clearwire's agent and distributor agreements as a
condition of resale of the Subscriber Products, and Clearwire will enforce
this limitation. Sale within the Territory without transshipment is a
material condition to Clearwire's rights under this Agreement. Clearwire
agrees that it will not misrepresent any of the Subscriber Products or any
of the capabilities of the
B-4
Subscriber Products. Specifically, Clearwire agrees that it will correctly
explain to end user customers the capabilities of the Subscriber Products
with respect to the Subscriber Products range, radio frequency and battery
life as detailed in the relevant Motorola Subscriber Product literature.
Motorola is responsible for complying with legal requirements regarding the
export or import of any Subscriber Product.
7. Force Majeure. Except for payment due, neither party will be liable for any
delay or failure to perform due to any cause beyond its reasonable control.
Causes include strikes, acts of God, interruptions of transportation. The
delivery schedule will be considered extended by a period of time equal to
the time lost because of any excusable delay.
8. Warranty. For Subscriber Products sold under this Agreement, Motorola
warrants its Subscriber Products to Clearwire (or Clearwire Affiliates),
except that if the Subscriber Products are resold, Motorola warrants to
end-users, and only in accordance with the Limited Warranty that Motorola
ships with its Subscriber Products [***] Limited Warranty). Motorola
makes no other representation or warranty of any other kind, express or
implied. MOTOROLA SPECIFICALLY DISCLAIMS THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. If any Subscriber
Product is defective at time of delivery to Clearwire, Clearwire's sole
remedy will be to return the Subscriber Product to Motorola for repair,
replacement or refund, as determined solely by Motorola. Clearwire will
process all customer warranty returns in accordance with Motorola's then
current service and return center procedures. All warranty returns require
a return authorization issued by Motorola with specific model, quantity and
price information for the Subscriber Product prior to acceptance at
Motorola's service center or return center. Prior to returning any
Subscriber Product to Motorola, Clearwire is responsible for prescreening
the Subscriber Products for defects or damage to ensure that only
Subscriber Products that are actually defective under the terms of
Motorola's Limited Warranty, or Subscriber Products that have been damaged
in transit prior to receipt by Clearwire, are returned to Motorola.
Subscriber Products returned to Motorola that are not defective or that
have not been damaged in transit prior to Clearwire's receipt may, at
Motorola's sole option, be returned to Clearwire at Clearwire's expense.
All returns are freight prepaid at Clearwire's expense. For resold
Subscriber Products that are subject to warranty claims, Motorola will hold
Clearwire or Clearwire's Affiliate harmless from third party warranty
claims.
9. Intellectual Property Indemnification. Excluding any intellectual property
rights obtained through acquisition of NextNet, Motorola agrees to
indemnify Clearwire against and to defend Clearwire, at Motorola's expense,
for any claims, suits, arbitration or other disputes brought against
Clearwire based upon a claim that any Subscriber Product furnished
hereunder by Motorola infringes any patent or copyright or misappropriates
a trade secret in any country worldwide where Motorola sells such
Subscriber Product and to pay costs and damages awarded based upon such
claim in any such suit, provided that Motorola is: (1) promptly notified by
Clearwire in writing within [***] of the date on which Clearwire first
received written notice of such claim; and (2) at Motorola's request and
expense is given sole control of the suit and all reasonably requested
assistance for defense of the claim. Motorola shall not be relieved of its
indemnification obligation as a result of delays in notifying Motorola of
the claim except to the extent the amount of the claim is increased as a
result of such delay. Motorola will not be liable for any settlement made
without its written consent. If the use or sale of any Subscriber Product
furnished under this Agreement is enjoined as a result of such suit,
Motorola at its option and at no expense to Clearwire, will: (1) obtain for
Clearwire the right to use or sell such Subscriber Products; (2) substitute
a functionally equivalent product with the same or similar features
reasonably acceptable to Clearwire and extend this indemnity to the
substitute products, or; (3) accept the return of the Subscriber Products
and reimburse Clearwire the purchase price therefore,
B-5
less a reasonable charge for prior use, if any, of the Subscriber Products.
If the claim is alleged prior to completion of delivery of the Subscriber
Products, Motorola has the right to decline to make further shipments
without being in breach of contract.
This indemnity does not extend to any suit based upon any infringement or
alleged infringement arising from Subscriber Products furnished by Motorola
that are: (1) altered in any way by Clearwire or any third party if the
alleged infringement would not have occurred but for such alteration; (2)
combined with any other products or elements not furnished or approved in
writing by Motorola if the alleged infringement would not have occurred but
for such combination; or (3) claims arising out of Clearwire's unique
specifications or instructions, if the alleged infringement would not have
occurred but for such unique specifications or instructions.
The indemnity provided in this section is the sole, exclusive, and entire
liability of Motorola and the remedies provided in this section are
Clearwire's exclusive remedies against Motorola for patent, copyright
infringement or trade secret misappropriation, whether direct or
contributory and is provided in lieu of all warranties, express, implied or
statutory in regard to these potential liabilities, including the warranty
against infringement specified in the Uniform Commercial Code.
Should any intellectual property right obtained through the acquisition of
NextNet be subject to an infringement or other claim and, in order to
continue to supply Subscriber Products which contain those intellectual
property rights, Motorola settles the claim, or is subject to a judgment,
requiring the payment of any royalty, then Clearwire agrees Motorola may
add that royalty fee, on a pass-through basis, to the Exhibit A price of
the affected Subscriber Products.
10. Product Liability Indemnity. Excluding Expedience Subscriber Products that
have not been modified or enhanced by Motorola where the modification or
enhancement is the claimed material defect, Motorola agrees to indemnity
Clearwire against and to defend, at its expense, any suits against
Clearwire based upon a claim by a third party that a material defect in any
Subscriber Products furnished under this Agreement by Motorola caused death
or bodily injury to any person and to pay costs and damages finally awarded
based upon such claim in any such suit; provided that Motorola is: (1)
promptly notified by Clearwire in writing within [***] of the date on
which Clearwire first received notice of the claim; and (2) at Motorola's
request and expense is given sole control of the suit and all requested
assistance for defense of the claim. Motorola shall not be relieved of its
indemnification obligation as a result of delays in notifying Motorola of
the claim except to the extent the amount of the claim is increased as a
result of such delay. Motorola shall not be liable for any settlement made
without its written consent. This indemnity does not extend to any suit
based upon death or bodily injury arising from Subscriber Products
furnished by Motorola that are: (1) altered by Clearwire or any third party
without the permission of Motorola if the alleged death or bodily injury
would not have occurred but for such alteration; (2) combined with any
other products or elements not furnished or approved in writing by Motorola
if the alleged death or bodily injury would not have occurred but for such
combination; or (3) designed and/or manufactured in accordance with
Clearwire's unique specifications or instructions if the alleged death or
bodily injury would not have occurred but for such unique specifications or
instructions. The indemnity provided in this section is the sole,
exclusive, and entire liability of Motorola and the remedies provided in
this section are Clearwire's exclusive remedies against Motorola for claims
based on a material defect in the Subscriber Product.
11. Limitation of Liability. Motorola's total liability for any and all costs,
damages, claims (but excluding indemnifiable claims set forth in Sections 9
and 10, and breaches of confidentiality
B-6
obligations) arising out of or in connection with this Agreement or
Subscriber Products supplied under this Agreement is limited to the
aggregate amount paid by Clearwire to Motorola hereunder in the prior [***]
provided, however, that during the first [***] of the term of this
Agreement, the cap on liability will be the greater of [***] or the
aggregate amount paid by Clearwire to Motorola hereunder in the prior [***]
Except for claims indemnified under Sections 9 and 10 and breaches of
confidentiality obligation; either party in no event will be liable,
whether in contract, tort, or otherwise, to the other for any incidental,
special, indirect, consequential or punitive damages, including loss of
use, loss of time, inconvenience, commercial loss, or lost profits,
savings, or revenues to the full extent such may be disclaimed by law.
12. Taxes. The prices listed in Exhibit A do not include any amount for
Federal, State and/or Local excise, sales, use, property, retailer's,
occupation or any other assessment in the nature of taxes however
designated, on the Subscriber Products or services provided under this
Agreement. If any such taxes (other than taxes measured by Motorola's net
income, or based on Motorola's gross receipts, or based on Motorola's
franchise) are determined to be applicable to this transaction, or to the
extent Motorola is required to pay or bear the burden of a tax, the tax
will be added to the prices set forth in Exhibit A and paid by Clearwire.
Personal property taxes assessable on the Subscriber Products will be the
responsibility of Clearwire. In the event Clearwire claims exemption from
sales, use or other such taxes under this Agreement, Clearwire will provide
Motorola with an exemption certificate or other evidence to establish
Clearwire's exempt status, and will hold Motorola harmless of any
subsequent assessments levied by a proper taxing authority for such taxes,
including interest, penalties, and late charges.
13. Technical Assistance. Motorola's warranty will not be enlarged, and no
obligation or liability will arise out of Motorola's rendering of technical
advice, facilities or service in connection with Clearwire's purchase of
the Subscriber Products.
14. Logos And Trademarks. In order that each party may protect its trademarks,
trade names, corporate slogans, corporate logo, product designations, and
the goodwill associated with the foregoing, neither party will have any
right to use the trademarks, trade names, corporate slogans, corporate logo
or product designations of the other party in the sale, lease, distribution
or advertising of any products of the other party or on any product
container, component part, business forms, sales, advertising and
promotional materials, as a part of an Internet domain name or on or in
connection with other business supplies or materials, whether in writing,
orally or otherwise, except with the express prior written consent of the
other party documented in a separate agreement.
15. Party Relationship. Each party is an independent contractor and not an
agent, joint venturer, or representative of the other, and neither party
may create any obligations or responsibilities on behalf of or in the name
of the other. Under no circumstances may either party hold itself out to be
a partner, employee, franchisee, representative, servant or agent of the
other party. Neither party will impose or create any obligation or
responsibility, express or implied, or make any promises, representations
or warranties on behalf of the other party, other than as expressly
provided herein.
16. Waiver. The failure of either party to insist in any one or more instances,
upon the performance of any of the terms or conditions or to exercise any
right contained in this Agreement will not be construed as a waiver or
relinquishment of the future performance of any terms or conditions or the
future exercise of such right, but the obligation of the other party with
respect to such future performance will continue in full force and effect.
[*** Confidential Treatment Requested]
B-7
17. Term and Termination.
a. The initial term of this Agreement will be for a period of eight (8)
years following the Effective Date. Unless notice of termination is
given by either party at least 120 days prior to the scheduled
termination date, this Agreement will continue in effect beyond the
initial term, in successive one-year terms. Notwithstanding any number
of renewals, this Agreement is a fixed term agreement and not an
agreement of indefinite term. Nothing contained in this Agreement
creates any express or implied obligation on either party to renew or
extend this Agreement or to create any right to continue this
Agreement on the same terms and conditions.
b. Either party may terminate this Agreement without liability by written
notice to the other if the other makes a general assignment for the
benefit of creditors, or if a petition in bankruptcy or under any
insolvency law is filed by or against the other and such petition is
not dismissed within sixty (60) days after it has been filed or the
other commits a material breach of its obligations hereunder. However,
in the case of any such breach which is capable of being cured,
neither party will terminate this Agreement unless and until the other
will have failed to make good such default within ninety (90) days
after it will have been served with a written notice requiring that
such default be made good and stating its intention to terminate the
Agreement if compliance with the notice is not met; provided, however,
that Subscriber Product deficiencies described in Section 4.a.2 will
not give rise to the termination remedy in this Section 17b. The
termination of this Agreement will not affect or prejudice any
provisions of this Agreement, which are expressly or by implication
provided to continue in effect after such termination.
c. Upon termination of this Agreement as a result of a material, uncured
breach by Clearwire: (i) Motorola is relieved of any obligations to
make any additional shipments and may cancel all of Clearwire's
unshipped orders for Subscriber Products, regardless of previous
acceptance by Motorola of those orders, and Motorola has no obligation
or liability to Clearwire or any other parry in connection with such
cancellations; (ii) all outstanding invoices to Clearwire and other
amounts due to Motorola from Clearwire become immediately due and
payable, and each invoice not yet submitted to Clearwire for
Subscriber Products shipped prior to termination will be due and
payable immediately upon submission of the invoice to Clearwire; (iii)
Clearwire will immediately discontinue any use of all Motorola names
and trademarks in association with the Subscriber Products, as well as
any other combination of words, designs, trademarks or trade names
that would indicate that Clearwire is or was an authorized distributor
of the Subscriber Products; and (iv) within 30 days after termination,
Clearwire will deliver to a location Motorola will specify all
Motorola property, including all equipment, customer data, software
items, catalogs, drawings, designs, engineering photographs, samples,
literature, sales aids and any confidential business information and
trade secrets of Motorola in Clearwire's possession, along with all
copies of these items. Motorola's acceptance of any order by Clearwire
for Subscriber Products after the termination of this Agreement will
not be construed as a renewal or extension of this Agreement, nor as a
waiver of termination of this Agreement.
d. The terms, provisions, representations and warranties contained in
this Agreement that by their sense and context are intended to survive
the performance by either or both parties will so survive the
completion of performances and termination of this Agreement,
including the making of any and all payments due under this Agreement.
B-8
e. On or after January 1, 2009, Motorola may terminate this Agreement
upon one year's prior written notice to Clearwire with continued
supply of Subscriber Products to Clearwire for a two year period
commencing on the termination notice date under the terms of this
Agreement.
f. Motorola will place the source code for current versions of the
Expedience Subscriber Product software owned by Motorola, as well as a
copy of the software itself, in escrow, at Clearwire's cost, under
terms and conditions that are mutually agreeable to the Parties. The
parties agree to promptly enter into good faith, commercially
reasonable negotiations in an effort to conclude a software escrow
agreement within forty-five (45) days after the Effective Date.
18. U.S. Government Sales. In the event that Clearwire elects to sell
Subscriber Products to a governmental entity, Clearwire does so solely at
its own option and risk, because, except as Motorola expressly accepts
specific terms in writing, Motorola makes no representations with respect
to the ability of its goods, services or prices to satisfy any statutes,
regulations, or provisions relating to such governmental sales.
19. Confidentiality. During the entire term of this Agreement, Section I of the
Side Agreement between Clearwire and Motorola, dated June 28, 2006, applies
to define Confidential Information, each party's use of the other's
Confidential Information, and dissemination of information about this
Agreement to third parties in any form.
20. Compliance with Laws. Clearwire and Motorola will comply with all laws and
regulations in connection with their performance of their obligations under
this Agreement, including those dealing with the sale and distribution of
the Subscriber Products purchased under this Agreement Clearwire and
Motorola will comply with all United States laws and regulations regarding
export licenses, or the control or regulation of export or re-export of
Subscriber Products or technical data sold or supplied to Clearwire.
Without limiting the generality of this provision, Clearwire will not sell
any Subscriber Products covered by this Agreement to any party if the sale
would constitute a violation of any law or regulation of the United States.
21. Dispute Resolution: Injunctive Relief. Any claims or disputes between the
parties will be submitted to non-binding mediation prior to initiation of
any formal legal process provided, however, that this provision does not
preclude either party from resorting to judicial proceedings if: (i) good
faith efforts to resolve the dispute under mediation are unsuccessful; or
(ii) the claim or dispute relates to intellectual property rights; or (iii)
a party seeks injunctive relief, such as a temporary restraining order.
Each party agrees that the other party shall be entitled to seek injunctive
relief to prevent breaches of the provisions of Section 19 hereof and to
specifically enforce the provisions of Section 19 hereof in addition to any
other remedy to which such party may be entitled at law or in equity.
22. Notices. All notices required under this Agreement (other than purchase
orders, invoices and notices under Paragraphs 2 or 3) will be sent by
overnight courier or registered or certified mail to the appropriate party
at its address stated on the first page of this Agreement (or to a new
address if the other has been properly notified of the change). If to
Motorola, the notice must be addressed to General Manager, WLBB Products
Group. A notice will not be effective until the party to which it is sent
actually receives it.
23. General. Except as otherwise expressly permitted, no alterations or
modifications of this Agreement will be binding upon either Clearwire or
Motorola unless made in writing and signed
B-9
by an authorized representative of each party. If any term or condition of this
Agreement is to any extent be held by a court or other tribunal to be invalid,
void or unenforceable, then that term or condition will be inoperative and void,
but the remaining rights and obligations of the parties will be construed and
enforced as if this Agreement did not contain the particular term or condition
held to be invalid, void or unenforceable. This Agreement will accrue to the
benefit of and be binding upon the parties hereto and any successor entity into
which either party will have been merged or consolidated or to which either
party will have sold or transferred all or substantially all its assets, but it
will not be otherwise assigned by either party without the prior written consent
of the other party. It is the intention of the parties that the exclusive and
preferred supplier commitments survive any change of control of Clearwire. The
parties agree that any consent to a requested assignment will not be
unreasonably withheld or delayed. This Agreement will be governed by the laws of
the State of New York, without regard to conflict of law rules of New York.
B-10
EXHIBIT C
AFTER MARKET PRODUCT SUPPORT
EXAMPLE OF RMA PROCESS
PRODUCTS WARRANTY REPAIR/RETURN PROCEDURE
CANOPY RETURN MATERIAL AUTHORIZATION REQUEST
(TO BE COMPLETED BY CANOPY WARRANTY ADMINISTRATOR)
RMA NUMBER: ___________________________
DATE OF APPROVAL: _____________________
DISTRIBUTOR: __________________________
CONTACT NAME: _________________________
ADDRESS: ______________________________
CITY, STATE, ZIP: _____________________
PHONE: ________________________________
EMAIL ADDRESS: ________________________
SHIP TO: Motorola Canopy
1299 E. Algonquin Road
Schaumburg, IL 60196
ATTN: CANOPY WARRANTY
RESELLER: _____________________________
CONTACT NAME: _________________________
ADDRESS: ______________________________
CITY, STATE, ZIP: _____________________
PHONE: ________________________________
EMAIL ADDRESS: ________________________
NOTE: ALL FIELDS OF THIS FORM ARE MANDATORY UNLESS OTHERWISE NOTED.
MISSING INFORMATION COULD RESULT IN DELAYED PROCESSING OR DENIAL OF
CLAIM.
END OPERATOR: _________________________
CONTACT NAME: _________________________
ADDRESS: ______________________________
CITY, STATE, ZIP: _____________________
PHONE: ________________________________
EMAIL ADDRESS: ________________________
<TABLE>
<CAPTION>
ISSUE 1NSR ESN MSN REPLACEMENT MSN
ITEM NO. CODE V/OOB ISSUE DESCRIPTION MODEL 0A-00-3E-XX-XX-XX 606XXXYYYY 606XXXYYYY
-------- ----- ----- ------------------- -------- ----------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 F1 OOB THIS IS THE PROBLEM 5700BH20 OA-00-3E-00-45-84 606CDF4562 606CDR2589
DESCRIPTION BOX.
2
3
4
5
6
7
</TABLE>
C-1
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
</TABLE>
THE FOLLOWING IS AN EXPLANATION OF THE FIELDS ON THE CANOPY RETURN MATERIAL
AUTHORIZATION (RMA ) REQUEST FORM. IF REQUESTING AN RMA FOR MORE THAN 30 UNITS,
REPLICATE THE ARMA REQUEST FORM SHEET
<TABLE>
<S> <C>
SHIP MOTOROLA CANOPY
AUTHORIZED 1299 E. ALGONQUIN ROAD
RMA SCHAUMBURG, IL 60196
EQUIPMENT TO: ATTN: CANOPY WARRANTY DEPARTMENT
WHEN COMPLETE WARRANTY@CANOPYWIRELESS.COM
FORWARD TO:
DEFINITIONS:
DISTRIBUTOR THESE FIELDS ARE FOR THE MOTOROLA CANOPY DISTRIBUTOR'S CONTACT
INFORMATION INCLUDING, CONTACT PERSON, EMAIL ADDRESS, SHIPPING
ADDRESS, AND PHONE NUMBER.
RESELLER THESE FIELDS ARE FOR THE RESELLER'S CONTACT INFORMATION
INCLUDING, CONTACT PERSON, EMAIL ADDRESS, SHIPPING ADDRESS, AND
PHONE NUMBER. NORMALLY THIS WOULD BE THE ACS OR ACR THOUGH IN
SOME CASE IT MAY BE THE DISTRIBUTOR. IF THE DISTRIBUTOR IS ALSO
THE RESELLER, THEN THE NAME SHOULD BE FILLED IN BUT OTHER
INFORMATION MAY BE LEFT BLANK.
END OPERATOR THESE FIELDS ARE FOR THE END OPERATOR'S CONTACT INFORMATION
INCLUDING, CONTACT PERSON, EMAIL ADDRESS, SHIPPING ADDRESS, AND
PHONE NUMBER. THE END OPERATOR IS THE ENTITY THAT BOUGHT THE
EQUIPMENT AND ON WHOSE BEHALF THIS RMA IS BEING PROCESSED.
CANOPY USES THIS INFORMATION FOR TRACKING AND MAY CONTACT THE
OPERATOR TO GAIN ADDITIONAL INFORMATION ON THE ISSUE SEEN.
CANOPY WILL NOT CONTACT THE OPERATOR TO DISPUTE OR REVOKE AN
AUTHORIZED RMA. IN THE EVENT THAT THIS FIELD IS LEFT BLANK AND
CANOPY NEEDS TO CONTACT THE OPERATOR WHO OBSERVED THE ISSUE,
CANOPY WILL CONTACT THE DISTRIBUTOR TO REQUEST THE CONTACT
INFORMATION DIRECTLY FOR THE PARTICULAR DEVICE.
RMA NUMBER ASSIGNED BY THE CANOPY WARRANTY ADMINISTRATOR. UNIQUE ID NUMBER
FOR THE RMA REQUEST.
DATE OF THIS IS THE DATE THE RMA REQUEST WAS APPROVED.
APPROVAL
ITEM NUMBER A UNIQUE DESIGNATOR FOR EACH UNIT INCLUDED IN THIS RMA REQUEST
IF MORE THAN 30 UNITS ARE INCLUDED IN THIS RMA REQUEST THEN THE
ARMA REQUEST FORM @ SHEET SHOULD BE REPLICATED.
ISSUE CODE IDENTIFIER FOR THE TYPE OF ISSUE THAT THE END OPERATOR IS
CLAIMING FOR THE UNIT POSSIBLE CHOICES FOR
</TABLE>
C-2
<TABLE>
<S> <C>
ISSUE CODE:
F1 MODULE DOES NOT POWER ON
F2 MODULE DOES NOT ESTABLISH INTERNET
CONNECTION
F3 MODULE DOES NOT ESTABLISH AN RF LINK
F4 MODULE CANNOT BE UPGRADED
F5 CLUSTER MANAGEMENT MODULE IS
MALFUNCTIONING
F6 SURGE SUPPRESSOR IS MALFUNCTIONING
F7 REFLECTOR KIT IS MALFUNCTIONING
F8 110V POWER SUPPLY IS MALFUNCTIONING
F9 110V/220V SWITCHING POWER SUPPLY IS
MALFUNCTIONING
F10 CAT 5 CABLE TESTER IS MALFUNCTIONING
F11 OTHER
INSRV/OOB THIS INDICATES WHETHER THE ISSUE THAT WAS SEEN WAS ON A NEW UNIT
STRAIGHT OUT-OF-BOX (OOB) OR AFTER THE UNIT WAS IN-SERVICE
(INSR) FOR SOME TIME. TO CLASSIFY A UNIT AS OUT-OF BOX THE ISSUE
MUST BE SEEN WITHIN TWO WEEKS OF THE OPERATOR=S ORIGINAL
PURCHASE DATE.
OUT-OF-BOX RMAS WILL BE REPLACED WITH NEW EQUIPMENT. IN-SERVICE
RMAS WILL BE REPLACED WITH REFURBISHED EQUIPMENT. FOR THIS
REASON, OUT-OF-BOX CLAIMS REQUIRE A COPY OF THE OPERATORS
PURCHASE ORDER, PURCHASE RECEIPT, OR A REFERENCE TO AN ALREADY
FILED CANOPY POS REPORT POSSIBLE CHOICES FOR INSRV/OOB:
INSRV IN-SERVICE
OOB OUT-OF-BOX
ISSUE DESCRIBE THE ISSUE AS SEEN WITH THIS UNIT AND ANY OTHER
DESCRIPTION INFORMATION THAT WILL CANOPY TO UNDERSTAND WHAT IS AT FAULT WITH
THE PRODUCT
MODEL CANOPY MODEL NUMBER OF THE UNIT. THE MODEL NUMBER IS LOCATED ON A
STICKER ON THE BACKSIDE OF THE RADIO MODULES PRECEDED WITH A
APN.@ POSSIBLE CHOICES FOR MODEL:
5200SM 5.2 GHZ SUBSCRIBER MODULE
5200AP 5.2 GHZ ACCESS POINT
5200BH 5.2 GHZ BACKHAUL
5700SM 5.7 GHZ SUBSCRIBER MODULE
5700SMRF 5.7 GHZ SUBSCRIBER MODULE W/REFLECTOR
5700AP 5.7 GHZ ACCESS POINT
5700BH 5.7 GHZ 10 MBPS BACKHAUL
5700BHRF 5.7 GHZ 10 MBPS BACKHAUL KIT WITH REFLECTOR
5700BHRF20 5.7 GHZ 20 MBPS BACKHAUL KIT WITH REFLECTOR
1008CK-2 CLUSTER MANAGEMENT MODULE
300SS SURGE SUPPRESSOR
27RD REFLECTOR HARDWARE KIT
SMMB1 UNIVERSAL MOUNTING BRACKET
ACPS110-03 110 VAC SINGLE XCVR POWER SUPPLYBU.S. & CANADA
ACPSSW-02 90-230VAC / 50-60HZ POWER SUPPLY-INCLUDES
EUROPLUG (CEE 7/16) ADAPTOR
CTCAT5-01 CATEGORY 5 CABLE TESTER (ONLY FOR US SHIPMENT)
ESN ELECTRONIC SERIAL NUMBER. THE ESN OF THE MODULE IS THE SAME AS
THE MAC ADDRESS OF THE MODULE THE ESN TAKES THE FORM
0A-00-3E~XX-XX-XX, WHERE AXX-XX-XX@ IS SOME ALPHA-NUMERIC
CHARACTERS THE ESN IS LOCATED ON A STICKER ON THE PLASTIC
HOUSING THAT CAN BE VIEWED WHEN THE BASE CAP IS REMOVED. NOTE:
IF THE ESN IS PROVIDED BUT THE MSN IS NOT, THEN CANOPY WILL NEED
TO BE CONTACTS TO VERIFY WARRANTY STATUS.
MSN MECHANICAL SERIAL NUMBER. THE MSN TAKES THE FOR 606XXXYYYY,
WHERE AXXX@ IS THREE ALPHA CHARACTERS AND AYYYY@ IS FOUR NUMERIC
CHARACTERS. WARRANTY STATUS CAN BE DETERMINED FROM THESE
ALPHA-NUMERIC CHARACTERS.
REPLACEMENT THE MSN OF THE DEVICE THAT IS USED FOR THE REPLACEMENT.
MSN
</TABLE>
C-3
EXHIBIT 10.58
EXECUTION VERSION
INTEL/CLEARWIRE CONFIDENTIAL
June 28, 2006
Intel Pacific, Inc.
c/o Intel Corporation
2200 Mission College Blvd., RN6-46
Santa Clara, CA 95054-1549
Attn: Intel Capital Portfolio Manager
Ladies and Gentlemen:
In consideration for the purchase by Intel Pacific, Inc. ("INTEL") of
shares of Class A Common Stock and Class B Common Stock of Clearwire
Corporation, a Delaware corporation (the "COMPANY"), pursuant to that certain
Common Stock Purchase Agreement dated as of June 28, 2006 (the "PURCHASE
AGREEMENT"), the Company and Intel agree to the terms and obligations of this
side letter agreement (this "AGREEMENT"), and Eagle River Holdings, LLC ("EAGLE
RIVER") shall be a party to this Agreement solely for the purpose of Section 7
herein.
The Company and Intel desire to enter into this Agreement in order to
amend, restate and replace certain rights and obligations under the side letter
agreement between the Company, Intel Capital Corporation ("INTEL SUB") and
certain other holders of the Company's capital stock dated October 13, 2004 (the
"PRIOR SIDE LETTER AGREEMENT") with the rights and obligations set forth in this
Agreement. Section 5.3 of the Prior Side Letter Agreement provides that the
Prior Side Letter Agreement may be amended by the written consent of written
consent of Intel Sub and Company.
As used herein, "INTEL" shall refer to Intel, Intel Sub, its ultimate
parent company, Intel Corporation, and/or one or more of the other direct or
indirect subsidiaries of Intel Corporation. Terms used herein and not otherwise
defined herein shall have the meanings assigned to them in the Purchase
Agreement, other than defined terms set forth in Section 6 hereof which shall
have the meaning assigned to them in the Stockholders Agreement (as defined
below). This Agreement shall amend and restate the Prior Side Letter Agreement
in its entirety and the Prior Side Letter Agreement shall terminate and no
longer have any force or effect.
1. Confidentiality.
1.1 Disclosure of Current Terms. The Company acknowledges that the terms and
conditions (collectively, the "TRANSACTION TERMS") of this Agreement, the
Purchase Agreement, the Investor Rights Agreement, the Voting Agreement,
the Joinder Agreement, the Collaboration Agreement, and all exhibits,
restatements and amendments thereto (collectively, the "TRANSACTION
DOCUMENTS"), shall be considered confidential information and shall not be
disclosed by the Company to any third party except in accordance with the
provisions set forth below.
1
1.2 Continuing Obligations Regarding the Financing Agreements. The Company
acknowledges that the terms and conditions (collectively, the "FINANCING
TERMS") of the Prior Side Letter Agreement, the Joinder Agreement dated
October 13, 2004 relating to the Stockholders Agreement, the Joinder
Agreement dated October 13, 2004 relating to the Registration Rights
Agreement dated March 16, 2004, and the Purchase Agreement dated October
13, 2004 and all exhibits, restatements and amendments thereto
(collectively, the "FINANCING AGREEMENTS") shall be considered confidential
information and shall not be disclosed by the Company to any third party
except in accordance with the provisions set forth below and except as
disclosed by the Company in its S-1 Registration Statement filed with the
U.S. Securities and Exchange Commission (the "SEC") on May 11, 2006.
1.3 Press Releases with Regard to the Intel Agreements. The Company and Intel
agree that there shall be no press release or other public statement issued
by either party relating to the Transaction Documents or the transactions
contemplated hereby, without the prior written consent of each party.
Following an agreed upon press release or other public announcement,
Intel's name and the fact that Intel is an investor in the Company may be
included in a reusable press release boilerplate statement, so long as
Intel has given the Company its initial approval of such boilerplate
statement and the boilerplate statement is reproduced in exactly the form
in which it was approved. No other public announcement regarding Intel in a
press release, conference, advertisement, professional or trade
publication, mass marketing materials or otherwise to the general public
may be made without Intel's prior written consent.
1.4 Permitted Disclosures. The Company may disclose (a) Financing Agreements,
Financing Terms, Transaction Documents and Transaction Terms, other than
the Collaboration Agreement, to its current or bona fide prospective
investors, acquirors of the Company or any of its assets, recipients of the
Company's securities in current or future acquisitions by the Company,
strategic partners, employees, investment bankers, lenders, accountants,
auditors and attorneys, in each case, only where such persons or entities
to whom disclosure is proposed are under reasonable nondisclosure
obligations, (b) the Company may disclose solely the fact that Intel is an
investor in the Company to any third parties without the requirement for
the consent of Intel or nondisclosure obligations; and (c) the Company
shall have the right to disclose to third parties any information regarding
the Financing Terms and/or Transaction Terms disclosed in a press release
or other public announcement by Intel or by the Company, subject to
compliance with Section 1.1 above. Notwithstanding anything else in this
Agreement or the other Transaction Agreements, including, without
limitation, the immediately preceding sentence and Section 13.11 of the
Collaboration Agreement, but subject to Section 1.5 below, none of the
terms and conditions of the Collaboration Agreement, the commercial
relationship established thereunder or any Confidential Information
relating thereto shall be disclosed by the Company or any of its affiliates
without Intel's prior written consent; provided, that, a redacted version
of the Collaboration Agreement, in a form prepared by Intel which shall be
reasonably acceptable to the Company, may be disclosed by the Company to
any of the persons or entities set forth in clause (a) of the preceding
sentence, in each case, only where such persons or entities are under
reasonable nondisclosure obligations; provided, further,
2
that the Company may incorporate, to the extent reasonable and necessary,
the economic terms of the Collaboration Agreement into financial models
prepared by the Company for such persons or entities and deliver such
financial models to such persons or entities that are under reasonable
nondisclosure obligations.
1.5 Legally Compelled Disclosure. In the event that the Company is requested or
becomes legally compelled (including without limitation, pursuant to
securities laws and regulations), in the opinion of the Company's legal
counsel, to disclose the existence of any of the Financing Agreements,
Financing Terms, Transaction Documents and/or Transaction Terms hereof in
contravention of Section 1 of this Agreement, to the extent it is lawful to
do so, the Company shall provide Intel with prompt written notice of that
fact before such disclosure and, if requested in writing by Intel before
such disclosure, will fully cooperate with Intel to use its commercially
reasonable efforts to seek a protective order, confidential treatment, or
other appropriate remedy with respect to the disclosure; provided, that,
Intel agree to reimburse the Company for any reasonable costs and expenses
it incurs in connection therewith not to exceed $35,000. If a protective
order, confidential treatment or other remedy is not obtained, the Company
shall furnish for disclosure only that portion of the information which, in
the opinion of the Company's legal counsel, is legally required and the
disclosure of such information shall not result in liability hereunder. The
Company agrees that, to the extent it is lawful to do so, it will provide
Intel with drafts of any documents, press releases or other filings in
which the Company is required, in the opinion of the Company's legal
counsel, to disclose any of the Financing Agreements, Financing Terms,
Transaction Documents and/or Transaction Terms or any other confidential
information subject to the terms of this Agreement at least five (5)
business days prior to the filing or disclosure thereof (or, if the filing
or disclosure thereof is subject to a deadline which is less than five
business days from the date the legal requirement arises, as much time
before the deadline as reasonably practicable), and that it will make any
changes related to the disclosure of confidential information in such
materials as reasonably requested by Intel within a reasonable period of
time, and prior to any filing deadline, if applicable, to the extent
permitted by law or any rules and regulations of the SEC or the FCC, as
applicable. If, as permitted above, confidential treatment is requested by
Intel, the Company agrees to file such a request and use commercially
reasonable efforts in responding to any SEC or FCC comments to pursue
assurance that confidential treatment will be granted, fully cooperating
with Intel (including, without limitation, providing Intel with the
opportunity to review and comment on the request and the responses to any
such SEC comments). The Company will not file this Agreement or the other
Financing Documents or Transaction Documents with any governmental
authority or any regulatory body, or disclose the identity of Intel or any
other Financing Terms or Transaction Terms in any filing except as
permitted above. Notwithstanding the foregoing, to the extent required to
be disclosed by the Company under 47 CFR 1.2112(a), the number of shares
held by Intel and the percentage interest of Intel in the Company may be
disclosed by the Company without the requirement for the consent of Intel
or procedures set forth in this Section 1.4.
3
1.6 Confidential Information. The disclosure and exchange of Confidential
Information (as defined in the CNDA) between the Company and Intel
Corporation (including any Intel board observer) shall be governed solely
by the terms of the Corporate Non-Disclosure Agreement No. 6061146 dated
August 4, 2004 (the "CNDA") executed between the Company and Intel. Without
limiting the foregoing, the Company agrees that neither the confidentiality
terms set forth in Section 13.15 of the Stockholders Agreement nor any
similar confidentiality obligation or restriction contained in any of the
Financing Agreements (except for this Agreement) shall be binding upon
Intel.
2. Additional Information Rights.
2.1 The Company shall include a capitalization table, certified by the Chief
Financial Officer of the Company and showing the current owners of the
Company's capital stock, with the quarterly financial statements delivered
pursuant to Section 9.0l(b) of the Stockholders Agreement and deliver such
capitalization to Intel.
2.2 The parties agree that Intel will have the right to either perform an
annual audit of the Company's and any of its consolidated subsidiaries'
books and records, accounting policies, internal controls processes, and
other information relevant to the Company's financial statements
("FINANCIAL INFORMATION") or annual review of the Company's external
auditors' workpapers, at its own expense and as reasonably requested by
Intel, which audit or workpaper review shall occur during normal business
hours. In addition, Intel will have the right to audit specific
transactions, and to make inquiries of management, review policies and
positions papers in connection with such transactions, and to review
original documents supporting such transaction, such as purchase orders,
invoices, signed agreements, and other evidence (the "TRANSACTION
INFORMATION") as reasonably needed to ensure accuracy of financial
statement data. In connection with such audit, the Company agrees that it
will cooperate with Intel and Intel's representatives to provide all
requested Financial Information and Transaction Information either verbally
or in writing, at Intel's option, and to grant access to its employees and
its external accounting firm as reasonably deemed necessary and appropriate
by Intel or Intel's representatives in order to perform such review.
3. Board Observer.
3.1 Intel Representative. So long as Intel beneficially owns, either directly
or indirectly, at least five percent (5%) of the issued and outstanding
capital stock of the Company (or any security exercisable or exchangeable
for or issued or issuable on conversion thereof) of the Company, and if
Intel no longer has the right to designate and nominate a director pursuant
to the Voting Agreement, the Company will permit a representative of Intel
(the "OBSERVER") to attend all meetings of the Company's Board of Directors
(the "BOARD") and all committees thereof (whether in person, telephonic or
other) in a non-voting, observer capacity and shall provide to Intel,
concurrently with the members of the Board, and in the same manner, notice
of such meeting and a copy of all materials provided to such members. The
Company may, in its sole discretion, invite one or more additional
representatives of Intel to attend meetings of the Board
4
as additional Observers; provided that the terms set forth in this
Agreement shall apply to the attendance of any such additional Observers.
3.2 Exclusion Rights. The Board shall have the right to exclude the Observer
from portions of meetings of the Board or omit to provide the Observer with
certain information if any of the Company's Chairman, Chief Executive
Officer or a majority of the members of the Board believes in good faith
that:
(a) such exclusion or omission is necessary in order to: (i) preserve the
Company's attorney-client privilege (based on the advice of Company
counsel); (ii) protect the proprietary nature of such information or
the Company's business objectives, opportunities and/or competitive
positioning; or (iii) fulfill the Company's obligations with respect
to confidential or proprietary information of third parties (provided,
however, that the Observer shall not be so excluded unless all other
persons whose receipt of such materials or presence at a meeting would
result in a violation of such third party confidentiality obligations
are also excluded); or
(b) such meeting or information involves information or analysis that
would pose a conflict of interest for Intel.
4. Directors and Officers Insurance Covenant. The Company will purchase and
maintain directors and officers insurance in an amount equal to not less
than $50 million, and the directors appointed or designated by Intel shall
be named as covered insureds thereunder. In the event the Company (i)
merges with another entity and the Company is not the surviving entity or
(ii) transfers all or substantially all of its assets, the Company shall
ensure that the successor of the Company assumes the Company's obligations,
hereunder and under the Company's Certificate of Incorporation and Bylaws,
with respect to indemnification of the Company's directors and the
maintenance of directors and officers insurance covering the Company's
directors.
5. Termination of Put Option Agreement. The Put Option Agreement, dated
October 13, 2004, by and between the Company and Intel Sub shall terminate
as of the Closing and shall no longer have any force or effect.
6. Additional Preemptive Rights. In addition to the preemptive rights (the
"PREEMPTIVE RIGHTS") granted to the Eligible Stockholders and the Eligible
NextNet Stockholders pursuant to Section 1 of the Stockholders Agreement,
in connection with each issuance of New Shares and upon the expiration of
the period to exercise any Preemptive Rights with respect to any issuance
of New Shares, the Company shall make an offering of any New Shares not
purchased by (i) the Eligible Stockholders or the Eligible NextNet
Stockholders pursuant to Section 1 of the Stockholders Agreement, or (ii)
Bell Canada or ERH pursuant to Section 11 of the Side Agreement dated as of
March 16, 2005, among the Company, ERH, and Bell Canada (collectively, the
"UNPURCHASED SHARES"), to Intel and Motorola, Inc. ("MOTOROLA") in
accordance with this Section 6.
5
6.1 The Company shall deliver a notice (the "ADDITIONAL PREEMPTIVE RIGHTS
NOTICE") to Intel and Motorola stating (i) the number of Unpurchased
Shares, (ii) that each of Intel and Motorola is entitled to purchase up to
50% of the Unpurchased Shares, and (iii) that the Unpurchased Shares are
being offered at the same price and on the same terms as previously offered
to the Eligible Stockholders and the Eligible NextNet Stockholders.
6.2 By written notification received by the Company, within five (5) business
days after the receipt of the Additional Preemptive Rights Notice, each of
Intel and Motorola may elect to purchase, at the price and on the terms
specified in the Additional Preemptive Rights Notice, up to 50% of the
Unpurchased Shares. Such written notice shall be a binding, irrevocable
commitment to purchase such Unpurchased Shares.
6.3 If either Intel or Motorola (as applicable, the "NON-PARTICIPATING PARTY")
does not elect to purchase all of the Unpurchased Shares that such
Non-Participating Party is entitled to purchase under Section 6.2 above,
the Company must offer the unsubscribed portion of the Non-Participating
Party's allocation of the Unpurchased Shares to the party (if any) that
has elected to purchase all of its allocated portion of the Unpurchased
Shares (the "PARTICIPATING PARTY") by delivering notice (the "NON-
PARTICIPATION NOTICE") to the Participating Party stating the number of
Unpurchased Shares that remain available for purchase (the "REMAINING
UNPURCHASED SHARES").
6.4 By written notification received by the Company, within five (5) business
days after the receipt of the Non-Participation Notice, the Participating
Party may elect to purchase, at the price and on the terms specified in the
Additional Preemptive Rights Notice, all or any part of the Remaining
Unpurchased Shares. Such written notice shall be binding, irrevocable
commitment to purchase such Remaining Unpurchased Shares.
6.5 If Intel and/or Motorola do not elect to subscribe for all New Shares that
they are entitled to purchase under this Section 6, the Company may offer
the unsubscribed portion of such New Shares to any Persons at a price not
less than, and upon terms no more favorable to the offeree, than those
specified in the Additional Preemptive Rights Notice, provided that the
Company completes the offer and sale of such unsubscribed portion within
120 days after the date the applicable Issue Notice is first delivered to
the stockholders under the Stockholders Agreement.
6.6 This Section 6 will terminate upon the closing of the Company's IPO.
6.7 Notwithstanding Section 1.04 of the Stockholders Agreement, if Intel or
Motorola fails to fully exercise its preemptive rights pursuant to Sections
1.01 or 1.02 of the Stockholders Agreement or this Section 6 of this
Agreement at any time, Intel or Motorola shall continue to be entitled to
its Preemptive Rights and Additional Preemptive Rights.
6
7. Limitations with Respect to McCaw Entities.
7.1 Commencing on the date of this Agreement and continuing thereafter for so
long as Craig O. McCaw ("MCCAW") or any of the McCaw Entities (as defined
in the Stockholders Agreement) (i) hold more than 25% of the voting power
of the Company, either individually or in the aggregate and have at least
one McCaw Representative on the Company's board of directors, or (ii) hold
more than 45% of the voting power of the Company, either individually or in
the aggregate neither McCaw nor any McCaw Entity (including without
limitation Eagle River Holdings, LLC, Eagle River Investments, LLC and
Eagle River, Inc, but excluding ICO Global Communications ("ICO") and the
Company and any of their respective subsidiaries) will directly or
indirectly, on behalf of any other person or entity, acquire any equity
interest in, or act as a lender, employee or consultant to any company
(excluding ICO and the Company and any of their respective subsidiaries)
for whom a majority of its business, at the time of such acquisition or
action, consists (or is expected to consist) of the provision of
terrestrial based portable and/or mobile wireless broadband services in the
United States ("NON-COMPETE BUSINESS"); provided, however, that the
acquisition of a legal or beneficial ownership of a passive equity
investment of no more than 10% of any entity shall not be deemed to
constitute a violation of this provision. The foregoing limitations shall
not apply to any acquisition of an equity interest in or actions as a
lender to any Non-Compete Businesses ("COMPETITIVE OPPORTUNITY") if McCaw
or the applicable McCaw Entity has made the Competitive Opportunity
available to the Company, and the Company's independent directors have not
directed the Company to pursue the Competitive Opportunity within thirty
(30) days following the date on which McCaw or the applicable McCaw Entity
sends notice to each of the Company's independent directors.
7.2 Eagle River hereby covenants and agrees that, if ICO acquires a
controlling interest in, or a substantial portion of the assets of, a
company or business that is a Non-Compete Business, as determined in good
faith by the Disinterested Directors of the Company, then they shall take
all necessary steps to ensure that no McCaw Representative shall
simultaneously serve as a director of ICO and the Company.
7.3 For purposes of this Agreement, a McCaw Representative is any individual
who is affiliated with the McCaw Entities as a director, principal,
partner, consultant, employee, shareholder, member or someone with a
relationship similar to those listed herein.
8. Miscellaneous.
8.1 Notices. All notices, requests, demands, instructions, documents and other
communications to be given under this Agreement to any party shall be in
writing and sent to the address/fax number set forth on the signature page
below (provided that any party may at any time change its address for
notice or other such information by giving written notice thereof in
writing to the other parties hereto).
7
8.2 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
8.3 Amendment and Waiver. Sections 1 through 6 and Section 8 of this Agreement
may not be amended or modified without the written consent of Intel and
Company. Section 7 of this Agreement may not be amended or modified without
the written consent of Intel and Eagle River. No waiver of any provision of
this Agreement shall be binding unless and until set forth expressly in
writing and signed by the waiving party. The waiver by any party hereto of
a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any preceding or succeeding breach of the same or
any other term or provision, or a waiver of any contemporaneous breach of
any other term or provision, or a continuing waiver of the same or any
other term or provision.
8.4 Specific Performance. The parties acknowledge that it will be impossible to
measure in money the damage to them caused by any failure to comply with
the covenants set forth in this Agreement, that each such covenant is
material, and that in the event of any such failure, the injured party will
not have an adequate remedy at law or in damages. Therefore, the parties
consent to the issuance of an injunction or the enforcement of other
equitable remedies against them at the suit of the other, without bond or
other security, to compel performance of all of the terms of this
Agreement, and waive the defense of the availability of relief in damages.
8.5 Severability. If any provision of this Agreement shall be declared void or
unenforceable by any judicial or administrative authority, the validity of
any other provision and of the entire Agreement shall not be affected
thereby.
8.6 Enforceability: Conflicts. In all events, the terms and provisions of this
Agreement shall be enforceable notwithstanding any conflicting term or
provision set forth in any of the other Financing Agreements. In the event
of any conflict between any term or provision of this Agreement and any
term or provision set forth in any of the other Financing Agreements, such
term or provision of this Agreement shall prevail over such term or
provision set forth in any of the other Financing Agreements.
8.7 No Impairment. Each of the parties hereto agree not to take any voluntary
action to avoid or seek to avoid the observance or performance of any of
the terms of this Agreement, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights granted
herein against impairment.
8.8 Further Assurances. Each of the parties hereto shall execute and deliver
all additional documents and instruments and shall do any and all acts and
things reasonably requested in connection with the performance of the
obligations undertaken in the Agreement or otherwise to effectuate in good
faith the intent of the parties.
8
8.9 Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
and the same instrument.
Please confirm that the above correctly reflects our understanding and
agreement with respect to the foregoing matters by signing the enclosed copy of
this letter and returning such copy to the Company.
Very truly yours,
CLEARWIRE CORPORATION Address:
Clearwire Corporation
5808 Lake Washington Blvd. NE, Suite 300
By: /s/ Benjamin G. Wolff Kirkland, WA 98033
--------------------------------- Facsimile No:(425)216-7900
Name: Benjamin G. Wolff Attn: Broady Hodder, General Counsel
Title: Co-Chief Executive Officer
Agreed and Accepted: (STAMP)
INTEL PACIFIC, INC Address:
Intel Pacific, Inc.
c/o Intel Corporation
By: /s/ Arvind Sodhani 2200 Mission College Blvd., RN6-46
-------------------------------- Santa Clara, CA 95054-1549
Name: Arvind Sodhani Attn: Intel Capital Portfolio Manager
Title: President Fax Number: (408)765-6038
With copy by e-mail to:
portfolio.manager@intel.com
Agreed and Accepted:
EAGLE RIVER HOLDINGS, LLC Address:
By: Eagle River, Inc. Eagle River Holdings, LLC
2300 Carillon Point
Kirkland, WA 98033
By: /s/ Benjamin G. Wolff Fax Number: 425-828-8061
---------------------------------
Name: Benjamin G. Wolff
Title: President
[SIGNATURE PAGE TO CLEARWIRE SIDE LETTER]
9
EXHIBIT 10.59
MASTER ROYALTY AND USE AGREEMENT
by and among
CLEARWIRE SPECTRUM HOLDINGS II LLC
and
CHICAGO INSTRUCTIONAL TECHNOLOGY FOUNDATION, INC.
DENVER AREA EDUCATIONAL TELECOMMUNICATIONS CONSORTIUM, INC.
INSTRUCTIONAL TELECOMMUNICATIONS FOUNDATION, INC.
PORTLAND REGIONAL EDUCATIONAL TELECOMMUNICATIONS CORPORATION
TWIN CITIES SCHOOLS' TELECOMMUNICATIONS GROUP, INC.
NORTH AMERICAN CATHOLIC EDUCATIONAL PROGRAMMING FOUNDATION, INC.
and the
OTHER LICENSEES EXECUTING THIS AGREEMENT
and
CLEARWIRE CORPORATION
Dated as of July 31, 2006
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. RELATIONSHIP SUMMARY ......................................... 2
Section 1.01. Overview .............................................. 2
Section 1.02. Overview of Mechanics and Structure of Agreements ..... 3
Section 1.03. Scope and Nature of Clearwire Group ................... 5
Section 1.04. Scope and Nature of Licenses .......................... 6
Section 1.05. Cross Defaults ........................................ 7
ARTICLE II. ECONOMIC ROYALTIES .......................................... 8
Section 2.01. Aggregate EBS Spectrum Capacity Economic Royalties .... 8
Section 2.02. Strategic Opportunity Spectrum Capacity (SOSC) ........ 9
ARTICLE III. ACCESS RIGHT ROYALTIES ..................................... 10
Section 3.01. Access Right Royalties ................................ 10
Section 3.02. Cost-Free Educational Accounts ........................ 10
Section 3.03. Educational Reservation Basic Cost-Free Education
Accounts .............................................. 11
Section 3.04. Additional Cost-Free Educational Accounts ............. 11
Section 3.05. Licensee MVNO ......................................... 12
Section 3.06. Access to Educational End User Devices ................ 13
Section 3.07. Sharing of Features and Service Sets .................. 13
Section 3.08. Preferred Content Provider ............................ 13
Section 3.09. [***].................................................. 14
Section 3.10. Strategic Opportunity Spectrum Capacity Right ......... 14
ARTICLE IV. CLOSING MECHANICS; ESCROW ................................... 17
Section 4.01. Deliveries at Execution of this Agreement ............. 17
Section 4.02. Escrow Deposit and Ministerial Condition Failure ...... 17
Section 4.03. EBS Spectrum Capacity IUA Closing(s) .................. 18
Section 4.04. Closing Site/Mechanics ................................ 20
Section 4.05. Subsequent Closings for Strategic Opportunity Spectrum
Capacity .............................................. 20
Section 4.06. Further Assurances .................................... 20
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF LICENSEES .................. 20
Section 5.01. Organization and Good Standing ........................ 21
Section 5.02. Authorization of Agreement ............................ 21
Section 5.03. No Conflict ........................................... 21
Section 5.04. Litigation ............................................ 22
Section 5.05. Compliance with Laws; Permits ......................... 22
Section 5.06. Offering Exemption; Securities Representations ........ 22
Section 5.07. Brokers ............................................... 23
Section 5.08. Knowledge ............................................. 23
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF CLEARWIRE ................. 23
</TABLE>
[*** Confidential Treatment Requested]
-i-
<TABLE>
<S> <C>
Section 6.01. Organization and Good Standing ........................ 24
Section 6.02. Authorization of Agreement ............................ 24
Section 6.03. Capitalization ........................................ 24
Section 6.04. Subsidiaries .......................................... 25
Section 6.05. No Conflict ........................................... 26
Section 6.06. Litigation ............................................ 26
Section 6.07. Compliance with Laws; Permits ......................... 26
Section 6.08. Brokers ............................................... 27
ARTICLE VII. COVENANTS .................................................. 27
Section 7.01. Consents and Approvals ................................ 27
Section 7.02. Notice of Breach ...................................... 27
Section 7.03. Escrow and Parent Shares .............................. 27
Section 7.04. Maintenance of FCC Qualifications ..................... 27
Section 7.05. Assignment of FCC Licenses ............................ 28
Section 7.06. Other FCC Requirements ................................ 28
Section 7.07. Legends ............................................... 28
Section 7.08. Fees and Taxes ........................................ 29
Section 7.09. Best Efforts for Duration of Relationship ............. 29
Section 7.10. Information Covenants and Maintenance of Guarantee .... 29
Section 7.11. Build-Out ............................................. 29
ARTICLE VIII. INFORMATION SHARING OBLIGATIONS AND CONSULTATION
REGARDING ACCESS RIGHT ROYALTIES AND CERTAIN
OTHER COVENANTS ........................................... 30
Section 8.01. Overview of Consultation/Information Exchange
Requirements .......................................... 30
Section 8.02. Capacity Disclosure ................................... 31
Section 8.03. System Information .................................... 32
Section 8.04. Preferred Content Provider Information ................ 32
Section 8.05. Limited Reciprocity Information ....................... 32
Section 8.06 Consultation Processes ................................ 33
Section 8.07. Information Access Rights Related to Clearwire
Parent ................................................ 34
Section 8.08. Information Audit Rights .............................. 35
ARTICLE IX. INDEMNIFICATION ............................................. 35
Section 9.01. Indemnification ....................................... 35
Section 9.02. Determination of Damages .............................. 36
Section 9.03. Limitations on Indemnification for Breaches of
Representations and Warranties ........................ 36
Section 9.04. Indemnification Procedures ............................ 37
ARTICLE X. TERMINATION .................................................. 38
Section 10.01. Expiration; Termination ............................... 38
Section 10.02. Defaults .............................................. 38
ARTICLE XI. GENERAL PROVISIONS .......................................... 38
</TABLE>
-ii-
<TABLE>
<S> <C>
Section 11.01. Payment of Sales, Use or Similar Taxes ................ 38
Section 11.02. Survival of Representations and Warranties ............ 39
Section 11.03. Expenses .............................................. 39
Section 11.04. Entire Agreement; Amendments and Waivers .............. 39
Section 11.05. Governing Law ......................................... 39
Section 11.06. Table of Contents and Headings ........................ 40
Section 11.07. Notices ............................................... 40
Section 11.08. Publicity ............................................. 40
Section 11.09. Severability .......................................... 41
Section 11.10. Binding Effect; Assignment ............................ 41
Section ll.1l. Remedies .............................................. 41
Section 11.12. Dispute Resolution Procedure .......................... 41
Section 11.13. Counterparts .......................................... 44
Section 11.14. Confidentiality ....................................... 44
Section 11.15. Non-Disclosure of Shared Information .................. 45
</TABLE>
-iii-
LIST OF EXHIBITS
I. Definitions and Interpretation
II.-A Form of IUA
II.-B Form of MRUA-2 IUA
II.-C Form of SOSC IUA
III. Form of Escrow Agreement
IV. Joinder to the Amended and Restated Stockholders Agreement dated
March 16, 2004
V. Joinder to the Registration Rights Agreement dated March 16, 2004
VI. Form of Clearwire Certificate
VII. Form of Licensee Certificate
LIST OF SCHEDULES
A. Schedule of all Licenses, Licensees' data, applicable Geographic Markets
and GSAs, existing use agreements and Unencumbered Spectrum Capacity and
Encumbered Spectrum Rights
B. Licensee(s) Schedule
C. Clearwire Schedule
-iv-
MASTER ROYALTY AND USE AGREEMENT
MASTER ROYALTY AND USE AGREEMENT ("Agreement"), dated as of July 31, 2006
(the "Effective Date") by and among Chicago Instructional Technology Foundation,
Inc. ("CITF"); Denver Area Educational Telecommunications Consortium, Inc.
("DAETC"); Instructional Telecommunications Foundation, Inc. ("ITF"); Portland
Regional Educational Telecommunications Corporation ("PRETC"); Twin Cities
Schools' Telecommunications Group, Inc. ("TCSTG") (collectively sometimes
referred to as the "ITF Cluster"): North American Catholic Educational
Programming Foundation, Inc. ("NACEPF"), and such additional Licensees as are
identified on Schedule A that execute this Agreement by joinder within 120 days
of the Effective Date (collectively with the ITF Cluster, the "Licensees" and
individually, with each member of the ITF Cluster, a "Licensee"). Clearwire
Spectrum Holdings II LLC, a Nevada limited liability company ("Clearwire"), and
Clearwire Corporation, a Delaware corporation ("Clearwire Parent"). (Each of the
foregoing referred to as a "Party" and all of the foregoing referred to
collectively as the "Parties" and all Licensees with EBS Spectrum on Schedule A
once under an IUA are referred to collectively as the "EBS Spectrum Group.")
Certain defined terms used in this Agreement, and rules of interpretation
applicable to this Agreement, are contained in Exhibit I hereto.
RECITALS:
WHEREAS, the Licensees have been granted certain licenses (as they may be
modified and renewed, the "FCC Licenses") by the Federal Communications
Commission (the "FCC") authorizing them to engineer and operate specified
Educational Broadband Service ("EBS") channels (including any associated J- and
K-Group channels, the "Channels") in the Geographic Markets and covering an area
having the population determined on the basis of 2000 census data, and providing
the number of megahertz of total capacity (measured post-transition, excluding J
and K block spectrum) times this population ("MHzPops"), all as identified on
Schedule A;
WHEREAS, subject to the Communications Act of 1934, as amended (the
"Communications Act"), and FCC rules, regulations and policies (the "FCC
Rules"), an EBS station's excess capacity may be used for commercial purposes
(the "Commercial Spectrum Capacity");
WHEREAS, Licensees desire to make available to Clearwire, and Clearwire
desires to have access to, the Commercial Spectrum Capacity for the Available
Channels identified on Schedule A (the "Unencumbered Spectrum Capacity") and, as
the circumstances permit, when and if the Channels identified on Schedule A that
are not presently Available (the [***]) become Available, all in accordance with
the terms of this Agreement; WHEREAS, NACEPF is also a party to that certain
Master Royalty and Use Agreement of even date herewith (the "MRUA-2 Agreement")
with respect to certain NACEPF Encumbered
[* * * Confidential Treatment Requested]
Spectrum Capacity as identified on Schedule A thereto (the "MRUA-2 Sch A") and
under both agreements NACEPF receives consideration under this Agreement to
facilitate the transmission of instructional, educational and religious
programming to schools, hospitals, public organizations and to facilitate
instructional broadband spectrum development for its educational instruction and
religious network;
WHEREAS, the bundle of value comprised of the EBS Economic Royalties and
the Access Right Royalties (collectively referred to as the "Total
Consideration"), for which the ITF Cluster is not required to perform any
services to Clearwire (other than the grants of rights and support of regulatory
compliance as provided in this Agreement), is central to the ITF Cluster's
efforts to advance the objectives and goals of their individual non-profit
missions to serve educational and non-profit communities and is central for
NACEPF's efforts to advance the transmission of its educational and religious
programming and to develop an instructional and religious broadband spectrum
network, in each case utilizing the Clearwire National Platform, including the
ability to use Clearwire as a single source access vendor under the IUAs, and
the IUAs and this Agreement would not have been executed but for all of the
elements of the Total Consideration;
WHEREAS, Clearwire desires to have access to the Commercial Spectrum
Capacity to the extent permitted by FCC Rules and the terms of this Agreement,
for the operation of its business, and the Parties recognize that the success of
Clearwire's business plan depends on its access to the Commercial Spectrum
Capacity (among other factors), and the Licensees desire Clearwire to have full
access rights to the Commercial Spectrum Capacity permitted under FCC Rules and
the terms of this Agreement, to enhance Clearwire's business for the benefit of
those Licensees that are shareholders of Clearwire Parent; and
WHEREAS, the Parties desire and intend to have a long-term mutually
beneficial relationship during the Term, the broad parameters and guiding
principles of which are as set out in Article I of this Agreement and which are
an integral part of the consideration hereunder.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, and agreements set forth in this
Agreement and for other good and valuable consideration, the sufficiency of
which is hereby acknowledged, the Parties hereto, intending legally to be bound,
agree as follows:
ARTICLE I.
RELATIONSHIP SUMMARY
Section 1.01. Overview.
(a) This Agreement, the Individual Use Agreements entered into
thereunder, and the Collateral Documents entered into by the Parties in
connection herewith, describe the arrangement through which Clearwire and its
Affiliates will obtain access to the Commercial Spectrum Capacity authorized by
the FCC Licenses identified on Schedule A hereto
-2-
(collectively, when under IUA hereunder, together with the Commercial Spectrum
Capacity from MRUA-2 Sch A, that becomes under IUA under the MRUA-2 Agreement,
the "EBS Spectrum Capacity") and certain Strategic Opportunity Spectrum Capacity
to be delivered to Clearwire under the terms of this Agreement.
(b) In addition to the Economic Royalties detailed in ARTICLE II,
central to each Licensee's grant of access to the Commercial Spectrum Capacity
to Clearwire under an IUA is Clearwire's agreement and covenant to provide the
Access Right Royalties and other benefits as detailed in ARTICLE III and as
provided for in each IUA, which consists of, among other items (i) access to the
Educational Reservation Basic Cost-Free Customer Accounts (Section 3.03); (ii)
access to the Additional Cost-Free Customer Accounts (Section 3.04); and (iii)
the Limited Reciprocity rights (Section 3.09), the Preferred Content Provider
rights (Section 3.08), and the Strategic Opportunity Spectrum Capacity rights
(Section 3.10), together with technology, facilities, equipment and other
functionality from Clearwire and its Affiliates all as more specifically set
forth in Section 3.06 and Section 3.07 and elsewhere in this Agreement and in
the IUAs related thereto. This Agreement and the IUAs would not have been
executed but for the Total Consideration.
(c) The Parties acknowledge that there will be many changes in the
course of the Term of this Agreement and during the terms of the IUAs, in
technology, capabilities, and regulatory environment among other areas, and the
Parties have agreed to act in a cooperative manner to preserve the intentions of
the relationships reflected in this Agreement and the IUAs to their mutual
advantage and to use their commercially reasonable best efforts to maintain that
mutual advantage.
Section 1.02. Overview of Mechanics and Structure of Agreements
(a) Individual Use Agreements for Commercial Spectrum Capacity. In
exchange for access to the Unencumbered Spectrum Capacity made available to
Clearwire pursuant to Individual Use Agreements executed and delivered in the
form attached as Exhibit II hereto (individually, an "IUA") in accordance with
the applicable closing procedure set forth in ARTICLE IV, Clearwire will provide
at the times and in the manner set forth in each IUA and hereunder, the Economic
Royalties set forth in ARTICLE II, consisting of a Upfront Royalty Deposit, and,
following the Commencement Date, the balance of the Upfront Royalty, an Equity
Royalty and the Monthly Royalties, together with the commitment to provide the
bundle of rights and services set forth in ARTICLE III (identified collectively
as the "Access Right Royalties") and to undertake the governance obligations of
ARTICLE VIII.
(i) Commencement Date. The "Commencement Date" means the
"Commencement Date" under the applicable IUA entered into pursuant to this
Agreement or the MRUA-2 Agreement.
(b) Encumbered Spectrum Capacity. Each Licensee will comply with all
material provisions of its agreements with third parties applicable to the [***]
subject to such Licensee's rights incident to a default of the other party
thereto or incident to a
[* * * Confidential Treatment Requested]
-3-
force majeure event. When and if such [***] becomes Available, Licensee and
Clearwire shall enter into an IUA hereunder with respect to such EBS Spectrum
Capacity in accordance with the applicable procedures for a Subsequent Closing
under ARTICLE IV. The term "Available" with respect to previously [***] means
that (A) the Commercial Spectrum Capacity on the Channels in the Market Area
subject to the IUA is not encumbered by any Lien, including, but not limited to,
any purchase option, right of first refusal, or other contractual obligation of
Licensee (each a "Third Party Agreement") (excluding interference consents,
interference agreements or similar agreements pertaining to the technical
operation of the Channels granted or entered into prior to the Effective Date of
the IUA) and (B) the Licensee is able to make all of the representations and
warranties contained in the IUA and to perform the applicable covenants in the
IUA.
(i) PRETC [***]. With respect to PRETC, the Parties acknowledge
that PRETC has agreed to negotiate in good faith for the renewal of its current
excess capacity agreement for the C channel group in Portland, Oregon with the
Person identified on Schedule A, which agreement expires on August 2, 2006
("Portland Agreement"). If PRETC fails to renew the Portland Agreement prior to
September 1, 2006, PRETC will on September 1, 2006, notify Clearwire in writing
of such fact. In the event of non-renewal, after such date either PRETC or
Clearwire shall have the right, upon written notice to the other Party, to
require the other Party to enter into an IUA in the form attached as Exhibit
II-B hereto as provided in this Section 1.02(b) following such notice. If
neither Party informs the other of its desire to enter into an IUA within 180
days after such notice, either Party may terminate the provisions of this
Section 1.02(b)(i) if the other Party again fails to provide notice of its
desire to enter into an IUA within ten (10) days after an additional notice from
the Party desiring to terminate this Section 1.02(b)(i).
(ii) DAETC [***] With respect to DAETC, the Parties acknowledge
that DAETC has agreed to negotiate in good faith for the renewal of its current
excess capacity agreement for two of the four D group channels at [***] with the
person identified on Schedule A (the "[***]"), which agreement expires on August
1, 2007. DAETC and Clearwire will enter into an IUA for the remaining two D
group channels in the form attached as Exhibit II-B hereto. If DAETC fails to
renew the [***] Agreement prior to September 1, 2007, DAETC will on September 1,
2007, notify Clearwire in writing of such fact. In the event of non-renewal,
after such date either DAETC or Clearwire shall have the right, upon written
notice to the other Party, to cause the DAETC IUA to be amended in accordance
with its terms to include the remaining two D-group channels licensed to DAETC
in [***], and to adjust the compensation paid to DAETC upward in proportion to
the increased MHzPops represented by the two added channels as shown on Schedule
A. If neither Party informs the other of its desire to include those channels
within the DAETC IUA within 180 days after such notice, either Party may
terminate the provisions of this Section 1.02(b)(ii) if the other Party again
fails to provide notice of its desire to enter into an IUA within ten days after
an additional notice from the Party desiring to terminate this Section
1.02(b)(ii).
(c) [***]. In the event that a Claim is brought
or threatened against the ITF Cluster or NACEPF by [***] claiming
[*** Confidential Treatment Requested]
-4-
one or more rights to the Commercial Spectrum Capacity specified on Schedule A
by virtue of the Licensee entering into this Agreement or an IUA hereunder in
alleged breach of a contractual right of first refusal ("ROFR") commitment or
negotiation commitment of such Licensee, Clearwire shall indemnify and defend
Licensee for, and hold the Licensee harmless from, any such Claim in accordance
with ARTICLE IX of this Agreement.
Section 1.03. Scope and Nature of Clearwire Group.
(a) Service Affiliates. As of the Effective Date, Clearwire and the
companies identified on Schedule 6.04 are all of the Affiliates under the
control of Clearwire Parent. Clearwire covenants and agrees to cause the entity
providing each of the Access Right Royalties and the other services provided for
in ARTICLE III to the Licensees (each a "Service Affiliate") to assume the
obligations of Clearwire hereunder and to be jointly and severally liable
therefore for the purpose of providing a direct contractual relationship between
the Licensees and the Service Affiliates so identified on Schedule 6.04 and
between the Licensees and each other entity that over time becomes a Service
Affiliate. The Service Affiliate and the Licensee shall execute such additional
agreements as may be required to effectuate the provision of the applicable
Access Right Royalty or other service, consistent with the terms hereof and the
applicable IUA (any such agreement, a "Collateral Document"). Nothing in this
Section 1.03(a) shall be construed to limit the primary obligation of Clearwire
to provide the Access Right Royalties.
(b) Spectrum Holding Company Commitment. Except as provided below in
this Section 1.03(b), during the term of this Agreement, each of Clearwire
Parent and Clearwire covenant and agree not to segregate the EBS Spectrum
Capacity IUAs in an entity except in an entity that holds at least 50% of the
spectrum of Clearwire Parent and its Affiliates, exclusive of the EBS Spectrum
Capacity IUAs represented by Schedule A. The restriction in this Section 1.03(b)
shall not apply, however, while the Parent Guarantee or a LOC Substitution is in
effect.
(c) Clearwire Parent Guarantees.
(i) Payment Guarantee. Except during the time an LOC Substitution
shall be in place and effective under Section 1.03(c)(i)(1), Clearwire Parent
hereby absolutely and unconditionally guarantees all of the payment obligations
of any Clearwire Affiliate, including Clearwire, under this Agreement, each IUA
entered into pursuant to this Agreement, each Required IUA, and any Collateral
Documents for the period from the Effective Date through December 31, 2016 (the
"Parent Guarantee"). This is a guarantee of payment and not of collection only.
The Parent Guarantee is irrevocable and unconditional, and shall be binding upon
the assignees of Clearwire Parent, and shall inure to the benefit of the
applicable Licensee and its successors and assigns. No failure or delay by a
Licensee in exercising any of its rights or powers hereunder shall operate as a
waiver thereof. The rights, remedies and benefits under this Section 1.03(c)(i)
are cumulative and not exclusive of any other rights, remedies or benefits a
Licensee may have against Clearwire Parent, Clearwire or Clearwire Affiliate
under this Agreement or any EBS Spectrum IUA or Required IUA. Clearwire Parent
hereby waives presentment, protest, demand or notice of any kind, other than
notices required under this Agreement, and all other suretyship defenses, and
agrees that no extension or other indulgence
-5-
granted to Clearwire, and no discharge or release of Clearwire or any other
party liable with respect to the guaranteed obligations, shall discharge or
affect the liability of Clearwire Parent. Notwithstanding the foregoing, prior
to making any demand for payment under the Parent Guarantee, the applicable
Licensee must make demand for payment by Clearwire and allow for the expiration
of all applicable cure periods. The Parent Guarantee shall not apply to any
payment obligations due with respect to a SOSC IUA or the Strategic Opportunity
Spectrum Capacity. The Parent Guarantee shall automatically extend to the
payment obligations pertaining to each EBS Spectrum IUA and each Required IUA. A
"Required IUA" is an IUA (other than a SOSC IUA) that is properly tendered by a
Licensee and is required to be entered into by Clearwire but that has not been
so executed in breach of this Agreement, however no breach shall be deemed to
have occurred during the pendency of a bona fide dispute for which the Dispute
Resolution Procedure is in process and where Clearwire has sought not to be
required to execute the IUA as its remedy. A Required IUA shall be treated as if
it had been entered into and a commencement date had occurred with respect
thereto on the last date such execution was required.
(1) Terms Applicable to the Guarantee. Payments pursuant to
the Parent Guarantee shall be made within thirty (30) days of the date of demand
for payment on the Parent Guarantee and shall bear interest at the Default
Interest Rate from the original due date to the date of payment and shall extend
to all amounts due from the Affiliate, including without limitation, the 2%
charge for late payment under the IUAs. Accrued but unpaid interest shall be
payable monthly.
(2) Terms Applicable to the Letter of Credit. At Clearwire
Parent's option it may at any time substitute a Qualifying Letter of Credit for
its obligation to provide the Parent Guarantee; provided that, the Chief
Financial Officer of Clearwire Parent shall have certified to Licensees that the
substitution for the Parent Guarantee is required in connection with a
modification of Clearwire Parent's loan covenants or a change in lenders or will
otherwise reduce Clearwire Parent's cost of, or increase its access to, funds
(the "LOC Substitution").
(3) Qualifying Letter of Credit. A "Qualifying Letter of
Credit" shall be in form and substance reasonably satisfactory to the Licensees
and: (A) shall be an unconditional stand-by letter of credit issued by a bank
organized under the laws of the United States or a State thereof, having
capital, surplus and undivided profits of not less than $25,000,000,000, that is
a member of the Federal Deposit Insurance Corporation and that has an issuer
rating from Moody's Investors Service of A2 or better (a "Qualifying Bank"), (B)
shall be in an amount equal to the net present value of the remaining EBS
Economic Royalties for the balance of the period to December 31, 2016,
discounted at 10% annually and recalculated on an annual basis on January 1st of
each year in such period, and (C) shall be in form and substance reasonably
acceptable to Licensee.
Section 1.04. Scope and Nature of Licenses. Each of the Licensees is an
independent non-profit organization, each possessing its own separate governing
board, assets and liabilities. The obligations of each of the Licensees
hereunder shall be several and not joint for all purposes and no Licensee shall
be responsible for any act or omission of any other Licensee.
-6-
Section 1.05. Cross Defaults.
(a) Upon and at any time after the occurrence of a Cross Default, any
Licensee shall have the right to withdraw from this Agreement and the MRUA-2
Agreement and/or any of the IUAs executed by such Licensee hereunder, upon
submission of a notice of withdrawal to Clearwire identifying which agreements
are to be terminated; provided that, if the Licensee is in receipt of a written
notice of Cross Default from Clearwire, the Licensee's notice of withdrawal with
respect to the Cross Default identified in such notice must be submitted to
Clearwire by the Licensee within ninety (90) days after the receipt of such
notice of Cross Default. Licensee's actual knowledge of the Cross Default shall
not limit the time permitted for its issuance of a notice of withdrawal. Upon
submission of a notice of withdrawal by a Licensee, the Term of the agreements
identified therein shall cease with respect to such Licensee and all of the
provisions of this Agreement applicable to a termination at the end of the Term
shall apply with respect to each IUA identified in the notice and, if
applicable, this Agreement as well. Clearwire will not be liable in damages to
any Licensee under this Agreement or an IUA as a result of a Cross Default,
except to the extent of such Licensee's actual damage under the IUA that is
subject to the Cross Default as a result of Clearwire's direct breach of such
IUA. A Cross Default shall not, in and of itself, be deemed to be a breach of an
IUA.
(b) Definitions and Interpretive Rules Related to Cross Defaults.
(i) A "Cross Default" occurs if a Payment Default or a Material
Failure has occurred and is not cured within [***] after written notice to
Clearwire (A) with respect to EBS Spectrum Capacity IUAs of Licensees in any
three Geographic Markets at the same time or (B) with respect to EBS Spectrum
Capacity IUAs of Licensees in any two Geographic Markets at the same time, as
long as those Geographic Markets represent at least [***] percent of total EBS
Spectrum Capacity MHzPops determined in accordance with clause (v) below.
(ii) "Geographic Market" means the larger of (A) the area covered
by the GSA of an EBS system that is listed on Schedule A or covered by an SOSC
IUA as amended from time to time, without regard to any subsequent swap
affecting such EBS system after the Effective Date, or (B) the area described in
Section 1.05(b)(ii)(A) combined with the area(s) covered by the substantially
overlapping GSA(s) of EBS and/or BRS systems which Clearwire or its Affiliates
have the right to use in that same market.
(iii) "Material Failure" means an act or failure to act that
materially threatens cancellation or material impairment of a FCC License.
(iv) Clearwire's failure to meet the Build-out Condition
specified in Section 7.11 is not considered a Default or a Material Failure.
(v) For purposes of determining the existence of a Cross Default,
all of the EBS Spectrum Capacity IUAs entered into pursuant to this Agreement
and the MRUA-2 Agreement shall be aggregated and considered together.
[*** Confidential Treatment Requested]
-7-
(vi) A Payment Default or Material Failure (A) under an IUA that
has been terminated by its terms prior to the [***] cure period specified in (i)
above, or (B) under any SOSC IUA, shall not be taken into consideration for
purposes of determining if a Cross Default has occurred.
ARTICLE II.
ECONOMIC ROYALTIES
Section 2.01. Aggregate EBS Spectrum Capacity Economic Royalties.
(a) EBS Spectrum Capacity IUAs. Clearwire shall cause to be paid to
the Licensees the Economic Royalties specified on Schedule A commencing upon
execution of the corresponding EBS Spectrum Capacity IUAs at the times specified
therein. In the case of NACEPF and the ITF Cluster the Economic Royalties are
comprised of an Upfront Royalty, an Equity Royalty and Monthly Royalties and, in
the case of the remaining Licensees, the Economic Royalties are comprised of an
Upfront Royalty and Monthly Royalties (collectively, the "EBS Economic
Royalties"). For the EBS Spectrum Group, the EBS Economic Royalties are in
addition to the Access Right Royalties specified in ARTICLE III. The EBS
Economic Royalties payable to the Licensees as reflected on Schedule A are
generally in proportion to their respective MHzPops, except as otherwise
provided on Schedule A.
(b) Equity Royalty - Escrow and Adjustments.
(i) Parent Shares/Price Per Share. The Equity Royalty payable in
respect of an EBS Spectrum Capacity IUA shall be the number of Parent Shares set
forth on Schedule A, based on a price per share of [***], and subject to
adjustment as provided in Section 2.01(b)(iii) below.
(ii) Escrow of Parent Shares. Within five (5) business days after
the Effective Date, Certificates representing the Parent Shares specified on
Schedule A for each EBS Spectrum Capacity IUA that could be executed hereunder
shall be dated the Effective Date, properly signed and issued, and such shares
shall be registered on the Effective Date in Clearwire Parent's stock ledger, in
the name of the corresponding Licensee (or its permitted designee approved by
Clearwire Parent), and such certificates together with stock powers executed in
blank by the Licensee, shall be deposited with the Escrow Agent as provided in
ARTICLE IV and the Escrow Agreement attached as Exhibit III hereto (the "Escrow
Agreement"), to be released to the Licensee on the Commencement Date of the
corresponding EBS Spectrum Capacity IUA (the "Escrow") or returned to Clearwire
Parent as provided in this Agreement or the applicable IUA.
(iii) Capital Changes. Distributions and Rights. The Parent
Shares issuable in respect of the Equity Royalty shall be adjusted for any
Capital Changes and for any
[*** Confidential Treatment Requested]
-8-
cash dividends and distributions made in respect of the Parent Shares from the
date hereof, and while they are held in Escrow from the Effective Date through
the date of payment to the Licensee and paid with the Parent Shares as the
Equity Royalty on the Commencement Date under the applicable EBS Spectrum
Capacity IUA. While the Parent Shares are in Escrow, the Escrow Agent shall
afford the applicable Licensees the opportunity to take all actions with respect
to such Parent Shares as if the Licensee owned the shares, including (except as
provided below) the exercise of preemptive rights, if any (subject to, and as
provided in, the Amended and Restated Stockholders Agreement dated as of March
16, 2004); provided that, the Escrow Agent shall not be required to advance
funds for the Licensee and the Licensee shall not be entitled to vote such
Parent Shares. Licensees shall not have any preemptive rights with respect to
any investment by Intel Corporation or Motorola, Inc. or their respective
Affiliates made pursuant to a binding agreement entered into prior to the
Effective Date (an "Excluded Investment"), or any investment by third parties
resulting from the exercise of the preemptive rights of third parties arising
from an Excluded Investment. "Capital Changes" include any recapitalization,
reclassification, split-up or consolidation of Parent Shares or stock dividend,
merger or consolidation of Clearwire Parent or sale by Clearwire Parent of all
or a portion of its assets, coupled with a distribution to shareholders.
(iv) Release of Escrowed Parent Shares. The Parent Shares
allocable to an EBS Spectrum Capacity IUA that is terminated under Section 11(f)
of the IUA or that is otherwise terminated prior to a Commencement Date under
the provisions of the EBS Spectrum Capacity IUA shall be released from Escrow
and returned to Clearwire Parent with the blank stock powers upon the effective
date of such termination.
Section 2.02. Strategic Opportunity Spectrum Capacity (SOSC).
(a) SOSC Economic Royalties. Upon execution of each Strategic
Opportunity Spectrum Capacity IUA (a "SOSC IUA") pursuant to a Tender as
provided in Section 3.10, Clearwire shall cause to be paid the SOSC Economic
Royalties required under Section 3.10(e) and the applicable SOSC IUA. The
allocation of SOSC Economic Royalties shall be as provided in Section 3.10(e).
(b) SOSC Equity Royalties. No part of the SOSC Economic Royalties
shall be paid in Parent Shares unless the parties to the particular SOSC IUA so
agree. If any amount is to be paid in Parent Shares, that portion of the SOSC
Economic Royalty so allocated shall be divided by the Price Per Share. For this
purpose, "Price Per Share" means the greater of (i) the value per share of
Parent Stock as determined by the board of directors of Clearwire Parent from
time to time, as in effect on the relevant closing date; or (ii) the price per
share of Parent Shares in the then most recently completed funding round of
Clearwire in excess of Fifty Million Dollars ($50,000,000), or, if such funding
round did not include common stock but did include preferred stock or other
convertible securities, the price per share of common stock, based on converting
such preferred stock or other convertible securities to common stock pursuant to
the applicable conversion rights, provided, however that (x) if the Parent
Shares are publicly traded on a national securities exchange or listed in a
national automated interdealer quotation system, the Price Per Share will be the
average reported closing trading price of the Parent Shares for the
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twenty trading days immediately prior to the Commencement Date of the related
IUA, and (y) any valuation pursuant to clause (b)(ii) above shall be based only
upon a transaction that has occurred within 180 days prior to the date of such
valuation, and if there has been no such transaction such valuation shall be
made in accordance with clause (b)(i) above of clause (x) of this proviso.
ARTICLE III.
ACCESS RIGHT ROYALTIES
Section 3.01. Access Right Royalties. Clearwire shall provide the Access
Right Royalties described in this ARTICLE III from and after the Commencement
Date of an IUA hereunder. The related provisions of ARTICLE VIII shall govern
the information rights of the Licensees with respect hereto.
Section 3.02. Cost-Free Educational Accounts.
(a) Included in the Access Right Royalties provided to Licensees,
Licensees shall be entitled to Cost-Free Educational Accounts as provided in
this Section 3.02, Section 3.03, and Section 3.04.
(b) "Cost-Free Educational Account" means a wireless broadband
connection that Clearwire provides to a Licensee without charge or expense to
such Licensee. Cost-Free Educational Accounts shall have the same capacity and
characteristics as the highest level of premium mass market retail service
provided on Clearwire's network in a given Market Area. Multiple individuals
that are associated with an Educational End User at the time may share the same
Cost-Free Educational Account through Wi-Fi hotspots, local area networks, and
other means. To the extent not inconsistent with the terms of this Agreement and
the applicable IUA, the Cost-Free Educational Accounts shall be subject to the
terms of Clearwire's then generally applicable Acceptable Use Policy. The
Cost-Free Educational Accounts shall be fully portable anywhere within the
Clearwire National Platform to the extent that Clearwire offers such portability
to any customer.
(c) Definitions Related to Cost-Free Educational Accounts. As used in
this ARTICLE III and elsewhere in this Agreement, the following terms have the
indicated meanings:
"Cell Site" means a tower, building or other outdoor structure equipped
with one or more antennas to serve the surrounding area.
"Clearwire National Platform" means the sum of all Market Areas and all
other areas within the United States where Clearwire and its Affiliates provide
comparable services.
"Market Area" means the network coverage footprint of the network of
Clearwire Parent and its Affiliates which includes all or part of the GSA(s) of
the Channels in the Geographic
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Market, based on its build-out engineered for services from time to time once it
has commenced commercial operation.
"Educational End Users" or "EEU" shall be only non-profit entities,
educational entities and/or Social Welfare Agencies that use the services for
their own purposes, provided that Licensees shall not provide such services
pursuant to a request-for-proposals (RFP) or other substantially similar
commercially competitive opportunities, and Licensees shall not provide such
services to any entity if such entity already has an existing business
relationship with Clearwire. For this purpose, "Social Welfare Agencies"
includes only (1) those governmental and quasi-governmental agencies and
departments that provide as their primary service public welfare assistance
services (such as low-income housing, food stamps, or domestic violence
services) to the public or (2) correctional institutions that use the service in
connection with a written agreement with the Licensee for specific programming
content produced or procured by Licensee or with whom Licensee has had a prior
written relationship; provided that such programming content is delivered to
such correctional institutions without charge or other fees. Social Welfare
Agencies shall specifically exclude treasury and revenue services departments,
law enforcement agencies, legislatures, the office of the mayor and the
military.
"Sector" means a directional antenna located at a cell site that serves a
portion of a Cell Site area.
Section 3.03. Educational Reservation Basic Cost-Free Education Accounts.
(a) In respect of Licensees' educational reservation covering the five
percent (5%) educational spectrum capacity currently required by the FCC Rules
pertaining to the FCC Licenses (the "Educational Reservation"), Licensees shall
be permitted to utilize the Educational Reservation in such locations served by
the Clearwire National Platform on a full time basis as Licensees desire for
their operations. Clearwire and Licensee shall at all times comply with
applicable FCC Rules. Clearwire may not use the Educational Reservation. In the
event that the Parties cannot agree on the application of any new rule or
interpretation regarding the Educational Reservation in their circumstances, the
Parties shall jointly approach the FCC for clarification in a timely fashion
and, to the extent the matter remains unresolved thereafter, shall settle the
matter applying the Dispute Resolution Procedure.
(b) Initially, Clearwire shall provide Licensees [***] Cost-Free
Educational Account per Cell Site per Market Area (each a "Basic Cost-Free
Education Account"). The number of Cost-Free Educational Accounts shall be
adjusted upward every [***] proportionate to the growth of the overall data
capacity of Clearwire's network in the Market Area where the EBS system is
located. The growth (if any) in the overall data capacity shall be determined as
set forth in Section 8.02(c) hereof.
Section 3.04. Additional Cost-Free Educational Accounts. In addition to,
and not in lieu of, the Cost-Free Educational Accounts provided to Licensee by
Clearwire pursuant to the Educational Reservation as set forth in Section 3.03,
Clearwire shall provide Licensees with
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additional Cost-Free Educational Accounts in the number computed in accordance
with this Section 3.04 (the "Additional Cost-Free Educational Accounts").
(a) Number and Periodic Adjustment. Each Licensee will have access to
additional spectrum capacity on Clearwire's network in Licensee's Market Area in
the form of Cost-Free Educational Accounts for use on the Clearwire National
Platform equal to the greater of (X) [***] Cost-Free Educational Accounts per
Sector in the Market Area where Licensee holds an FCC License to operate an EBS
system and (Y) the quantity of Cost-Free Educational Accounts determined by
applying the Formula Quantity. The number of Additional Cost Free Educational
Accounts that Clearwire is obligated to provide to Licensee shall be
recalculated and revised [***].
(i) The "Formula Quantity" as of any date, is equal to the
product obtained by multiplying: (a) the Local Channel Ratio by (b) [***], by
(c) the number of subscribers served by Clearwire in the Market Area as of the
end of the previous calendar year. In the event that this product is a fraction,
it shall be rounded up or down to the nearest whole number, where the "Local
Channel Ratio" is the fraction obtained by dividing the number of EBS channels
provided to Clearwire by Licensee under IUA in a given Market Area as of the
date of the calculation by the total number of EBS and BRS channels with
substantially overlapping GSAs then used to provide service in such Market Area
licensed to or under a use agreement with Clearwire (including those of
Licensee) as of that date.
(ii) Educational End Users. Cost-Free Educational Accounts shall
be exclusively for Educational End Users and not for resale, assignment or
transfer by a Licensee outside of its Educational End User environment or to
persons who cease to be officially associated with such Educational End User.
(By way of example, a university may resell the service to its students,
faculty, administrators and staff, while such persons are involved with the
university, but shall cease to provide the service if a member of the faculty
terminates employment or a student graduates and ceases to be involved in
university matters.)
(b) Time of Delivery. The Additional Cost-Free Educational Accounts
shall be provided by Clearwire to Licensee pursuant to this Section 3.04(b) upon
the commercial launch of Clearwire's broadband wireless service in any Market
Area where a Licensee has an EBS Spectrum Capacity IUA in place with Clearwire,
or the applicable Commencement Date thereof if later.
Section 3.05. Licensee MVNO.
(a) In addition to the right to Cost-Free Educational Accounts,
Licensees shall have the right to resell the Clearwire service in the form of
MVNO Educational Accounts to additional Educational End Users in each Market
Area for use on the Clearwire National Platform. An "MVNO Educational Account"
shall have the identical characteristics as a Cost-Free Educational Account
under Section 3.02(b), except that there shall be a charge to Licensee as
determined pursuant to this Section 3.05. Clearwire shall sell to Licensees such
services, at a cost equal to [***] provided by Clearwire to an arms-length third
party in
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such Market Area or other comparable market pursuant to any applicable
agreement. However, the number of MVNO Educational Accounts is limited in each
Market Area to [***] the number of Cost-Free Educational Accounts for that
Market Area.
(b) Mechanics. The resale of Clearwire's services pursuant to this
Section 3.05 shall be accomplished pursuant to a standard Clearwire wholesale
agreement form drafted in a manner consistent with the terms of this Agreement
and the applicable IUA, which will be provided to any Licensee requesting the
right to resell an MVNO Educational Account to an Educational End User. Such
arrangement shall be executed not later than thirty (30) days after the
availability of such services.
Section 3.06. Access to Educational End User Devices. Clearwire shall also
make any end-user equipment used in the Clearwire National Platform available
for purchase by Licensees at [***] above Clearwire's cost to acquire such
end-user equipment. Equipment provided to Licensees pursuant to this section
shall be used solely by Educational End Users and not for resale.
Section 3.07. Sharing of Features and Service Sets. Licensees shall have
access to, and full use of, system capabilities, services and feature sets that
are generally provided to Clearwire's retail customers or wholesalers to mass
market customers. Licensees shall have access to reasonably necessary support
made available to Clearwire's commercial customers generally, and that is
reasonably necessary for the Licensees to offer services to their Educational
End Users as contemplated by their agreement. The Licensees shall have access to
new capabilities, features and service sets within six months of the time that
Clearwire makes them available to customers generally, but not earlier than the
Commencement Date with respect to any particular IUA.
Section 3.08. Preferred Content Provider.
(a) Scope. In the event that Clearwire provides third party content to
customers over its network in any Market Area where Licensee is a party to an
EBS Spectrum Capacity IUA, Licensee shall be a "Preferred Content Provider" over
such network in that Market Area. As a Preferred Content Provider, Licensee
shall have the same degree of access to, and use of, any system capability,
service or feature set that is provided to premium third party content
providers.
(b) Service Sets and Features. [***] Licensee elects to utilize them.
Licensee agrees that the programming that Licensee supplies to customers through
Clearwire's network will be educational in nature. Licensee agrees not to resell
Clearwire's network access, features and/or service sets to third parties,
except in accordance with Sections 3.04(a)(ii) and 3.05.
(c) Capacity Constraints. Clearwire reserves the right to restrict the
use of the capabilities and services made available to the Licensee as a
Preferred Content Provider under
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this Section 3.08 if such use is no longer commercially and technically feasible
due to limitations in network capabilities. Clearwire shall comply with the
provisions of ARTICLE VIII to ensure timely access to information about capacity
usage and permit Licensee a reasonable opportunity to secure alternative access.
Section 3.09. [***]
Section 3.10. Strategic Opportunity Spectrum Capacity Right.
(a) Scope. Licensees shall be permitted to Tender Strategic
Opportunity Spectrum Capacity ("Strategic Opportunity Spectrum Capacity" or
"SOSC") for Quality Spectrum to Clearwire under Section 3.10(b) and (c).
"Quality Spectrum" is defined for purposes of this Section 3.10 as Commercial
Spectrum Capacity that is: [***] [***] The maximum number of MHzPops deliverable
under both this Agreement and the MRUA-2 Agreement shall be equal to the greater
of [***] MHzPops (based on 2000 census data) or [***] times the total number of
MHzPops delivered on EBS Spectrum Capacity IUAs executed under Schedule A and
MRUA-2 Sch A.
(b) General Strategic Opportunity Spectrum Capacity Right
(i) Clearwire Spectrum Designation List. Clearwire Spectrum Staff
will produce a list from time to time of spectrum acquisition target parameters
(the "A-List"), updated not less frequently than every 180 days. Clearwire shall
provide the A-List to Licensee Representatives within ten business days of the
execution of this Agreement, and thereafter not later than five business days
following the effective date of a change or revision to the A-List information,
including any implicit revision as a result of an action taken to approve a
spectrum
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transaction that is outside the terms of a then-current A-List. For a period of
up to 120 days after any modification of the A-List, Clearwire shall be required
to enter into Strategic Opportunity Spectrum IUAs in the form attached as
Exhibit II- C ("SOSC IUAs") for Quality Spectrum Tendered within the A-List
parameters, subject to a Clearwire Parent board approval process, if required.
(ii) Uniform Application of A-List Parameters. The A-List
parameters shall apply to all Clearwire spectrum purchase and use agreements
within the applicable period from all sources. If the A-List parameters are
altered for any reason, including without limitation as evidenced by a Clearwire
spectrum acquisition from a third party, the A-List parameters will be deemed
changed automatically and Clearwire shall be required to redefine and promptly
issue a new set of A-List parameters reflecting the characteristics of such
spectrum. Clearwire may exclude from the A-List parameters the effect of
acquisitions of spectrum capacity in smaller markets not within the A-List
parameters in connection with a larger transaction where the smaller market
acquisition is deemed necessary or advisable by Clearwire for a strategic
purpose in connection with the larger transaction.
(iii) Clearwire Board Approval Process. If Clearwire Parent board
approval is required for a Tendered SOSC IUA, the following procedure shall
apply: (a) Clearwire management will (based on this Agreement) recommend
approval to the Clearwire Parent board, (b) Clearwire Parent board action will
be taken at the next meeting of the Clearwire Parent board, but not later than
thirty days from the date of the Tender, (c) Clearwire management will promptly
advise Licensees of the result and (d) if the Clearwire Parent board does not
approve the transaction, it shall provide a written explanation of the reason
why such rejection was commercially reasonable under the circumstances.
Clearwire Parent and Clearwire covenant and agree that they will not permit
Licensee Tenders to be treated less favorably or in a manner different from any
other spectrum acquisitions as evidenced by the results of Clearwire's spectrum
acquisitions over the term of the SOSC right. Upon Licensee's request following
any Clearwire board action declining a Tender, Clearwire shall provide
information supporting the reason for the declined Tender, including relevant
information from all spectrum transactions in the period commencing 60 days
before such action and for 90 days thereafter, with such detail as reasonably
requested by the Licensees on the terms thereof.
(c) Mandatory Strategic Opportunity Spectrum Capacity Right.
Notwithstanding the General Strategic Opportunity Spectrum Capacity Right
provisions of Section 3.10(b). Licensees may Tender, and Clearwire shall enter
into, a SOSC IUA for Quality Spectrum identified by a Licensee that qualifies as
a Mandatory SOSC IUA. A "Mandatory SOSC IUA" is one Tendered where the following
financial thresholds have not been exceeded (a) up front payments collectively
for all Mandatory SOSC IUAs including the Tendered SOSC IUA shall not exceed
[***] and (b) the total net present value expense collectively for all Mandatory
SOSC IUAs, including the Tendered SOSC IUA, shall not exceed [***] (assuming a
30-year term and 10% discount rate) (the "Mandatory Thresholds"). There is no
limit on the quantity of Mandatory SOSC IUAs, as long as they collectively do
not exceed either of the Mandatory Thresholds. Clearwire must execute a
Mandatory SOSC IUA within ten days of the
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Licensees' Tender of the Mandatory SOSC IUA, unless the Parties agree to a later
date in writing.
(d) Tender Process. Clearwire will designate a senior member of its
spectrum acquisition management (a "Senior Spectrum Manager") to meet in person
or telephonically with the Licensee Representatives or their designee at a
mutually agreeable time in the first week of each month after the Effective Date
of this Agreement to consult on matters related to the SOSC provisions of
Section 3.10 (the "SOSC Committee"). As frequently as necessary, but in all
events not less frequently than once per month, the Senior Spectrum Manager and
the Licensee Representatives (or their designated representatives) shall confer
concerning objectives in progress with respect to SOSC opportunities. The
Licensee Representatives will present a list of EBS systems then subject to
contract with a Licensee or targeted by the Licensee for acquisition that meets
the Quality Spectrum definition (each such proposal, a "Tender").
Unless subject to Clearwire Parent board approval, Clearwire shall
enter in a SOSC IUA in respect of Tendered spectrum capacity (A) within 60 days
of the date of the Tender or (B) if the Tendered spectrum capacity represents
channels that are the subject of a binding agreement executed within 90 days
from the date of the Tender, upon the Closing thereof.
(e) Strategic Opportunity Spectrum Capacity IUA Terms. SOSC IUA Terms
would be on the same terms as the then current IUA under this Agreement,
modified as follows:
(i) The total Economic Royalty will be [***] per MHzPop using
2000 census data, determined on a net present value basis using a ten percent
discount rate and a 30 year term.
(ii) For spectrum that is made available pursuant to Section
3.10(b), up front payments will be [***] of the total Economic Royalty unless
the parties negotiate a different allocation at the time.
(iii) Parent Shares may be substituted for a portion of royalties
by agreement of the parties to the SOSC IUA.
(iv) The SOSC IUA will be in the form attached as Exhibit II-C
hereto, which reflects the EBS Spectrum Capacity IUA, except with less
restrictive IUA terms with respect to assignment and sublicensing, and the
absence of an accelerated build-out obligation, the absence of a Parent
Guarantee, and the absence of cross-default provisions.
(f) Clearwire EBS and BRS Transactions. Subject to Sections
3.10(b)(iii) and (d), Clearwire shall inform Licensee Representatives within ten
(10) business days of its entering into binding agreements for the acquisition
of rights to spectrum in the EBS and BRS bands. Information disclosed pursuant
to this Section will be limited to the public information available through the
FCC public notice process. Clearwire's obligations set forth in this Section are
in addition to, and not in lieu of, the requirements of Section 3.10(b)(iii).
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ARTICLE IV.
CLOSING MECHANICS; ESCROW
Section 4.01. Deliveries at Execution of this Agreement. On the Effective
Date of this Agreement, Clearwire and each of the Licensees shall take the
following actions required of it by subsections (a) through (c) hereof.
(a) Licensees. Each Licensee shall deliver or cause to be delivered to
Clearwire each of the following, duly executed by an authorized representative
of such Licensee: (i) the Escrow Agreement dated on or before the Effective Date
in the case of Licensees in the ITF Cluster and NACEPF; (ii) one EBS Spectrum
Capacity IUA completed in accordance with this Agreement and the instructions in
the form of IUA with respect to the Unencumbered Spectrum authorized under each
FCC License held by such Licensee and identified on Schedule A; (iii) the
certificate(s) of such Licensee described in Section 4.01(c); and (iv) evidence
of the delivery to the Escrow Agent of the stock powers executed in blank by
such Licensee as required under this Agreement and the joinders attached to this
Agreement as Exhibits IV and V. Each Licensee shall have specified on Schedule
4.01 attached hereto its respective wire accounts (each a "Wire Account"), which
Wire Account shall be included in the applicable IUA. Absent notice of different
instructions, all cash payments to be made as provided on Schedule A, and as
otherwise reflected in the applicable IUA or this Agreement to be paid to a
Licensee, shall be to such Wire Account in immediately available funds.
(b) Clearwire. Clearwire shall deliver or cause to be delivered to
each of the Licensees each of the following, duly executed by an authorized
representative of Clearwire: (i) the Escrow Agreement dated on or before the
Effective Date in the case of Licensees in the ITF Cluster and NACEPF; (ii) one
EBS Spectrum Capacity IUA completed in accordance with this Agreement and the
instructions in the form of IUA with respect to the Unencumbered Spectrum
authorized under each FCC License identified on Schedule A to the applicable
Licensee; (iii) its certificate described in of Section 4.01 (c); (iv) the
Upfront Royalty Deposit provided for in the applicable EBS Spectrum Capacity IUA
as reflected on Schedule A; (v) the payment of any balance of the Applicable Fee
Payments (per Section 11.03) not previously paid; and (vi) evidence of delivery
of the Parent Shares specified on Schedule A to the Escrow Agent.
(c) Officers Certificates. In connection with the execution of this
Agreement, each Party shall deliver to each other Party, in each case certified
as of the Effective Date of this Agreement by an authorized officer of the
delivering Party, (A) a copy of the resolutions of the board of directors of the
delivering Party authorizing the execution, delivery and performance of this
Agreement and (B) a certificate of incumbency, with signatures of the officers
of such Party authorized to execute and deliver this Agreement.
Section 4.02. Escrow Deposit and Ministerial Condition Failure.
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(a) Each of Clearwire Parent and Clearwire and each of the ITF Cluster
Licensees and NACEPF shall deliver to the Escrow Agent within five (5) days of
the Effective Date of this Agreement, (i) the Escrow Agreement dated as of the
Effective Date and duly executed by an authorized representative of such Party,
(ii) in the case of Clearwire Parent and Clearwire properly executed
certificates dated the Effective Date and representing the full amount of the
Parent Shares reflected in the Equity Royalties on Schedule A, which shall be
issued and outstanding, registered in the names of the applicable Licensees and
deposited into the Escrow, all as provided in Section 2.01, and (iii) in the
case of each Licensee, stock powers executed by it in blank. Each of Clearwire,
NACEPF and the ITF Cluster shall cause the Escrow Agent to execute the Escrow
Agreement and to take the actions provided for therein to be taken by the Escrow
Agent, and to deliver to each of the Parties a receipt evidencing the foregoing.
(b) Termination for Ministerial Condition Failure. As permitted by
this Section 4.02(a) and Section 2.0l(b)(ii), the Parent Shares may be deposited
with the Escrow Agent up to five days following the Effective Date. In the event
that the deposit of such Parent Shares is not made within such time period, for
any reason whatsoever, this Agreement shall terminate as shall each of the IUAs
executed hereunder, and the Parties shall have no further obligations of any
kind or nature whatsoever hereunder or thereunder.
Section 4.03. EBS Spectrum Capacity IUA Closing(s).
(a) Initial Closing. Subject to the terms and conditions set forth in
this Agreement, the closing of the transactions provided in this Agreement,
including with respect to those EBS Spectrum Capacity IUAs that are executed on
the date hereof (each an "Initial Closing"), shall take place on the Effective
Date of this Agreement (the "Initial Closing Date").
(b) Subsequent Closings. Subject to the terms and conditions set forth
in this Agreement, the closing of the transactions provided in this Agreement
shall take place when the Commercial Spectrum Capacity becomes Available at
which time an EBS Spectrum Capacity IUA shall be executed (each a "Subsequent
Closing"), which date shall be the Effective Date for that IUA (the "Subsequent
Closing Date").
(c) Closing Conditions.
(i) Conditions to Each Party's Obligations at a Closing. The
respective obligations of each Party to effect execution and closing of an EBS
Spectrum Capacity IUA at the Initial Closing or at any Subsequent Closing shall
be subject to the satisfaction on or prior to the applicable Closing Date of the
following conditions with respect to that EBS Spectrum Capacity IUA.
(1) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court or
other Government Agency of competent jurisdiction preventing the consummation of
the transactions contemplated in the applicable IUA or under this Agreement as
it relates to such IUA; provided, however, that
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prior to invoking this condition, each Party hereto shall use all commercially
reasonable efforts to have any such injunction or other order vacated.
(2) No Cross Default Condition. The Licensee shall not have
exercised its right to terminate this Agreement and the IUA as a result of a
Cross Default and the issuance of a withdrawal notice under Section 1.05(a) with
respect to that IUA.
(3) Availability. The Commercial Spectrum Capacity of the
applicable IUA is Available as defined in Section 1.02(b).
(ii) Conditions to the Obligations of Clearwire. The obligations
of Clearwire to effect any Closing of an EBS Spectrum Capacity IUA hereunder
shall be subject to the satisfaction at or prior to the applicable Closing Date
of such IUA of each of the following conditions, any of which may be waived,
solely in writing, and exclusively by Clearwire:
(1) Representations and Warranties. The representations and
warranties of the Licensee contained in of the IUA shall be true and correct in
all material respects as of the Effective Date of such IUA.
(2) Officer Certificates. Clearwire shall have received
copies, in each case certified as of the applicable Closing Date by an
authorized officer of each Licensee, of (i) the resolutions of the board of
directors of the Licensee, authorizing the execution, delivery and performance
of the IUA, (ii) the signature and incumbency of the officers of the Licensee
authorized to execute and deliver the IUA, and (iii) certifying that the
representations and warranties of the Party to be made under the IUA are true
and correct.
(3) Joinders; Substantial Compliance with Master Agreement.
The Licensee shall have delivered to Clearwire Parent executed joinders in the
form attached to this Agreement as Exhibits IV and V. The Licensee shall be in
compliance with all of the material terms of this Agreement as it relates to
such Licensee.
(iii) Conditions to Obligations of Licensee. The obligations of a
Licensee to effect any Closing of an EBS Spectrum Capacity IUA hereunder shall
be subject to the satisfaction at or prior to the applicable Closing Date of
such IUA of each of the following conditions, any of which may be waived, solely
in writing, and exclusively by such Licensee:
(1) Representations and Warranties. The representations and
warranties of Clearwire contained in the IUA shall be true and correct in all
material respects as of the Effective Date of such IUA.
(2) Officer Certificates. Licensee shall have received
copies, in each case certified as of the applicable Closing Date by an
authorized officer of Clearwire, of (i) the resolutions of the board of
directors of Clearwire and each Clearwire Affiliate that is a Party hereto,
authorizing the execution, delivery and performance of the IUA, (ii) the
signature and incumbency of the officers of Clearwire authorized to execute and
deliver the IUA, and (iii)
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certifying that the representations and warranties of the Party to be made under
the IUA are true and correct.
(3) Substantial Compliance with Master Agreement. Clearwire,
Clearwire Parent and the other Affiliates that are or become Parties hereto,
shall be in compliance with all of the material terms of this Agreement as it
relates to such Licensee.
(4) Escrow. The Escrow shall contain all of the Parent
Shares applicable to the EBS Spectrum Capacity IUA being entered into and such
Parent Shares shall have been issued and be outstanding and registered in the
name of Licensee and the Escrow shall contain any and all additional amounts as
may be required to reflect any distributions and adjustments due to Capital
Changes as provided therein.
(5) No Clearwire Material Adverse Effect. During the period
from the Effective Date of this Agreement to the Effective Date of the
applicable EBS Spectrum Capacity IUA, there shall not have occurred any event
that has had or is reasonably likely to have a Clearwire Material Adverse
Effect.
Section 4.04. Closing Site/Mechanics. Each of the Closings will occur by
electronic delivery procedure agreed by the Parties, provided that the first
Initial Closing shall take place at the offices of Day, Berry & Howard LLP, 875
Third Avenue, New York, New York 10022.
Section 4.05. Subsequent Closings for Strategic Opportunity Spectrum
Capacity.
(a) SOSC IUA. At any time when Strategic Opportunity Spectrum is
tendered as provided in Section 3.10, Licensee shall deliver to Clearwire a SOSC
IUA at the time provided for therein for execution.
At each Subsequent Closing, the applicable licensee and Clearwire shall
deliver an SOSC IUA with respect to such SOSC, duly executed by an authorized
representative of each.
Section 4.06. Further Assurances. Upon the terms and subject to the
conditions of this Agreement, each of the Parties hereto shall use its
reasonable best efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable consistent with
applicable law to consummate and make effective in the most expeditious manner
practicable the Closing of each IUA and compliance with the obligations therein
and herein in respect of each such IUA.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF LICENSEES
Except as set forth on a referenced "Schedule" to this ARTICLE V, each of
the Licensees for itself, severally and not jointly or in addition to any other
Licensee, hereby represents and warrants to Clearwire and Clearwire Parent that:
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Section 5.01. Organization and Good Standing. It is a nonprofit corporation
duly organized, validly existing and in good standing under the laws of its
state of organization and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now
conducted and as proposed to be conducted. Except as disclosed in Schedule 5.01.
it is duly qualified or authorized to do business as a foreign corporation and
is in good standing under the laws of each jurisdiction in which it owns or
leases real property or FCC Licenses and each other jurisdiction in which the
conduct of its business or the ownership of its properties requires such
qualification or authorization, except where the failure to be so qualified,
authorized or in good standing does not have and would not reasonably be
expected to have a Licensee Material Adverse Effect.
Section 5.02. Authorization of Agreement. It has all requisite corporate
power and authority (i) to enter into, deliver and carry out the transactions
contemplated by this Agreement (the "Contemplated Transactions") and each other
agreement, document, or instrument or certificate contemplated by this Agreement
to be delivered on the date thereof, (ii) to enter into and deliver all
documents required or necessary to be executed by it in connection with the
consummation of the Contemplated Transactions on the date hereof (collectively
the "Licensee Documents"), and (iii) to consummate the Contemplated Transactions
taking place on the date hereof. This Agreement has been and the Licensee
Documents when delivered will be duly and validly executed and delivered by it
and (assuming the due authorization, execution and delivery by the other parties
hereto and thereto) this Agreement constitutes and the Licensee Documents will
constitute when delivered the legal, valid and binding obligations of Licensee,
enforceable against it in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
Section 5.03. No Conflict. This representation is made to the best
knowledge of each Licensee with respect to agreements pursuant to which, by
their explicit terms, the time periods for ROFR rights and which agreements
themselves have expired. Except as set forth on Schedule 5.03:
(a) Neither the execution and delivery by Licensee of this Agreement
or the Licensee Documents, nor compliance by Licensee with any of the provisions
hereof or thereof will (i) conflict with, or result in the breach of, any
provision of the Governing Documents of Licensee, (ii) conflict with, violate,
result in the breach of, constitute (with or without due notice, lapse of time
or both) a default under, result in the acceleration of, create in any Party the
rights to accelerate, terminate, modify or cancel, or require any notice,
consent or waiver under, any note, bond, mortgage, indenture, license, agreement
or other obligation to which Licensee is a party or by which Licensee or any of
its properties or assets is bound or (iii) violate any statute, rule,
regulation, order or decree of any Government Agency or authority by which
Licensee is bound, except in the cases of clauses (ii) and (iii) for such
violations, breaches or defaults as would not, individually or in the aggregate,
have a Licensee(s) Material Adverse Effect.
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(b) No consent, waiver, approval, order, permit or authorization of,
or declaration or filing with, or notification to, any Person or Government
Agency is required on the part of Licensee in connection with the execution and
delivery of this Agreement or the Licensee Documents or the compliance by
Licensee with any of the provisions hereof or thereof, except as contemplated
herein or therein.
Section 5.04. Litigation. Except as set forth on Schedule 5.04 of the
disclosure schedule attached hereto by one or more of the Licensees (the
"Licensee(s) Schedule") and other than Proceedings of general applicability and
those related to market transitions ("FCC Proceedings"), there is no Proceeding
now in progress or pending or, to the knowledge of Licensee, threatened against
Licensee or the assets (including the intellectual property rights) or the
business of Licensee, nor to the knowledge of Licensee, does there exist any
basis therefore, except for immaterial claims brought against Licensee in the
ordinary course of business.
Section 5.05. Compliance with Laws; Permits. Excepting the markets listed
on Schedule 5.05 of the Licensee(s) Schedule, and only to the best knowledge of
the Licensee, assuming compliance in all material respects with the
Communications Act and FCC Rules by other parties to a Third Party Agreement
where and during the time access to the Commercial Spectrum Capacity has been
governed by such Third Party Agreement, in respect of all licenses, including
those otherwise subject to Third Party Agreements, and assuming that the Third
Party Agreement complies in all material respects with the Communications Act
and FCC Rules. Licensee (a) has complied in all respects with all federal,
state, and local laws, rules, ordinances, codes, consents, authorizations,
registrations, regulations, decrees, directives, judgments and orders applicable
to it and its business other than where noncompliance would not, individually or
in the aggregate, reasonably be expected to have a Licensee(s) Material Adverse
Effect and (b) has all federal, state, and local governmental Permits necessary
in the conduct of its business as currently conducted and to own and use its
assets in the manner in which such assets are currently owned and used other
than where the failure to possess such Permits would not, individually or in the
aggregate, reasonably be expected to have a Licensee(s) Material Adverse Effect,
such Permits are in full force and effect, and no violations have been recorded
in respect of any such Permit, and no proceeding is pending or, to the best
knowledge of Licensee, threatened to revoke or limit any such Permit.
Section 5.06. Offering Exemption; Securities Representations. NACEPF and
each of the ITF Cluster Licensees hereby represent and warrant the following:
(a) Schedule 5.06 sets forth the Licensees that are and those that are
not "accredited investors" as this term is defined in Rule 501(a) of Regulation
D as promulgated by the U.S. Securities and Exchange Commission under the
Securities Act.
(b) Excepting that portion of the Equity Royalty to be delivered to a
designee of Licensee approved in writing by Clearwire Parent, each Licensee is
acquiring the Equity Royalty for its own account, for investment purposes only
and not with a view to the distribution (as such term is used in Section 2(11)
of the Securities Act) thereof. Each Licensee understands that the Equity
Royalty has not been registered under the Securities Act and cannot be sold
unless
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subsequently registered under the Securities Act or an exemption from such
registration is available.
(c) Each Licensee is knowledgeable and experienced in the
telecommunications industry and is capable of evaluating the risks and merits of
the Contemplated Transactions, including the acquisition of the Parent Shares,
and making an informed decision with respect thereto. Each Licensee acknowledges
receipt of Clearwire Parent's Private Placement Memorandum and Supplement
thereto (the "Private Placement Memorandum"). Licensee, its officers, and
directors have had sufficient opportunity to ask questions of and receive
answers from Clearwire Parent concerning the business of Clearwire Parent, its
operations, assets and liabilities. Licensee and its representatives have had an
opportunity to review all documents and records concerning Clearwire Parent and
its business that such Licensee has requested. Each Licensee has conducted its
own independent assessment, analysis and investigation with respect to Clearwire
Parent and its business at the time of entering into this Agreement and has
agreed to enter into this Agreement based solely on this assessment, analysis
and investigation, and the representations and warranties of Clearwire set forth
in ARTICLE VI hereof.
(d) Each Licensee is aware that Clearwire Parent is a speculative
enterprise, that certain of the information disclosed to Licensee contains
forward looking statements which involve risks and uncertainties, and that
Clearwire Parent's actual results may differ significantly from the results
discussed in these forward looking statements. Each Licensee further
acknowledges that the value of Clearwire Parent's assets is inherently uncertain
and is dependent upon market, technological, and regulatory developments
concerning feasible and allowable uses. Each Licensee represents and warrants to
Clearwire Parent that it has assessed these factors independently and has agreed
to enter into this Agreement without reliance upon or expectation of any
representations, warranties, or disclosures of any kind from Clearwire, except
as specifically set forth in ARTICLE VI hereof.
Section 5.07. Brokers. Neither Licensee nor any of its directors, officers,
employees, or representatives has employed any broker or finder in connection
with the Contemplated Transactions. NACEPF and ITF Cluster Licensees are solely
responsible for all fees payable to D.F. Hadley & Co., Inc.
Section 5.08. Knowledge. Any representation, warranty, covenant,
obligation, or part thereof that states that it is made to the best knowledge of
Licensee is made to its best knowledge after commercially reasonable
investigation and includes all facts which it knew or should have known as a
result of such investigation, including the best knowledge of Licensee's
executive officers and legal counsel after commercially reasonable
investigation.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF CLEARWIRE
Except as set forth on a referenced "Schedule" to this ARTICLE VI,
Clearwire hereby represents and warrants to Licensees that:
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Section 6.01. Organization and Good Standing. Clearwire Parent is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and Clearwire is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Nevada. Each has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now conducted. Clearwire
is duly qualified or authorized to do business as a foreign corporation and is
in good standing under the laws of each jurisdiction in which it owns or leases
real property and each other jurisdiction in which the conduct of its business
or the ownership of its properties requires such qualification or authorization,
except where the failure to be so qualified, authorized or in good standing does
not have and would not reasonably be expected to have a Clearwire Material
Adverse Effect.
Section 6.02. Authorization of Agreement. Each of Clearwire Parent and
Clearwire has all requisite corporate power and authority (i) to enter into,
deliver and carry out the Contemplated Transactions, each IUA and each other
agreement, document, or instrument or certificate contemplated by this
Agreement, (ii) to enter into and deliver all documents required or necessary to
be executed by it in connection with the consummation of the Contemplated
Transactions (collectively the "Clearwire Documents"), and (iii) to consummate
the Contemplated Transactions. This Agreement has been and the Clearwire
Documents will be when delivered duly and validly executed and delivered by
Clearwire and (assuming the due authorization, execution and delivery by the
other parties hereto and thereto) this Agreement constitutes and the Clearwire
Documents will constitute when delivered the legal, valid and binding
obligations of Clearwire, enforceable against it in accordance with their terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
Section 6.03. Capitalization.
(a) As of the date of this Agreement, and without giving effect to the
Contemplated Transactions, (i) the authorized capital stock of Clearwire
consists of 500,000,000 shares of Class A Common Stock, $0.0001 par value per
share (the "Class A Common Stock"). 100,000,000 shares of Class B Common Stock,
$0.0001 par value per share ("Class B Common Stock"), and 5,000 shares of
Preferred Stock, par value $0.0001 per share ("Preferred Stock"), (ii) there are
173,842,111 shares of Class A Common Stock, 56,072,860 shares of Class B Common
Stock and no shares of Preferred Stock issued and outstanding and (iii) no
shares of Class A Common Stock, Class B Common Stock or Preferred Stock are held
by Clearwire as treasury stock. All of the issued and outstanding shares of
Class B Common Stock were duly authorized for issuance and are validly issued,
fully paid and non-assessable.
(b) As of the date of this Agreement, and without giving effect to the
Contemplated Transactions, other than (i) the conversion rights of the Class B
Common Stock, (ii) warrants to purchase 56,351,034 shares of Class A Common
Stock (the "Warrants"), and (iii) except as set forth on Schedule 6.03(b) of the
disclosure schedule attached hereto by Clearwire ("Clearwire Schedule"), there
are no existing options, warrants, calls, rights, commitments or
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other agreements of any character to which Clearwire Parent is a party and,
except as contemplated in the preceding sentence and in the Clearwire Schedule,
there are no securities of Clearwire Parent outstanding which upon conversion or
exchange would require, the issuance, sale or transfer of any additional shares
of Class A Common Stock or other equity securities of Clearwire Parent or other
securities convertible into, exchangeable for or evidencing the right to
subscribe for or purchase shares of Class A Common Stock or other equity
securities of Clearwire Parent. Except as disclosed in the Clearwire Schedule,
and except for the Stockholders Agreement and as disclosed in the Private
Placement Memorandum and the Registration Rights Agreement, as of the Initial
Closing Date Clearwire is not a party to any voting trust or other voting
agreement with respect to any of the shares of Class A Common Stock.
(c) The authorization, offer, issuance, sale and delivery of the
Equity Royalty pursuant to this Agreement and the applicable IUAs has been duly
authorized by all requisite corporate action on the part of Clearwire, and the
Equity Royalties, when issued, sold and delivered in accordance with this
Agreement, will be validly issued and outstanding, and when released to
Licensees from escrow, will be fully paid and nonassessable, free of any Liens
and not subject to preemptive or similar rights of the other shareholders of
Clearwire or others (other than as set forth in the Clearwire Schedule, the
Private Placement Memorandum, the Stockholders Agreement, the Debt Warrants or
Clearwire' Certificate of Incorporation, as amended). The terms, designations,
powers, preferences and relative participating, optional and other special
rights, and the qualifications, limitations and restrictions, of the Class A
Common Stock are as stated in Clearwire Parent's Certificate of Incorporation,
as amended.
Section 6.04. Subsidiaries. Schedule 6.04 hereto sets forth the name of
each Subsidiary of Clearwire as of the Initial Closing Date, immediately prior
to the occurrence of the Initial Closing, and without giving effect to the
Contemplated Transactions ("Subsidiaries") and, with respect to each Subsidiary,
the jurisdiction in which it is incorporated or organized, the jurisdictions, if
any, in which it is qualified to do business, the number of shares of its
authorized capital stock, the number and class of shares thereof duly issued and
outstanding, the names of all stockholders or other equity owners and the number
of shares of stock owned by each stockholder or the amount of equity owned by
each equity owner. The outstanding shares of capital stock or equity interests
of each such Subsidiary are validly issued, folly paid and nonassessable, and
all such shares or other equity interests represented as being owned by
Clearwire Parent are owned by it free and clear of any and all Liens, except as
set forth in Schedule 6.04. Except as set forth in Schedule 6.04, there is no
existing option, warrant, call, commitment or agreement to which any such
Subsidiary is a party requiring, and there are no convertible securities of any
Subsidiary outstanding which upon conversion would require, the issuance of any
additional shares of capital stock or other equity interests of any Subsidiary
or other securities convertible into shares of capital stock or other equity
interests of any Subsidiary or other equity security of any Subsidiary. Each
such Subsidiary is a duly organized and validly existing corporation or other
entity in good standing under the laws of the jurisdiction of its organization
and is duly qualified to do business and is in good standing under the laws of
(i) each jurisdiction in which it owns or leases real property and (ii) each
other jurisdiction in which the conduct of its business or the ownership of its
assets requires such qualification and where a
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failure to be so qualified would have a Clearwire Material Adverse Effect. Each
such Subsidiary has all requisite corporate or limited liability company power
and authority to own its properties and carry on its business as presently
conducted.
Section 6.05. No Conflict.
(a) Except as set forth on Schedule 6.05(a) of the Clearwire Schedule
hereto, neither of the execution and delivery by Clearwire of this Agreement and
of the Clearwire Documents, nor the compliance by Clearwire with any of the
provisions hereof or thereof will (i) conflict with, or result in the breach of,
any provision of the Governing Documents of Clearwire, (ii) conflict with,
violate, result in the breach of, or constitute (with or without due notice,
lapse of time or both) a default under, result in the acceleration of, create in
any Party the rights to accelerate, terminate, modify or cancel, or require any
notice, consent or waiver under, any note, bond, mortgage, indenture, license,
agreement or other obligation to which Clearwire is a party or by which
Clearwire or any of its properties or assets are bound or (iii) violate any
statute, rule, regulation, order or decree of any Government Agency by which
Clearwire is bound, except, in the case of clauses (ii) and (iii), for such
violations, breaches or defaults as would not, individually or in the aggregate,
have a Clearwire Material Adverse Effect.
(b) Except as set forth in Schedule 6.05(b). no consent, waiver,
approval, order, permit or authorization of, or declaration or filing with, or
notification to, any Person or Government Agency is required on the part of
Clearwire in connection with the execution and delivery of this Agreement or the
Clearwire Documents or the compliance by Clearwire with any of the provisions
hereof or thereof.
Section 6.06. Litigation. Except as would not reasonably be expected to
have a materially adverse effect on the ability of Clearwire to close hereunder
or as set forth on Schedule 6.06 of the Clearwire Schedule, (a) there is no
Proceeding now in progress or pending or, to the knowledge of Clearwire,
threatened against Clearwire or the assets or the business of Clearwire and (b)
Clearwire is not subject to any order, writ, injunction or decree of any court
or other Government Agency.
Section 6.07. Compliance with Laws; Permits. Except as provided on Schedule
6.07 of the Clearwire Schedule, Clearwire (a) has complied in all respects with
all federal, state, and local laws, rules, ordinances, codes, consents,
authorizations, registrations, regulations, decrees, directives, judgments and
orders applicable to it and its business other than where noncompliance would
not, individually or in the aggregate, reasonably be expected to have a
Clearwire Material Adverse Effect and (b) has all federal, state, and local
governmental Permits necessary in the conduct of its business as currently
conducted and to own and use its assets in the manner in which such assets are
currently owned and used other than where the failure to possess such Permits
would not, individually or in the aggregate, reasonably be expected to have a
Clearwire Material Adverse Effect, such Permits are in full force and effect,
and no violations have been recorded in respect of any such Permit, and no
proceeding is pending or, to the best knowledge of Clearwire, threatened to
revoke or limit any such Permit.
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Section 6.08. Brokers. Neither Clearwire nor any of its directors,
officers, employees or representatives has employed any broker or finder in
connection with the Contemplated Transactions.
ARTICLE VII.
COVENANTS
Section 7.01. Consents and Approvals. Clearwire will use its commercially
reasonable efforts to obtain, and shall cooperate with each Licensee and assist
each Licensee in obtaining, all consents, waivers, amendments, modifications,
approvals, authorizations, permits and licenses which are required to be
obtained by Clearwire and/or one or more of the Licensees to effectuate this
Agreement. Each Licensee will use its respective commercially reasonable efforts
to obtain, and shall cooperate with Clearwire and assist Clearwire in obtaining,
all consents, waivers, amendments, modifications, approvals, authorizations,
permits and licenses which are required to be obtained by Clearwire and/or such
Licensee to effectuate this Agreement.
Section 7.02. Notice of Breach. Each Licensee shall promptly give Clearwire
written notice of any matter that becomes known to such Licensee which such
Licensee determines is reasonably likely to constitute a breach of any
representation, warranty, agreement or covenant of such Licensees contained in
this Agreement. Clearwire and Clearwire Parent shall promptly give the Licensees
written notice of any matter that becomes known to them which Clearwire or
Clearwire Parent determines is reasonably likely to constitute a breach of any
representation, warranty, agreement or covenant of Clearwire or Clearwire Parent
contained in this Agreement.
Section 7.03. Escrow and Parent Shares. Clearwire covenants that the full
number of Parent Shares for the Equity Royalty on Schedule A and adjusted as
provided in Section 2.01(b)(iii) from time to time, shall be deposited pursuant
to the Escrow Agreement for delivery to the appropriate Licensee or its
designees (subject to approval by Clearwire Parent) on the applicable
Commencement Date, at which time Clearwire covenants that the Parent Shares
shall be fully paid and non-assessable, without restrictions, except as set
forth in the legend provided for in Section 7.07.
Section 7.04. Maintenance of FCC Qualifications. The provisions of this
Section 7.04 apply only to spectrum identified on Schedule A that has not been
subject to an IUA. Except as such qualifications may be affected by this
Agreement or one or more IUAs entered into pursuant to this Agreement, each
Licensee hereby covenants and agrees that it shall maintain all necessary
qualifications to hold and to obtain renewal in the ordinary course of any FCC
License, subject to Clearwire's obligation to cause Licensee's FCC License to
timely meet the substantial service requirement and to comply with FCC Rules in
its use and access to the licensed spectrum, as such qualifications may be
amended or modified from time to time (individually an "FCC Qualification" and
collectively referred to as the "FCC Qualifications"), and further covenants
that it shall not knowingly or negligently take any action, or fail to take any
action, which action or failure to act creates a material risk that Licensee
shall lose any FCC Qualification; provided, that in the event that the FCC or
any other legal authority shall at any
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time specify new or different qualifications or conditions for the maintenance
of any FCC Qualification or shall issue a pronouncement offering a new
interpretation of an FCC Qualification, Clearwire shall reimburse on demand
Licensee's reasonable expenses of taking such action as are required for
Licensee to bring itself and its operations into compliance with such new or
different qualifications or conditions; provided, further, that it shall not be
deemed a breach of this sentence if a Licensee loses an FCC Qualification as a
result, in whole or in part, of an act or omission of Clearwire or any failure
of Clearwire to perform its obligations under this Agreement or any IUA. If, at
any time, a Licensee fails, or it appears to said Licensee more likely than not
that it will fail, to maintain any one or more of its FCC Qualifications with
respect to any of its FCC Licenses or its operations pursuant thereto, such
Licensee shall give written notice to Clearwire within five (5) days after
Licensee becomes actually aware that (i) it no longer maintains such FCC
Qualifications or (ii) with the passage of time or upon the occurrence of a
future event it will no longer maintain such FCC Qualifications (referred to as
a "Disqualification Event"). Each Licensee shall cooperate with reasonable
requests of Clearwire made from time to time for the purpose of verifying, at
Clearwire's expense, that Licensee maintains its FCC Qualifications. Upon the
occurrence of a Disqualification Event, the affected Licensee shall, at
Clearwire's expense, promptly undertake all reasonable actions to obtain, to the
extent permitted by applicable law, a waiver from the FCC regarding the
circumstances giving rise to such Disqualification Event or to cure the
circumstances giving rise to such Disqualification Event.
Section 7.05. Assignment of FCC Licenses. The provisions of this Section
7.05 apply only to spectrum identified on Schedule A that has not been subject
to an IUA. Licensee may assign the FCC License to any entity that is eligible
under FCC Rules to hold the FCC License, who is reasonably acceptable to
Clearwire and who assumes Licensee's prospective obligations under this
Agreement, whereupon Licensee shall be forever relieved of such prospective
obligations. Clearwire and Licensees agree that it is reasonable for Clearwire
to reject a proposed assignee where the proposed assignee or its affiliate
competes with Clearwire's offering over EBS or BRS spectrum. In the event that
Licensee desires to assign its FCC License to another entity, Licensee shall
inform Clearwire in writing of the identity of such entity and within twenty
(20) days of such notice Clearwire shall inform Licensee in writing of whether
Clearwire consents to such assignment or refuses to consent to such assignment
and, if it refuses, the reason(s) it is relying upon for such refusal.
Notwithstanding the foregoing, Licensee may, without the prior consent of
Clearwire, sell, assign, sublease, delegate or transfer this Agreement or any of
its rights or obligations hereunder to any of Licensee's affiliates controlled
by or under common control with Licensee.
Section 7.06. Other FCC Requirements. In carrying out this Agreement, the
Parties will comply at all times with applicable laws, as well as rules and
policies of the FCC. The Parties believe that the provisions of this Agreement
comply with all current FCC rules and policies, and agree not to express any
contrary view to regulatory agencies or the general public.
Section 7.07. Legends. Each Licensee hereby consents to the placement of
the legends set out in Clearwire Parent's Amended and Restated Stockholders
Agreement, dated as of March
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16, 2004, on all certificates representing capital stock of Clearwire Parent
received by Licensee pursuant to this Agreement.
Section 7.08. Fees and Taxes. Until the end of the term of the IUA that is
the last to expire, Clearwire shall pay all fees and taxes (now existing or
hereafter arising) imposed on Licensees as a result of the licensing, regulation
or use of Licensees' EBS Spectrum by Clearwire or Licensees, including, without
limitation, any Federal spectrum, USF and/or regulatory fees that may be imposed
on EBS Spectrum in the future.
Section 7.09. Best Efforts for Duration of Relationship. The Parties
acknowledge that there will be many changes in the course of the term of the
IUAs in technology, capabilities, and regulatory environment and other relevant
areas, and the Parties covenant and agree to act in a cooperative manner to
preserve the intent of the relationships reflected in this Agreement to their
mutual advantage and to use their commercially reasonable best efforts to
maintain that mutual advantage in accordance with the initial intent of the
Parties.
Section 7.10. Financial Information Covenants and Maintenance of Guarantee.
Clearwire Parent and Clearwire covenant and agree to provide the financial and
other information required by ARTICLE VIII in a timely fashion.
Section 7.11. Build-Out.
(a) For those Geographic Markets where (i) Clearwire and its
Affiliates have the use of eight or more channels of EBS and/or BRS spectrum
with substantially overlapping GSAs, and (ii) Clearwire has entered into an IUA
with an EBS Spectrum Group Licensee for EBS spectrum in such Geographic Market
(the "Build-out Markets"): (A) Clearwire or its Affiliate shall commence
construction of wireless broadband networks with respect to [***] of the EBS
spectrum (measured on the basis of MHzPops) of the Build-out Markets within
[***] of the earliest Commencement Date of an IUA executed between Clearwire and
a Licensee ("First Commencement Date"), (B) Clearwire or its Affiliates shall
commence construction of wireless broadband networks with respect to [***] of
the EBS spectrum (measured on the basis of MHzPops) of the Build-out Markets
within [***] of the First Commencement Date, and (C) Clearwire or its Affiliates
shall commence construction of wireless broadband networks with respect to [***]
of the EBS Spectrum (measured on the basis of MHzPops) of the Build-out Markets
within [***] of the First Commencement Date (such clauses (A), (B) and (C)
referred to as the "Build-out Condition").
(b) In each Build-out Market where Clearwire has commenced
construction of a wireless broadband network pursuant to Section 7.11(a) above,
Clearwire shall deliver wireless broadband service to [***] of the then-current
GSA population of each EBS Spectrum Group EBS system within [***] of the
completion of the bandplan transition in the local Basic Trading Area and
notification of completion per Section 27.1235 of the FCC Rules. For the purpose
of this Agreement, population shall be considered to be served by applying the
then-current standard set forth in the FCC Rules or policies for substantial
service in the EBS service,
[*** Confidential Treatment Requested]
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or, if the FCC Rules and policies contain no such standard, with reference to
coverage maps then employed by Clearwire in the Geographic Market for marketing
to prospective customers.
(c) The "Build-out Failure Financial Royalty" shall apply when and
during the time that: (i) Clearwire is not in compliance with the
then-applicable Build-out Condition, or (ii) Clearwire is not in compliance with
Section 7.11(b).
(d) The Build-out Failure Financial Royalty shall be an amount equal
[***] of the applicable Monthly Royalties (adjusted for the Limited CPI
Adjustment) due to be paid with respect to the quantity of EBS Spectrum measured
in MhzPops for which Clearwire has failed to meet the requirements of Section
7.11(a) and (b) above.
(e) The monthly amount of the Build-out Failure Financial Royalty
shall be distributed pro-rata to each Licensee which operates an EBS system in a
Geographic Market where: (i) the Build-out Condition has not been met, or the
Build-out Condition has been met, but the requirement of Section 7.11(b) above
has not been met. The amount of Build-out Failure Financial Royalty each such
Licensee receives shall be determined pro-rata according to the MHzPops of its
EBS Stations meeting the criteria set forth in (i) and/or (ii) above. At the
option of the affected Licensee, in lieu of accepting its pro rata share of
Build-out Failure Financial Royalty such Licensee may instead accept equivalent
Access Royalties and other services in one or more other Geographic Markets
served by Clearwire.
ARTICLE VIII.
INFORMATION SHARING OBLIGATIONS AND CONSULTATION REGARDING ACCESS RIGHT
ROYALTIES AND CERTAIN OTHER COVENANTS
Section 8.01. Overview of Consultation/Information Exchange Requirements.
(a) Guiding Principles. The consultation, governance and information
rights and obligations and the related processes for audit contained in this
ARTICLE VIII (collectively, the "Ongoing Obligations"), are intended to preserve
the benefits to Licensees set forth in Article III and Section 7.11 hereof in
light of changes in the wireless broadband environment over a Term of
approximately 30 years. By way of example and not limitation, the Parties
recognize that changes to the technology or architecture of Cell Sites or
Sectors, or to the composition, number or characteristics of Subscribers, could,
without accompanying changes to the provisions of Article III result in an
adverse impact on the number of Cost-Free Customer Accounts to which a Licensee
is entitled or otherwise impair their value in comparison to the anticipated
circumstances at the time of execution of this Agreement. As well, it is the
intent of the Parties to supply those Licensees which are Clearwire Parent
shareholders (or have the right to become Clearwire Parent shareholders) with
information as described in Section 8.07. The Ongoing Obligations are intended
to facilitate good faith negotiation and resolution of issues arising from
changes in circumstances during the Term, but any failure to comply with the
Ongoing Obligations is to be addressed through the Dispute Resolution Procedure
and shall not give rise to a right to terminate an IUA or this Agreement.
[*** Confidential Treatment Requested]
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(b) Party Representatives. To facilitate the Ongoing Obligations, the
Parties shall designate Party Representatives as provided in this Section
8.01(b) to act as representatives of the Licensees that appoint them hereunder,
on the one hand, and Clearwire, on the other hand, with respect to the all
matters under this Agreement and in particular with respect to matters governed
by Section 8.06. Licensees shall have not less than two representatives, one of
whom shall be designated by NACEPF (the "NACEPF Representative") and the other
of whom shall be designated by the ITF Cluster (the "ITF Group Representative"
and with NACEPF Representative, and any third representative (the "Licensee
Representatives"). If so requested, the Licensees other than NACEPF and the ITF
Cluster may request, as a group, one additional Licensee Representative to
represent their interests. Clearwire shall designate two representatives, at
least one of whom shall be an officer of Clearwire Parent and one of whom shall
be a Clearwire senior spectrum management executive (who may be the same person)
(the "Clearwire Representatives" and with the Licensee Representatives, the
"Party Representatives"). The initial Party Representatives shall be the
individuals identified on Schedule 8.01 hereto.
(c) Relationship Management. To facilitate the management of the
relationship between Licensees and Clearwire, the affected Licensees shall be
provided with the information disclosure provided for in Section 8.02 through
Section 8.05 at the times specified therein. The completeness and accuracy of
such information may be evaluated through the audit process set forth in Section
8.06. Clearwire Parent information will be made available in accordance with
Section 8.07 to any Licensee which is a shareholder or has the right to become a
shareholder of Clearwire Parent.
Section 8.02. Capacity Disclosure.
(a) Initial Capacity Disclosure. Within thirty (30) days of the later
of (i) the commercial launch of a Clearwire Affiliate's broadband wireless
system in any Market Area, and (ii) the Commencement Date of an IUA for EBS
Spectrum in the Market Area (such later date, the "EBS Relevance Date"),
Clearwire shall disclose in writing to the affected Licensees: (1) the total
number of EBS and BRS channels Clearwire currently is utilizing for Permitted
Uses (as defined in the IUAs) in the Market Area, (2) the number of Cell Sites
in the Market Area, and (3) the number of Sectors in the Market Area. The
information pursuant to (1) and (2) shall be updated at each Information Sharing
Meeting, and the information pursuant to (3) shall be updated as provided in
Section 8.02(b) below.
(b) Annual Update. By January 31 of each year following the EBS
Relevance Date for a Market Area, Clearwire shall disclose in writing to the
affected Licensee(s): (1) the number of Sectors in the Market Area, and (2) the
number of subscribers in the Market Area served by Clearwire or any of its
Affiliates. All information shall be as of December 31 of the previous year.
(c) Data Capacity Measurement. On the first and fifth anniversaries of
the EBS Relevance Date for a Market Area, and every five years thereafter,
Clearwire shall disclose in writing to the affected Licensees the overall data
capacity of the network in such Market Area as measured by its average
throughput. The average throughput measurement shall be made in
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such fashion as shall be agreed by the Party Representatives in consultation
with Clearwire engineers and other technical experts prior to such anniversary,
using metrics that are as consistent as possible with those utilized at the time
of the immediately prior average throughput measurement (with respect to each
Market Area on each such anniversary, the "Updated Capacity Disclosure").
Section 8.03. System Information.
Within thirty (30) days of the EBS Relevance Date for a Market Area,
Clearwire shall disclose in writing to the affected Licensee(s) the system
capabilities, services, and feature sets that are generally provided to
Clearwire's or its Affiliate's retail customers and wholesalers to mass market
customers ("System Service Capabilities"), which information can be provided by
reference to Clearwire's website to the extent that it is available to the
public there. At such time as System Service Capabilities are changed for any
Market Area, Clearwire shall so notify the affected Licensee(s) in writing
within 30 days of such change. Clearwire will also provide appropriate
supporting information of the change as may be reasonably requested by Licensee.
Section 8.04. Preferred Content Provider Information.
(a) Within thirty (30) days of the later of the EBS Relevance Date for
a Market Area and the date when third-party content is delivered in the Market
Area, Clearwire shall disclose to the affected Licensee(s) in writing the system
capabilities, and/or service or feature sets that are then being provided to
third-party content providers in the Market Area, and a schedule of the charges,
if any, for any of the foregoing, together with the basis on which such charges
are imposed to demonstrate that the pricing requirements of Section 3.08(b) are
being satisfied. Clearwire shall advise the affected Licensee(s) of anticipated
changes in the price structure and the effective date of any such change not
less than 30 days before such change shall become effective.
(b) Clearwire shall disclose in a timely fashion to permit Licensee to
make alternative arrangements if Clearwire anticipates that there may be
limitations in the network capabilities in a Market Area that could cause
Clearwire to restrict the use of capabilities and services pertaining to a
Licensee's providing content over the broadband wireless network in that Market
Area. Prior to restricting access of Licensee as a result of such limitations,
as permitted under Section 3.08, Clearwire shall have disclosed in sufficient
detail the scope of such constraints. Clearwire shall promptly advise Licensee
if as a result of a change in technology, business practices, customer dynamics,
or otherwise, the capacity constraint is dissipated at any time, which would
reinstate the obligations of Clearwire under Section 3.08.
Section 8.05. Limited Reciprocity Information.
Should Clearwire enter into advanced stage negotiations to form a strategic
relationship with any entity covered by [***]. it shall promptly notify
the Licensee Representatives in writing. Clearwire will use its commercially
reasonable best efforts to arrange one or more meetings between NACEPF and the
ITF Cluster and any such actual or potential strategic partner
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so as to permit discussion of carriage of the networks contemplated under
Section 3.09. Clearwire shall use it commercially reasonable best efforts to
facilitate negotiations to a successful conclusion.
Section 8.06. Consultation Processes.
(a) Consultation Process Pertaining to Access Right Royalty
Information. As often as necessary, but in no event less than once per calendar
quarter, the Licensee Representatives or their designees shall be given access
to members of Clearwire's management and/or technical staff to review the
process and content of information sharing pursuant to Article VIII, and to
address any questions or concerns about the manner, timeliness and completeness
of the information received, in addition to questions about its content.
(b) Process for Altering Definitions/Formulae to Maintain Integrity of
Relationship. At the call of any Party Representative, the Party Representatives
shall meet, together with such other employees or advisors as may facilitate
such meeting, to discuss concerns over the operation of the formulas and the
scope of defined terms as a result of one or more changes in Clearwire's
technology and/or business practices that individually or collectively produce a
material adverse change to the Access Royalties or other material benefits that
some or all of the Licensees receive pursuant to this Agreement, and to
determine if a reformation of this Agreement or any or all EBS Spectrum IUAs
should be implemented to prevent or reverse such material adverse change(s).
(i) The Parties agree to share such information and to provide
such technical assistance in collecting and evaluating such information as may
be useful or necessary to facilitate the process required by Section 8.06(a) and
(b). In connection with such consultation, any Party Representative may propose
altering the scope of a term or formula under this Agreement or an IUA
("Reformation Proposal") to achieve the goals set forth in Section 8.01 and to
preserve the Licensee benefits set forth Article III or elsewhere in this
Agreement. If the Parties agree on the change, they shall take such action as is
necessary to amend this Agreement and the applicable IUAs. If the Parties cannot
agree on a proposed modification in a timely manner, any Party Representative
may invoke the Special Dispute Resolution Procedure identified for this purpose
in Section 11.12(d). Any Party Representative may invoke for the first time
Special Dispute Resolution Procedure set forth above at any time following the
Commencement Date of an IUA between such Parties.
(ii) No Party Representative may invoke the Special Dispute
Resolution Procedure in support of a Reformation Proposal on the same principal
grounds more frequently than every five (5) years during the Term of this
Agreement. By way of example but not limitation: no Party Representative's
Reformation Proposal justified primarily on Clearwire network technical changes
can be pursued through the Special Dispute Resolution Procedure within five (5)
years of the immediately preceding Special Dispute Resolution Procedure
justified primarily on Clearwire network technical changes. By way of further
example and not limitation: no Party's Representative's Reformation Proposal
justified primarily on Clearwire's changed business practices can be pursued
through the Special Dispute Resolution Procedure
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within five (5) years of the immediately preceding Special Dispute Resolution
Procedure justified primarily on Clearwire's changed business practices.
Section 8.07. Information Access Rights Related to Clearwire Parent.
[***]
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[***]
Section 8.08. Information Audit Rights.
(a) Licensees may audit the information provided by Clearwire pursuant
to Sections 8.02, 8.03, and 8.04. Licensees' audit will be limited to
Clearwire's records and engineering documents that are relevant and sufficient
to verify the information provided by Clearwire. No more than once per calendar
year for each Market Area, each Licensee may audit one or more metrics reported
by Clearwire for that Market Area where an IUA has been executed between
Clearwire and Licensee. In the case of metrics that are not specific to Market
Areas, but that are company-wide or regional, any member of the EBS Spectrum
Group may audit one or more of such metrics reported by Clearwire no more than
once per calendar year. Clearwire must provide the underlying source documents
within 20 days of a request for audit by a Licensee.
(b) The costs incurred by a Licensee in performing an audit under this
Section 8.08 shall be borne by the Licensee; provided that, if there is a
discrepancy of [***] or more with respect to a particular metric in a Market
Area, costs of audit of that metric shall be borne by Clearwire and promptly
paid upon submission of an invoice.
ARTICLE IX.
INDEMNIFICATION
Section 9.01. Indemnification
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(a) Each Licensee severally shall indemnify Clearwire, its Affiliates,
and each of their respective stockholders (other than Licensee(s)), directors,
officers, employees, agents, successors and assigns (collectively, the
"Clearwire Indemnified Parties") and hold each of the Clearwire Indemnified
Parties harmless from and against any and all Damages based upon, attributable
to or resulting from:
(i) The failure of any representation or warranty of that
Licensee set forth in ARTICLE V hereof, or any representation or warranty
contained in any certificate delivered by or on behalf of that Licensee pursuant
to this Agreement, to be true and correct as of the dates made; and
(ii) The breach of any covenant or other agreement on the part of
that Licensee under this Agreement.
(b) Clearwire shall indemnify the Licensees, their Affiliates, and
each of their respective, agents, successors and assigns (collectively, the
"Licensee(s) Indemnified Parties") and hold each of the Licensee(s) Indemnified
Parties harmless from and against any and all Damages based upon, attributable
to or resulting from:
(i) The failure of any representation or warranty of Clearwire
set forth in ARTICLE VI hereof, or any representation or warranty contained in
any certificate delivered by or on behalf of Clearwire pursuant to this
Agreement, to be true and correct as of the dates made;
(ii) The breach of any covenant or other agreement on the part of
Clearwire under this Agreement; and
(iii) The operation of equipment by, the provision of service by
or otherwise related to the activities of Clearwire, any of its Affiliates or
any of its sublicensees or resellers including, without limitation, damage to
health.
Section 9.02. Determination of Damages. As used herein, "Damages" means any
and all losses, claims, demands, liabilities, obligations, actions, suits,
orders, statutory or regulatory compliance requirements, or proceedings asserted
by any Person, and all damages, costs, expenses, assessments, judgments,
recoveries and deficiencies, including interest, penalties, investigatory
expenses, consultants' fees, and reasonable attorneys' fees and costs, of every
kind and description, contingent or otherwise. For purposes of the above, the
amount of Damages in respect of any breach of a representation or warranty shall
be determined without regard to any limitation or qualification as to
materiality, Licensee(s) Material Adverse Effect, Clearwire Material Adverse
Effect, knowledge or similar language set forth in such representation or
warranty.
Section 9.03. Limitations on Indemnification for Breaches of
Representations and Warranties. An indemnifying Party shall not have any
liability under Section 9.01(a)(i) or Section 9.0l(b)(i) hereof unless the
aggregate amount of Damages to the indemnified Parties finally determined to
arise thereunder based upon, attributable to or resulting from the failure of
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any representation or warranty to be true and correct or the breach of any
covenant, exceeds $10,000 in the aggregate (the "Deductible") and, in such
event, the indemnifying Party shall be required to pay the amount of such
Damages including those used to compute the Deductible.
Section 9.04. Indemnification Procedures
(a) In the event that any claim shall be asserted by any Person in
respect of which payment may be sought under Section 9.01 hereof (regardless of
the Deductible referred to above) (each, a "Claim"), the indemnified Party shall
reasonably and promptly cause written notice (a "Claim Notice") of the assertion
of any Claim of which it has knowledge which is covered by this indemnity to be
forwarded to the indemnifying Party. The indemnifying Party shall have the
right, at its sole option and expense, to be represented by counsel of its
choice, which must be reasonably satisfactory to the indemnified Party, and to
defend against, negotiate, settle or otherwise deal with any Claim which relates
to any Damages indemnified against hereunder. If the indemnifying Party elects
to defend against, negotiate, settle or otherwise deal with any Claim which
relates to any Damages indemnified against hereunder, it shall within five (5)
days of the delivery of the Claim Notice (or sooner, if the nature of the Claim
so requires) notify the indemnified Party of its intent to do so. If the
indemnifying Party elects not to defend against, negotiate, settle or otherwise
deal with any Claim which relates to any Damages indemnified against hereunder,
fails to notify the indemnified Party of its election as herein provided or
contests its obligation to indemnify the indemnified Party for such Damages
under this Agreement, the indemnified Party may defend against, negotiate,
settle or otherwise deal with such Claim. If the indemnified Party defends any
Claim, then the indemnifying Party shall reimburse the indemnified Party for the
expenses of defending such Claim upon submission of periodic bills. If the
indemnifying Party shall assume the defense of any Claim, the indemnified Party
may participate, at his or its own expense, in the defense of such Claim;
provided, however, that such indemnified Party shall be entitled to participate
in any such defense with separate counsel at the expense of the indemnifying
Party if, so requested by the indemnifying Party to participate or in the
reasonable opinion of counsel to the indemnified Party, a conflict or potential
conflict exists between the indemnified Party and the indemnifying Party that
would make such separate representation advisable; and provided, further, that
the indemnifying Party shall not be required to pay for more than one such
counsel for all indemnified Parties in connection with any Claim. The Parties
hereto agree to cooperate fully with each other in connection with the defense,
negotiation, or settlement of any such Claim.
(b) After any final judgment or award shall have been rendered by a
court, arbitration board or administrative agency of competent jurisdiction and
the expiration of the time in which to appeal therefrom, or a settlement shall
have been consummated, or the indemnified Party and the indemnifying Party shall
have arrived at a mutually binding agreement with respect to a Claim hereunder,
the indemnified Party shall forward to the indemnifying Party notice of any sums
due and owing by the indemnifying Party pursuant to this Agreement with respect
to such matter.
(c) The failure of the indemnified Party to give reasonably prompt
notice of any Claim shall not release, waive or otherwise affect the
indemnifying Party's obligations with
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respect thereto except to the extent that the indemnifying Party can demonstrate
actual loss and prejudice as a result of such failure.
ARTICLE X.
TERMINATION
Section 10.01. Expiration; Termination. The term of this Agreement begins
on the Effective Date and ends on July 31, 2036, unless sooner terminated (the
"Term"). Termination of this Agreement pursuant to this Section 10.01 shall
terminate all rights and obligations of the Parties hereunder and this Agreement
shall become void and have no force or effect. Notwithstanding the foregoing,
this Section 10.01 and ARTICLES IX and XI shall survive termination of this
Agreement, and no Party shall be relieved from any liability for any breach of
any of its covenants or agreements in this Agreement prior to such termination.
Section 10.02. Defaults.
(a) Any default under, breach of or misrepresentation under the
covenants, obligations or representations set out in this Agreement (other than
a Payment Default) must be cured within [***] of receipt of written notice
thereof from Clearwire, if the defaulting Party is a Licensee, or from a
Licensee if the defaulting Party is Clearwire, as long as the defaulting Party
commences to cure such default within [***] of receipt of written notice and
proceeds with reasonable diligence thereafter, provided, however, that Payment
Defaults must be cured within [***] of receipt of notice thereof. In the event
that a payment obligation remains unpaid [***] after its original due date, the
defaulting Party shall pay interest on the unpaid amount from the original due
date until the time of payment equal to the greater of (i) [***] or (ii) a
fluctuating rate equal to the Prime Rate as of the original due date plus [***],
but in no event exceeding the highest lawful rate of interest that may be
charged or collected. Interest shall be due and payable monthly. In addition, if
any payment remains unpaid 30 days after its original due date, a penalty equal
to [***] of the unpaid amount shall become immediately due and payable. The
"Prime Rate" shall be the rate last published in the Wall Street Journal or any
similar successor publication as the Prime Rate as of the applicable date.
Clearwire's failure to meet the Build-out Condition shall not be deemed a
default or Material Failure hereunder.
(b) A Licensee shall have the right to withdraw from this Agreement
and terminate any IUA to which it is a party upon the occurrence of a Cross
Default as provided in Section 1.05.
ARTICLE XI.
GENERAL PROVISIONS
Section 11.01. Payment of Sales, Use or Similar Taxes. Clearwire shall be
liable for and shall pay (and shall indemnify and hold harmless the Licensee(s)
Indemnified Parties against) all
[* * * Confidential Treatment Requested]
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sales, use, stamp, documentary, filing, recording, transfer, real estate
transfer, registration, duty or similar fees or taxes or governmental charges
(together with any interest or penalty, addition to tax or additional amount
imposed) as levied by any taxing authority in connection with the Contemplated
Transactions.
Section 11.02. Survival of Representations and Warranties. The Parties
hereto hereby agree that the representations and warranties contained in this
Agreement or in any certificate, document or instrument delivered in connection
herewith, shall survive each of the Closings hereunder for a period of [***]
from the Initial Closing Date or Subsequent Closing Date with respect to the EBS
Spectrum that is subject to such Initial Closing or Subsequent Closing, as
applicable, regardless of any investigation made by the Parties hereto. All
agreements and covenants contained herein shall survive indefinitely until, by
their respective terms, they are no longer operative.
Section 11.03. Expenses. Clearwire shall reimburse Licensees for all of
Licensees' reasonable out-of-pocket expenses incurred in preparation and
negotiation of this Agreement and the term sheet and the IUAs (whether or not
the Parties execute this Agreement) and shall reimburse up to [***] for each IUA
closed on the Effective Date or within three (3) months of the date of this
Agreement and [***] for each IUA closed thereafter. The expenses incurred by
Licensees for the negotiation and preparation of all subsequent documents
appended to this Agreement and to each IUA, and in connection with any FCC
activity or activity to preserve, obtain or renew licenses for EBS Spectrum
shall be reimbursed by Clearwire, as long as expenses over $1,000 are approved
as to reasonableness by Clearwire in advance. (The amounts due and remaining
payable by Clearwire under this Section 11.03 as of any date are sometimes
referred to herein as the "Applicable Fee Payments"). Licensees and Clearwire
shall otherwise each bear their own expenses except as stated otherwise in any
IUA.
Section 11.04. Entire Agreement; Amendments and Waivers. This Agreement
(including the schedules and exhibits hereto), represents the entire
understanding and agreement between the Parties hereto with respect to the
subject matter hereof and can be amended, supplemented or changed, and any
provision hereof can be waived, only by written instrument making specific
reference to this Agreement signed by the Party against whom enforcement of any
such amendment, supplement, modification or waiver is sought. No action taken
pursuant to this Agreement, including without limitation, any investigation by
or on behalf of any Party, shall be deemed to constitute a waiver by the Party
taking such action of compliance with any representation, warranty, covenant, or
agreement contained herein. The waiver by any Party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a further or
continuing waiver of such breach or as a waiver of any other or subsequent
breach. No failure on the part of any Party to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power, or
remedy by such Party preclude any other or further exercise thereof or the
exercise of any other right, power, or remedy.
Section 11.05. Governing Law. The validity, meaning and effect of this
Agreement shall be determined in accordance with the laws of the State of New
York applicable to contracts
[*** Confidential Treatment Requested]
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made and to be performed in that state, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.
Section 11.06. Table of Contents and Headings. The table of contents and
section headings of this Agreement are for reference purposes only and are to be
given no effect in the construction or interpretation of this Agreement.
Section 11.07. Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally or by overnight courier, or mailed by certified mail, return receipt
requested, to the Parties (and shall also be transmitted by facsimile to the
Persons receiving copies thereof) at the following addresses (or to such other
address as a Party may have specified by notice given to the other Party
pursuant to this provision):
If to Clearwire, to: Clearwire Corporation
5808 Lake Washington Blvd. N.E., Suite 300
Kirkland, WA 98033
Attention: [***]
Facsimile No.: [***]
With a copy to: Clearwire Corporation
5808 Lake Washington Blvd. N.E., Suite 300
Kirkland, WA 98033
Attention: [***]
Facsimile No.: [***]
And a copy to: Davis Wright Tremaine LLP
2600 Century Square
1501 Fourth Avenue
Seattle, WA 98101-1688
Attention: [***]
Facsimile No.: [***]
If to Licensee(s), to: Contact information on Schedule A
In either case, with a copy to:
Day, Berry & Howard LLP
875 Third Avenue
New York, New York 10022
Attention: [***]
Facsimile No.: [***]
Section 11.08. Publicity. No public release, announcement or other form of
publicity concerning this Agreement or the transactions described in this
Agreement, shall be issued by
[* * * Confidential Treatment Requested]
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either Party without the prior consent of the other Party, except as such
release or announcement may be required by law, regulation or the rules or
regulations of any securities exchange, in which case the Party required to make
the release or announcement shall, to the extent possible, allow the other Party
reasonable time to comment on such release or announcement in advance of such
issuance. The Parties shall use reasonable efforts to consult in good faith with
each other with a view to agreeing upon any press release or public announcement
relating to the transactions contemplated hereby prior to the consummation
thereof.
Section 11.09. Severability. If any provision of this Agreement is invalid
or unenforceable, the balance of this Agreement shall remain in effect.
Section 11.10. Binding Effect; Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties and their respective successors and
permitted assigns.
Section 11.11. Remedies. The Parties recognize that, in the event that a
Party should refuse to perform any provisions of this Agreement, monetary
damages alone will not be adequate. The non-defaulting Party shall therefore be
entitled, in addition to any other remedies which may be available, including
money damages, to obtain specific performance of the terms of this Agreement.
Notwithstanding any other provision herein, no remedy conferred by any of the
specific provisions of this Agreement is intended to be exclusive of any other
remedy, and each and every remedy shall be cumulative and shall be in addition
to every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise. The election of any one or more remedies by a
Party shall not constitute a waiver of the right to pursue other available
remedies at any time.
Section 11.12. Dispute Resolution Procedure.
(a) General. The Parties desire to resolve disputes arising out of
this Agreement without litigation. Accordingly, the Parties agree to use the
dispute resolution procedures set forth in this Section 11.12 (the "Dispute
Resolution Procedures") as their sole means of adjudication with respect to any
controversy or claim arising out of or relating to this Agreement or its breach.
(b) Dispute Notice. At the written request of any party (a "Dispute
Notice") , the Parties to the dispute will within seven business days of the
Dispute Notice, appoint knowledgeable, responsible representatives to meet and
negotiate in good faith to resolve any dispute arising under this Agreement. The
Parties intend that these negotiations be conducted by business representatives,
including at least one senior executive of each party to the dispute. The
representatives shall meet and confer, in person or by teleconference, not later
than such seventh business day after the date of the Dispute Notice. The
location, format, frequency, duration and conclusion of these discussions shall
be left to the discretion of the representatives; provided that, the duration
shall not exceed 45 days from the date of the Dispute Notice (an "Action Date")
unless extended by mutual written agreement of the Parties setting forth a new
Action Date. The Dispute Notice and any extension shall specify the Action Date.
The Dispute Notice shall set forth the nature of the dispute, in reasonable
detail. Discussion and correspondence
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among the representatives for purposes of these negotiations shall be treated as
confidential information developed for purposes of settlement, exempt from
discovery and production, and shall not be admissible in the arbitration
described below. Documents identified in or provided with such communications,
which are not prepared for purposes of the negotiations, are not so exempted and
may, if otherwise admissible, be admitted in evidence in the arbitration. If the
Parties are unable to resolve any disputes arising under or relating to this
Agreement (each a "Dispute") using the process described in this Section
11.12(b) within the time period provided, including without limitation disputes
regarding a breach or default under this Agreement, the Parties shall arbitrate
such dispute pursuant to the arbitration provisions set forth in Section
11.01(c) and as modified by the Special Arbitration provisions Section 11.01(d)
in the case of disputes arising under Section 8.06(b).
(c) Arbitration. Any Dispute that has not be resolved within the time
period provided for in Section 11.12(b) shall be resolved by a panel of three
Arbitrators. The Dispute Notice shall automatically serve as a written notice of
a request to submit the Dispute for arbitration if there has not been a
resolution of the Dispute by the Action Date, and the Parties agree to submit
the Dispute to a panel of three Arbitrators who shall be appointed within 30
days of the Action Date (the "Submission Period"). During the Submission Period,
the Parties shall appoint the Arbitrators in accordance with the Commercial
Arbitration Rules (then in effect) of the American Arbitration Authority
("AAA"), as modified below. No punitive damages (or any other amount awarded for
the purpose of imposing a penalty) will be awarded for a breach of this
Agreement.
(i) During the Submission Period, the Parties may submit a
request for discovery to the Arbitrators, who shall determine whether the scope
of the requested discovery is appropriate or useful for the resolution of the
Dispute and order the discovery in their discretion; provided that such
discovery process shall be concluded not later than 30 days following the
submission date (the "Discovery Close Date").
(ii) The arbitration hearing shall be fixed by the Arbitrators to
be not sooner than 20 days nor later than 45 days after the Discovery Close Date
(the "Hearing Date"). The hearing shall be located at a neutral site as mutually
agreed by the Parties, or if the Parties cannot so agree, then the location of
the arbitration shall be Boston, Massachusetts, if NACEPF is a party, or Denver,
Colorado if NACEPF is not a party. The Federal Rules of Evidence shall apply to
the arbitration hearing. The party bringing a particular claim or asserting an
affirmative defense will have the burden of proof with respect thereto. Each
party shall bear the burden of persuasion with respect to its proposal for
resolution of the matter. The arbitration proceedings and all testimony,
filings, documents and information relating to or presented during the
arbitration proceedings shall be deemed to be information subject to the
confidentiality provisions of this Agreement. The Arbitrators will have no power
or authority, pursuant to the rules of the AAA or otherwise, to relieve the
Parties from their agreement hereunder to arbitrate or otherwise to amend or
disregard any provision of this Agreement, including without limitation the
provisions of this Section.
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(iii) Each party shall be permitted to submit a pre-hearing brief
not to exceed 25 pages and such technical supporting material as is necessary or
useful, to be submitted to the Arbitrators and the other party not later than 5
days before the Hearing Date, and each party may issue a response thereto not
later than 2 days before the Hearing Date. Following the arbitration hearing,
each party shall be permitted to submit a post-hearing brief not to exceed 25
pages within 5 days following the Hearing Date and a reply brief within 2 days
thereafter (the "Pleading Close Date"). Should an Arbitrator refuse or be
unable to proceed with arbitration proceedings as called for by this Section,
the Arbitrator shall be replaced pursuant to the rules of the AAA. If an
Arbitrator is replaced after the arbitration hearing has commenced, then a
rehearing shall take place in accordance with this Section and the rules of the
AAA.
(iv) Within fifteen (15) days after the Pleading Close Date, the
Arbitrators will prepare and distribute to the Parties a writing setting forth
the Arbitration Panel's reasons for the its determination. The findings and
conclusions and the award, if any, shall be deemed to be confidential
information of the Parties. Neither party may disclose such information to any
third party other than their professional advisors or as required by law or
regulations, except in connection with an action to enforce the award.
(v) The Arbitrators are instructed to schedule promptly all
discovery and other procedural steps and otherwise to assume case management
initiative and control to effect an efficient and expeditious resolution of the
Dispute. The Arbitrators are authorized to issue monetary sanctions against
either party if, upon a showing of good cause, such party is unreasonably
delaying the proceeding.
(vi) Any award rendered by the Arbitrators will be final,
conclusive, and binding upon the Parties and any judgment thereon may be entered
and enforced in any court of competent jurisdiction.
(vii) The non-prevailing party to an arbitration shall pay its
own expenses, the fees of each Arbitrator, the administrative fee of the AAA,
and the expenses, including without limitation, reasonable attorneys' fees and
costs, and expert and witness fees and costs, incurred by the other party to the
arbitration. In the case of a decision which partially favors each party,
expenses shall be paid as determined by the Arbitrators. In connection with any
judicial proceeding to compel arbitration pursuant to this Agreement or to
confirm, vacate or enforce any award rendered by the Arbitrators, the prevailing
party in such a proceeding shall be entitled to recover reasonable attorney's
fees and expenses incurred in connection with such proceedings, in addition to
any other relief to which it may be entitled.
(viii) Notwithstanding anything to the contrary, neither party
shall have any obligation to arbitrate claims for injunctive relief, specific
performance, or other equitable relief or for the use or unauthorized disclosure
of confidential information, as to which either party shall be entitled to seek
and obtain relief exclusively from the state or federal courts sitting in
Boston, Massachusetts, where NACEPF is a party, and otherwise in Denver,
Colorado, and each party hereby irrevocably submits to the jurisdiction of any
such court; provided that, any and all claims for damages shall remain subject
to arbitration.
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(d) Special Arbitration. With respect to any Dispute arising under
Section 8.06(b), the Arbitration procedures set forth in Section 11.12(c) shall
govern as modified by this Section 11.12(d).
(i) During the first 15 days of the Submission Period each of the
Parties shall designate an arbitrator and unless the third arbitrator has been
selected as provided in the following sentence, the two arbitrators together
shall, within 10 days of their appointment, select the third arbitrator who
shall be an expert in one of the principal areas that is the subject to the
arbitration. If the Parties can agree within the first 15 days of the Submission
Period, the third arbitrator shall be a mutually selected individual with
substantial experience in the general subject matter of the Dispute (the
"Expert"). No arbitrator shall have been employed by either party during the 24
months preceding the hearing date, unless the other party consents. The Expert
shall serve as the chair of the panel.
(ii) During the Submission Period, each Party shall submit to the
each other and the Arbitrators, a description of the Dispute and a proposed
resolution, based on the facts known to the party at the time (an "Initial
Proposal").
(iii) Following discovery and as a part of the party's brief,
each party shall make such adjustments, if any, as the party determines
appropriate to the Initial Proposal.
(iv) Notwithstanding Section 11.12(c)(vii), in the case of a
Special Arbitration, each party shall bear its own expenses and the Parties
shall each bear half of the expenses of the arbitration; provided that, the
costs and expenses of the prevailing party in any court action to compel
arbitration shall be borne by the non-prevailing party as provided in the last
clause of Section 11.12(c)(vii).
Section 11.13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
Section 11.14. Confidentiality. The terms of this Agreement that are not
otherwise required to be disclosed to the FCC in support of the De facto
Transfer Application, requests for renewal thereof or notices submitted to the
FCC, or as required to be disclosed in filings with the Securities and Exchange
Commission or state securities agencies, will be kept strictly confidential by
the Parties and their agents, which confidentiality obligation will survive the
termination or expiration of this Agreement for a period of [***]. The Parties
may make disclosures as required by law, and to employees, shareholders, agents,
attorneys and accountants (collectively, "Agents") as required to perform
obligations under the Agreement, provided, however, that the Parties will cause
all Agents to honor the provisions of this section. In addition, either Party
may disclose this Agreement to its Affiliates, strategic partners, actual or
potential investors, lenders, acquirers, merger partners, and others whom it
deems in good faith to have a need to know such information for purposes of
pursuing a transaction or business relationship with it, so long as it secures
an enforceable obligation from such third party to limit the use and disclosure
of this Agreement as provided herein. The Parties will submit a
[*** Confidential Treatment Requested]
-44-
confidentiality request to the FCC in the event the FCC seeks from the Parties a
copy of this Agreement or any other confidential information regarding its
terms.
Section 11.15. Non-Disclosure of Shared Information. As used herein, the
term "Confidential Information" shall mean all non-public information disclosed
hereunder, whether written or oral, that is designated as confidential or that,
given the nature of the information or the circumstances surrounding its
disclosure, is plainly confidential or by the Parties' practices should be
understood to be confidential. The term Confidential Information does not
include information which: (1) has been or becomes published or is now, or in
the future, in the public domain without breach of this Agreement or breach of a
similar agreement by a third party; (2) prior to disclosure hereunder, is
property within the legitimate possession of the receiving Party; (3) is
lawfully received from a third party having rights therein without restriction
of third party's or the receiving Party's rights to disseminate the information
and without notice of any restriction against its further disclosure; or (4) is
independently developed by the receiving Party through persons who have not had,
either directly or indirectly, access to or knowledge of such Confidential
Information. During the Term, the Parties may supply and/or disclose to each
other Confidential Information relating to the business of the other Party. Each
item of Confidential Information will be kept confidential by the Parties during
the Term and for a period of three (3) years thereafter but may be disclosed in
the enforcement or seeking of damages with respect to a Party's rights under
this Agreement. The receiving Party will be responsible for any improper use of
the Confidential Information by it or any of its Agents. Without the prior
written consent of the disclosing Party, the receiving Party will not disclose
to any entity or person the Confidential Information, or the fact that the
Confidential Information has been made available to it, except for disclosures
required by law, disclosures authorized by the Party owning the Confidential
Information and disclosures made in the context of the enforcement or seeking of
damages with respect to a Party's rights under this Agreement. Each person to
whom Confidential Information is disclosed must be advised of its confidential
nature and must agree to abide by the terms of this section. The provisions of
this Section 11.15 and of Section 14 of the IUA represent the entire
understanding and agreement of the Parties with respect to the subject matter
hereof and thereof and supercede all prior oral or written agreements between
the Parties with respect to such subject matter, including, without limitation,
all non-disclosure agreements.
[THE REMAINDER OF THE PAGE IS INTENTIONALLY LEFT BLANK.]
-45-
Each Party has caused this Master Royalty and Use Agreement to be duly
executed by its duly authorized officer or representative on the date first
above written.
CLEARWIRE SPECTRUM HOLDINGS II LLC
By: /s/ R. Gerard Salemme
------------------------------------
Name: R. Gerard Salemme
Title: EVP
CLEARWIRE CORPORATION
By: /s/ R. Gerard Salemme
------------------------------------
Name: R. Gerard Salemme
Title: EVP
LICENSEES
CHICAGO INSTRUCTIONAL
TECHNOLOGY FOUNDATION, INC.
By: /s/ John B. Schwartz
------------------------------------
Name: John B. Schwartz
Title: Pres.
DENVER AREA EDUCATIONAL
TELECOMMUNICATIONS CONSORTIUM, INC.
By: /s/ John B. Schwartz
------------------------------------
Name: John B. Schwartz
Title: Pres.
INSTRUCTIONAL
TELECOMMUNICATIONS FOUNDATION, INC.
By: /s/ John B. Schwartz
------------------------------------
Name: John B. Schwartz
Title: Pres.
-46-
NORTH AMERICAN CATHOLIC EDUCATIONAL
PROGRAMMING FOUNDATION, INC.
By: /s/ John Primeau
------------------------------------
Name: John Primeau
Title: Pres.
PORTLAND REGIONAL EDUCATIONAL
TELECOMMUNICATIONS
CORPORATION
By: /s/ John B. Schwartz
------------------------------------
Name: John B. Schwartz
Title: Pres.
TWIN CITIES SCHOOLS' TELECOMMUNICATIONS
GROUP, INC.
By: /s/ John B. Schwartz
------------------------------------
Name: John B. Schwartz
Title: Pres.
-47-
EXHIBIT I
DEFINITIONS AND INTERPRETATION
EXHIBIT I
DEFINITIONS AND INTERPRETATIONS
(a) Index of Definitions. Meanings to the following terms are located
at the following sections with this Agreement:
<TABLE>
<S> <C>
AAA .................................................... Section 11.12(c)
Access Right Royalties ................................. Section 1.02(a)
Action Date ............................................ Section 11.12(b)
Additional Cost Free Educational Accounts .............. Section 3.04
Affiliate .............................................. Definitions
Agents ................................................. Section 11.14
Agreement .............................................. Preamble
A-List ................................................. Section 3.10(b)(i)
Applicable Fee Payments ................................ Section 11.03
Available .............................................. Section 1.02(b)
Basic Cost-Free Education Account ...................... Section 3.03(b)
Basic Trading Area ..................................... Definitions
Build-out Condition .................................... Section 7.11(a)
Build-out Failure Financial Royalty .................... Section 7.11(d)
Build-out Markets ...................................... Section 7.11(a)
Calculation of Time Period ............................. Definitions
Capital Changes ........................................ Section 2.01(b)(iii)
Cash Upfront Royalty Deposit ........................... Definitions
Cell Site .............................................. Section 3.02(c)
Channels ............................................... Recitals
CITF ................................................... Preamble
Claim .................................................. Section 9.04(a)
Class A Common Stock ................................... Section 6.03(a)
Class B Common Stock ................................... Section 6.03(a)
Clearwire .............................................. Preamble
Clearwire Documents .................................... Section 6.02
Clearwire Gone Private Period .......................... Section 8.07(c)
Clearwire Indemnified Parties .......................... Section 9.01(a)
Clearwire Material Adverse Effect ...................... Definitions
Clearwire National Platform ............................ Section 3.02(c)
Clearwire Parent ....................................... Preamble
Clearwire Private Company Financials ................... Section 8.07(b)
Clearwire Representative ............................... Section 8.01(b)
</TABLE>
<TABLE>
<S> <C>
Clearwire Schedule ..................................... Section 6.03(b)
Closing Date(s) ........................................ Definitions
Collateral Document .................................... Section 1.03(a)
Commencement Date ...................................... Section 1.02(a)(i)
Commercial Spectrum Capacity ........................... Recitals
Communications Act ..................................... Recitals
Company Package ........................................ Section 8.07(a)
Confidential Information ............................... Section 11.15
Contemplated Transaction ............................... Section 5.02
Cost-Free Educational Account .......................... Section 3.02(b)
Cross Default .......................................... Section 1.05(b)(i)
DAETC .................................................. Preamble
Damages ................................................ Section 9.02
Deductible ............................................. Section 9.03
Default Interest Rate .................................. Definitions
[***] Agreement ........................................ Section 1.02(b)(ii)
Discovery Closing Date ................................. Section 11.12(c)(i)
Dispute ................................................ Section 11.12(b)
Dispute Notice ......................................... Section 11.12(b)
Dispute Resolution Procedures .......................... Section 11.12(a)
Disqualification Event ................................. Section 7.04
EBS .................................................... Recitals
EBS Economic Royalties ................................. Section 2.01(a)
EBS Relevance Date ..................................... Section 8.02(a)
EBS Spectrum Capacity .................................. Section 1.01(a)
EBS Spectrum Group ..................................... Preamble
Economic Royalty ....................................... Definitions
Educational End User ................................... Section 3.02(c)
Educational Reservation ................................ Section 3.03(a)
Effective Date ......................................... Preamble
Equity Royalties ....................................... Definitions
Escrow ................................................. Section 2.01(b)
Escrow Agent ........................................... Definitions
Escrow Agreement ....................................... Section 2.01(b)
Exchange Act ........................................... Section 8.07(a)
Exhibits/Schedules ..................................... Definitions
FCC .................................................... Recitals
FCC IUA Approval ....................................... Definitions
FCC License ............................................ Recitals
FCC Proceedings ........................................ Section 5.04
FCC Qualifications ..................................... Section 7.04
FCC Rules .............................................. Recitals
</TABLE>
[*** Confidential Treatment Requested]
-2-
<TABLE>
<S> <C>
First Commencement Date ................................ Section 7.11(a)
Formula Quantity ....................................... Section 3.04(a)(i)
Gender and Number ...................................... Definitions
Geographic Market ...................................... Section 1.05(b)(ii)
Governing Documents .................................... Definitions
Government Agency ...................................... Definitions
GSA .................................................... Definitions
Hearing Date ........................................... Section 11.12(c)(ii)
Herein ................................................. Definitions
Including .............................................. Definitions
Initial Closing ........................................ Section 4.03(a)
Initial Closing Date ................................... Section 4.03(a)
ITF .................................................... Preamble
ITF Cluster ............................................ Preamble
ITF Group Representative ............................... Section 8.01(b)
IUA .................................................... Section 1.02(a)
Law .................................................... Definitions
LBS/UBS Spectrum ....................................... Definitions
Licensee ............................................... Preamble
Licensee Documents ..................................... Section 5.02
Licensee Representatives ............................... Section 8.01(b)
Licensee(s) Indemnified Parties ........................ Section 9.01(b)
Licensee(s) Material Adverse Effect .................... Definitions
Lien ................................................... Definitions
[***] .................................................. Section 3.09(a)
LOC Substitution ....................................... Section 1.03(c)(i)(2)
Local Channel Ratio .................................... Section 3.04(a)(i)
Mandatory SOSC IUAs .................................... Section 3.10(b)
Mandatory Strategic Opportunity Spectrum
Capacity Right ...................................... Section 3.10(c)
Mandatory Thresholds ................................... Section 3.10(c)
Market Area ............................................ Section 3.02(c)
Material Failure ....................................... Section 1.05(b)(iii)
MHzPops ................................................ Recitals
Monthly Royalties ...................................... Definitions
MRUA-2 Agreement ....................................... Recitals
MRUA-2 Sch A ........................................... Recitals
MVNO Educational Account ............................... Section 3.05
NACEPF ................................................. Preamble
NACEPF Representative .................................. Section 8.01(b)
Ongoing Obligations .................................... Section 8.01(a)
Other Definitional and Interpretive Matters ............ Definitions
Parent Guarantee ....................................... Section 1.03(c)(i)
</TABLE>
[*** Confidential Treatment Requested]
-3-
<TABLE>
<S> <C>
Parent Shares .......................................... Definitions
Party .................................................. Preamble
Party Representative ................................... Section 8.01(b)
Payment Default ........................................ Definitions
Permit ................................................. Definitions
Person ................................................. Definitions
Pleading Close Date .................................... Section 11.12(c)(iii)
Portland Agreement ..................................... Section 1.02(b)(i)
Preferred Content Provider ............................. Section 3.08(a)
Preferred Stock ........................................ Section 6.03(a)
PRETC .................................................. Preamble
Price Per Share ........................................ Section 2.02(b)
Prime Rate ............................................. Section 10.02(a)
Proceeding ............................................. Definitions
Qualifying Bank ........................................ Section 1.03(c)(i)(3)
Quality Spectrum ....................................... Section 3.10(a)
Required IUA ........................................... Section 1.03(c)(i)
ROFR ................................................... Section 1.02(c)
Sector ................................................. Section 3.02(c)
Securities Act ......................................... Definitions
Senior Spectrum Manager ................................ Section 3.10(d)
Service Affiliate ...................................... Section 1.03(a)
Social Welfare Agencies ................................ Section 3.02(c)
SOSC ................................................... Section 3.10(a)
SOSC Committee ......................................... Section 3.10(d)
SOSC Economic Royalties ................................ Section 2.02(a)
SOSC Equity Royalties .................................. Section 2.02(b)
SOSC IUAs .............................................. Section 3.10(b)(i)
Strategic Opportunity Spectrum Capacity ................ Section 3.10(a)
Submission Period ...................................... Section 11.12(c)
Subsequent Closing ..................................... Section 4.03(b)(i)
Subsequent Closing Date ................................ Section 4.03(b)(i)
Subsidiaries ........................................... Section 6.04
System Service Capabilities ............................ Section 8.03
TCSTG .................................................. Preamble
Tender ................................................. Section 3.10(d)
Term ................................................... Section 10.01
Third Party Agreement .................................. Section 1.02(b)
Total Consideration .................................... Recitals
Unencumbered Spectrum Capacity ......................... Recitals
Updated Capacity Disclosure ............................ Section 8.02(c)
Upfront Royalty ........................................ Definitions
Wire Account ........................................... Section 4.01(a)
</TABLE>
-4-
(b) Definitions. The following terms have the following meanings
throughout this Agreement:
"Affiliate" means, with respect to any entity, any other entity that
directly, or through one or more intermediaries, controls or is controlled by or
is under common control with such first entity, but does not include any entity
that directly or indirectly, or through one or more intermediaries, controls
Clearwire Parent, or any entity that directly or indirectly, or through one or
more intermediaries, is under common control with Clearwire Parent but is not a
direct or indirect subsidiary of Clearwire Parent. As used in this definition,
"control" (including, with correlative meanings, "controlled by" and "under
common control with") shall mean possession, directly or indirectly, of power to
direct or cause the direction of management or policies (whether through
ownership of securities or partnership or other ownership interests, by contract
or otherwise).
"Basic Trading Area" has the meaning given in the FCC Rules for BRS.
"Clearwire Material Adverse Effect" means a material adverse effect on the
business, operations, properties, assets, condition (financial or other) or
results of operations of Clearwire, taken as a whole, other than changes
affecting the broadband wireless business generally.
"Closing Date(s)" means the Initial Closing Date or each Subsequent Closing
Date.
"De facto Transfer Application" has the meaning set forth in the IUA.
"Default Interest Rate" means an interest rate equal to the greater of (i)
[***] or (ii) a fluctuating rate equal to the "Prime Rate" as announced from
time to time by The Wall Street Journal plus [***], but in no event exceeding
the highest lawful rate of interest that may be charged or collected.
"Escrow Agent" shall be Wells Fargo Bank N.A. or its Affiliate, including
any successor thereto appointed in accordance with the terms of the Escrow
Agreement.
"Economic Royalty" means the total royalty set forth on Schedule A.
"Equity Royalties" means the Initial Closing Equity Royalties and/or the
Subsequent Closing Equity Royalties. "FCC IUA Approval" means the grant of de
facto transfer of an IUA by the FCC.
"Governing Documents" means articles of incorporation, certificate of
incorporation, bylaws, certificate of formation, limited liability company
agreement, or similar governing documents of an entity.
[*** Confidential Treatment Requested]
"Government Agency" means any Federal, state or local government or any
foreign, national, provincial, or local government, or any governmental,
regulatory, legislative, executive, or administrative authority, agency or
commission, or any court, tribunal, or judicial body.
"GSA" shall have the meaning set forth in the IUA.
"Law" means the common law and any federal, provincial, state, local, or
foreign statute, law, ordinance, code, rule, regulation, or other requirement or
rule of law.
"LBS/UBS Spectrum" means lower and/or upper band EBS or BRS spectrum,
post-transition, and channels numbered 1, 2 or 3, pre-transition, as defined by
the FCC Rules.
"Licensee(s) Material Adverse Effect" means a material adverse effect on
the business, operations, properties, assets, condition (financial or other) or
results of operations of Licensee(s), taken as a whole, other than changes
affecting EBS licensees or the broadband wireless business generally.
"Lien" means any lien, pledge, mortgage, deed of trust, security interest,
lease, option, right of first refusal, easement, or encumbrance.
"Limited CPI Adjustment" shall have the meaning set forth in the IUA.
"Monthly Royalties" shall have the meaning set forth in the IUA.
"Parent Shares" means shares of Class A Common Stock, par value $0.0001, of
Clearwire Corporation.
"Payment Default" means the failure to pay an amount due under this
Agreement.
"Permit" means all permits, licenses, franchises, consents, variances,
exemptions, Authorizations and the like issued by Governmental Authorities to or
for the benefit of a Party to the Agreement (as the case may be).
"Person," whether or not such term is capitalized, means any individual,
partnership, firm, corporation, limited liability licensee(s), association,
trust, unincorporated organization, or other entity.
"Proceeding" means any action, suit, litigation, arbitration proceeding
(including any civil, criminal, administrative, investigative or appellate
proceeding), hearing, inquiry, examination or investigation commenced, brought,
conducted or heard by or before, or otherwise involving any court or other
Government Agency or any arbitrator or arbitration panel.
"Securities Act" means the Securities Act of 1933, as amended.
-2-
"Upfront Royalty" shall have the meaning set forth in the IUA.
"Upfront Royalty Deposit" shall have the meaning set forth in the IUA.
(c) Other Definitional and Interpretive Matters. Unless otherwise
expressly provided, for purposes of the Agreement, the following rules of
interpretation shall apply:
(1) Calculation of Time Period. When calculating the period
of time before which, within which or following which any act is to be done or
step taken pursuant to this Agreement, the date that is the reference date in
calculating such period shall be excluded. If the last day of such period is a
non-Business Day, the period in question shall end on the next succeeding
Business Day.
(2) Exhibits/Schedules. The Exhibits and Schedules to this
Agreement are hereby incorporated and made a part hereof and are an integral
part of this Agreement. Any capitalized terms used in any Exhibit or Schedule
but not otherwise defined therein shall be defined as set forth in this
Agreement.
(3) Gender and Number. Any reference in this Agreement to
gender shall include all genders, and words imparting the singular number only
shall include the plural and vice versa.
(4) Herein. The words such as "herein." "hereinafter,"
"hereof," and "hereunder" refer to this Agreement as a whole and not merely to a
subdivision in which such words appear unless the context otherwise requires.
(5) Including. The word "including" or any variation thereof
means "including, without limitation" and shall not be construed to limit any
general statement that it follows to the specific or similar items or matters
immediately following it.
(d) The Parties hereto have participated jointly in the negotiation
and drafting of this Agreement and, in the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as jointly
drafted by the Parties hereto and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any provision
of this Agreement.
-3-
EXHIBIT II-A
FORM OF IUA
EXHIBIT I-A
EDUCATIONAL BROADBAND SERVICE
LONG TERM DE FACTO TRANSFER
INDIVIDUAL USE AGREEMENT
THIS Educational Broadband Service Long Term De facto Transfer Individual
Use Agreement (the "AGREEMENT") is entered into as of _________, 20_____(1) (the
"EFFECTIVE DATE"), by and between __________ ,(2) a __________ (3) (the
"LICENSEE"); and Clearwire Spectrum Holdings II LLC, a Nevada limited liability
company ("CLEARWIRE") (with each of Licensee and Clearwire sometimes referred to
individually as "PARTY" and collectively as "PARTIES").
RECITALS:
WHEREAS the Licensee is authorized by the Federal Communications Commission
("FCC") under the rules, regulations and published policies of the FCC (as they
may be amended, "FCC RULES") to engineer and operate Educational Broadband
Service ("EBS") channels 4(including any associated J- or K-Group channels and
any channels exchanged for the listed channels, the "CHANNELS") under call sign
__________ (the "FCC LICENSE") in the __________ BASIC TRADING AREA")(6);
WHEREAS Licensee, Clearwire Corporation, a Delaware corporation ("CLEARWIRE
PARENT"), Clearwire and certain other EBS licensees are parties to that certain
Master Royalty and Use Agreement, dated ___________ , 2006 (the "MASTER
AGREEMENT"), which sets forth certain rights and obligations between the Parties
with respect to access to EBS spectrum licensed to Licensee and certain other
licensees, including capacity on the Channels;
WHEREAS this Agreement is an integral part of the Master Agreement; and
WHEREAS the Parties have agreed to enter into this Agreement for Licensee
to provide Clearwire with access to the capacity on the Channels, which pursuant
to the FCC Rules, can be made available for commercial use, in accordance with
the terms and conditions below, and subject to FCC approval.
THEN, in consideration of the premises and covenants set forth in this
Agreement, and for good and valuable consideration, the sufficiency of which is
acknowledged by the Parties' signatures, the Parties agree as follows:
----------
(1) Insert Initial Closing Date or Subsequent Closing Date, as applicable.
(2) Insert name of licensee.
(3) Insert organizational information on licensee.
(4) Insert EBS channel designations.
(6) Insert the one or more Basic Trading Areas that host the GSA(s) of the
Channels.
1. TERM(7)
(A) TERM. Subject to Section 1(b), the term of this Agreement begins
on the Effective Date and ends on July 31, 2036 (the "TERM"), unless this
Agreement is terminated earlier in accordance with Section 11. Prior to the
Commencement Date (as defined below), the provisions of this Agreement which are
expressly ineffective before the Commencement Date as well as Sections 3, 4, 7
and 8 shall be ineffective until the Commencement Date, at which time all
provisions of this Agreement shall be fully effective. The other provisions in
this Agreement shall be effective from the Effective Date and until the
termination or expiration of this Agreement. The "COMMENCEMENT DATE" is the day
that the FCC grants the De facto Transfer Application.
(B) RENEWAL OF FCC LICENSE AND EXTENSION OF AGREEMENT. In the event
that the FCC License expires during the Term, this Agreement will also expire at
such time unless the FCC License is renewed and FCC authorization for this
Agreement is extended. Licensee and Clearwire will cooperate to timely file a
renewal application for the FCC License, in conjunction with a request for
renewal of the De facto Transfer Authorization for the next FCC License term.
Subject to Section 11, this Agreement will continue to apply unless the FCC
denies by Final Order any application for renewal of the FCC License or the De
facto Transfer Authorization, or the FCC requires the expiration of this
Agreement at an earlier time. "Final Order" means an order issued by the FCC
that can no longer be appealed.
2. ROYALTY COMPENSATION
(A) EQUITY ROYALTY. Pursuant to the Master Agreement,_____ 8 shares of
Clearwire Parent Class A Common Stock (as the number of such shares may be
adjusted in accordance with the requirements of the Master Agreement, the
"EQUITY ROYALTY") have been deposited in escrow (the "ESCROW") for delivery to
Licensee pursuant to the terms of an escrow agreement (as it may be or may have
been amended or replaced, the "Escrow Agreement") by and among __________ (9)
and __________ (10) (as it may be replaced, the "ESCROW AGENT"). Clearwire shall
cause the Escrow Agent to deliver the Equity Royalty to Licensee within ten (10)
days of the Commencement Date. The Equity Royalty is partial consideration for
the execution and delivery of this Agreement by Licensee. In the event that this
Agreement is terminated pursuant to Section 11(f) or is otherwise terminated
prior to the Commencement Date, the Parent Stock shares shall be released from
Escrow and returned to Clearwire Parent with the blank stock powers upon the
effective date of such termination. In the event that this Agreement is
terminated pursuant to Section 11(g), Licensee shall transfer to Clearwire that
number of Equity Royalty shares that have been issued to Licensee pursuant to
this Agreement that is equal to the product of the number of Equity Royalty
shares issued pursuant to this Agreement (as adjusted
----------
(7) For DAETC IUA, change this heading to "TERM; ADDITION OF CHANNELS" and
insert Rider C.
(8) Insert number of shares as shown on Schedule A of the Master Agreement, as
such number may have been adjusted in accordance with the terms of the
Master Agreement for "Capital Changes" as defined and calculated
thereunder.
(9) Insert names of parties other than escrow agent.
(10) Insert name of Escrow Agent.
2
for stock splits, stock combinations and reclassifications between the date of
issuance and the return date) and the fraction having as its numerator the
number of days between the date of such termination and July 31, 2036 and having
as its denominator the number of days between the Effective Date and July 31,
2036. In the event that such product is a fraction, it shall be rounded to the
nearest whole share. Promptly after such return, Clearwire shall cause Clearwire
Parent to issue a new share certificate for the Equity Royalty shares as are
retained by Licensee. Except to the extent expressly required by this Section
2(a), in no event shall Licensee be required to return or refund any portion or
the whole of the Equity Royalty notwithstanding any termination of this
Agreement and this Section 2(a) shall survive the termination of this
Agreement.(11)
(B) UPFRONT ROYALTY.(12)
(C) MONTHLY ROYALTIES. Within five (5) business days following the
Commencement Date and by the first day of each month thereafter throughout the
Term, Clearwire will pay Licensee a monthly royalty (as it may be adjusted
pursuant to Section 2(c)(i) and (ii), the "MONTHLY ROYALTIES") as shown in the
following table. The Monthly Royalty due for any partial calendar month, at the
commencement of the Commencement Date or expiration of the Term, shall be
prorated. If the FCC grant of the De facto Transfer Authorization is stayed by
the FCC or by any Federal court on appeal of the FCC's grant, and such stay
precludes the provision of the capacity of the Channels during its effective
period, no Monthly Royalties shall be paid during the period of that legal
incapacity, and for any period of such incapacity that lasts for less than a
full calendar month, the Monthly Royalty for that month shall be pro rated.
<TABLE>
<CAPTION>
YEAR IN WHICH ROYALTY IS PAID MONTHLY ROYALTIES (13)
----------------------------- ----------------------
<S> <C>
2006-2010 $__________
2011-2015 $__________
2016-2020 $__________
2021-2025 $__________
2026-2030 $__________
2031-2036 $__________
</TABLE>
----------
(11) This Section 2(a) does not apply to School District IUAs, and should be
replaced with the word "RESERVED" in those IUAs.
(12) For Instruction Telecommunications Foundation, Inc. and North American
Catholic Educational Programming Foundation, Inc. IUAs, insert Rider A for
those of its IUAs executed prior to the date that any of its IUAs are
granted by the FCC and Rider B for those IUAs executed after the date that
any of its IUAs are granted by the FCC. For all other Licensees, insert
Rider B.
(13) Insert Monthly Royalty as expressed in Schedule A of the Master Agreement.
3
(i) LIMITED CPI ADJUSTMENT. On August 31, 2012 and on each
anniversary thereof (August 31, 2012 and each anniversary, an "ADJUSTMENT
DATE"), the Monthly Royalties shall be increased by multiplying each Monthly
Royalty, as it may have been previously adjusted pursuant to this clause (i), by
the sum of (A) one plus (B) the Adjustment Factor, as defined below in this
section. [***] "CPI" means The Consumer Price Index for All Urban Consumers
(CPI-U) for the U.S. City Average for All Items, 1984-1986=100 as published by
the Bureau of Labor Statistics of the United States Department of Labor;
provided, however, in the event that the CPI (or a successor or substitute
index) is not available, a similar reliable U.S. governmental or other
nonpartisan publication selected by Licensee will be used.
(ii) ADJUSTMENT RELATED TO BUILD-OUT. The Monthly Royalties will
be adjusted, if required, pursuant to Section 7.11 of the Master Agreement.
(D) PREPARATION REIMBURSEMENT. Within ten (10) days after the
Effective Date, Clearwire shall reimburse Licensee for the preparation of this
Agreement in the amount of __________.(14) This obligation shall apply without
regard to whether or not this Agreement is subsequently terminated.
(E) PAYMENT RECEIPT ADDRESS. Absent notice of different instructions
from Licensee, all cash payments to be paid to Licensee shall be paid by check
mailed to the following address, which address may be changed by Licensee by
notice to Clearwire:
_____________________________________
_____________________________________
_____________________________________
_____________________________________
Attn: ___________________________(15)
(F) W-9. Within ten (10) days following the execution of this
Agreement, Licensee shall deliver a completed IRS Form W-9 to Clearwire.
(G) No Set-Off. All payments of Upfront Royalties, Equity Royalties
(16) and Monthly Royalties shall be made without set-off except for a sum that
Licensee is finally determined to owe Clearwire by arbitration conducted
pursuant to this Agreement.
----------
(14) Insert $1,500 if the Effective Date is on or before September 28, 2006 or
$2,500 if the Effective Date is after September 28, 2006.
(15) Insert Licensee-provided mailing address.
[*** Confidential Treatment Requested]
4
(H) CLEARWIRE PARENT GUARANTEE OR LETTER OF CREDIT. Clearwire shall
cause Clearwire Parent to comply with its guarantee and letter of credit
obligations set forth in the Master Agreement with respect to this Agreement,
and shall not permit Clearwire Parent to repudiate any such guarantee unless it
is replaced by a letter of credit issued in compliance with the application
provisions of the Master Agreement. Any violation of this Section 2(h)
constitutes a material default of this Agreement.
(I) INTEREST ON OVERDUE AMOUNTS. Clearwire shall pay interest to
Licensee on all payments owed under this Agreement more than thirty (30) days in
arrears, accruing from the original payment due date and continuing until
payment of the amount due, in an amount equal to the greater of (i) ten (10)
percent or (ii) a fluctuating rate equal to the "Prime Rate" as announced from
time to time by The Wall Street Journal plus [***] percent, but in no event
exceeding the highest lawful rate of interest that may be charged or collected
(the "DEFAULT INTEREST RATE"). Accrued interest shall be due and payable
monthly. In addition, for payments owed under this Agreement thirty (30) days or
more in arrears, a penalty equal to [***] percent of the payment owed shall be
immediately due and payable.
3. EXCLUSIVE NEGOTIATION PERIOD
For a time period beginning [***] Licensee will negotiate in good faith
exclusively with Clearwire about a possible renewal of this Agreement. During
such period, Licensee and its agents and advisors will not discuss or solicit
other opportunities to enable third parties to make use of the Channels.
4. FREQUENCY BAND TRANSITION
The Channels covered by this Agreement either have been or will be subject
to relocation to different frequencies and/or to different technical
characteristics in accordance with a transition plan adopted in accordance with
the FCC Rules promulgated in WT Docket No. 03-66 (the "TRANSITION"). In the
event that the Transition is not complete, the remaining provisions of this
Section 4 shall be effective and, otherwise, shall be ineffective. Clearwire and
Licensee will cooperate in the Transition in accordance with FCC Rules, to
facilitate Clearwire's and Licensee's use of the Channels, consistent with this
Agreement. To the extent that, after the Commencement Date, the FCC allows
Licensee to participate in selecting the entity initiating and/or overseeing the
Transition of the Channels (the "PROPONENT"), then Licensee will designate and
otherwise reasonably promote Clearwire or its designee as Proponent or
co-Proponent and otherwise support Clearwire's interests in the means and
outcome of the Transition to the extent permitted by FCC Rules and consistent
with Licensee's Transition rights thereunder and interests hereunder and after
expiration or termination of this Agreement; provided, however, if Licensee is
obligated by any other agreement relating to other channels in the market to
promote some other party as Proponent or co-Proponent, Licensee's equally
qualified support for both Clearwire and such other party shall fully satisfy
Licensee's obligations in this sentence. Licensee will consult with Clearwire
before adopting, consenting to, or otherwise agreeing to any change of
frequencies or characteristics of the Channels after the Commencement Date other
than those changes specified by FCC Rules. After the
----------
(16) Delete ", Equity Royalty" from School District IUAs.
[* * * Confidential Treatment Requested]
5
Commencement Date, Licensee will use its commercially reasonable efforts to make
Clearwire aware of and to seek the permission of meeting participants to allow
Clearwire to participate in its scheduled meetings with the Proponent to the
extent they concern Transition of the Channels to channel plans required or
allowed as an outcome of the FCC's transition proceedings, provided that
Licensee is aware sufficiently in advance of the meeting that it will involve
that subject matter. In any event, Licensee will provide Clearwire with a
summary report of any meetings or discussions with such third persons occurring
after the Commencement Date in which Clearwire was not invited to participate.
In the event that neither Clearwire nor any third party initiates and/or
completes the Transition of the Channels within the time frames specified by the
FCC, Licensee may, at its sole option, avail itself of any "self-transition"
rights made available pursuant to FCC Rules. Licensee's reasonable costs of such
self-transition will be paid and/or reimbursed by Clearwire in their entirety.
5. CAPACITY REQUIREMENTS AND USES; CERTAIN LICENSEE ACCESS RIGHT ROYALTIES
(A) Clearwire Capacity. On and after the Commencement Date, subject to
FCC Rules and the restrictions imposed thereby, Clearwire will have the right to
use all of the capacity of the Channels other than Licensee's Reserved Capacity,
the Access Right Royalties and Licensee's other rights and benefits granted by
this Agreement or the Master Agreement ("CLEARWIRE CAPACITY") and, subject to
FCC Rules and the power of the FCC to control the radio frequency spectrum,
Licensee shall not use Clearwire Capacity or enter into any agreement to allow
any third party to use Clearwire Capacity other than as may be contemplated by
this Agreement.
(B) Licensee's Reserved Capacity. AS USED IN THIS AGREEMENT,
"Licensee's Reserved Capacity" MEANS:
(i) Prior to the Commencement Date, all of the Capacity of the
Channels.
(ii) From the Commencement Date until sixty (60) days after
Licensee receives a notice from Clearwire that Clearwire intends to utilize
the capacity of the Channels, the lesser of one Channel and that number of
Channels Licensee used during the last regular school session immediately
preceding the Effective Date (the "LEGACY RESERVATION"), which Licensee may
use to provide services that further the educational mission of accredited
schools ("LICENSEE'S CAPACITY"). Licensee's operations pursuant to Section
5(b)(i) and (ii) are solely in furtherance of Licensee's educational
charter and are not intended for the benefit of Clearwire or conducted in
exchange for any royalties or other consideration.
(iii) After the later of the Commencement Date and the date that
any one or more of the Channels is engineered to operate in any digital
modulation (the "LEGACY STOP DATE"), in respect of Licensee's educational
reservation covering the five percent (5%) educational spectrum capacity
currently required by the FCC Rules pertaining to the FCC Licenses (the
"EDUCATIONAL RESERVATION"), Licensee shall be permitted to utilize the
Educational Reservation in such locations served by the Clearwire National
Platform on a
6
full time basis as Licensee desires for its operations. Clearwire and
Licensee shall at all times comply with applicable FCC Rules. Clearwire may
not use the Educational Reservation. In the event that the Parties cannot
agree on the application of any new rule or interpretation regarding the
Educational Reservation in their circumstances, the Parties shall jointly
approach the FCC for clarification in a timely fashion and, to the extent
the matter remains unresolved thereafter, shall settle the matter by
applying the Dispute Resolution Procedures.
(C) [***]
(D) SECTION 27.1214(E) AMENDMENTS. To the extent required under
Section 27.1214(e) of FCC Rules, on the date that is [***] after the Effective
Date and every [***] thereafter during the Term, Licensee shall have a period of
sixty (60) days to request a review of its minimum educational use requirements,
in which event and at which time the Parties shall negotiate in good faith an
amendment to this Agreement that accommodates any bona fide changes in
educational needs, technology and other relevant factors. Any such amendment
shall provide, among other terms and conditions agreed to by the Parties: (i)
with respect to Licensee and any Educational End Users (defined below) for whom
Clearwire has provided an Educational Account, Clearwire shall make available
any equipment, services or software upgrades that Clearwire makes generally
available to Clearwire's retail customers subscribing to the same tier of
service in the Market Area over Broadband Radio Service or EBS facilities; (ii)
to the extent such amendment materially increases Clearwire's monthly costs
either to operate its leased capacity or to meet Licensee's changed educational
use requirements, whether or not such costs will be offset by a reduction in the
Monthly Royalties for the remainder of the Term, a refund in an amount to be
agreed upon by both Parties, or both; (iii) Clearwire may accommodate changes in
Licensee's Reserved Capacity through any reasonable means available so as to
avoid disruption to the advanced wireless services provided by Clearwire; and
(iv) Clearwire shall not be required to accommodate changes in Licensee's
Reserved Capacity in a manner that has a negative economic impact on Clearwire
or Clearwire's commercial operations under the Agreement. The adjustments set
forth in this subsection shall be in addition to, and not in lieu of,
adjustments set forth in other portions of this Agreement or the Master
Agreement. Neither Party shall have any obligation to enter into any amendment
pursuant to this Section.
(E) CHANNEL SWAPPING; COSTS.
[Clearwire may not require Licensee to swap Channels, by assignment of FCC
License, sublicensing or otherwise, without the prior written consent of
Licensee, which Licensee may withhold at its discretion.](17)
----------
(17) Use the bracketed language in all IUAs other than those executed by
Instruction Telecommunications Foundation, Inc. or North American Catholic
Educational Programming Foundation, Inc.
[*** Confidential Treatment Requested]
7
[After the Commencement Date, provided that Clearwire is not in breach of this
Agreement, Clearwire shall be permitted to require Licensee to swap all but not
less than all of the spectrum authorized by the FCC License for Suitable
Replacement Spectrum licensed to one entity (the "SWAP PARTNER") in either the
Geographic Market or one different U.S. market without Licensee's consent,
provided that Licensee receives the same benefits it would otherwise receive
from Clearwire under this Agreement, such swap is reversed at the expiration or
termination of this Agreement and Licensee receives assurances reasonably
acceptable to Licensee that it will receive back from the Swap Partner within
six (6) months after such expiration or termination the same or superior
channels and channel rights Licensee provided to the Swap Partner (as reasonably
determined by Licensee), without any lien or encumbrance and free of the rights
of third parties. Clearwire agrees to bear all costs and expenses associated
with the implementation of channel swapping and reversal of the swap, including
without limitation the reasonable out-of-pocket costs of Licensee's engineering
consultants and attorneys. The foregoing requirements with respect to the
reversal of a swap shall survive the expiration or termination of this
Agreement, unless termination is caused by Licensee's breach of this Agreement.
"SUITABLE REPLACEMENT SPECTRUM" means regular FCC Authorization (and not
special, special temporary, experimental or developmental authorization) in
Licensee's name and entitling Licensee to use one FCC-defined channel (plus
related guardbands, if any) for each FCC-defined channel (and associated
guardband segment, if any) provided to the Swap Partner (an "ASSIGNED CHANNEL"),
and each such replacement channel (and associated guardband segment, if any) (a
"RECEIVED CHANNEL") shall have the following additional characteristics: (1) it
is swapped along with the other Channels to a single licensee having the same
number of channels; (2) it may not be Broadband Radio Service ("BRS") Channel 1,
2 or 2A; (3) it shall be of an entire EBS channel (e.g., EBS Channel Gl) as
defined in FCC Rule 27.5(i) or any successor rule, and not a channel created
from parts of FCC-defined channels; (4) Licensee's upper or lower band segment
Channels (or, if pre-Transition, Licensee's Channels bearing FCC-assigned
numbers 1, 2 or 3) must be replaced with three upper or lower band segment
channels (or, if pre-Transition, channels bearing FCC-assigned numbers 1, 2 or
3) that will be contiguous through the post-Transition period; (5) it shall have
a FCC-defined geographic service area ("GSA") at least as large as that of the
Assigned Channel of like number (e.g., Gl and Dl); (6) its GSA shall include a
total estimated population at least as large as the total estimated population
within the GSA of the Assigned Channel of like number; (7) if the Received
Channel is subject to any Interference Consent(s), those Interference Consent(s)
must meet the requirements for classification as Conforming Interference
Consents and provide Licensee, after the swap, with the same rights the Licensee
would have pursuant to a Conforming Interference Consent as reasonably
determined by Licensee; (8) the Received Channel's authorization shall not be
subject to any facts or circumstances which Licensee reasonably determines could
cause its FCC authorization to be cancelled, forfeited, revoked, subject to
cancellation, forfeiture or revocation, or not to be able to transition to its
default channel specified in FCC Rule 27.5(i)(2) or any successor rule; (9) the
Received Channel shall be free and clear of all liens, encumbrances, and rights
of persons (with the exception of third party leases that will not apply after
the swap and except agreements permitted under clause (7)); and (10) the
Received Channel shall be free of any unusual license conditions not also
applicable to the Assigned Channel. Clearwire's right to require Licensee to
swap is subject to FCC consent and the consent of the Swap Partner.
Notwithstanding the
8
foregoing in this Section 5(e), Licensee shall reasonably consider channel swaps
for spectrum that is not Suitable Replacement Spectrum.](18)
6. EQUIPMENT; CONTINUATION OF ACCESS RIGHT ROYALTIES; CONTROL OF OPERATIONS
(A) OPERATION AND MAINTENANCE OF EQUIPMENT. Subject to the last
sentence of this Section 6(a), prior to the Legacy Stop Date (as defined in
Section 5(b)(iii)), Licensee may operate the legacy video transmission equipment
currently in place, if any (including replacements thereto), for the Channels
(the "EBS EQUIPMENT") at each transmission site (including substituted and
additional sites), it being understood that Licensee's operations under this
Section 6(a) are solely for Licensee's educational purposes. If Licensee chooses
not to operate the transmission equipment currently in place or replacements
thereto, then Licensee and Clearwire will cooperate in filing all necessary
applications and notices with the FCC to "go dark" and not transmit on the
Channels for an allowed period of time or notify the FCC that Licensee has
ceased operation. If Clearwire or any of its Affiliates has EBS and/or BRS
spectrum operations in the Market Area of the Channels, then Clearwire will
operate legacy video for Licensee at Clearwire's expense until the earlier of
the Legacy Stop Date and the end of the Transition.
(B) MAINTENANCE OF LEGACY EQUIPMENT. Subject to the last sentence of
Section 6(a), while operating a video system for Licensee's educational purposes
under Section 6(a), it is Licensee's responsibility to operate and maintain its
video equipment.
(C) EQUIPMENT PURCHASE OR LEASE OPTION; TAIL SERVICES AND EQUIPMENT.
(i) Subject to subsection (ii) below, in the event this Agreement
expires or is terminated for any reason other than a default by Licensee,
Licensee shall have the option, upon giving notice to Clearwire within
thirty (30) days of such expiration or termination (the "PURCHASE OPTION
PERIOD"), to purchase the whole or any part as determined by Licensee of
transmission and reception equipment (not including any tower rights) then
in operation that is used to transmit Licensee's Reserved Capacity on the
Channels, whether such equipment is dedicated entirely to Licensee's
Reserved Capacity or shared (the "LICENSEE'S SPECIFIED EQUIPMENT"), or
equivalent equipment. The price for such equipment shall be equal to the
lesser of the (x) [***]
----------
(18) Use bracketed language only in Instruction Telecommunications Foundation,
Inc. and North American Catholic Educational Programming Foundation, Inc.
IUAs.
[*** Confidential Treatment Requested]
9
[***]
(ii) If Licensee notifies Clearwire of its desire to acquire
Licensee's Specified Equipment and Additional Equipment-Related Features,
in lieu of selling the Licensee's Specified Equipment and Additional
Equipment-Related Features to Licensee as specified in subsection (i)
above, Clearwire shall have the option instead to lease such to Licensee
for an initial term of one year, renewable annually at the option of
Licensee for as many as nine (9) one-year renewal terms. During the period
of such lease, Clearwire shall have the right to share the use of
Licensee's Specified Equipment and Additional Equipment-Related Features,
so long as such sharing does not diminish the utility to Licensee. The
monthly amount payable by Licensee to Clearwire to lease these items shall
be the lesser of: (x) [***] of fair market value of the Licensee's
Specified Equipment and Additional Equipment-Related Features at the
commencement of the initial lease term, and (y) Clearwire's [***] of
leasing Licensee's Specified Equipment and Additional Equipment-Related
Features to Licensee.
(iii) For the purposes of this Section 6(c), determinations of
fair market value shall be made by an independent engineering firm selected
by Licensee and subject to approval by Clearwire, and the cost of reaching
such determination shall be shared equally by parties.
[* * * Confidential Treatment Requested]
10
(iv) For a period of [***] after the expiration or termination of
this Agreement, unless termination resulted from Licensee's breach of this
Agreement, Licensee shall have the right to continue to receive the same
in-kind facilities, services and benefits Licensee received during the
Term, including each of the Access Right Royalties under Section 7, on the
most favorable terms and conditions, including price, as Clearwire or any
of its Affiliates offers such Access Right Royalties, or services and
equipment substantially similar thereto. When Clearwire provides Licensee
with the price and other terms for the Access Right Royalties under this
paragraph, Clearwire will also provide an officer's certificate certifying
that such pricing and other terms meet the requirements of this Section
6(c) and are the MFN Price. The provisions of this Section 6(c) shall
survive the expiration or termination of this Agreement for any cause,
unless termination is caused by Licensee's breach of this Agreement.
(D) OPERATION OF FACILITIES ON THE CHANNELS TO MEET SUBSTANTIAL
SERVICE REQUIREMENTS. In addition to the foregoing, Clearwire, at its expense,
will construct, operate and maintain facilities for the Channels that provide
operating transmission and coverage capability sufficient to satisfy minimum
build-out, operational, service or performance requirements applicable to the
Channels or which must be satisfied to avoid a reduction in Channels or their
capacity, including substantial service standards, all as required or prescribed
under then-applicable FCC Rules. Without limiting the generality of the
foregoing, Clearwire shall have constructed and maintained in service such
facilities operating on the Channels as are needed to qualify for a "safe
harbor" under the FCC Rule 27.14(e)(l)(ii) and/or 27.14(e)(2), as they may be
amended from time to time, or any other applicable "safe harbor" as may be
reasonably acceptable to Licensee, so that Licensee would qualify for at least
one of such "safe harbors" on [***] substantial service showing deadline of FCC
Rule 27.14(e) had been advanced to [***] and Clearwire shall continue to
maintain such facilities in service between [***] and the later of [***] and
such date to which the FCC may extend the substantial service showing deadline
so as to ensure that the FCC finds that Licensee has met the substantial service
requirement under FCC Rule 27.14(e). In the event that the FCC by Final Order
effective prior to [***] extends the substantial service showing date beyond
[***], then the [***] deadline shall be extended to the date that is sixteen
(16) months before such extended date. In the event that Clearwire determines
that it may not satisfy the [***], and if, by [***], Clearwire demonstrates to
Licensee's reasonable satisfaction that Clearwire will meet the [***] deadline
if this deadline is extended to [***], then this deadline shall be extended to
[***] by written notice from Licensee to Clearwire. In the event that (i)
Clearwire elects to make such demonstration by [***], and Licensee informs
Clearwire that Licensee is not reasonably satisfied that Clearwire will meet the
[***] if the deadline for it is extended to [***], or (ii) Clearwire does not
make such a demonstration by [***], Clearwire shall be in material breach of
this Agreement and Clearwire shall have a cure period to meet the [***] that
ends on [***], notwithstanding any longer cure period or requirement for breach
notice for non-payment breaches provided by Section 11(c). If Clearwire fails to
meet the [***] by the end of that thirty (30) day cure period, Licensee shall
have the right to terminate this Agreement or to build such facilities as
qualify for a "safe harbor" under Section 27.14(e) of FCC Rules, and Clearwire
shall reimburse Licensee's reasonable costs of doing so. In the event Clearwire
makes such
[*** Confidential Treatment Requested]
11
demonstration to Licensee's reasonable satisfaction, but fails to satisfy the
[***], such failure shall constitute a material breach by Clearwire, for which
there shall be no requirement of breach notice or opportunity to cure
notwithstanding Section 11(c), and Licensee shall have the right to terminate
this Agreement or to build such facilities as qualify for a "safe harbor" under
Section 27.14(e) of FCC Rules, and Clearwire shall reimburse Licensee's
reasonable costs of doing so.
(E) CONTROL OVER OPERATIONS. On and after the Commencement Date,
Clearwire shall exercise such day-to-day operational control over operations on
the Channels as permitted by FCC Rules pertaining to de facto transfer
agreements under its secondary markets rules; provided, however, that Licensee
shall retain such powers of oversight and control as are needed to ensure
compliance with standards of conduct for which Licensee remains accountable to
the FCC or as otherwise reserved by this Agreement. In the event (A) Licensee
becomes aware of an on-going violation or repeated violations by Clearwire of
the Communications Act or the FCC Rules governing its use or Licensee's use of
the Channels (collectively, the "Governing Rules"), or any other violation of
the Governing Rules that might adversely affect Licensee's rights in the
License, might impose unreimbursed liability on Licensee as licensee of the
Channels or might cause the FCC to revoke, cancel, rescind or materially
adversely modify the De facto Transfer Authorization and (B) after Licensee
gives notice to Clearwire of such violations), Clearwire does not immediately,
in the case of an on-going violation, begin to cure such violation and fully
effect such cure within thirty (30) days or such period that the FCC may
specifically impose, and in the case of repeated violations, take steps to
prevent such violations in the future and fully effect such steps within thirty
(30) days or such period that the FCC may specifically impose, such that the
violation does not re-occur, Licensee shall be entitled to take action to force
Clearwire to immediately cease such violation(s), immediately comply with the
Governing Rules and take such preventative steps, all at Clearwire's expense,
and including the right to immediately seek injunctive relief, and in each case
without first giving Clearwire any further notice or awaiting any further cure
period.
7. ACCESS RIGHT ROYALTIES
Clearwire shall provide the access right royalties described in this
Section 7 (the "ACCESS RIGHT ROYALTIES") from and after the later of the
Commencement Date and the first commercial launch by Clearwire of its wireless
services on the Channels or other EBBS or BRS channels in the Geographic Market
of the Channels.
(A) COST-FREE EDUCATIONAL ACCOUNTS. Included in the Access Right
Royalties provided to Licensee, Licensee shall be entitled to Cost-Free
Educational Accounts in respect of the Educational Reservation and the
Additional Cost-Free Educational Accounts as provided in this Section 7.
(i) Educational Reservation Basic Cost-Free Educational Accounts.
A. In respect of Licensee's educational reservation covering
the [***] educational spectrum capacity currently required by the FCC
Rules pertaining to the FCC Licenses (the "EDUCATIONAL RESERVATION"),
Licensee shall be permitted to utilize the Educational Reservation in
such locations served by the
[*** Confidential Treatment Requested]
12
Clearwire National Platform on a full time basis as Licensee desires
for its operations. Clearwire and Licensee shall at all times comply
with applicable FCC Rules. Clearwire may not use the Educational
Reservation. In the event that the Parties cannot agree on the
application of any new rule or interpretation regarding the
Educational Reservation in their circumstances, the Parties shall
jointly approach the FCC for clarification in a timely fashion and, to
the extent the matter remains unresolved thereafter, shall settle the
matter by applying the Dispute Resolution Procedures.
B. Initially, Clearwire shall provide Licensee [***]
Cost-Free Educational Account per Cell Site in the Market Area (each a
"BASIC COST-FREE EDUCATION ACCOUNT"). The number of Cost-Free
Educational Accounts provided pursuant to this Agreement shall be
adjusted upward every [***] proportionate to the growth of the overall
data capacity of Clearwire's network in the Market Area of the
Channels. The growth (if any) in the overall data capacity shall be
determined as set forth in Section 20(b)(iii).
(B) ADDITIONAL COST-FREE EDUCATIONAL ACCOUNTS. In addition to, and not
in lieu of, the Cost-Free Educational Accounts provided to Licensee by Clearwire
pursuant to the Educational Reservation as set forth in Section 7(a), Clearwire
shall provide Licensee with additional Cost-Free Educational Accounts in the
number computed in accordance with this Section 7(b) (the "ADDITIONAL COST-FREE
EDUCATIONAL ACCOUNTS").
(i) Number and Periodic Adjustment. Licensee will have access to
additional spectrum capacity on Clearwire's National Platform in the form
of Cost-Free Educational Accounts equal to the greater of (X) [***]
Cost-Free Educational Accounts per Sector in the Market Area of the
Channels and (Y) the quantity of Cost-Free Educational Accounts determined
by applying the Formula Quantity. The number of Additional Cost Free
Educational Accounts that Clearwire is obligated to provide to Licensee
shall be recalculated and revised annually as of January 31 of each
calendar year.
A. Educational End Users. Cost-Free Educational Accounts
shall be exclusively for Educational End Users and not for resale,
assignment or transfer by Licensee outside of its Educational End User
environment or to persons who cease to be officially associated with
such Educational End User. (By way of example, a university may resell
the service to its students, faculty, administrators and staff, while
such persons are involved with the university, but shall cease to
provide the service if a member of the faculty terminates employment
or a student graduates and ceases to be involved in university
matters.)
B. Time of Delivery. The Additional Cost-Free Educational
Accounts shall be provided by Clearwire to Licensee pursuant to this
Section 7(b) upon the commercial launch of Clearwire's broadband
wireless service in the Market Area of the Channels, or the applicable
Commencement Date thereof if later.
(C) LICENSEE MVNO.
[*** Confidential Treatment Requested]
13
(i) In addition to the right to Cost-Free Educational Accounts,
Licensee shall have the right to resell the Clearwire service in the form
of MVNO Educational Accounts to Educational End Users in the Market Area.
An "MVNO EDUCATIONAL ACCOUNT" shall have the identical characteristics as a
Cost-Free Educational Account, except that there shall be a charge to
Licensee as determined pursuant to this Section 7(c). Clearwire shall sell
to Licensee such services, at a cost equal to the lowest wholesale rate
provided by Clearwire to an arms-length third party in the Market Area of
the Channels or other comparable market pursuant to any applicable
agreement. However, the number of MVNO Educational Accounts is limited in
such Market Area to twice the number of Cost-Free Educational Accounts for
such Market Area.
(ii) Mechanics. The resale of Clearwire's services pursuant to
this Section 7(c) shall be accomplished pursuant to a standard Clearwire
wholesale agreement form revised to be consistent with the terms of this
Agreement, which will be provided to Licensee upon its request to resell an
MVNO Educational Account to an Educational End User. Such arrangement shall
be executed not later than thirty (30) days after the availability of such
services.
(D) ACCESS TO EDUCATIONAL END USER DEVICES. Clearwire shall also make
any end-user equipment used in the Clearwire National Platform available for
purchase by Licensee at [***] above Clearwire's cost to acquire such end-user
equipment. Equipment provided to Licensee pursuant to this section shall be used
solely by Educational End Users and not for resale.
(E) SHARING OF FEATURES AND SERVICE SETS. Licensee shall have access
to, and full use of, system capabilities, services and feature sets that are
generally provided to Clearwire's retail customers or wholesalers to mass market
customers. Licensee shall have access to reasonably necessary support made
available to Clearwire's commercial customers generally, and that is reasonably
necessary for Licensee to offer services to its Educational End Users as
contemplated by their agreement. Licensee shall have access to new capabilities,
features and service sets within six months of the time that Clearwire makes
them available to customers generally, but not earlier than the Commencement
Date.
(F) ORDERING COST-FREE EDUCATIONAL ACCOUNTS AND ADDITIONAL COST-FREE
EDUCATIONAL ACCOUNTS; DELIVERY AND INSTALLATION. Licensee may activate Cost-Free
Educational Accounts and Additional Cost-Free Educational Accounts at no cost to
Licensee, via submission of a standard Order Form or online ordering to
Clearwire, to the extent consistent with the terms of this Agreement. Clearwire
will fill each such order within the standard delivery interval by which it
activates new service requests for subscribers generally, and shall ship
associated user units to Licensee's requested destination or complete
installation of user equipment which normally is installed by Clearwire, its
Affiliate or a contractor of either of them within the standard installation
interval by which it makes new installations of user units. Licensee shall
comply with all laws and obtain any necessary governmental permits or approvals,
and third party approvals, which are necessary in order for Clearwire to
undertake an installation.
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14
(G) TERMS OF USE. To the extent not inconsistent with the terms of
this Agreement, Licensee's ordering and use of Cost-Free Educational Accounts,
the Additional Cost-Free Educational Accounts and MVNO Accounts, and the use of
such services by Licensee's users and permitted users, shall be governed by the
acceptable use policy and terms of service, and such other policies of general
applicability which apply to such services, which are subject to amendment and
may be found at http://www.clearwire.com or such other URL as may be designated;
provided, however, that financial terms contained in the terms of service shall
not apply to such services. In addition to the foregoing policies, but only to
the extent not inconsistent with the terms of this Agreement, Clearwire may
specify from time to time, in its sole discretion, reasonable and
non-discriminatory procedures for the activation, addition, deletion or
substitution of services to Licensee, its users and permitted users that do not
impose obligations on or detract from the services received by Licensee or its
permitted users.
(H) EQUIPMENT AND SOFTWARE. For Licensee and any permitted users for
whom Clearwire provides services pursuant to this Section 7, Clearwire shall
make available any equipment, services or software, including upgrades, that
Clearwire makes generally available to Clearwire's or its Affiliate's retail
customers subscribing to the same tier of service in the market(s) where it is
used over BRS or EBS facilities. In the event that any equipment upgrade
involves replacement of equipment, the replaced equipment shall be returned to
Clearwire or its designee and title to the replacement equipment shall transfer
to Licensee or its designee.
(I) TITLE. All equipment provided by Clearwire to Licensee shall be
the property of Licensee or its designee(s), free and clear of all liens and
encumbrances, when paid in full (if any payment is required). Licensee shall
own, and be solely responsible for the maintenance and operation of, all
facilities installed at Licensee's locations and receive sites, including the
sites of its permitted users, subject to manufacturers' warranties.
(J) PREFERRED CONTENT PROVIDER.
(i) Scope. In the event that Clearwire provides third party
content to customers over its network in the Market Area of the Channels,
Licensee may elect to become a "PREFERRED CONTENT PROVIDER" over such
network in such Market Area for such duration as Licensee may select. As a
Preferred Content Provider, Licensee shall have the same degree of access
to, and use of, any system capability, service or feature set that is
provided to premium third party content providers.
(ii) Service Sets and Features. To the extent that Clearwire's or
its Affiliates' most favored program suppliers pay for features and/or
service sets, Licensee shall pay an equal amount for equal features and/or
service sets to the extent that Licensee elects to utilize them. Licensee
agrees that the programming that Licensee supplies to customers through
Clearwire's network will be educational in nature. Licensee agrees not to
resell Clearwire's network access, features and/or service sets to third
parties, except in accordance with Sections 7(b)(i)a, and 7(c).
(iii) Capacity Constraints. Clearwire reserves the right to
restrict the use of the capabilities and services made available to
Licensee as a Preferred Content Provider under this Section 7(j) if such
use is no longer commercially and technically feasible due to
15
limitations in network capabilities. Clearwire shall comply with the
provisions of this Agreement and the Master Agreement to ensure timely
access to information about capacity usage and permit Licensee a reasonable
opportunity to secure alternative access.
(K) DEFINITIONS.
(i) "ADDITIONAL COST-FREE EDUCATIONAL ACCOUNT" is defined in
Section 7(b).
(ii) "CELL SITE" means a tower, building or other outdoor
structure equipped with one or more antennas to serve the surrounding area.
(iii) "CLEARWIRE NATIONAL PLATFORM" means all Market Areas and
all other areas within the United States where Clearwire and its Affiliates
provide comparable services.
(iv) "COST-FREE EDUCATIONAL ACCOUNT" means a wireless broadband
connection that Clearwire or its affiliate provides to Licensee without
charge or expense to Licensee. Cost-Free Educational Accounts shall have
the same capacity and characteristics as the highest level of premium mass
market retail service provided on Clearwire or its affiliate's network in
the market where it is used. Multiple individuals that are associated with
an Educational End-User may share the same Cost-Free Educational Account
through Wi-Fi hotspots, local area networks, and other means. To the extent
not inconsistent with the terms of this Agreement, the Cost-Free
Educational Accounts shall be subject to the terms of Clearwire's then
generally applicable Acceptable Use Policy. The Cost-Free Educational
Accounts shall be fully portable anywhere within the Clearwire National
Platform to the extent that Clearwire offers such portability to any
customer.
(v) "EDUCATIONAL END USERS" or "EEU" shall be only non-profit
entities, educational entities and/or Social Welfare Agencies that use the
services for their own purposes, provided that Licensees shall not provide
such services pursuant to a request-for-proposals (RFP) or other
substantially similar commercially competitive opportunities, and Licensees
shall not provide such services to any entity if such entity already has an
existing business relationship with Clearwire. For this purpose, "SOCIAL
WELFARE AGENCIES" includes only (1) those governmental and
quasi-governmental agencies and departments that provide as their primary
service public welfare assistance services (such as low-income housing,
food stamps, or domestic violence services) to the public or (2)
correctional institutions that use the service in connection with a written
agreement with the Licensee for specific programming content produced or
procured by Licensee or with whom Licensee has had a prior written
relationship; provided that such programming content is delivered to such
correctional institutions without charge or other fees. Social Welfare
Agencies shall specifically exclude treasury and revenue services
departments, law enforcement agencies, legislatures, the office of the
mayor and the military.
(vi) "FORMULA QUANTITY" as of any date, is the product, rounded
up or down to the nearest whole number, obtained by multiplying: (a) the
Local Channel Ratio
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by (b) [***], and by (c) the number of subscribers served by Clearwire or
any of its affiliates in the Market Area of the Channels as of the end of
the previous calendar year. In the event that this product is a fraction,
it shall be rounded up or down to the nearest whole number.
(vii) "GEOGRAPHIC MARKET" means the larger of (A) the area
covered by the GSA(s) of the Channels, as amended from time to time,
without regard to any subsequent swap affecting the Channels after the
Effective Date, and (B) such GSA(s) combined with the area(s) covered by
the substantially overlapping GSA(s) of EBS and/or BRS systems which
Clearwire or any of its Affiliates have the right to use in that same
market.
(viii) "LOCAL CHANNEL RATIO" is the fraction obtained by dividing
the number of Channels as of the date of the calculation by the total
number of EBS and BRS channels in the Market Area of the Channels with
substantially overlapping GSAs then used to provide service in such Market
Area licensed to or under a use agreement with Clearwire or any of its
Affiliates (including those of Licensee) as of that date, in each case
determined without multiplying a channel by the number of times it is
deployed.
(ix) "MARKET AREA" means the network coverage footprint of the
network of Clearwire and its Affiliates which includes all or part of the
GSA(s) of the Channels in the Geographic Market, based on its build-out
engineered for services from time to time once it has commenced commercial
operation.
(x) "MARKET AREA OF THE CHANNELS" is the Market Area of the
Channels as of the Effective Date.
(xi) "MVNO ACCOUNTS" means a broadband connection and related
Services that Clearwire or its affiliate provides, including such user
equipment as Clearwire or its affiliate may provide for such connection
services.
(xii) "ORDER FORM" is a form which elicits such information as is
reasonably required by Clearwire to provide the service, and which does not
contain any provision that modifies the service or any provision that is
inconsistent with this Agreement. It is agreed that Clearwire Order Forms
will be in the form of its standard order forms.
(xiii) "SECTOR" means a directional antenna located at a cell
site that serves a portion of a Cell Site area.
8. INTERFERENCE CONSENTS
Upon advance written notice to Licensee given after the Commencement Date,
Clearwire shall have the right to enter into agreements ("INTERFERENCE
CONSENTS") allowing third party licensees and operators to operate transmitters
that cause greater levels of signal strength within the Licensee's GSA than
otherwise is permitted under Part 27 of FCC Rules in order to coordinate
Clearwire's operations in Licensee's GSA with those of third parties. This right
shall apply only to such Interference Consents ("CONFORMING INTERFERENCE
CONSENTS") as (1) by their
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17
terms expire upon the earlier of the expiration or termination of this
Agreement; (2) do not result in or allow operations as may result in a
degradation in the value of the Channels or any impairment of the FCC License
for the Channels that is material or will continue beyond the expiration or
termination of this Agreement; (3) are limited to terms and conditions providing
for fair and reciprocal rights and limitations for and on the operation of
Licensee's facilities and the facilities of the other party in connection with
system coordination inside Licensee's GSA and at Licensee's GSA boundaries and
provisions ancillary thereto, but not channel swapping; (4) do not cede, grant
or provide any part of the Licensee's GSA or channel capacity to a third party;
(5) do not allow the placement of third party transmitters operating on the
frequencies of any of the Channels within the Licensee's GSA, except for
transmitters operated pursuant to Special Temporary Authority for not more than
a total of 180 days plus a renewal period of not more than 180 days, and in any
event ending prior to the expiration or termination of this Agreement; and (6)
do not prevent the construction of facilities sufficient to qualify the Licensee
for a substantial service safe harbor pursuant to the terms of this Agreement.
Third-party rights to use Licensee's GSA or channel capacity other than those
matters related above are to be handled in accordance with the assignment or
sublicensing provisions of this Agreement.
All Interference Consents entered into by Clearwire pursuant to this
Section shall provide that the Licensee has the right to require the third party
to cease operations that required the Interference Consent to exist upon the
expiration or termination of this Agreement, including the right of specific
performance of such requirement and the payment by the third party of attorneys'
fees in enforcing that right, and that such rights shall not be affected or
diminished by any default by Clearwire. Except in connection with a permitted
assignment of this Agreement itself, Clearwire shall have no right or power to
assign any such Interference Consent, it being understood that Clearwire's
rights to enter such Interference Consents is based upon a special relationship
with Licensee. Unless termination results from Licensee's material breach of
this Agreement, Clearwire shall be responsible for any unreimbursed cost or
damages to Licensee as a result of a third party's failure to cease operations
upon expiration or termination of the Agreement, and shall pay Licensee's legal
fees in connection with enforcement of the Interference Consent. The rights in
this paragraph shall survive the expiration or termination of this Agreement for
any cause.
Clearwire shall not enter into any Interference Consent, or any amendment
or supplement thereto, without first giving Licensee and its counsel thirty (30)
days advanced written notice or such lesser time as may be required by the
exigencies of the situation but no less than ten (10) days (the "NOTICE PERIOD")
of Clearwire's intention to enter into the consent, amendment or supplement,
along with a complete and unredacted form of the consent, amendment or
supplement (and any documents to which it refers) and a statement of the Notice
Period applicable thereto. In the event that Clearwire intends to execute an
Interference Consent, or any amendment or supplement thereto, that materially or
substantively differs from the form previously supplied to Licensee, Clearwire
shall once again follow the procedure and requirements of the immediately
preceding sentence as though no notice of the document in the prior form had
been given. During the Notice Period applicable to any proposed Interference
Consent, or any amendment or supplement thereto, Clearwire shall answer
questions and entertain comments and suggestions of the Licensee. The failure of
Licensee to object to any proposed Interference Consent, or any amendment or
supplement thereto, shall not constitute a
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waiver of this Section 8 or be construed as Licensee's implied endorsement of
such proposed consent, amendment or supplement.
9. OTHER APPLICATIONS, APPLICATION COSTS; FEES; DE FACTO TRANSFER
AUTHORIZATION APPLICATION
(A) APPLICATION PREPARATION. Clearwire will prepare and submit in its
name all applications, amendments, petitions, requests for waivers, and other
documents necessary for the proper operation of Clearwire Capacity consistent
with this Agreement and Licensee's responsibilities as a FCC licensee. Licensee
will prepare and submit all applications, amendments, petitions, requests for
waivers, and other documents necessary for the modification, maintenance and
renewal of the FCC License that, under FCC Rules, may only be filed by Licensee,
including any such filings reasonably requested by Clearwire that are consistent
with this Agreement and Licensee's responsibilities as a FCC licensee. The
Parties will cooperate in the preparation and submission of all applications,
amendments, petitions, requests for waivers, and other documents necessary to
secure any FCC approval, consent or other action required to effectuate this
Agreement, including the substantial service showing required by [***]. In no
event shall Licensee be required to make any filing or to take any position
before the FCC or other Government Agency that is inconsistent with Licensee's
interests or which Licensee believes in good faith may be construed by the FCC
or other Government Agency as inconsistent with its responsibilities as a FCC
licensee, not submitted in good faith or submitted for a purpose of delay in a
proceeding.
(B) APPLICATION COSTS. Clearwire will, at its own expense, prepare all
applications, notices, certificates, exhibits, consent agreements, approvals or
authorizations that Clearwire submits to the FCC or seeks to have Licensee
submit to the FCC pursuant to the Agreement. Clearwire will also promptly pay or
reimburse Licensee for its reasonable out-of-pocket expenses in connection with
the activities requested or required of Licensee by Clearwire under this
Agreement, including Licensee's expenses associated with the renewal of any FCC
License and with any other filings with, or information requested by, the FCC,
or required of Licensee to remain eligible under FCC Rules to provide Clearwire
Capacity to Clearwire.
(C) FEES AND TAXES. Clearwire will pay any Federal spectrum, federal
regulatory, universal service, number portability fees, payphone fees, E911 fees
and other fees, charges, assessments, impositions and taxes associated with the
FCC License or imposed on Licensee as a result of the licensing, regulation or
use of the capacity of the Channels by Licensee or Clearwire including, without
limitation, any such fees, charges, assessments, impositions and taxes that may
be imposed on or with respect to EBS spectrum or spectrum licenses in the
future. Clearwire shall pay all such fees, charges, assessments, impositions and
taxes upon receipt of notice from the FCC or taxing authority that such fees are
due, or upon receipt of at least thirty (30) days advance written notice from
Licensee that such fees or charges are due in the event that notice is not sent
to Clearwire by the FCC or such taxing authority. Without limiting the
generality of the foregoing, Clearwire shall be liable for and shall pay (and
shall indemnify and hold harmless the Licensee Indemnified parties against) all
sales, use, stamp, documentary, filing, recording, transfer, real estate
transfer, registration, duty or similar fees or taxes or governmental charges
(together with any interest or penalty, addition to tax or additional amount
imposed) as levied by any taxing authority in connection with this Agreement.
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19
(D) FCC LONG TERM DE FACTO TRANSFER LEASE AND EXTENSION APPLICATIONS.
Within ten (10) business days following the execution of this Agreement and
prior to consummating the transfer of de facto control of the Channels, the
Parties shall cooperate as required to prepare and file with the FCC all forms
and related exhibits, certifications and other documents necessary to obtain the
FCC's authorization (the "DE FACTO TRANSFER AUTHORIZATION") of the long term de
facto transfer caused by this Agreement as set forth in FCC Rule 1.9030(e) as
amended from time to time (the "FCC LONG TERM LEASE APPLICATION"). Each Party
shall fully cooperate with the other, and do all things reasonably necessary to
timely submit, prosecute and defend the FCC Long Term Lease Application, and
will promptly file or provide the other Party with all other information which
is required to be provided to the FCC in furtherance of efforts to obtain or
retain such grant. The Parties shall disclose in the FCC Long Term Lease
Application the automatic extension of Clearwire's use rights upon the renewal
of the FCC License. The Parties shall include in any FCC License renewal
application, or separately request, as necessary, a request to permit
Clearwire's use rights for the renewal term of the FCC License, if the Term will
continue during any part of such FCC License renewal term. The Parties shall
prosecute each such original or renewal application diligently and in good
faith, including defending it and the grant thereof against all petitions to
deny, informal objections, petitions for reconsideration, applications for
review, appeals, writs, requests for stay filed against any such application or
its grant, and shall file and prosecute petitions for reconsideration,
applications for review, petitions for appeal, notices of appeal, writs of
certiorari and associated pleadings challenging any denial of any such
application or request. Any fees associated with the filing of the FCC Long Term
Lease Application and applications or requests for renewal of the De facto
Transfer Authorization, and all costs incurred in preparing, prosecuting or
defending any and all petitions for reconsideration, applications for review,
appeals, writs, requests for stay and remands of the grant or denial of any such
original or renewal application and related pleadings, and for activity (such as
oral argument and FCC staff visits) in support thereof, shall be paid by
Clearwire. To the extent Licensee is required to file this Agreement with the
FCC, the Licensee shall first notify and consult with Clearwire, and will to the
extent permitted by the FCC redact all information from the Agreement which
Clearwire reasonably designates as confidential including, but not limited to,
all payment information.
10. TRANSFERS OR ASSIGNMENTS
(A) ASSIGNMENT AND TRANSFER BY CLEARWIRE. Subject to Section 10(c) and
(d), [***] and any required FCC consent or authorization, which [***], Clearwire
may assign this Agreement to a third party or experience a Transfer of Control;
provided, however, that Clearwire shall remain responsible for the performance
of the payment obligations of the assignee pursuant to the Agreement, except
that Clearwire shall not be responsible for the performance of the payment
obligations of those assignees whose creditworthiness is equal to or better than
Clearwire's, as measured by each party's respective bond ratings or other
comparable measure, and who sign an agreement with, and reasonably acceptable
to, Licensee to assume the obligations of Clearwire hereunder. Licensee's
consent may be withheld, if, among other things, Clearwire does not covenant in
writing in form and substance reasonably acceptable to Licensee to provide or
does not demonstrate to Licensee the capability to provide at the time of
assignment or Transfer of Control and thereafter the same level of services,
features and access to Licensee, including without limitation all of the Access
[*** Confidential Treatment Requested]
20
Right Royalties in the Market Area of the Channels, that Clearwire would have
provided or been obligated to provide had the Agreement not been assigned, and
any such assignment or Transfer of Control without Licensee's consent shall be
void and of no force and effect. "TRANSFER OF CONTROL" means a transfer, sale or
assignment of equity in Clearwire, or any direct or indirect parent of
Clearwire, that would require FCC consent under present provisions of Section
310 of the Communications Act of 1934, as amended, other than (i) a transfer,
sale or assignment of equity in Clearwire Parent, a merger of Clearwire Parent
or a merger with any of Clearwire Parent's Affiliates even if such transfer
otherwise constitutes a transfer of Clearwire or (ii) a transaction in which an
entity acquires all or substantially all of the assets of the Clearwire
subsidiaries that hold the U.S. assets and operating companies.
(B) SUBLICENSING BY CLEARWIRE. Subject to Section 10(d), [***] and any
required FCC consent or authorization, [***] Clearwire may sublicense the use of
Clearwire Capacity; provided, however, that Clearwire shall remain responsible
for the performance of the payment obligations pursuant to this Agreement,
except that Clearwire shall not be responsible for the performance of the
payment obligations if and to the extent the sublicensee agrees with Licensee by
agreement in form and substance reasonably acceptable to Licensee to perform
such payment obligations and if the sublicensee's creditworthiness is equal to
or better than Clearwire's, as measured by each party's respective bond ratings
or other comparable measure. Licensee's consent may be withheld if, among other
things, Clearwire does not covenant in writing in form and substance reasonably
acceptable to Licensee to provide the same level of services, features and
access to Licensee including without limitation all of the Access Right
Royalties in the Market Area of the Channels under this Agreement, that it would
have provided or been obligated to provide had such Clearwire Capacity not been
sublicensed. In the event Clearwire's rights under this Agreement are
sublicensed, Licensee may require the sublicensee, at its expense, to provide
Licensee with an unconditional stand-by letter of credit issued by a FDIC-member
bank organized under the laws of the United States or a State hereof, having
capital, surplus and undivided profits of not less than $25,000,000,000, and
that has an issuer rating from Moody's Investors Service of A2 or better in the
amount of the net present value of the remaining Monthly Royalty payments for
the period ending on the tenth (10th) anniversary of the Effective Date
discounted at ten percent (10%) annually and recalculated on an annual basis on
January 1, which Licensee may draw down one or more times to cure any payment
default of such sublicensee hereunder. Such letter of credit shall be in form
and substance reasonably acceptable to Licensee. Clearwire may not allow a
sublicensee to sublicense the use of Clearwire Capacity to another third party.
(C) PERMITTED ASSIGNMENTS BY CLEARWIRE; DISTINCT SERVICE ENTITY.
Notwithstanding the foregoing but subject to Section 10(d), Clearwire, with
prior notice to Licensee but without the prior consent of Licensee, may: (1)
subject to the Guarantee provided under the Master Agreement, assign any of its
rights under this Agreement as collateral, provided that Clearwire shall remain
responsible for performance of all its obligations under this Agreement and
related obligations under the Master Agreement and further provided that the
assignment shall be subject to the provisions of Section 9-408(d) of the Uniform
Commercial Code (Official Text); and (2) sell, assign, sublease, delegate or
transfer this Agreement or any of its rights or obligations hereunder to any of
Clearwire's Affiliates or any entity that acquires all or substantially all of
the assets of the Clearwire subsidiaries that hold the U.S. assets and
[* * * Confidential Treatment Requested]
21
operating companies. In the event that an entity (a "SERVICE ENTITY") other than
Clearwire is not the direct provider of any one or more of the Access Right
Royalties, within ten (10) days of Licensee's request, Clearwire shall cause
such Service Entity to execute and to deliver a written undertaking, in form and
substance reasonably acceptable to Licensee, to provide such Access Right
Royalties as it may provide in accordance with the provisions of this Agreement
applicable thereto, including an assumption of the obligations of Clearwire
under Section 7 and to be jointly and severally liable with Clearwire therefore
(a "SERVICE ENTITY AGREEMENT"). No Service Entity Agreement shall be deemed to
relieve Clearwire of any of its Access Right Royalty obligations hereunder.
(D) PRE-COMMENCEMENT DATE RESTRICTIONS. In no event shall Clearwire
undertake or experience any assignment, Transfer of Control or sublicensing
prior to the Commencement Date.
(E) ASSIGNMENT BY LICENSEE. Licensee may assign the FCC License to any
entity that is eligible under FCC Rules to hold the FCC License, who is
reasonably acceptable to Clearwire and who assumes Licensee's prospective
obligations under this Agreement, whereupon Licensee shall be forever relieved
of such prospective obligations. If FCC consent to the assignment of the De
facto Transfer Authorization is required for the rights of Licensee hereunder to
be assigned to such proposed assignee, the Parties shall promptly join with the
proposed assignee in seeking such consent and shall cooperate in prosecuting
such consent application. Clearwire and Licensee agree that it is reasonable for
Clearwire to reject a proposed assignee where the proposed assignee or its
affiliate competes with Clearwire's offering over EBS or BRS spectrum. In the
event that Licensee desires to assign its FCC License to another entity,
Licensee shall inform Clearwire in writing of the identity of such entity and
within twenty (20) days of such notice Clearwire shall inform Licensee in
writing of whether Clearwire consents to such assignment or refuses to consent
to such assignment and, if it refuses, the reason(s) it is relying upon for such
refusal. Notwithstanding the foregoing, Licensee may, without the prior consent
of Clearwire: (1) assign any of its rights under this Agreement as collateral
and (2) sell, assign, sublease, delegate or transfer this Agreement or any of
its rights or obligations hereunder to any of Licensee's affiliates controlled
by or under common control with Licensee.
(F) [***]
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11. TERMINATION OF AGREEMENT
(A) This Agreement will automatically terminate with respect to the
FCC License or affected Channel(s) upon the earlier of: (1) the loss or
expiration without renewal of the FCC License; or (2) an FCC Final Order
revoking, terminating or canceling the FCC License, and in either such event
this Agreement shall terminate on the date specified as the expiration,
revocation, termination or cancellation date by any order in that proceeding (as
that date may have been extended by stay or otherwise) or, in the absence of
such specified date, the effective date of the last decision in that proceeding.
(B) This Agreement may be terminated by either Party if the other
Party fails to cure a payment default under this Agreement within sixty (60)
days of receipt of written notice from the non-defaulting Party specifying the
payment default. If the non-defaulting party terminates the Agreement within one
hundred eighty (180) days of a payment default, the payment default will not be
included in the definition of a Cross Default under the Master Agreement.
(C) This Agreement may be terminated by either Party after the
material breach of a non-payment obligation by the other Party or a material
misrepresentation by the
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23
other Party and, except as provided in Section 6(d), the failure or refusal of
the breaching Party (i) to diligently commence efforts to cure such default with
reasonable promptness after receipt of written notice from the non-defaulting
Party specifying the default but in no event any later than thirty (30) days
after receipt of such notice, or (ii) to diligently continue efforts to cure
such default after commencing such efforts, or (iii) to cure such default within
one-hundred twenty (120) days of receipt of written notice from the
non-defaulting Party specifying the default. In the event of an uncured material
breach of a non-payment obligation, Licensee shall have the option, but not the
obligation, to cure such breach at Clearwire's expense. A breach by a Service
Entity of a Service Entity Agreement (subject to the expiration of applicable
cure periods in the Service Entity Agreement, which shall be consistent with
those stated in this Agreement) shall be deemed a breach by Clearwire of this
Agreement. In the event of a material breach of this Agreement by Licensee prior
to the Commencement Date, Clearwire's sole recourse shall be to seek the
specific performance of this Agreement by Licensee.
(D) This Agreement shall terminate automatically in the event that
Licensee elects to withdraw from the Master Agreement incident to a Cross
Default, as defined in the Master Agreement.
(E) Licensee may terminate this Agreement pursuant to Section 16(b).
(F) If the Commencement Date does not occur by the first (1st)
anniversary of the Effective Date, thereafter either Party may terminate this
Agreement at any time before the Commencement Date by giving written notice of
termination to the other Party.
(G) In the event that the Commencement Date occurs, but the FCC's
grant of the De facto Transfer Authorization is subsequently rescinded and such
rescission has become a Final Order, this Agreement shall be deemed terminated
on the date specified as the required termination date by any order in that
proceeding (as that date may have been extended by stay or otherwise) or, in the
absence of such specified date, the effective date of the last decision in that
proceeding.
(H) In the event of an FCC Final Order denying any application to
allow the continuation or renewal of the De facto Transfer Authorization for a
portion of the Term, this Agreement shall be deemed terminated on the date
specified as the required termination date by any order in that proceeding (as
that date may have been extended by stay or otherwise) or, in the absence of
such specified date, the effective date of the last decision in that proceeding.
(I) The Parties will notify the FCC of the termination of this
Agreement with respect to the FCC License or any of the Channels within ten (10)
calendar days following the termination.
(J) Except as expressly set forth in this Agreement, upon the
expiration or termination of this Agreement, each Party will pay its own fees
and expenses related to this Agreement and the transactions contemplated herein,
and the Parties will have no further liability to each other except by reason of
any breach of this Agreement occurring prior to the date of expiration or
termination or after such expiration or termination if the breach is of a
provision that by its terms survives such expiration or termination. Any
termination or expiration of this
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Agreement, regardless of cause, will not release either Licensee or Clearwire
from any liability arising from any breach or violation by that Party of the
terms of this Agreement prior to the expiration or termination. The general and
procedural provisions of this Agreement, which may be relevant to enforcing the
obligations or duties of the Parties, as well as any other provisions that by
their terms obligate either party following expiration or termination, will
survive the expiration or termination of this Agreement until the obligations or
duties are performed or discharged in full.
(K) The Parties recognize that, in the event that a Party fails or
refuses to perform any provisions of this Agreement, monetary damages alone will
not be adequate. The non-defaulting Party shall therefore be entitled, in
addition to any other remedies which may be available, including money damages,
to obtain specific performance of the terms of this Agreement. Except as
expressly set forth in this Agreement no remedy conferred by any of the specific
provisions of this Agreement is intended to be exclusive of any other remedy,
and each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute or otherwise. Except as expressly set forth in this Agreement, the
election of any one or more remedies by a Party shall not constitute a waiver of
the right to pursue other available remedies at any time.
12. EXPENSES AND REVENUES
All subsequent documents appended to this Agreement, and any FCC activity
or activity to preserve, obtain or renew licenses shall be reimbursed by
Clearwire, provided that (and except as specified otherwise in this Agreement)
expenses in excess of $1,000 are approved as to reasonableness by Clearwire in
advance, such approval not to be unreasonably withheld, conditioned or delayed;
and provided further that Licensee shall not be required to take any action for
which Licensee may request expense reimbursement from Clearwire until the
Parties have reached agreement on reimbursement of expenses of Licensee related
to such action in excess of $1,000. Except as otherwise provided in this
Agreement, each Party will pay its own expenses incident to any amendments or
modifications to the Agreement, including, but not limited to, all fees and
expenses of their respective legal counsel and any engineering and accounting
expenses. Licensee is entitled to none of the revenue generated from the use of
the Clearwire Capacity, but only the royalties provided for in this Agreement.
13. COMPETITION
Licensee agrees that it will not, during the Term of this Agreement,
engage in building, operating, managing or distributing, on a for-profit basis,
a wireless broadband network in the Market Area, except as allowed by this
Agreement and except for the use of the Educational Reservation and the Access
Royalties in compliance with the provisions hereof applicable to such royalties.
25
14. CONFIDENTIALITY AND NON-DISCLOSURE(19)
(A) CONFIDENTIALITY OF THE TERMS OF THIS AGREEMENT. The terms of this
Agreement that are not otherwise required to be disclosed to the FCC in support
of the De facto Transfer Application, requests for renewal thereof or notices
submitted to the FCC, or as required to be disclosed in filings with the
Securities and Exchange Commission or state securities agencies, will be kept
strictly confidential by the Parties and their agents, which confidentiality
obligation will survive the termination or expiration of this Agreement for a
period of two (2) years. The Parties may make disclosures as required by law,
and to employees, shareholders, agents, attorneys and accountants (collectively,
"AGENTS") as required to perform obligations under the Agreement, provided,
however, that the Parties will cause all Agents to honor the provisions of this
section. In addition, either Party may disclose this Agreement to its
Affiliates, strategic partners, actual or potential investors, lenders,
acquirers, merger partners, and others whom it deems in good faith to have a
need to know such information for purposes of pursuing a transaction or business
relationship with it, so long as it secures an enforceable obligation from such
third party to limit the use and disclosure of this Agreement as provided
herein. The Parties will submit a confidentiality request to the FCC in the
event the FCC seeks from the Parties a copy of this Agreement or any other
confidential information regarding its terms.
(B) NON-DISCLOSURE OF SHARED INFORMATION. As used herein, the term
"Confidential Information" shall mean all non-public information disclosed
hereunder, whether written or oral, that is designated as confidential or that,
given the nature of the information or the circumstances surrounding its
disclosure, is plainly confidential or by the Parties' practices should be
understood to be confidential. The term Confidential Information does not
include information which: (1) has been or becomes published or is now, or in
the future, in the public domain without breach of this Agreement or breach of a
similar agreement by a third party; (2) prior to disclosure hereunder, is
property within the legitimate possession of the receiving Party; (3) is
lawfully received from a third party having rights therein without restriction
of third party's or the receiving Party's rights to disseminate the information
and without notice of any restriction against its further disclosure; or (4) is
independently developed by the receiving Party through persons who have not had,
either directly or indirectly, access to or knowledge of such Confidential
Information. During the Term, the Parties may supply and/or disclose to each
other Confidential Information relating to the business of the other Party. Each
item of Confidential Information will be kept confidential by the Parties during
the Term and for a period of three (3) years thereafter, but may be disclosed in
the enforcement or seeking of damages with respect to a Party's rights under
this Agreement. The receiving Party will be responsible for any improper use of
the Confidential Information by it or any of its Agents. Without the prior
written consent of the disclosing Party, the receiving Party will not disclose
to any entity or person the Confidential Information, or the fact that the
Confidential Information has been made available to it, except for disclosures
required by law, disclosures authorized by the Party owning the Confidential
Information and disclosures made in the context of the enforcement or seeking of
damages with respect to a Party's rights under this Agreement. Each person to
whom
----------
(19) If the Licensee is a governmental body subject to an open records, sunshine
or similar law or regulation that requires Licensee to make information
available to the public in an manner or to an extent that would be
inconsistent with this Section 14, revise this Section 14 to be consistent
with such law or regulation.
26
Confidential Information is disclosed must be advised of its confidential nature
and must agree to abide by the terms of this section.
15. ASSUMPTION OF LIABILITIES
Neither Party is assuming or will be responsible for any of the other's
liabilities or obligations (including but not limited to customer obligations)
except as required by the FCC or this Agreement.
16. FCC-MANDATED OBLIGATIONS
(A) Licensee and Clearwire are familiar with the FCC Rules affecting
secondary markets for spectrum and the provision of EBS, the Communications Act
of 1934, as amended ("COMMUNICATIONS ACT"), the Code of Federal Regulations, and
all other applicable FCC Rules, and agree to comply with all such laws and
regulations.
(B) Effective on the Commencement Date, Clearwire assumes primary
responsibility for complying with the Communications Act, and any FCC Rules that
apply to the Channels and FCC License, and this Agreement may be revoked,
cancelled or terminated, in accordance with Section 11, by Licensee or by the
FCC if Clearwire materially fails to comply with applicable laws and
regulations.
(C) Neither Licensee nor Clearwire will represent itself as the legal
representative of the other before the FCC or any party, but will cooperate with
each other consistent with this Agreement with respect to FCC matters concerning
the Licenses and the Channels.
(D) If the FCC License is revoked, cancelled, terminated or otherwise
ceases to be in effect, Clearwire will have no continuing authority or right to
use the Channels unless otherwise authorized by the FCC.
(E) This Agreement is not an assignment, sale or transfer of the FCC
License itself.
(F) This Agreement will not be assigned to any entity that is
ineligible or unqualified to enter into a use agreement for the Channels under
the FCC Rules.
(G) Licensee will not consent to an assignment, subassignment or
sublicensing of this secondary market arrangement unless such assignment,
subassignment or sublicensing complies with applicable FCC Rules and this
Agreement.
(H) Licensee and Clearwire must each retain a copy of this Agreement
and make it available upon request by the FCC, in accordance with the
confidentiality provisions in Section 14.
27
17. LICENSEE'S AUTHORIZATIONS
Licensee shall maintain all necessary qualifications to hold and to obtain
renewal in the ordinary course of the FCC License subject to Clearwire's
obligations under this Agreement, including, without limitation, Clearwire's
obligation to cause Licensee's FCC License to timely meet the substantial
service requirement, as such qualifications may be amended or modified from time
to time (individually an "FCC QUALIFICATION" and collectively referred to as the
"FCC QUALIFICATIONS"), and shall not knowingly or negligently take any action,
or fail to take any action, which action or failure to act creates a material
risk that Licensee shall lose any FCC Qualification; provided, that in the event
that the FCC or any other legal authority shall at any time specify new or
different qualifications or conditions for the maintenance of any FCC
Qualification or shall issue a pronouncement offering a new interpretation of a
FCC Qualification, Clearwire shall reimburse on demand Licensee's reasonable
expenses of taking such action as are required for Licensee to bring itself and
its operations into compliance with such new or different qualifications or
conditions and maintaining such compliance; provided, further, that it shall not
be deemed a breach of this sentence if Licensee loses a FCC Qualification as a
result, in whole or in part, of an act or omission of Clearwire or any failure
of Clearwire to perform its obligations under this Agreement. If, at any time,
Licensee fails, or it appears to Licensee more likely than not that it will
fail, to maintain any one or more of its FCC Qualifications with respect to the
License, Licensee shall give written notice to Clearwire within five (5) days
after Licensee becomes actually aware that (i) it no longer maintains such FCC
Qualifications or (ii) with the passage of time or upon the occurrence of a
future event it will no longer maintain such FCC Qualifications (referred to as
a "DISQUALIFICATION EVENT"). Licensee shall cooperate with reasonable requests
of Clearwire made from time to time for the purpose of verifying, at Clearwire'
expense, that Licensee maintains its FCC Qualifications. Upon the occurrence of
a Disqualification Event, Licensee shall, at Clearwire's expense, promptly
undertake all reasonable actions to obtain, to the extent permitted by
applicable law, a waiver from the FCC regarding the circumstances giving rise to
such Disqualification Event or to cure the circumstances giving rise to such
Disqualification Event.
18. MUTUAL REPRESENTATIONS AND WARRANTIES
(A) BY LICENSEE TO CLEARWIRE. Subject to any specific exceptions
identified on any schedule to the Master Agreement,(20) Licensee hereby
represents and warrants to Clearwire that:
(i) Organization and Good Standing. It is a nonprofit corporation
duly organized, validly existing and in good standing under the laws of its
state of organization and has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as
now conducted and as proposed to be conducted. It is duly qualified or
authorized to do business as a foreign corporation and is in good standing
under the laws of each jurisdiction in which it owns or leases real
property and each other jurisdiction in which the conduct of its business
or the ownership of its properties requires
----------
(20) Delete this clause from School District IUAs.
28
such qualification or authorization, except where the failure to be so
qualified, authorized or in good standing does not have and would not
reasonably be expected to have a material adverse effect on the business,
operations, properties, assets, condition (financial or other) or results
of operations of Licensee, taken as a whole, other than changes affecting
the broadband wireless business generally ("LICENSEE MATERIAL ADVERSE
EFFECT").
(ii) Authorization of Agreement. It has all requisite corporate
power and authority to enter into, deliver and carry out the transactions
contemplated by this Agreement. This Agreement has been duly and validly
executed and delivered by it and (assuming the due authorization, execution
and delivery by the other parties hereto) this Agreement constitutes the
legal, valid and binding obligations of Licensee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in
a proceeding at law or in equity).
(iii) No Conflict. Except as set forth on the disclosure schedule
attached hereto by Licensee (the "LICENSEE SCHEDULE"):
A. Neither the execution and delivery by Licensee of this
Agreement, nor compliance by Licensee with any of the provisions
hereof will (i) conflict with, or result in the breach of, any
provision of Licensee's certificate or articles of incorporation or
bylaws, (ii) conflict with, violate, result in the breach of,
constitute (with or without due notice, lapse of time or both) a
default under, result in the acceleration of, create in any party the
rights to accelerate, terminate, modify or cancel, or require any
notice, consent or waiver under, any note, bond, mortgage, indenture,
license, agreement or other obligation to which Licensee is a party or
by which Licensee or any of its properties or assets is bound or (iii)
violate any statute, rule, regulation, order or decree of any Federal,
state or local government, or any governmental, regulatory,
legislative, executive, or administrative authority, agency or
commission, or any court, tribunal, or judicial body ("GOVERNMENT
AGENCY") by which Licensee is bound, except in the cases of clauses
(ii) and (iii) for such conflicts, violations, breaches, accelerations
or defaults as would not, individually or in the aggregate, have a
Licensee Material Adverse Effect.
B. No consent, waiver, approval, order, permit or
authorization of, or declaration or filing with, or notification to,
any person, entity or Government Agency is required on the part of
Licensee in connection with the execution and delivery of this
Agreement or the compliance by Licensee with any of the provisions
hereof, except as contemplated herein.
(iv) FCC Licenses. Except as set forth on the disclosure schedule
attached hereto by Licensee (the "LICENSEE SCHEDULE"):
A. To the best knowledge of Licensee, all information set
forth in Schedule A regarding the License is complete and accurate in
all material respects,
29
although Licensee makes no representation as to the MHzPops associated
with the License. Licensee holds the License free and clear of all any
lien, pledge, mortgage, deed of trust, security interest, claim,
lease, charge, option, right of first refusal, easement, servitude,
transfer restriction, encumbrance or any other restriction or
limitation whatsoever except for liens for taxes not then due and
payable and generally applicable FCC-imposed restrictions ("Liens").
B. Licensee is authorized, by final order, to hold the FCC
License, subject to any pending renewal application listed on the
Licensee Schedule.
C. To the best knowledge of Licensee, the Licensee Schedule
sets forth a true list of interference consents that have been granted
by Licensee with respect to any FCC Licenses and that are germane
under the two-way rules and would have a material impact on the use of
the Channels (excluding routine consents customary in the industry).
(v) Litigation. Except as set forth in the Licensee Schedule and
other than proceedings of general applicability and those related to market
transitions, there is no action, suit, litigation, arbitration proceeding
(including any civil, criminal, administrative, investigative or appellate
proceeding), hearing, inquiry, audit, examination or investigation
commenced, brought, conducted or heard by or before, or otherwise involving
any court or other Government Agency or any arbitrator or arbitration panel
now in progress or pending or, to the knowledge of Licensee, threatened
against Licensee or the assets (including the intellectual property rights)
or the business of Licensee, nor to the knowledge of Licensee, does there
exist any basis therefore, except for immaterial claims brought against
Licensee in the ordinary course of business. Other than orders issued in
licensing proceedings which contain no continuing requirements or
continuing unusual conditions and Orders which are set forth on the
Licensee Schedule, Licensee is not subject to any order, writ, judgment,
injunction, decree, stipulation, determination, or award entered by or with
any Government Agency.
(vi) Compliance with Laws; Permits. To the best knowledge of the
Licensee where and during the time access to the Channels currently subject
to the FCC License has been governed by a third party agreement (and
assuming that the third party agreement and normal conduct by parties
pursuant to this type of agreement comply in all material respects with the
Communications Act and FCC Rules) and except as provided in the Licensee
Schedule, Licensee (a) has complied in all respects with all federal,
state, local and foreign laws, rules, ordinances, codes, consents,
authorizations, registrations, regulations, decrees, directives, judgments
and orders applicable to it and its business with the Channels other than
where noncompliance would not reasonably be expected to have a Licensee
Material Adverse Effect and (b) has all federal, state, and local
governmental permits, authorizations, approvals, licenses, certificates and
consents ("PERMITS") necessary in the conduct of its business as currently
conducted with the Channels and to own and use its assets used with the
Channels in the manner in which such assets are currently owned and used
other than where the failure to possess such Permits would not,
individually or in the aggregate, reasonably be expected to have a Licensee
Material Adverse Effect, such Permits are in full force and effect, and no
violations have been
30
recorded in respect of any such Permit, and no proceeding is pending or, to
the best knowledge of Licensee, threatened to revoke or limit any such
Permit.
(vii) Offering Exemption: Securities Representations.(21)
A. The Licensee Schedule states whether Licensee is or is
not an "accredited investors" as this term is defined in Rule 501(a)
of Regulation D as promulgated by the U.S. Securities and Exchange
Commission under the Securities Act.
B. Licensee is acquiring the Equity Royalty for its own
account, for investment purposes only and not with a view to the
distribution (as such term is used in Section 2(11) of the Securities
Act) thereof. Licensee understands that the Equity Royalty has not
been registered under the Securities Act and cannot be sold unless
subsequently registered under the Securities Act or an exemption from
such registration is available.
C. Licensee is knowledgeable and experienced in the
telecommunications industry and is capable of evaluating the risks and
merits of the Equity Royalty, and making an informed decision with
respect thereto. Licensee, its officers, and directors have had
sufficient opportunity to ask questions of and receive answers from
Clearwire concerning the business of Clearwire, its operations, assets
and liabilities. Licensee and its representatives have had an
opportunity to review all documents and records concerning Clearwire
and its business that Licensee has requested. Licensee has conducted
its own independent assessment, analysis and investigation with
respect to Clearwire and its business at the time of entering into
this Agreement and has agreed to enter into this Agreement based
solely on this assessment, analysis and investigation, and the
representations and warranties of Clearwire set forth in this
Agreement and the Master Agreement.
D. Licensee is aware that Clearwire Parent is a speculative
enterprise, that certain of the information disclosed to Licensee
contains forward looking statements which involve risks and
uncertainties, and that Clearwire Parent's actual results may differ
significantly from the results discussed in these forward looking
statements. Licensee further acknowledges that the value of Clearwire
Parent's assets is inherently uncertain and is dependent upon market,
technological, and regulatory developments concerning feasible and
allowable uses. Licensee represents and warrants to Clearwire that it
has assessed these factors independently and has agreed to enter into
this Agreement without reliance upon or expectation of any
representations, warranties, or disclosures of any kind from
Clearwire, except as set forth or delivered pursuant to this Agreement
or the Master Agreement.
(viii) Brokers. Neither Licensee nor any of its directors,
officers, employees, or representatives has employed any broker or finder
in connection with this
----------
(21) Delete this subsection (viii) from School District IUAs.
31
Agreement other than D.F. Hadley & Co., Inc. Licensee is solely responsible
for all fees payable to D.F. Hadley & Co., Inc.(22)
(ix) Knowledge. Any representation, warranty, covenant,
obligation, or part thereof that states that it is made to the best
knowledge of Licensee is made to its best knowledge after commercially
reasonable investigation and includes all facts which it knew or should
have known as a result of such investigation, including the best knowledge
of Licensee's executive officers and legal counsel after commercially
reasonable investigation.
(B) BY CLEARWIRE TO LICENSEE. Subject to any specific exceptions
identified in the Master Agreement, Clearwire hereby represents and warrants to
Licensee that:
(i) Organization and Good Standing. Clearwire Parent is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Clearwire is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Nevada. Each has all requisite corporate or limited liability
company power and authority to own, lease and operate its properties and to
carry on its business as now conducted. Each of Clearwire and Clearwire
Parent is duly qualified or authorized to do business as a foreign
organization and is in good standing under the laws of each jurisdiction in
which it owns or leases real property and each other jurisdiction in which
the conduct of its business or the ownership of its properties requires
such qualification or authorization, except where the failure to be so
qualified, authorized or in good standing does not have and would not
reasonably be expected to have a material adverse effect on the business,
operations, properties, assets, condition (financial or other) or results
of operations of Clearwire or Clearwire Parent, taken as a whole, other
than changes affecting the broadband wireless business generally
("CLEARWIRE MATERIAL ADVERSE EFFECT").
(ii) Authorization of Agreement. Each of Clearwire Parent and
Clearwire has all requisite corporate or limited liability company power
and authority (i) to enter into, deliver and carry out this Agreement, and
(ii) to enter into and deliver all documents required or necessary to be
executed by it in connection with the consummation of this Agreement. This
Agreement (assuming the due authorization, execution and delivery by
Licensee) constitutes the legal, valid and binding obligations of
Clearwire, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at law or in equity).
Clearwire Parent's obligation to issue the Equity Royalty in the Master
Agreement (assuming the due authorization, execution and delivery by the
other parties thereto) constitutes the legal, valid and binding obligations
of Clearwire Parent, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors' rights and remedies generally, and
subject, as to
----------
(22) Delete this Subsection (ix) from School District IUAs.
32
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at law or in equity).
(iii) Equity Royalty.(23) The authorization, offer, issuance,
sale and delivery of the Equity Royalty has been duly authorized by all
requisite corporate action on the part of Clearwire Parent, and the Equity
Royalty, when issued, sold and delivered in accordance with the Master
Agreement and this Agreement, will be validly issued and outstanding, fully
paid and nonassessable, free of any Liens and not subject to preemptive or
similar rights of the other shareholders of Clearwire Parent or others
(other than as set forth in the Stockholders Agreement, as defined in the
Master Agreement, or Clearwire Parent's Certificate of Incorporation, as
amended). The terms, designations, powers, preferences and relative
participating, optional and other special rights, and the qualifications,
limitations and restrictions, of the Class A Common Stock are as stated in
the Clearwire Parent's Certificate of Incorporation, as amended.
(iv) No Conflict. Neither of the execution and delivery by
Clearwire or Clearwire Parent of this Agreement or the Master Agreement,
nor the compliance by Clearwire or Clearwire Parent with any of the
provisions hereof or thereof will (i) conflict with, or result in the
breach of, any provision of the certificate of incorporation, certificate
of limited liability company, bylaws or operating agreement of Clearwire or
Clearwire Parent, (ii) conflict with, violate, result in the breach of, or
constitute (with or without due notice, lapse of time or both) a default
under, result in the acceleration of, create in any party the rights to
accelerate, terminate, modify or cancel, or require any notice, consent or
waiver under, any note, bond, mortgage, indenture, license, agreement or
other obligation to which Clearwire or Clearwire Parent is a party or by
which Clearwire or Clearwire Parent or any of its respective properties or
assets are bound or (iii) violate any statute, rule, regulation, order or
decree of any Government Agency by which Clearwire or Clearwire Parent is
bound, except, in the case of clauses (ii) and (iii), for such conflicts,
violations, breaches, accelerations or defaults as would not, individually
or in the aggregate, have a Clearwire Material Adverse Effect.
(v) Consents. No consent, waiver, approval, order, permit or
authorization of, or declaration or filing with, or notification to, any
person, entity or Government Agency is required on the part of Clearwire or
Clearwire Parent in connection with the execution and delivery of this
Agreement or the Master Agreement or the compliance by Clearwire or
Clearwire Parent with any of the provisions hereof or thereof.
(vi) Litigation. Except as would not reasonably be expected to
have a materially adverse effect on the ability of Clearwire to execute,
deliver and perform this Agreement, or the ability of Clearwire Parent to
issue to Equity Royalty, (a) there is no Proceeding now in progress or
pending or, to the knowledge of Clearwire, threatened against Clearwire or
Clearwire Parent or the assets or the business of Clearwire or Clearwire
Parent and (b) neither Clearwire nor Clearwire Parent is subject to any
order,
----------
(23) Do not insert this representation in School District IUAs. For these IUAs
insert "RESERVED."
33
writ, injunction or decree of any court or other Government Agency other
than orders issued in licensing proceedings.
(vii) Compliance with Laws; Permits. Each of Clearwire and
Clearwire Parent (a) has complied in all respects with all federal, state,
and local laws, rules, ordinances, codes, consents, authorizations,
registrations, regulations, decrees, directives, judgments and orders
applicable to it and its business other than where noncompliance would not,
individually or in the aggregate, reasonably be expected to have a
Clearwire Material Adverse Effect and (b) has all federal, state, and local
governmental Permits necessary in the conduct of its business as currently
conducted and to own and use its assets in the manner in which such assets
are currently owned and used other than where the failure to possess such
Permits would not, individually or in the aggregate, reasonably be expected
to have a Clearwire Material Adverse Effect, such Permits are in full force
and effect, and no violations have been recorded in respect of any such
Permit, and no proceeding is pending or, to the best knowledge of
Clearwire, threatened to revoke or limit any such Permit.
(viii) Brokers. Neither Clearwire nor any of its directors,
officers, employees or representatives has employed any broker or finder in
connection with this Agreement.
19. INDEMNIFICATION
(A) Licensee shall indemnify Clearwire, its Affiliates, and each of
their respective stockholders, directors, officers, employees, agents,
successors and assigns (collectively, the "CLEARWIRE INDEMNIFIED PARTIES") and
hold each of the Clearwire Indemnified parties harmless from and against any and
all Damages based upon, attributable to or resulting from:
(i) the failure of any representation or warranty of Licensee set
forth herein, or any representation or warranty contained in any
certificate delivered by or on behalf of Licensee pursuant to this
Agreement, to be true and correct as of the dates made; or
(ii) the breach of any covenant or other agreement on the part of
the Licensee under this Agreement.
(B) Clearwire shall indemnify the Licensee, its Affiliates, and each
of their respective, agents, successors and assigns (collectively, the "LICENSEE
INDEMNIFIED PARTIES") and hold each of the Licensee Indemnified parties harmless
from and against any and all Damages based upon, attributable to or resulting
from:
(i) the failure of any representation or warranty of Clearwire
set forth herein, or any representation or warranty contained in any
certificate delivered by or on behalf of Clearwire pursuant to this
Agreement, to be true and correct as of the dates made;
34
(ii) the breach of any covenant or other agreement on the part of
Clearwire under this Agreement;
(iii) the operation of equipment by, the provision of service by
or otherwise related to the activities of Clearwire, any of its Affiliates
or any of its sublicensees or resellers including, without limitation,
damage to health; or
(iv) any forfeitures or fines levied by the FCC against Licensee,
or loss or impairment of the FCC License, arising from Clearwire's act or
omission.
(C) DETERMINATION OF DAMAGES. As used herein, "DAMAGES" means any and
all losses, claims, demands, liabilities, obligations, actions, suits, orders,
statutory or regulatory compliance requirements, or proceedings asserted by any
Person, and all damages, costs, expenses, assessments, judgments, recoveries and
deficiencies, including interest, penalties, investigatory expenses,
consultants' fees, and reasonable attorneys' fees and costs, of every kind and
description, contingent or otherwise. For purposes of the above, the amount of
Damages in respect of any breach of a representation or warranty shall be
determined without regard to any limitation or qualification as to materiality
set forth in such representation or warranty. As used in this Agreement,
"PERSON," whether or not such term is capitalized, means any individual,
partnership, firm, corporation, limited liability licensee(s), association,
trust, unincorporated organization, or other entity.
(D) INDEMNIFICATION PROCEDURES.
(i) In the event that any claim shall be asserted by any Person
in respect of which payment may be sought under this Section 19 (each, a
"CLAIM"), the indemnified party shall reasonably and promptly cause written
notice (a "CLAIM NOTICE") of the assertion of such Claim of which it has
knowledge which is covered by this indemnity to be forwarded to the
indemnifying party. The indemnifying party shall have the right, at its
sole option and expense, to be represented by counsel of its choice, which
must be reasonably satisfactory to the indemnified party, and to defend
against, negotiate, settle or otherwise deal with any Claim which relates
to any Damages indemnified against hereunder. If the indemnifying party
elects to defend against, negotiate, settle or otherwise deal with any
Claim which relates to any Damages indemnified against hereunder, it shall
within five (5) days of delivery of the Claim Notice (or sooner, if the
nature of the Claim so requires) notify the indemnified party of its intent
to do so. If the indemnifying party elects not to defend against,
negotiate, settle or otherwise deal with any Claim which relates to any
Damages indemnified against hereunder, fails to notify the indemnified
party of its election as herein provided or contests its obligation to
indemnify the indemnified party for such Damages under this Agreement, the
indemnified party may defend against, negotiate, settle or otherwise deal
with such Claim. If the indemnified party defends any Claim, then the
indemnifying party shall reimburse the indemnified party for the expenses
of defending such Claim upon submission of periodic bills. If the
indemnifying party shall assume the defense of any Claim, the indemnified
party may participate, at his or its own expense, in the defense of such
Claim; provided, however, that such indemnified party shall be entitled to
participate in any such defense with separate counsel at the expense of the
indemnifying party if, so requested by the indemnifying party to
participate or (ii) in the reasonable
35
opinion of counsel to the indemnified party, a conflict or potential
conflict exists between the indemnified party and the indemnifying party
that would make such separate representation advisable; and provided,
further, that the indemnifying party shall not be required to pay for more
than one such counsel for all indemnified parties in connection with any
Claim. The parties hereto agree to cooperate fully with each other in
connection with the defense, negotiation, or settlement of any such Claim.
(ii) After any final judgment or award shall have been rendered
by a court, arbitration board or administrative agency of competent
jurisdiction and the expiration of the time in which to appeal therefrom,
or a settlement shall have been consummated, or the indemnified party and
the indemnifying party shall have arrived at a mutually binding agreement
with respect to a Claim hereunder, the indemnified party shall forward to
the indemnifying party notice of any sums due and owing by the indemnifying
party pursuant to this Agreement with respect to such matter.
(iii) The failure of the indemnified party to give reasonably
prompt notice of any Claim shall not release, waive or otherwise affect the
indemnifying party's obligations with respect thereto except to the extent
that the indemnifying party can demonstrate actual loss and prejudice as a
result of such failure.
(E) SURVIVAL. Each Party's obligations under this section will survive
the expiration or termination of this Agreement.
20. INFORMATION SHARING OBLIGATIONS AND CONSULTATION REGARDING ACCESS RIGHT
ROYALTIES AND CERTAIN OTHER COVENANTS
(A) OVERVIEW OF CONSULTATION/INFORMATION EXCHANGE REQUIREMENTS.
(i) Guiding Principles. The consultation, governance and
information rights and obligations and the related processes for audit
contained in this Section 20 (collectively, the "ONGOING OBLIGATIONS"), are
intended to preserve the benefits to Licensees set forth in this
Agreement's Sections 6(c), 7 and Section 2(c)(ii) and Section 7.11 of the
Master Agreement hereof in light of changes in the wireless broadband
environment over a Term of approximately 30 years. By way of example and
not limitation, the Parties recognize that changes to the technology or
architecture of Cell Sites or Sectors, or to the composition, number or
characteristics of Subscribers, could, without accompanying changes to the
provisions of Section 7 result in an adverse impact on the number of
Cost-Free Customer Accounts to which Licensee is entitled or otherwise
impair their value in comparison to the anticipated circumstances at the
time of execution of this Agreement. As well, it is the intent of the
Parties to supply Licensee with information as described in Section 20(f)
if Licensee owns shares of Clearwire Parent stock pursuant to Section 2 of
this Agreement and the related provisions of the Master Agreement. The
Ongoing Obligations are intended to facilitate good faith negotiation and
resolution of issues arising from changes in circumstances during the Term,
but any failure to comply
36
with the Ongoing Obligations is to be addressed through the Dispute
Resolution Procedures and shall not give rise to a right to terminate this
Agreement.
(ii) Party Representatives. To facilitate the Ongoing
Obligations, each Party shall designate a party representative as provided
in this Section 20(a)(ii) to act as its representative with respect to the
all matters under this Agreement and in particular with respect to matters
governed by Section 20(e) (the "PARTY REPRESENTATIVES"). Notwithstanding
the foregoing in this Section 20(a)(ii), if the rights of Clearwire
hereunder at the outset of a negotiation hereunder are held by Clearwire or
a Clearwire Affiliate and the rights of Licensee hereunder remain held by
the entity that executed this Agreement as the "Licensee" or an Affiliate
of that entity, then the appointment of Party Representatives, including
the number for each, shall be governed by Section 8.01(b) of the Master
Agreement, and if during any negotiations the rights of Clearwire hereunder
are not held by Clearwire or a Clearwire Affiliate or the rights of
Licensee hereunder are no longer held by the entity that executed this
Agreement as the "Licensee" or an Affiliate of that entity, then the
appointment of Party Representatives, including the number for each, shall
be governed by this Section 20(a)(ii) and the Parties shall promptly make
new appointments.
(iii) Relationship Management. To facilitate the management of
the relationship between Licensee and Clearwire, the Licensee shall be
provided with the information disclosure provided for in Section 20(b)
through Section 20(e) at the times specified therein. The completeness and
accuracy of such information may be evaluated through the audit process set
forth in Section 20(g). Clearwire Parent information will be made available
in accordance with Section 20(f) if Licensee owns shares of Clearwire
Parent stock pursuant to Section 2 of this Agreement and the related
provisions of the Master Agreement.
(B) CAPACITY DISCLOSURE.
(i) Initial Capacity Disclosure. Within thirty (30) days of the
later of (i) the commercial launch of a Clearwire Affiliate's broadband
wireless system in the Market Area, and (ii) the Commencement Date (such
later date, the "EBS RELEVANCE DATE"), Clearwire shall disclose in writing
to Licensee: (1) the total number of EBS and BRS channels Clearwire
currently is utilizing in the Market Area of the Channels, (2) the number
of Cell Sites in such Market Area, and (3) the number of Sectors in such
Market Area. The information pursuant to (1) and (2) shall be updated at
each Information Sharing Meeting, and the information pursuant to (3) shall
be updated as provided in Section 20(b)(ii).
(ii) Annual Update. By January 31 of each year following the EBS
Relevance Date, Clearwire shall disclose in writing to Licensee: (1) the
number of Sectors in such Market Area, and (2) the number of subscribers in
such Market Area served by Clearwire or any of its Affiliates. All
information shall be as of December 31 of the previous year.
(iii) Data Capacity Measurement. On the [***] and [***]
anniversaries of the EBS Relevance Date, and every [***] thereafter,
Clearwire shall disclose in writing
[*** Confidential Treatment Requested]
37
to Licensee the overall data capacity of the network in such Market Area as
measured by its average throughput. The average throughput measurement
shall be made in such fashion as shall be agreed by the Party
Representatives in consultation with Clearwire engineers and other
technical experts prior to such anniversary, using metrics that are as
consistent as possible with those utilized at the time of the immediately
prior average throughput measurement (on each such anniversary, the
"UPDATED CAPACITY DISCLOSURE").
(C) SYSTEM INFORMATION.
Within thirty (30) days of the EBS Relevance Date, Clearwire shall disclose
in writing to Licensee the system capabilities, services, and feature sets
that are generally provided to Clearwire's or its Affiliate's retail
customers and wholesalers to mass market customers ("SYSTEM SERVICE
CAPABILITIES"), which information can be provided by reference to
Clearwire's website to the extent that it is available to the public there.
At such time as System Service Capabilities are changed for any Market
Area, Clearwire shall so notify Licensee in writing within 30 days of such
change. Clearwire will also provide appropriate supporting information of
the change as may be reasonably requested by Licensee.
(D) PREFERRED CONTENT PROVIDER INFORMATION.
(i) Within thirty (30) days of the later of the EBS Relevance
Date and the date when third-party content is delivered in the Market Area,
Clearwire shall disclose to Licensee in writing the system capabilities,
and/or service or feature sets that are then being provided to third-party
content providers in the Market Area, and a schedule of the charges, if
any, for any of the foregoing, together with the basis on which such
charges are imposed to demonstrate that the pricing requirements of Section
7(j) are being satisfied. Clearwire shall advise Licensee of anticipated
changes in the price structure and the effective date of any such change
not less than 30 days before such change shall become effective.
(ii) Clearwire shall disclose in a timely fashion to permit
Licensee to make alternative arrangements if Clearwire anticipates that
there may be limitations in the network capabilities in the Market Area of
the Channels that could cause Clearwire to restrict the use of capabilities
and services pertaining to a Licensee's providing content over the
broadband wireless network in that Market Area. Prior to restricting access
of Licensee as a result of such limitations, as permitted under Section
7(j), Clearwire shall have disclosed in sufficient detail the scope of such
constraints. Clearwire shall promptly advise Licensee if as a result of a
change in technology, business practices, customer dynamics, or otherwise,
the capacity constraint is dissipated at any time, which would reinstate
the obligations of Clearwire under Section 7(j).
(E) CONSULTATION PROCESSES.
(i) Consultation Process Pertaining to Access Right Royalty
Information. As often as necessary, but in no event less than once per
calendar quarter, the Licensee Representatives or their designees shall be
given access to members of Clearwire's management and/or technical staff to
review the process and content of
38
information sharing pursuant to this Section 20, and to address any
questions or concerns about the manner, timeliness and completeness of the
information received, in addition to questions about its content.
(ii) Process for Altering Definitions/Formulae to Maintain
Integrity of Relationship. At the call of any Party Representative, the
Party Representatives shall meet, together with such other employees or
advisors as may facilitate such meeting, to discuss concerns over the
operation of the formulas and the scope of defined terms as a result of one
or more changes in Clearwire's technology and/or business practices that
individually or collectively produce a material adverse change to the
Access Right Royalties or other material benefits that Licensee receives
pursuant to this Agreement, and to determine if a reformation of this
Agreement should be implemented to prevent or reverse such material adverse
change(s).
A. The Parties agree to share such information and to
provide such technical assistance in collecting and evaluating such
information as may be useful or necessary to facilitate the process
required by Section 20(e)(i) and (ii). In connection with such
consultation, any Party Representative may propose altering the scope
of a term or formula under this Agreement (a "REFORMATION PROPOSAL")
to achieve the goals set forth in Section 20(a) and to preserve the
Licensee benefits set forth Section 7 or elsewhere in this Agreement.
If the Parties agree on the change, they shall take such action as is
necessary to amend this Agreement. If the Parties cannot agree on a
proposed modification in a timely manner, any Party Representative may
invoke the Special Dispute Resolution Procedure identified for this
purpose in Section 21(d)(xii). Any Party Representative may invoke for
the first time Special Dispute Resolution Procedure set forth above at
any time following the Commencement Date.
B. No Party Representative may invoke the Special Dispute
Resolution Procedure in support of a Reformation Proposal on the same
principal grounds more frequently than every five (5) years during the
Term of this Agreement. By way of example but not limitation: no Party
Representative's Reformation Proposal justified primarily on Clearwire
network technical changes can be pursued through the Special Dispute
Resolution Procedure within five (5) years of the immediately
preceding Special Dispute Resolution Procedure justified primarily on
Clearwire network technical changes. By way of further example and not
limitation: no Party's Representative's Reformation Proposal justified
primarily on Clearwire's changed business practices can be pursued
through the Special Dispute Resolution Procedure within five (5) years
of the immediately preceding Special Dispute Resolution Procedure
justified primarily on Clearwire's changed business practices.
(F) INFORMATION ACCESS RIGHTS RELATED TO CLEARWIRE PARENT.
(i) Access to Information. [***]
[*** Confidential Treatment Requested]
39
[***]
[*** Confidential Treatment Requested]
40
[***]
(G) INFORMATION AUDIT RIGHTS.
(i) Licensee may audit the information provided by Clearwire
pursuant to Section 20(b), 20(c), and 20(d). Licensee's audit will be
limited to Clearwire's records and engineering documents that are relevant
and sufficient to verify the information provided by Clearwire. No more
than once per calendar year, Licensee may audit one or more metrics
reported by Clearwire for the Market Area. Clearwire must provide the
underlying source documents within 20 days of a request for audit by a
Licensee.
(ii) The costs incurred by Licensee in performing an audit under
this Section 20(g) shall be borne by the Licensee; provided that, if there
is a discrepancy of 5% or more with respect to a particular metric in the
Market Area, costs of audit of that metric shall be borne by Clearwire and
promptly paid upon submission of an invoice.
21. MISCELLANEOUS
(A) LAWS, RULES AND REGULATIONS. This Agreement is subject to all
laws, rules, regulations and ordinances relative to, among other things, the
subject matter addressed in this Agreement.
(B) FORCE MAJEURE. Other than the failure to pay money when required,
neither Party will be liable for any nonperformance under this Agreement due to
causes beyond its reasonable control that could not have been reasonably
anticipated by the non-performing Party and that cannot be reasonably avoided or
overcome; provided that the non-performing party gives the other Party prompt
written notice of such cause, and in any event, within fifteen (15) calendar
days of its discovery.
(C) INDEPENDENT PARTIES. None of the provisions of this Agreement will
be deemed to constitute a partnership, joint venture, or any other such
relationship between the Parties, and neither Clearwire nor Licensee will have
any authority to bind the other in any manner. Neither Party will have or hold
itself out as having any right, authority or agency to act on behalf of the
other Party in any capacity or in any manner, except as may be specifically
authorized in this Agreement.
[*** Confidential Treatment Requested]
41
(D) DISPUTE RESOLUTION.(24)
(i) General. The parties desire to resolve disputes arising out
of this Agreement without litigation. Accordingly, the Parties agree to use
the dispute resolution procedures set forth in this Section 21(d) (the
"DISPUTE RESOLUTION PROCEDURES") as their sole means of adjudication with
respect to any controversy or claim arising out of or relating to this
Agreement or its breach.
(ii) Dispute Notice. At the written request of any Party (a
"DISPUTE NOTICE"), the Parties to the dispute will within seven business
days of the Dispute Notice, appoint knowledgeable, responsible
representatives to meet and negotiate in good faith to resolve any dispute
arising under this Agreement. The Parties intend that these negotiations be
conducted by business representatives, including at least one senior
executive of each Party to the dispute. The representatives shall meet and
confer, in person or by teleconference, not later than such seventh
business day after the date of the Dispute Notice. The location, format,
frequency, duration and conclusion of these discussions shall be left to
the discretion of the representatives; provided that, the duration shall
not exceed 45 days from the date of the Dispute Notice (an "ACTION DATE")
unless extended by mutual written agreement of the Parties setting forth a
new Action Date. The Dispute Notice and any extension shall specify the
Action Date. The Dispute Notice shall set forth the nature of the dispute,
in reasonable detail. Discussion and correspondence among the
representatives for purposes of these negotiations shall be treated as
confidential information developed for purposes of settlement, exempt from
discovery and production, and shall not be admissible in the arbitration
described below. Documents identified in or provided with such
communications, which are not prepared for purposes of the negotiations,
are not so exempted and may, if otherwise admissible, be admitted in
evidence in the arbitration. If the Parties are unable to resolve any
disputes arising under or relating to this Agreement (each a "DISPUTE")
using the process described in this Section 21(d) within the time period
provided, including without limitation disputes regarding a breach or
default under this Agreement, the Parties shall arbitrate such dispute
pursuant to the arbitration provisions set forth in Section 21(d)(iii) and
as modified by the Special Arbitration provisions Section 21(d)(xii) in the
case of disputes arising under Section 20(e)(ii).
(iii) Arbitration. Any Dispute that has not be resolved within
the time period provided for in Section 21(d)(ii) shall be resolved by a
panel of three Arbitrators. The Dispute Notice shall automatically serve as
a written notice of a request to submit the Dispute for arbitration if
there has not been a resolution of the Dispute by the Action Date, and the
Parties agree to submit the Dispute to a panel of three arbitrators who
shall be appointed within 30 days of the Action Date (the "SUBMISSION
PERIOD"). During the Submission Period, the Parties shall appoint the
arbitrators in accordance with the Commercial Arbitration Rules (then in
effect) of the American Arbitration Association ("AAA"), as modified below.
No punitive damages (or any other amount awarded for the purpose of
imposing a penalty) will be awarded for a breach of this Agreement.
----------
(24) If the Licensee is a governmental agency that is required to conduct
dispute resolution by other means, substitute the other means for this
Section 21(d).
42
(iv) During the Submission Period, the Parties may submit a
request for discovery to the arbitrators, who shall determine whether the
scope of the requested discovery is appropriate or useful for the
resolution of the Dispute and order the discovery in their discretion;
provided that such discovery process shall be concluded not later than 30
days following the submission date (the "DISCOVERY CLOSE DATE").
(v) The arbitration hearing shall be fixed by the arbitrators to
be not sooner than 20 days nor later than 45 days after the Discovery Close
Date (the "HEARING DATE"). The hearing shall be located at a neutral site
as mutually agreed by the Parties, or if the Parties cannot so agree, then
the location of the arbitration shall be the largest city within the GSA of
the Channels(25). The Federal Rules of Evidence shall apply to the
arbitration hearing. The Party bringing a particular claim or asserting an
affirmative defense will have the burden of proof with respect thereto.
Each Party shall bear the burden of persuasion with respect to its proposal
for resolution of the matter. The arbitration proceedings and all
testimony, filings, documents and information relating to or presented
during the arbitration proceedings shall be deemed to be information
subject to the confidentiality provisions of this Agreement. The
arbitrators will have no power or authority, pursuant to the rules of the
AAA or otherwise, to relieve the Parties from their agreement hereunder to
arbitrate or otherwise to amend or disregard any provision of this
Agreement, including without limitation the provisions of this Section.
(vi) Each Party shall be permitted to submit a pre-hearing brief
not to exceed 25 pages and such technical supporting material as is
necessary or useful, to be submitted to the arbitrators and the other Party
not later than 5 days before the Hearing Date, and each Party may issue a
response thereto not later than 2 days before the Hearing Date. Following
the arbitration hearing, each Party shall be permitted to submit a
post-hearing brief not to exceed 25 pages within 5 days following the
Hearing Date and a reply brief within 2 days thereafter (the "PLEADING
CLOSE DATE"). Should an arbitrator refuse or be unable to proceed with
arbitration proceedings as called for by this Section, the arbitrator shall
be replaced pursuant to the rules of the AAA. If an arbitrator is replaced
after the arbitration hearing has commenced, then a rehearing shall take
place in accordance with this Section and the rules of the AAA.
(vii) Within fifteen (15) days after the Pleading Close Date, the
arbitrators will prepare and distribute to the Parties a writing setting
forth the arbitration panel's reasons for its determination. The findings
and conclusions and the award, if any, shall be deemed to be confidential
information of the Parties. Neither Party may disclose such information to
any third party other than their professional advisors or as required by
law or regulations, except in connection with an action to enforce the
award.
(viii) The Arbitrators are instructed to schedule promptly all
discovery and other procedural steps and otherwise to assume case
management initiative and control to effect an efficient and expeditious
resolution of the Dispute. The arbitrators are authorized
----------
(25) For North American Catholic Educational Programming Foundation, Inc. IUAs,
substitute "Providence, RI" for "the largest city within the GSA of the
Channels" and for the ITF Cluster insert "Boulder, CO."
43
to issue monetary sanctions against either Party if, upon a showing of good
cause, such Party is unreasonably delaying the proceeding.
(ix) Any award rendered by the arbitrators will be final,
conclusive, and binding upon the Parties and any judgment thereon may be
entered and enforced in any court of competent jurisdiction.
(x) The non-prevailing Party to an arbitration shall pay its own
expenses, the fees of each arbitrator, the administrative fee of the AAA,
and the expenses, including without limitation, reasonable attorneys' fees
and costs, and expert and witness fees and costs, incurred by the other
Party to the arbitration. In the case of a decision which partially favors
each Party, expenses shall be paid as determined by the arbitrators. In
connection with any judicial proceeding to compel arbitration pursuant to
this Agreement or to confirm, vacate or enforce any award rendered by the
arbitrators, the prevailing Party in such a proceeding shall be entitled to
recover reasonable attorney's fees and expenses incurred in connection with
such proceedings, in addition to any other relief to which it may be
entitled.
(xi) Notwithstanding anything to the contrary, neither Party
shall have any obligation to arbitrate claims for injunctive relief,
specific performance, or other equitable relief or for the use or
unauthorized disclosure of confidential information, as to which either
Party shall be entitled to seek and obtain relief from a court of competent
jurisdiction; provided that, any and all claims for damages shall remain
subject to arbitration.
(xii) Special Arbitration. With respect to any Dispute arising
under Section 20(e)(ii), the Arbitration procedures set forth in Section
21(d) above shall govern as modified by this Section 21(d)(xii).
44
A. During the first 15 days of the Submission Period each of
the Parties shall designate an arbitrator and unless the third
arbitrator has been selected as provided in the following sentence,
the two arbitrators together shall, within 10 days of their
appointment, select the third arbitrator who shall be an expert in one
of the principal areas that is the subject to the arbitration. If the
Parties can agree within the first 15 days of the Submission Period,
the third arbitrator shall be a mutually selected individual with
substantial experience in the general subject matter of the Dispute
(the "EXPERT"). No arbitrator shall have been employed by either Party
during the 24 months preceding the hearing date, unless the other
Party consents. The Expert shall serve as the chair of the panel.
B. During the Submission Period, each Party shall submit to
the each other and the arbitrators, a description of the Dispute and a
proposed resolution, based on the facts known to the Party at the time
(an "INITIAL PROPOSAL").
C. Following discovery and as a part of the Party's brief,
each Party shall make such adjustments, if any, as the Party
determines appropriate to the Initial Proposal.
D. Notwithstanding Section 21(d)(x), in the case of a
Special Arbitration, each Party shall bear its own expenses and the
Parties shall each bear half of the expenses of the arbitration;
provided that, the costs and expenses of the prevailing Party in any
court action to compel arbitration shall be borne by the non-
prevailing Party as provided in the last clause of Section 21(d)(x).
(E) NOTICES.
All notices and other communications under this Agreement shall be in writing
and shall be deemed given when delivered personally or by overnight courier, or
mailed by certified mail, return receipt requested, to the Parties (and shall
also be transmitted by facsimile to the Persons receiving copies thereof) at the
following addresses (or to such other address as a Party may have specified by
notice given to the other Party pursuant to this provision):
(i) CLEARWIRE:
Clearwire Spectrum Holdings II LLC
5808 Lake Washington Blvd. N.E.
Suite 300
Kirkland, WA 98033
Attn: [***]
Fax: [***]
With a Copy to:
Clearwire Spectrum Holdings II LLC
5808 Lake Washington Blvd. N.E.
Suite 300
[* * * Confidential Treatment Requested]
45
Kirkland, WA 98033
Attn: [***]
Fax: [***]
Davis Wright Tremaine, LLP
2600 Century Square
1501 Fourth Avenue
Seattle, WA 98101
Attn: [***]
Fax: [***]
(ii) LICENSEE
With a Copy to:(26)
Either Party may change its addresses for receipt of notice or payment by
giving notice of such change to the other Party as provided in this Section.
(F) APPLICABLE LAW. The validity, construction and performance of this
Agreement will be governed by and construed in accordance with the laws of the
State of New York.(27)
(G) SEVERABILITY. If any provision of this Agreement is found to be
illegal, invalid or unenforceable, such provision will be enforced to the
maximum extent permissible so as to effect the intent of the Parties, and the
validity, legality and enforceability of the remaining provisions will not in
any way be affected or impaired, unless continued enforcement of the provision
frustrates the intent of the Parties. To the extent that the Parties or the FCC
determine that the provisions of this Agreement are not adequate to enable
Licensee to comply with the regulatory requirements associated with the FCC
License, the Parties will amend these provisions to ensure that the Licensee is
in compliance with its FCC obligations with respect to the FCC License. The
Parties believe that the provisions of this Agreement comply with all current
FCC Rules, and shall express that belief to regulatory agencies and the general
public.
----------
(26) Insert notice address(es) information provided by Licensee.
(27) If the Licensee is a governmental entity whose agreements must be subject
to another State's laws, insert reference to that State's laws in lieu of
New York.
[*** Confidential Treatment Requested]
46
(H) BEST EFFORTS. The Parties acknowledge that there will be many
changes in the course of the Term, in technology, capabilities, and regulatory
environment among other areas, and agree to act in a cooperative manner to
preserve the intentions of the relationships reflected in the Agreements to
their mutual advantage and to use their commercially reasonable best efforts to
maintain that mutual advantage.
(I) NO WAIVER. No delay or failure by either Party in exercising any
right under this Agreement, and no partial or single exercise of that right,
will constitute a waiver of that or any other right. Failure to enforce any
right under this Agreement will not be deemed a waiver of future enforcement of
that or any other right.
(J) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but which collectively
will constitute one and the same instrument. Signatures transmitted by facsimile
will be effective to create such counterparts.
(k) HEADINGS. The headings and captions used in this Agreement are for
convenience only and are not to be considered in construing or interpreting this
Agreement.
(I) CONSTRUCTION. The Parties and their respective counsel have
negotiated this Agreement. This Agreement will be interpreted in accordance with
its terms and without any strict construction in favor of or against either
Party based on draftsmanship of the Agreement or otherwise.
(M) COMPLETE AGREEMENT. This Agreement constitutes the entire
agreement between the Parties with respect to the subject matter addressed, and
supersedes and replaces all prior or contemporaneous understandings or
agreements, written or oral, between the Parties or any of their affiliates
regarding this subject matter other than the Master Agreement. No amendment to
or modification of this Agreement will be binding unless in writing and signed
by a duly authorized representative of each of the Parties.
(N) COOPERATION. The Parties will take and Clearwire shall cause
Clearwire Parent to take such further action and execute such further
assurances, documents and certificates as either Party may reasonably request to
effectuate the purposes of this Agreement.
(O) INSURANCE.
(i) Clearwire shall maintain and shall cause each Service Entity
to maintain insurance coverage, and on all certificates for coverage under
general liability, automobile liability, employer's liability, worker's
compensation, and any other coverages required under local law, shall: (i)
name Licensee as an "Additional Insured" on the liability policies,
including without limitation, as an insured with respect to third-party
claims or actions made or brought directly against Licensee or against
Licensee, Clearwire and/or such Service Entity as co-defendants and arising
out of or in connection with this Agreement or operations; (ii) be written
as a primary policy not contributing with any other coverage which Licensee
may carry for the acts and omissions of Clearwire or such Service Entity
and for whom Clearwire or such Service Entity is responsible; and (iii)
stipulate that Licensee shall receive thirty (30) days' prior written
notice of any
47
cancellation in coverage; provided that such cancellation shall not relieve
Clearwire of its continuing obligation to maintain or to cause each such
Service Entity to maintain insurance coverages in accordance with this
Section.
(ii) Clearwire shall maintain and shall cause each Service Entity
to maintain with reputable insurers having a Best Rating of A or better:
A. Commercial general liability insurance with at least
$2,000,000 combined single limit bodily injury and property damage
limits written on an occurrence basis.
B. Full statutory coverage for Workers' Compensation and
Employers Liability with limits as required by law. These policies
will contain waivers of the insurer's subrogation rights against
Licensee where permitted by law.
C. Errors and omissions or professional liability coverage
with a limit of at least $1,000,000 per each claim and $1,000,000
annual aggregate. If Clearwire obtains a claims-made policy, Clearwire
shall maintain continuous coverage in effect at least three (3) years
beyond the expiration or termination of this Agreement through
continuous renewal of the same policy or purchase of extended
discovery period or retroactive insurance dated back to at least the
date of the beginning of this Agreement. This coverage should include
infringement of copyright, trademark, title or slogan, piracy,
plagiarism or unauthorized use of materials. Clearwire may self-insure
this provision as long as Clearwire maintains a minimum net worth of
at least $100 million.
D. All risk property insurance policy coverage in amounts
adequate to cover Licensee's property in Clearwire's care, custody and
control.
(iii) Clearwire shall furnish Licensee with certificates of
insurance evidencing all of the insurance referred to herein (including
renewals of insurance). Clearwire's obligations under this Section shall in
no way affect or limit the indemnification, remedy, or warranty provisions
set forth in this Agreement.
(P) PUBLICITY. No public release, announcement or other form of
publicity concerning this Agreement or the transactions described in this
Agreement, shall be issued by either Party without the prior consent of the
other Party, except as such release or announcement may be required by law,
regulation or the rules or regulations of any securities exchange, in which case
the Party required to make the release or announcement shall, to the extent
possible, allow the other Party reasonable time to comment on such release or
announcement in advance of such issuance. The Parties shall use reasonable
efforts to consult in good faith with each other with a view to agreeing upon
any press release or public announcement relating to the transactions
contemplated hereby prior to the consummation thereof.
48
AGREED TO:
CLEARWIRE SPECTRUM HOLDINGS II LLC
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
[--LICENSEE--]
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
ATTACHMENTS:
Licensee Schedule
49
RIDER A
(i) On the Effective Date, Clearwire shall pay Licensee
____________________________Dollars ($________________)(28) (the "UPFRONT
ROYALTY DEPOSIT") as a down-payment of [***] of the upfront royalty
(the "UPFRONT ROYALTY"). Within ten (10) Business Days after the Commencement
Date, Clearwire shall pay the Licensee _________________________________ Dollars
($___________)(29) which is the remaining balance (the "BALANCE") of the Upfront
Royalty, plus any amount (the "APPLIED AMOUNT") of the Upfront Royalty Deposit
as may have been applied in payment of "Upfront Royalties" or "Monthly
Royalties" under any one or more of Licensee's Other IUAs; provided, however,
that, if any part or the whole of the Balance or the Applied Amount is received
more than five (5) days after the Commencement Date, that part or whole shall
bear interest at the Default Rate of Interest (as defined in Section 2(i))
accruing from the Commencement Date and continuing until paid.
(ii) Clearwire and Licensee have entered into, or may enter into,
one or more other Educational Broadband Service Long Term De facto Transfer
Individual Use Agreements ("LICENSEE'S OTHER IUAS" which are referred to
together with this Agreement as the "LICENSEE'S IUAS") pursuant to which
Licensee has or will have received payments also referred to in Licensee's Other
IUAs as "Upfront Royalty Deposits."
a. In the event that the FCC approval of the de facto
transfer of any of Licensee's Other IUAs occurs before the Commencement Date
hereunder, the Upfront Royalty Deposit hereunder shall become nonrefundable,
even if this Agreement is terminated. In this event, the Upfront Royalty Deposit
shall be shifted pro rata by MHzPop among those of Licensee's Other IUAs
("LICENSEE'S FIRST GRANT IUAS") as have the earliest date of FCC approval of de
facto transfer, and applied first in payment of "Upfront Royalties" and (if any
shifted amount remains after that application) and then in payment of "Monthly
Royalties" due under such Licensee's First Grant IUAs dollar-for-dollar as they
become due. In the event that the FCC subsequently approves the de facto
transfer of this Agreement, the application of the Upfront Royalty Deposit
hereunder to those Licensee's First Grant IUAs shall be reversed to the extent
that it has not been applied in payment of "Upfront Royalties" or "Monthly
Royalties" due such Licensee's First Grant IUAs and shall be a permanently
vested and non-refundable portion of the Upfront Royalty. In the event that this
Agreement is terminated prior to the Commencement Date, the Upfront Royalty
Deposit hereunder shall be applied to the payment obligations of Clearwire under
Licensee's First Grant IUAs (if any), dollar-for-dollar, in order of maturity.
For purposes of this Section 2(b), "MHZPOPS" are those shown on Schedule A of
the Master Agreement.
b. If this Agreement is a Licensee's First Grant IUA, and
there are Licensee's Other IUAs that are not Licensee's First Grant IUAs on the
Commencement Date of this Agreement ("UNGRANTED IUAs"), then the "Upfront
Royalty Deposits" under the Ungranted IUAs shall be shifted pro rata by MHzPop
among Licensee's First Grant IUAs, including this Agreement, and applied first
in payment of "Upfront Royalties" and (if any shifted
----------
(28) Insert amount that is [***] of the Upfront Royalty as determined from
Schedule A of Master Agreement.
(29) Insert amount that is the remaining [***] of the Cash Upfront Royalty as
determined from Schedule A of Master Agreement.
[*** Confidential Treatment Requested]
50
amount remains after that application) and then in payment of "Monthly
Royalties" due under such Licensee's First Grant IUAs (including this Agreement)
dollar-for-dollar as they become due. In the event that the FCC subsequently
approves the de facto transfer of any one or more Ungranted IUAs, the
application of the "Upfront Royalty Deposits" of such one or more Ungranted IUAs
to this Agreement shall be reversed to the extent that these deposits have not
been applied in payment of Upfront Royalties and Monthly Royalties under this
Agreement and shall be permanently vested and non-refundable portion of the
"Upfront Royalty" of such one or more Ungranted IUAs. In the event that any such
one or more Ungranted IUAs is terminated prior to its "Commencement Date," the
portion of the "Upfront Royalty Deposit" of such one or more Ungranted IUAs as
has been shifted to this Agreement but not yet applied in the payment of Upfront
Royalties and Monthly Royalties hereunder shall be applied to such royalties,
dollar-for-dollar, as they become due.
c. If the FCC has not granted its approval of the de facto
transfer of this Agreement by the first anniversary of the Effective Date and,
as of that anniversary date, has not granted its approval of the de facto
transfer of any of Licensee's Other IUAs that have been executed, then the
Upfront Royalty Deposit shall be vested and non-refundable as follows:
(1) On such anniversary date, [***] of the Upfront
Royalty Deposit shall become vested and non-refundable; and
(2) for each thirty (30) days after that anniversary
date preceding a termination of this Agreement pursuant to Section 1l(f), an
additional [***] of the Upfront Royalty Deposit shall become vested and
non-refundable, with the amount that becomes vested and nonrefundable for any
period less than thirty (30) days being pro rated.
d. If this Agreement is terminated pursuant to Section
11(g), Licensee shall refund to Clearwire that portion of the Upfront Royalty
that has been paid to Licensee (excluding any portion of "Upfront Royalty
Deposits" shifted to this Agreement from Ungranted IUAs that has been applied to
Monthly Royalties or reversed) for application with respect to this Agreement
that is equal to the product of the Upfront Royalty (excluding such portion) and
the fraction having as its numerator the number of days between the date of such
termination and July 31, 2036 and having as its denominator the total of number
of days between the Effective Date and July 31, 2036.
(iii) Refund on Termination.
a. The Upfront Royalty is compensation for Licensee's
agreement to enter into this Agreement and is not compensation to Licensee for
any other commitment of Licensee. In the event that a refund of the whole or any
portion of the Upfront Royalty is required, it shall be repaid to Clearwire
without interest. Except to the extent expressly required by this Section 2(b),
in no event shall Licensee be required to return or refund any portion or the
whole of the Upfront Royalty notwithstanding any termination of this Agreement
and this Section 2(b) shall survive the termination of this Agreement.
[*** Confidential Treatment Requested]
51
RIDER B:
(i) DOWNPAYMENT ON EFFECTIVE DATE; PAYMENT OF BALANCE. On the
Effective Date, Clearwire shall pay Licensee ___________________________ Dollars
($__________________)(30) (the "UPFRONT ROYALTY DEPOSIT") as a down-payment of
[***] of the upfront royalty (the "UPFRONT ROYALTY"). Within ten (10) Business
Days after the Commencement Date, Clearwire shall pay the Licensee
_______________ Dollars ($__________________)(31) which is the remaining balance
of the Upfront Royalty; provided, however, that, if any part or the whole of the
balance is received more than five (5) days after the Commencement Date, that
part or the whole shall bear interest at the Default Rate of Interest (as
defined in Section 2(i)) accruing from the Commencement Date and continuing
until paid.
(ii) REFUND ON TERMINATION.
(a) The Upfront Royalty is compensation for Licensee's
agreement to enter into this Agreement and is not compensation to Licensee for
any other commitment of Licensee. In the event that a refund to Clearwire of the
whole or any portion of the Upfront Royalty is required, it shall be repaid to
Clearwire without interest. Except to the extent expressly required by this
Section 2(b), in no event shall Licensee be required to return or refund any
portion or the whole of the Upfront Royalty notwithstanding any termination of
this Agreement and this Section 2(b) shall survive the termination of this
Agreement.
(b) If this Agreement is terminated pursuant to Section
11(f), Licensee shall promptly thereafter return to Clearwire the lesser of
(i) ______________________________________________________(32) and (ii) the
difference between _________________________(33) and the product of (X) the
number of months and partial months (expressed as a decimal) between the first
anniversary of the Effective Date and the date such termination notice is
delivered, (Y) [***] and (Z) the full amount of the Upfront Royalty Deposit.
(c) If this Agreement is terminated pursuant to Section
11(g), Licensee shall refund to Clearwire that portion of the Upfront Royalty
that has been paid to Licensee for application with respect to this Agreement
that is equal to the product of the Upfront Royalty and the fraction having as
its numerator the number of days between the date of such termination and July
31, 2036 and having as its denominator the total of number of days between the
Effective Date and July 31, 2036.
----------
(30) Insert amount that is [***] of the Cash Upfront Royalty as determined from
Schedule A of Master Agreement.
(31) Insert amount that is the remaining [***] of the Cash Upfront Royalty as
determined from Schedule A of Master Agreement.
(32) Insert the number that is [***] of the Cash Upfront Royalty Deposit.
(33) Ditto.
[*** Confidential Treatment Requested]
52
RIDER C:
(c) ADDITION OF CHANNELS.
(I) The Parties acknowledge that Licensee, pursuant to the
[***] Agreement (as defined in the Master Agreement) has agreed to negotiate in
good faith with a third party for the renewal of its current excess capacity
agreement for channels D1 and D2 in [***], which agreement expires on [***]. In
the event the [***] Agreement is not renewed by [***], Licensee shall on [***]
provide written notice to Clearwire that such D1 and D2 channels (the
"ADDITIONAL CHANNELS") are Available (as defined in the Master Agreement) and
thereafter Licensee and Clearwire shall each have the right, upon written notice
to the other Party, to require the other Party to execute an amendment to this
Agreement in accordance with the terms of this Section 2(c) (the "ADDITIONAL
CHANNELS NOTICE").
(II) If neither Licensee nor Clearwire delivers the
Additional Channels Notice by [***], either Party may terminate the provisions
of this Agreement with respect to such Additional Channels.
(III) Upon delivery of the Additional Channels Notice (the
"DELIVERY DATE") the Additional Channels shall immediately and automatically
become Channels hereunder and shall be subject to the terms and conditions of
this Agreement and the Master Agreement, and the following provisions shall take
effect:
A. The term "Channels" shall be amended to include the
Additional Channels and any associated J-Group channels, but the application of
the provisions of this Agreement (other than the provision of this section) to
the Additional Channels shall be governed by Section _ (d) below.
B. The amount of Monthly Royalties payable hereunder
shall increase in proportion to the increase in MHzPops represented by the
Additional Channels, and Clearwire shall, within ten (10) days after the
Delivery Date pay Licensee the pro rated amount of the increased Monthly Royalty
for the period between such notice date and the end of the month.
C. Within ten (10) days after the Delivery Date,
Clearwire shall have caused the Clearwire Parent Class A Common Stock held in
Escrow for the Additional Channels, as that number of shares may have been
adjusted in accordance with the requirements of the Master Agreement, to be
delivered by the Escrow Agent to Licensee, whereupon such additional shares
shall be deemed a part of the Equity Royalty hereunder.
D. Within ten (10) days of the Delivery Date, Clearwire
shall pay to Licensee an additional amount of __________________________________
Dollars ($____________________)(34) representing the additional Upfront Royalty
Deposit which would have been payable had the term "Channels" included all four
of Channels D1 through D4 on the Effective Date been on the Commencement Date;
provided, however, that, if the additional Upfront Royalty payable for the
----------
(34) Insert amount determined by reference to Schedule A of Master Agreement.
[* * * Confidential Treatment Requested]
53
Additional Channels is not received within such time period, so much of such
remaining balance as has not been received by Licensee by such tenth (10th)
Business Day shall bear interest at the Default Rate of Interest (as defined in
Section 11(b)) from [***] until paid in full.
E. Within ten (10) days of the Additional Channels
Commencement Date, as defined below, Clearwire shall pay Licensee the remaining
unpaid balance of the Upfront Royalty as would have been paid had the term
"Channels" included all four of Channels D1 through D4 on the Commencement Date;
provided, however, that, if such balance payable for the Additional Channels is
not received within such time period, so much of such balance as has not been
received by Licensee by such tenth (10th) Business Day shall bear interest at
the Default Rate of Interest (as defined in Section 11(b)) from [***] until paid
in full.
(iv) Prior to the Additional Channels Commencement Date (as
defined below), the provisions of this Agreement which are expressly ineffective
before the Commencement Date as well as Sections 3, 4, 7 and 8 shall be
ineffective as applied to the Additional Channels and associated J-Group
channels until the Additional Channels Commencement Date, at which time all
provisions of this Agreement shall be fully applicable to the Additional
Channels and associated J-Group channels. The other provisions in this Agreement
shall be fully applicable to the Additional Channels and associated J-Group
channels from the Delivery Date and until the termination or expiration of this
Agreement. The "Additional Channels Commencement Date" is the day that the FCC
grants the Additional Channels De facto Transfer Application.
(v) Within ten (10) business days following the Delivery
Date and prior to consummating the transfer of de facto control of the
Additional Channels, the Parties shall cooperate as required to prepare and file
with the FCC all forms and related exhibits, certifications and other documents
necessary to obtain the FCC's authorization (the "ADDITIONAL CHANNELS DE FACTO
TRANSFER AUTHORIZATION") of the long term de facto transfer caused by this
Agreement as set forth in FCC Rule 1.9030(e) as amended from time to time (the
"ADDITIONAL CHANNELS FCC LONG TERM LEASE APPLICATION"). Each Party shall fully
cooperate with the other, and do all things reasonably necessary to timely
submit, prosecute and defend the Additional Channels FCC Long Term Lease
Application, and will promptly file or provide the other Party with all other
information which is required to be provided to the FCC in furtherance of
efforts to obtain or retain such grant. The Parties shall disclose in the
Additional Channels FCC Long Term Lease Application the automatic extension of
Clearwire's use rights upon the renewal of the FCC License. The Parties shall
include in any FCC License renewal application, or separately request, as
necessary, a request to permit Clearwire's use rights for the Additional
Channels for the renewal term of the FCC License, if the Term will continue
during any part of such FCC License renewal term. The Parties shall prosecute
each such original or renewal application diligently and in good faith,
including defending it and the grant thereof against all petitions to deny,
informal objections, petitions for reconsideration, applications for review,
appeals, writs, requests for stay filed against any such application or its
grant, and shall file and prosecute petitions for reconsideration, applications
for review, petitions for appeal, notices of appeal, writs of certiorari and
associated pleadings challenging any denial of any such application or request.
Any fees associated with the filing of the Additional Channels FCC Long Term
Lease Application and applications or requests for renewal of the Additional
Channels De
[*** Confidential Treatment Requested]
54
facto Transfer Authorization, and all costs incurred in preparing, prosecuting
or defending any and all petitions for reconsideration, applications for review,
appeals, writs, requests for stay and remands of the grant or denial of any such
original or renewal application and related pleadings, and for activity (such as
oral argument and FCC staff visits) in support thereof, shall be paid by
Clearwire. Upon grant of the Additional Channels Long Term De facto Transfer
Authorization, the provisions of this Agreement applicable to the Long Term De
facto Transfer Authorization shall apply to the Additional Channels Long Term De
facto Transfer Authorization as though it were the Long Term De facto Transfer
Authorization.
55
EXHIBIT II-B
FORM OF MRUA-2 IUA
[SEE EXHIBIT II-A]
EXHIBIT II-C
FORM OF SOSC IUA
EXHIBIT II-C
EDUCATIONAL BROADBAND SERVICE
LONG TERM DE FACTO TRANSFER
SOSC INDIVIDUAL USE AGREEMENT
THIS Educational Broadband Service Long Term De facto Transfer SOSC
Individual Use Agreement (the "AGREEMENT") is entered into as of ______________,
20__(1) (the "EFFECTIVE DATE"), by and between ___________________________,(2)
a __________________(3) (the "LICENSEE"); and Clearwire Spectrum Holdings II
LLC, a Nevada limited liability company ("CLEARWIRE") (with each of Licensee and
Clearwire sometimes referred to individually as "PARTY" and collectively as
"PARTIES").
RECITALS:
WHEREAS the Licensee is authorized by the Federal Communications Commission
("FCC") under the rules, regulations and published policies of the FCC (as they
may be amended, "FCC RULES") to engineer and operate Educational Broadband
Service ("EBS") channels ___________ ________ (4)(including any associated J- or
K-Group channels and any channels exchanged for the listed channels, the
"CHANNELS") under call sign ______________________________________________ (the
"FCC LICENSE") in the ____________________________ BASIC TRADING AREA")(5);
WHEREAS this Agreement is an integral part of the Master Agreement; and
WHEREAS the Parties have agreed to enter into this Agreement for Licensee
to provide Clearwire with access to the capacity on the Channels, which pursuant
to the FCC Rules, can be made available for commercial use, in accordance with
the terms and conditions below, and subject to FCC approval.
THEN, in consideration of the premises and covenants set forth in this
Agreement, and for good and valuable consideration, the sufficiency of which is
acknowledged by the Parties' signatures, the Parties agree as follows:
1. TERM
(A) TERM. Subject to Section 1(b), the term of this Agreement begins
on the Effective Date and ends on July 31, 2036 (the "TERM"), unless this
Agreement is terminated earlier in accordance with Section 11. Prior to the
Commencement Date (as defined below), the provisions of this Agreement which are
expressly ineffective before the Commencement Date as well as Sections 3, 4, 7
and 8 shall be ineffective until the Commencement Date, at which time all
provisions of this Agreement shall be fully effective. The other provisions in
this Agreement
----------
(1) Insert Subsequent Closing Date.
(2) Insert name of licensee.
(3) Insert organizational information on licensee.
(4) Insert EBS channel designations.
(5) Insert the one or more Basic Trading Areas that host the GSA(s) of the
Channels.
shall be effective from the Effective Date and until the termination or
expiration of this Agreement. The "Commencement Date" is the day that the FCC
grants the De facto Transfer Application.
(B) RENEWAL OF FCC LICENSE AND EXTENSION OF AGREEMENT. In the event
that the FCC License expires during the Term, this Agreement will also expire at
such time unless the FCC License is renewed and FCC authorization for this
Agreement is extended. Licensee and Clearwire will cooperate to timely file a
renewal application for the FCC License, in conjunction with a request for
renewal of the De facto Transfer Authorization for the next FCC License term.
Subject to Section 11, this Agreement will continue to apply unless the FCC
denies by Final Order any application for renewal of the FCC License or the De
facto Transfer Authorization, or the FCC requires the expiration of this
Agreement at an earlier time. "Final Order" means an order issued by the FCC
that can no longer be appealed.
2. ROYALTY COMPENSATION
(A) UPFRONT ROYALTY.
(i) DOWNPAYMENT ON EFFECTIVE DATE; PAYMENT OF BALANCE. On the
Effective Date, Clearwire shall pay Licensee __________ Dollars
($_______)(6) (the "UPFRONT ROYALTY DEPOSIT") as a down-payment of [***]
of the upfront royalty (the "UPFRONT ROYALTY"). Within ten (10) Business
Days after the Commencement Date, Clearwire shall pay the Licensee _______
Dollars ($_________)(7) which is the remaining balance of the Upfront
Royalty; provided, however, if any part or the whole of the balance is
received more than five (5) days after the Commencement Date, that part or
whole shall bear interest at the Default Rate of Interest (as defined in
Section 2(g)) accruing from the Commencement Date and continuing until
paid.
(ii) REFUND ON TERMINATION.
A. The Upfront Royalty is compensation for Licensee's
agreement to enter into this Agreement and is not compensation to
Licensee for any other commitment of Licensee. In the event that a
refund to Clearwire of the whole or any portion of the Upfront Royalty
is required, it shall be repaid to Clearwire without interest. Except
to the extent expressly required by this Section 2(a), in no event
shall Licensee be required to return or refund any portion or the
whole of the Upfront Royalty notwithstanding any termination of this
Agreement and this Section 2(a) shall survive the termination of this
Agreement.
B. If this Agreement is terminated pursuant to Section
1l(f), Licensee shall promptly thereafter return to Clearwire the
lesser of (i) _____________________________(8) and (ii)
----------
(6) Insert amount that is [***] of the Cash Upfront Royalty as determined from
Section 3.10 of Master Agreement.
(7) Insert amount that is the remaining [***] of the Cash Upfront Royalty as
determined from Section 3.10 of Master Agreement.
(8) Insert the number that is [***] of the Cash Upfront Royalty Deposit.
[*** Confidential Treatment Requested]
2
the difference between ___________________(9) and the product of (X)
the number of months and partial months (expressed as a decimal)
between the first anniversary of the Effective Date and the date such
termination notice is delivered, (Y) [***] and (Z) the full amount
of the Upfront Royalty Deposit.
C. If this Agreement is terminated pursuant to Section
11(e), Licensee shall refund to Clearwire that portion of the Upfront
Royalty that has been paid to Licensee for application with respect to
this Agreement that is equal to the product of the Upfront Royalty and
the fraction having as its numerator the number of days between the
date of such termination and July 31, 2036 and having as its
denominator the total of number of days between the Effective Date and
July 31, 2036.
(B) MONTHLY ROYALTIES. Within five (5) business days following the
Commencement Date and by the first day of each month thereafter throughout the
Term, Clearwire will pay Licensee a monthly royalty (as it may be adjusted
pursuant to Section 2(c)(i), the "MONTHLY ROYALTIES") as shown in the following
table. The Monthly Royalty due for any partial calendar month, at the
commencement of the Commencement Date or expiration of the Term, shall be
prorated. If the FCC grant of the De facto Transfer Authorization is stayed by
the FCC or by any Federal court on appeal of the FCC's grant, and such stay
precludes the provision of the capacity of the Channels during its effective
period, no Monthly Royalties shall be paid during the period of that legal
incapacity, and for any period of such incapacity that lasts for less than a
full calendar month, the Monthly Royalty for that month shall be pro rated.
<TABLE>
<CAPTION>
MONTHLY
YEAR IN WHICH ROYALTIES
ROYALTY IS PAID (10)
--------------- ---------
<S> <C>
2006-2010 $_____
2011-2015 $_____
2016-2020 $_____
2021-2025 $_____
2026-2030 $_____
2031-2036 $_____
</TABLE>
----------
(9) Ditto.
(10) Insert Monthly Royalty as determined pursuant to Section 3.10 of the Master
Agreement.
[*** Confidential Treatment Requested]
3
(i) LIMITED CPI ADJUSTMENT. On the later of (A) August 31 next
following the Effective Date and (B) August 31, 2012, and on each
anniversary of such later date (an "ADJUSTMENT DATE"), the Monthly
Royalties shall be increased by multiplying each Monthly Royalty, as it may
have been previously adjusted pursuant to this clause (i), by the sum of
(X) one plus (Y) the Adjustment Factor, as defined below in this section.
[***] "CPI" means The Consumer Price Index for All Urban
Consumers (CPI-U) for the U.S. City Average for All Items, 1984-1986 = 100
as published by the Bureau of Labor Statistics of the United States
Department of Labor; provided, however, in the event that the CPI (or a
successor or substitute index) is not available, a similar reliable U.S.
governmental or other nonpartisan publication selected by Licensee will be
used.
(C) PREPARATION REIMBURSEMENT. Within ten (10) days after the
Effective Date, Clearwire shall reimburse Licensee for the preparation of this
Agreement in the amount of __________.(11) This obligation shall apply without
regard to whether or not this Agreement is subsequently terminated.
(D) PAYMENT RECEIPT ADDRESS. Absent notice of different instructions
from Licensee, all cash payments to be paid to Licensee shall be paid by check
mailed to the following address, which address may be changed by Licensee by
notice to Clearwire:
_______________________________
_______________________________
_______________________________
_______________________________
Attn: _________________________(12)
(E) W-9. Within ten (10) days following the execution of this
Agreement, Licensee shall deliver a completed IRS Form W-9 to Clearwire.
(F) NO SET-OFF. All payments of Upfront Royalties and Monthly
Royalties shall be made without set-off except for a sum that Licensee is
finally determined to owe Clearwire by arbitration conducted pursuant to this
Agreement.
(G) INTEREST ON OVERDUE AMOUNTS. Clearwire shall pay interest to
Licensee on all payments owed under this Agreement more than thirty (30) days in
arrears, accruing from the original payment due date and continuing until
payment of the amount due, in an amount equal to the greater of (i) [***]
or (ii) a fluctuating rate equal to the "Prime Rate" as announced from
time to time by The Wall Street Journal plus [***], but in no event
----------
(11) Insert $1,500 if the Effective Date is on or before September 28, 2006 or
$2,500 if the Effective Date is after September 28, 2006.
(12) Insert Licensee-provided mailing address.
[*** Confidential Treatment Requested]
4
exceeding the highest lawful rate of interest that may be charged or collected
(the "DEFAULT INTEREST RATE"). Accrued interest shall be due and payable
monthly. In addition, for payments owed under this Agreement thirty (30) days or
more in arrears, a penalty equal to [***] of the payment owed shall be
immediately due and payable.
3. EXCLUSIVE NEGOTIATION PERIOD
For a time period beginning [***], Licensee will negotiate in good faith
exclusively with Clearwire about a possible renewal of this Agreement. During
such period, Licensee and its agents and advisors will not discuss or solicit
other opportunities to enable third parties to make use of the Channels.
4. FREQUENCY BAND TRANSITION
The Channels covered by this Agreement either have been or will be subject
to relocation to different frequencies and/or to different technical
characteristics in accordance with a transition plan adopted in accordance with
the FCC Rules promulgated in WT Docket No. 03-66 (the "TRANSITION"). In the
event that the Transition is not complete, the remaining provisions of this
Section 4 shall be effective and, otherwise, shall be ineffective. Clearwire and
Licensee will cooperate in the Transition in accordance with FCC Rules, to
facilitate Clearwire's and Licensee's use of the Channels, consistent with this
Agreement. To the extent that, after the Commencement Date, the FCC allows
Licensee to participate in selecting the entity initiating and/or overseeing the
Transition of the Channels (the "PROPONENT"), then Licensee will designate and
otherwise reasonably promote Clearwire or its designee as Proponent or
co-Proponent and otherwise support Clearwire's interests in the means and
outcome of the Transition to the extent permitted by FCC Rules and consistent
with Licensee's Transition rights thereunder and interests hereunder and after
expiration or termination of this Agreement; provided, however, if Licensee is
obligated by any other agreement relating to other channels in the market to
promote some other party as Proponent or co-Proponent, Licensee's equally
qualified support for both Clearwire and such other party shall fully satisfy
Licensee's obligations in this sentence. Licensee will consult with Clearwire
before adopting, consenting to, or otherwise agreeing to any change of
frequencies or characteristics of the Channels after the Commencement Date other
than those changes specified by FCC Rules. After the Commencement Date, Licensee
will use its commercially reasonable efforts to make Clearwire aware of and to
seek the permission of meeting participants to allow Clearwire to participate in
its scheduled meetings with the Proponent to the extent they concern Transition
of the Channels to channel plans required or allowed as an outcome of the FCC's
transition proceedings, provided that Licensee is aware sufficiently in advance
of the meeting that it will involve that subject matter. In any event, Licensee
will provide Clearwire with a summary report of any meetings or discussions with
such third persons occurring after the Commencement Date in which Clearwire was
not invited to participate. In the event that neither Clearwire nor any third
party initiates and/or completes the Transition of the Channels within the time
frames specified by the FCC, Licensee may, at its sole option, avail itself of
any "self-transition" rights made available pursuant to FCC Rules. Licensee's
reasonable costs of such self-transition will be paid and/or reimbursed by
Clearwire in their entirety.
[*** Confidential Treatment Requested]
5
5. CAPACITY REQUIREMENTS AND USES; CERTAIN LICENSEE ACCESS RIGHT ROYALTIES
(A) CLEARWIRE CAPACITY. On and after the Commencement Date, subject to
FCC Rules and the restrictions imposed thereby, Clearwire will have the right to
use all of the capacity of the Channels other than Licensee's Reserved Capacity,
the Access Right Royalties and Licensee's other rights and benefits granted by
this Agreement or the Master Agreement ("CLEARWIRE CAPACITY") and, subject to
FCC Rules and the power of the FCC to control the radio frequency spectrum,
Licensee shall not use Clearwire Capacity or enter into any agreement to allow
any third party to use Clearwire Capacity other than as may be contemplated by
this Agreement.
(B) LICENSEE'S RESERVED CAPACITY. As used in this Agreement,
"LICENSEE'S RESERVED CAPACITY" means:
(i) Prior to the Commencement Date, all of the Capacity of the
Channels.
(ii) From the Commencement Date until sixty (60) days after
Licensee receives a notice from Clearwire that Clearwire intends to utilize
the capacity of the Channels, the lesser of one Channel and that number of
Channels Licensee used during the last regular school session immediately
preceding the Effective Date (the "LEGACY RESERVATION"), which Licensee may
use to provide services that further the educational mission of accredited
schools ("LICENSEE'S CAPACITY"). Licensee's operations pursuant to Section
5(b)(i) and (ii) are solely in furtherance of Licensee's educational
charter and are not intended for the benefit of Clearwire or conducted in
exchange for any royalties or other consideration.
(iii) After the later of the Commencement Date and the date that
any one or more of the Channels is engineered to operate in any digital
modulation (the "LEGACY STOP DATE"), in respect of Licensee's educational
reservation covering the five percent (5%) educational spectrum capacity
currently required by the FCC Rules pertaining to the FCC Licenses (the
"EDUCATIONAL RESERVATION"), Licensee shall be permitted to utilize the
Educational Reservation in such locations served by the Clearwire National
Platform on a full time basis as Licensee desires for its operations.
Clearwire and Licensee shall at all times comply with applicable FCC Rules.
Clearwire may not use the Educational Reservation. In the event that the
Parties cannot agree on the application of any new rule or interpretation
regarding the Educational Reservation in their circumstances, the Parties
shall jointly approach the FCC for clarification in a timely fashion and,
to the extent the matter remains unresolved thereafter, shall settle the
matter applying the Dispute Resolution Procedure.
(C) [***]
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6
(D) SECTION 27.1214(E) AMENDMENTS. To the extent required under
Section 27.1214(e) of FCC Rules, on the date that is [***] after the Effective
Date and every [***] thereafter during the Term, Licensee shall have a period of
sixty (60) days to request a review of its minimum educational use requirements,
in which event and at which time the Parties shall negotiate in good faith an
amendment to this Agreement that accommodates any bona fide changes in
educational needs, technology and other relevant factors. Any such amendment
shall provide, among other terms and conditions agreed to by the Parties: (i)
with respect to Licensee and any Educational End Users (defined below) for whom
Clearwire has provided an Educational Account, Clearwire shall make available
any equipment, services or software upgrades that Clearwire makes generally
available to Clearwire's retail customers subscribing to the same tier of
service in the Market Area over Broadband Radio Service ("BRS") or EBS
facilities; (ii) to the extent such amendment materially increases Clearwire's
monthly costs either to operate its leased capacity or to meet Licensee's
changed educational use requirements, whether or not such costs will be offset
by a reduction in the Monthly Royalties for the remainder of the Term, a refund
in an amount to be agreed upon by both Parties, or both; (iii) Clearwire may
accommodate changes in Licensee's Reserved Capacity through any reasonable means
available so as to avoid disruption to the advanced wireless services provided
by Clearwire; and (iv) Clearwire shall not be required to accommodate changes in
Licensee's Reserved Capacity in a manner that has a negative economic impact on
Clearwire or Clearwire's commercial operations under the Agreement. The
adjustments set forth in this subsection shall be in addition to, and not in
lieu of, adjustments set forth in other portions of this Agreement or the Master
Agreement. Neither Party shall have any obligation to enter into any amendment
pursuant to this Section.
(E) CHANNEL SWAPPING; COSTS.
After the Commencement Date, provided that Clearwire is not in breach of this
Agreement, Clearwire shall be permitted to require Licensee to swap all but not
less than all of the spectrum authorized by the FCC License for Suitable
Replacement Spectrum licensed to one entity (the "SWAP PARTNER") in either the
Geographic Market or one different U.S. market without Licensee's consent,
provided that Licensee receives the same benefits it would otherwise receive
from Clearwire under this Agreement, such swap is reversed at the expiration or
termination of this Agreement and Licensee receives assurances reasonably
acceptable to Licensee that it will receive back from the Swap Partner within
six (6) months after such expiration or termination the same or superior
channels and channel rights Licensee provided to the Swap Partner (as reasonably
determined by Licensee), without any lien or encumbrance and free of the rights
of third parties. Clearwire agrees to bear all costs and expenses associated
with the implementation of channel swapping and reversal of the swap, including
without limitation the reasonable out-of-pocket costs of Licensee's engineering
consultants and attorneys. The foregoing requirements with respect to the
reversal of a swap shall survive the expiration or termination of this
Agreement, unless termination is caused by Licensee's breach of this Agreement.
"SUITABLE REPLACEMENT SPECTRUM" means regular FCC Authorization (and not
special, special temporary, experimental or developmental authorization) in
Licensee's name and entitling Licensee to use one FCC-defined channel (plus
related guardbands, if any) for each FCC-defined channel (and associated
guardband segment, if any) provided to the Swap Partner (an "ASSIGNED CHANNEL"),
and each such replacement channel (and associated guardband segment, if any) (a
"RECEIVED CHANNEL") shall have the following additional characteristics: (1) it
is swapped along with the
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7
other Channels to a single licensee having the same number of channels; (2) it
may not be BRS Channel 1, 2 or 2A; (3) it shall be of an entire EBS channel
(e.g., EBS Channel Gl) as defined in FCC Rule 27.5(i) or any successor rule, and
not a channel created from parts of FCC-defined channels; (4) Licensee's upper
or lower band segment Channels (or, if pre-Transition, Licensee's Channels
bearing FCC-assigned numbers 1, 2 or 3) must be replaced with three upper or
lower band segment channels (or, if pre-Transition, channels bearing
FCC-assigned numbers 1, 2 or 3) that will be contiguous through the
post-Transition period; (5) it shall have a FCC-defined geographic service area
("GSA") at least as large as that of the Assigned Channel of like number (e.g.,
Gl and Dl); (6) its GSA shall include a total estimated population at least as
large as the total estimated population within the GSA of the Assigned Channel
of like number; (7) if the Received Channel is subject to any Interference
Consent(s), those Interference Consent(s) must meet the requirements for
classification as Conforming Interference Consents and provide Licensee, after
the swap, with the same rights the Licensee would have pursuant to a Conforming
Interference Consent as reasonably determined by Licensee; (8) the Received
Channel's authorization shall not be subject to any facts or circumstances which
Licensee reasonably determines could cause its FCC authorization to be
cancelled, forfeited, revoked, subject to cancellation, forfeiture or
revocation, or not to be able to transition to its default channel specified in
FCC Rule 27.5(i)(2) or any successor rule; (9) the Received Channel shall be
free and clear of all liens, encumbrances, and rights of persons (with the
exception of third party leases that will not apply after the swap and except
agreements permitted under clause (7)); and (10) the Received Channel shall be
free of any unusual license conditions not also applicable to the Assigned
Channel. Clearwire's right to require Licensee to swap is subject to FCC consent
and the consent of the Swap Partner. Notwithstanding the foregoing in this
Section 5(e), Licensee shall reasonably consider channel swaps for spectrum that
is not Suitable Replacement Spectrum.
6. EQUIPMENT; CONTINUATION OF ACCESS RIGHT ROYALTIES; CONTROL OF OPERATIONS
(A) OPERATION AND MAINTENANCE OF EQUIPMENT. Subject to the last
sentence of this Section 6(a), prior to the Legacy Stop Date (as defined in
Section 5(b)(iii)), Licensee may operate the legacy video transmission equipment
currently in place, if any (including replacements thereto), for the Channels
(the "EBS EQUIPMENT") at each transmission site (including substituted and
additional sites), it being understood that Licensee's operations under this
Section 6(a) are solely for Licensee's educational purposes. If Licensee chooses
not to operate the transmission equipment currently in place or replacements
thereto, then Licensee and Clearwire will cooperate in filing all necessary
applications and notices with the FCC to "go dark" and not transmit on the
Channels for an allowed period of time or notify the FCC that Licensee has
ceased operation. If Clearwire or any of its Affiliates has EBS and/or BRS
spectrum operations in the Market Area of the Channels, then Clearwire will
operate legacy video for Licensee at Clearwire's expense until the earlier of
the Legacy Stop Date and the end of the Transition.
(B) POST-TRANSITION OR MIGRATION OPERATION AND MAINTENANCE OF
EQUIPMENT ON THE EXCLUDED CHANNELS. Subject to the last sentence of Section
6(a), while
8
operating a video system for Licensee's educational purposes under Section 6(a),
it is Licensee's responsibility to operate and maintain its video equipment.
(C) EQUIPMENT PURCHASE OR LEASE OPTION; TAIL SERVICES AND EQUIPMENT.
(i) Subject to subsection (ii) below, in the event this Agreement
expires or is terminated for any reason other than a default by Licensee,
Licensee shall have the option, upon giving notice to Clearwire within
thirty (30) days of such expiration or termination (the "PURCHASE OPTION
PERIOD"), to purchase the whole or any part as determined by Licensee of
transmission and reception equipment (not including any tower rights) then
in operation that is used to transmit Licensee's Reserved Capacity on the
Channels, whether such equipment is dedicated entirely to Licensee's
Reserved Capacity or shared (the "LICENSEE'S SPECIFIED EQUIPMENT"), or
equivalent equipment. The price for such equipment shall be equal to the
lesser of the [***]
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9
[***]
(ii) If Licensee notifies Clearwire of its desire to acquire
Licensee's Specified Equipment and Additional Equipment-Related Features,
in lieu of selling the Licensee's Specified Equipment and Additional
Equipment-Related Features to Licensee as specified in subsection (i)
above, Clearwire shall have the option instead to lease such to Licensee
for an initial term of one year, renewable annually at the option of
Licensee for as many as nine (9) one-year renewal terms. During the period
of such lease, Clearwire shall have the right to share the use of
Licensee's Specified Equipment and Additional Equipment-Related Features,
so long as such sharing does not diminish the utility to Licensee. The
monthly amount payable by Licensee to Clearwire to lease these items shall
be the lesser of: (x) [***] of fair market value of the Licensee's
Specified Equipment and Additional Equipment-Related Features at the
commencement of the initial lease term, and (y) Clearwire's [***] of
leasing Licensee's Specified Equipment and Additional Equipment-Related
Features to Licensee.
(iii) For the purposes of this Section 6(c), determinations of
fair market value shall be made by an independent engineering firm selected
by Licensee and subject to approval by Clearwire, and the cost of reaching
such determination shall be shared equally by parties.
(iv) For a period of [***] after the expiration or
termination of this Agreement, unless termination resulted from Licensee's
breach of this Agreement, Licensee shall have the right to continue to
receive the same in-kind facilities, services and benefits Licensee
received during the Term, including each of the Access Right Royalties
under Section 7, on the most favorable terms and conditions, including
price, as Clearwire or any of its Affiliates offers such Access Right
Royalties, or services and equipment substantially similar thereto. When
Clearwire provides Licensee with the price and other terms for the Access
Right Royalties under this paragraph, Clearwire will also provide an
officer's certificate certifying that such pricing and other terms meet the
requirements of this Section 6(c) and are the MFN Price. The provisions of
this Section 6(c) shall survive the expiration or termination of this
Agreement for any cause, unless termination is caused by Licensee's breach
of this Agreement.
(D) OPERATION OF FACILITIES ON THE CHANNELS TO MEET SUBSTANTIAL
SERVICE REQUIREMENTS. In addition to the foregoing, Clearwire, at its expense,
will construct, operate and maintain facilities for the Channels that provide
operating transmission and coverage capability sufficient to satisfy minimum
build-out, operational, service or performance requirements applicable to the
Channels or which must be satisfied to avoid a reduction in Channels or their
capacity, including substantial service standards, all as required or prescribed
under then-applicable FCC Rules. Without limiting the generality of the
foregoing, Clearwire shall have constructed and maintained in service such
facilities operating on the Channels as are needed to qualify for a "safe
harbor" under the FCC Rule 27.14(e)(l)(ii) and/or 27.14(e)(2), as they may be
amended from time to time, or any other applicable "safe harbor" as may be
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10
reasonably acceptable to Licensee, so that Licensee would qualify for at least
one of such "safe harbors" on [***] as if the [***] substantial service showing
deadline of FCC Rule 27.14(e) had been advanced to [***] (the "[***]") and
Clearwire shall continue to maintain such facilities in service between [***]
and the later of [***] and such date to which the FCC may extend the substantial
service showing deadline so as to ensure that the FCC finds that Licensee has
met the substantial service requirement under FCC Rule 27.14(e). In the event
that the FCC by Final Order effective prior to [***] extends the substantial
service showing date beyond [***], then the [***] deadline shall be extended to
the date that is [***] before such extended date. In the event that Clearwire
determines that it may not satisfy the [***], and if, by [***], Clearwire
demonstrates to Licensee's reasonable satisfaction that Clearwire will meet the
[***]'s deadline if this deadline is extended to [***], then this deadline shall
be extended to [***] by written notice from Licensee to Clearwire. In the event
that (i) Clearwire elects to make such demonstration by [***], and Licensee
informs Clearwire that Licensee is not reasonably satisfied that Clearwire will
meet the [***] if the deadline for it is extended to [***] or (ii) Clearwire
does not make such a demonstration by [***], Clearwire shall be in material
breach of this Agreement and Clearwire shall have a cure period to meet the
[***] that ends on [***], notwithstanding any longer cure period or requirement
for breach notice for non-payment breaches provided by Section 11(c). If
Clearwire fails to meet the [***] by the end of that thirty (30) day cure
period, Licensee shall have the right to terminate this Agreement or to build
such facilities as qualify for a "safe harbor" under Section 27.14(e) of FCC
Rules, and Clearwire shall reimburse Licensee's reasonable costs of doing so. In
the event Clearwire makes such demonstration to Licensee's reasonable
satisfaction, but fails to satisfy the [***] by [***] such failure shall
constitute a material breach by Clearwire, for which there shall be no
requirement of breach notice or opportunity to cure notwithstanding Section
11(c), and Licensee shall have the right to terminate this Agreement or to build
such facilities as qualify for a "safe harbor" under Section 27.14(e) of FCC
Rules, and Clearwire shall reimburse Licensee's reasonable costs of doing so.
(E) CONTROL OVER OPERATIONS. On and after the Commencement Date,
Clearwire shall exercise such day-to-day operational control over operations on
the Channels as permitted by FCC Rules pertaining to de facto transfer
agreements under its secondary markets rules; provided, however, that Licensee
shall retain such powers of oversight and control as are needed to ensure
compliance with standards of conduct for which Licensee remains accountable to
the FCC or as otherwise reserved by this Agreement. In the event (A) Licensee
becomes aware of an on-going violation or repeated violations by Clearwire of
the Communications Act or the FCC Rules governing its use or Licensee's use of
the Channels (collectively, the "Governing Rules"), or any other violation of
the Governing Rules that might adversely affect Licensee's rights in the
License, might impose unreimbursed liability on Licensee as licensee of the
Channels or might cause the FCC to revoke, cancel, rescind or materially
adversely modify the De facto Transfer Authorization and (B) after Licensee
gives notice to Clearwire of such violation(s), Clearwire does not immediately,
in the case of an on-going violation, begin to cure such violation and fully
effect such cure within thirty (30) days or such period that the FCC may
specifically impose, and in the case of repeated violations, take steps to
prevent such violations in the future and fully effect such steps within thirty
(30) days or such period that the FCC may
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11
specifically impose, such that the violation does not re-occur, Licensee shall
be entitled to take action to force Clearwire to immediately cease such
violation(s), immediately comply with the Governing Rules and take such
preventative steps, all at Clearwire's expense, and including the right to
immediately seek injunctive relief, and in each case without first giving
Clearwire any further notice or awaiting any further cure period.
7. ACCESS RIGHT ROYALTIES
Clearwire shall provide the access right royalties described in this
Section 7 (the "Access Right Royalties") from and after the later of the
Commencement Date and the first commercial launch by Clearwire of its wireless
services on the Channels or other EBS or BRS channels in the Geographic Market
of the Channels.
(A) COST-FREE EDUCATIONAL ACCOUNTS. Included in the Access Right
Royalties provided to Licensee, Licensee shall be entitled to Cost-Free
Educational Accounts in respect of the Educational Reservation and the
Additional Cost-Free Educational Accounts as provided in this Section 7.
(i) Educational Reservation Basic Cost-Free Educational Accounts.
A. In respect of Licensee's educational reservation covering the
[***] educational spectrum capacity currently required by the FCC Rules
pertaining to the FCC Licenses (the "EDUCATIONAL RESERVATION"), Licensee
shall be permitted to utilize the Educational Reservation in such locations
served by the Clearwire National Platform on a full time basis as Licensee
desires for its operations. Clearwire and Licensee shall at all times
comply with applicable FCC Rules. Clearwire may not use the Educational
Reservation. In the event that the Parties cannot agree on the application
of any new rule or interpretation regarding the Educational Reservation in
their circumstances, the Parties shall jointly approach the FCC for
clarification in a timely fashion and, to the extent the matter remains
unresolved thereafter, shall settle the matter by applying the Dispute
Resolution Procedures.
B. Initially, Clearwire shall provide Licensee [***] Cost-Free
Educational Account per Cell Site in the Market Area (each a "BASIC
COST-FREE EDUCATION ACCOUNT"). The number of Cost-Free Educational Accounts
provided pursuant to this Agreement shall be adjusted upward every [***]
proportionate to the growth of the overall data capacity of Clearwire's
network in the Market Area of the Channels. The growth (if any) in the
overall data capacity shall be determined as set forth in Section
20(b)(iii).
(B) ADDITIONAL COST-FREE EDUCATIONAL ACCOUNTS. In addition to, and not
in lieu of, the Cost-Free Educational Accounts provided to Licensee by Clearwire
pursuant to the Educational Reservation as set forth in Section 7(a), Clearwire
shall provide Licensee with additional Cost-Free Educational Accounts in the
number computed in accordance with this Section 7(b) (the "ADDITIONAL COST-FREE
EDUCATIONAL ACCOUNTS").
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(i) Number and Periodic Adjustment. Licensee will have access to
additional spectrum capacity on Clearwire's National Platform in the form
of Cost-Free Educational Accounts equal to the greater of (X) [***]
Cost-Free Educational Accounts per Sector in the Market Area of the
Channels and (Y) the quantity of Cost-Free Educational Accounts determined
by applying the Formula Quantity. The number of Additional Cost Free
Educational Accounts that Clearwire is obligated to provide to Licensee
shall be recalculated and revised annually as of January 31 of each
calendar year.
A. Educational End Users. Cost-Free Educational Accounts
shall be exclusively for Educational End Users and not for resale,
assignment or transfer by Licensee outside of its Educational End User
environment or to persons who cease to be officially associated with such
Educational End User. (By way of example, a university may resell the
service to its students, faculty, administrators and staff, while such
persons are involved with the university, but shall cease to provide the
service if a member of the faculty terminates employment or a student
graduates and ceases to be involved in university matters.)
B. Time of Delivery. The Additional Cost-Free Educational
Accounts shall be provided by Clearwire to Licensee pursuant to this
Section 7(b) upon the commercial launch of Clearwire's broadband wireless
service in the Market Area of the Channels, or the applicable Commencement
Date thereof if later.
(C) LICENSEE MVNO.
(i) In addition to the right to Cost-Free Educational Accounts,
Licensee shall have the right to resell the Clearwire service in the form
of MVNO Educational Accounts to Educational End Users in the Market Area.
An "MVNO EDUCATIONAL ACCOUNT" shall have the identical characteristics as a
Cost-Free Educational Account, except that there shall be a charge to
Licensee as determined pursuant to this Section 7fc). Clearwire shall sell
to Licensee such services, at a cost equal to the lowest wholesale rate
provided by Clearwire to an arms-length third party in the Market Area of
the Channels or other comparable market pursuant to any applicable
agreement. However, the number of MVNO Educational Accounts is limited in
such Market Area to twice the number of Cost-Free Educational Accounts for
such Market Area.
(ii) Mechanics. The resale of Clearwire's services pursuant to
this Section 7(c) shall be accomplished pursuant to a standard Clearwire
wholesale agreement form revised to be consistent with the terms of this
Agreement, which will be provided to Licensee upon its request to resell an
MVNO Educational Account to an Educational End User. Such arrangement shall
be executed not later than thirty (30) days after the availability of such
services.
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(D) ACCESS TO EDUCATIONAL END USER DEVICES. Clearwire shall also make
any end-user equipment used in the Clearwire National Platform available for
purchase by Licensee at [***] above Clearwire's cost to acquire such end-user
equipment. Equipment provided to Licensee pursuant to this section shall be used
solely by Educational End Users and not for resale.
(E) SHARING OF FEATURES AND SERVICE SETS. Licensee shall have access
to, and full use of, system capabilities, services and feature sets that are
generally provided to Clearwire's retail customers or wholesalers to mass market
customers. Licensee shall have access to reasonably necessary support made
available to Clearwire's commercial customers generally, and that is reasonably
necessary for Licensee to offer services to its Educational End Users as
contemplated by their agreement. Licensee shall have access to new capabilities,
features and service sets within six months of the time that Clearwire makes
them available to customers generally, but not earlier than the Commencement
Date.
(F) ORDERING COST-FREE EDUCATIONAL ACCOUNTS AND ADDITIONAL COST-FREE
EDUCATIONAL ACCOUNTS; DELIVERY AND INSTALLATION. Licensee may activate Cost-Free
Educational Accounts and Additional Cost-Free Educational Accounts at no cost to
Licensee, via submission of a standard Order Form or online ordering to
Clearwire, to the extent consistent with the terms of this Agreement. Clearwire
will fill each such order within the standard delivery interval by which it
activates new service requests for subscribers generally, and shall ship
associated user units to Licensee's requested destination or complete
installation of user equipment which normally is installed by Clearwire, its
Affiliate or a contractor of either of them within the standard installation
interval by which it makes new installations of user units. Licensee shall
comply with all laws and obtain any necessary governmental permits or approvals,
and third party approvals, which are necessary in order for Clearwire to
undertake an installation.
(G) TERMS OF USE. To the extent not inconsistent with the terms of
this Agreement, Licensee's ordering and use of Cost-Free Educational Accounts,
the Additional Cost-Free Educational Accounts and MVNO Accounts, and the use of
such services by Licensee's users and permitted users, shall be governed by the
acceptable use policy and terms of service, and such other policies of general
applicability which apply to such services, which are subject to amendment and
may be found at http://www.clearwire.com or such other URL as may be designated;
provided, however, that financial terms contained in the terms of service shall
not apply to such services. In addition to the foregoing policies, but only to
the extent not inconsistent with the terms of this Agreement, Clearwire may
specify from time to time, in its sole discretion, reasonable and
non-discriminatory procedures for the activation, addition, deletion or
substitution of services to Licensee, its users and permitted users that do not
impose obligations on or detract from the services received by Licensee or its
permitted users.
(H) EQUIPMENT AND SOFTWARE. For Licensee and any permitted users for
whom Clearwire provides services pursuant to this Section 7, Clearwire shall
make available any equipment, services or software, including upgrades, that
Clearwire makes generally available to Clearwire's or its Affiliate's retail
customers subscribing to the same tier of service in the market(s) where it is
used over BRS or EBS facilities. In the event that any equipment upgrade
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14
involves replacement of equipment, the replaced equipment shall be returned to
Clearwire or its designee and title to the replacement equipment shall transfer
to Licensee or its designee.
(I) TITLE. All equipment provided by Clearwire to Licensee shall be
the property of Licensee or its designee(s), free and clear of all liens and
encumbrances, when paid in full (if any payment is required). Licensee shall
own, and be solely responsible for the maintenance and operation of, all
facilities installed at Licensee's locations and receive sites, including the
sites of its permitted users, subject to manufacturers' warranties.
(J) PREFERRED CONTENT PROVIDER.
(i) Scope. In the event that Clearwire provides third party
content to customers over its network in the Market Area of the Channels,
Licensee may elect to become be a "PREFERRED CONTENT PROVIDER" over such
network in such Market Area for such duration as Licensee may select. As a
Preferred Content Provider, Licensee shall have the same degree of access
to, and use of, any system capability, service or feature set that is
provided to premium third party content providers.
(ii) Service Sets and Features. To the extent that Clearwire's or
its Affiliates' most favored program suppliers pay for features and/or
service sets, Licensee shall pay an equal amount for equal features and/or
service sets to the extent that Licensee elects to utilize them. Licensee
agrees that the programming that Licensee supplies to customers through
Clearwire's network will be educational in nature. Licensee agrees not to
resell Clearwire's network access, features and/or service sets to third
parties, except in accordance with Sections 7(b)(i)a. and 7(c).
(iii) Capacity Constraints. Clearwire reserves the right to
restrict the use of the capabilities and services made available to
Licensee as a Preferred Content Provider under this Section 7(j) if such
use is no longer commercially and technically feasible due to limitations
in network capabilities. Clearwire shall comply with the provisions of this
Agreement and the Master Agreement to ensure timely access to information
about capacity usage and permit Licensee a reasonable opportunity to secure
alternative access.
(K) DEFINITIONS.
(i) "ADDITIONAL COST-FREE EDUCATIONAL ACCOUNT" is defined in
Section 7(b).
(ii) "CELL SITE" means a tower, building or other outdoor
structure equipped with one or more antennas to serve the surrounding area.
(iii) "CLEARWIRE NATIONAL PLATFORM" means all Market Areas and
all other areas within the United States where Clearwire and its Affiliates
provide comparable services.
(iv) "COST-FREE EDUCATIONAL ACCOUNT" means a wireless broadband
connection that Clearwire or its affiliate provides to Licensee without
charge or
15
expense to Licensee. Cost-Free Educational Accounts shall have the same
capacity and characteristics as the highest level of premium mass market
retail service provided on Clearwire or its affiliate's network in the
market where it is used. Multiple individuals that are associated with an
Educational End-User may share the same Cost-Free Educational Account
through Wi-Fi hotspots, local area networks, and other means. To the extent
not inconsistent with the terms of this Agreement, the Cost-Free
Educational Accounts shall be subject to the terms of Clearwire's then
generally applicable Acceptable Use Policy. The Cost-Free Educational
Accounts shall be fully portable anywhere within the Clearwire National
Platform to the extent that Clearwire offers such portability to any
customer.
(v) "EDUCATIONAL END USERS" or "EEU" shall be only non-profit
entities, educational entities and/or Social Welfare Agencies that use the
services for their own purposes, provided that Licensees shall not provide
such services pursuant to a request-for-proposals (RFP) or other
substantially similar commercially competitive opportunities, and Licensees
shall not provide such services to any entity if such entity already has an
existing business relationship with Clearwire. For this purpose, "SOCIAL
WELFARE AGENCIES" includes only (1) those governmental and
quasi-governmental agencies and departments that provide as their primary
service public welfare assistance services (such as low-income housing,
food stamps, or domestic violence services) to the public or (2)
correctional institutions that use the service in connection with a written
agreement with the Licensee for specific programming content produced or
procured by Licensee or with whom Licensee has had a prior written
relationship; provided that such programming content is delivered to such
correctional institutions without charge or other fees. Social Welfare
Agencies shall specifically exclude treasury and revenue services
departments, law enforcement agencies, legislatures, the office of the
mayor and the military.
(vi) "FORMULA QUANTITY" as of any date, is the product, rounded
up or down to the nearest whole number, obtained by multiplying: (a) the
Local Channel Ratio by (b) [***], and by (c) the number of subscribers
served by Clearwire or any of its affiliates in the Market Area of the
Channels as of the end of the previous calendar year. In the event that
this product is a fraction, it shall be rounded up or down to the nearest
whole number.
(vii) "GEOGRAPHIC MARKET" means the larger of (A) the area
covered by the GSA(s) of the Channels as amended from time to time, without
regard to any subsequent swap affecting the Channels after the Effective
Date, and (B) such GSA(s) combined with the area(s) covered by the
substantially overlapping GSA(s) of EBS and/or BRS systems which Clearwire
or any of its Affiliates have the right to use in that same market.
(viii) "LOCAL CHANNEL RATIO" is the fraction obtained by dividing
the number of Channels as of the date of the calculation by the total
number of EBS and BRS channels in the Market Area of the Channels with
substantially overlapping GSAs then used to provide service in such Market
Area licensed to or under a use agreement with Clearwire or any of its
Affiliates (including those of Licensee) as of that date, in
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16
each case determined without multiplying a channel by the number of times
it is deployed.
(ix) "MARKET AREA" means the network coverage footprint of the
network of Clearwire and its Affiliates which includes all or part of the
GSA(s) of the Channels in the Geographic Market, based on its build-out
engineered for services from time to time once it has commenced commercial
operation.
(x) "MARKET AREA OF THE CHANNELS" is the Market Area of the
Channels as of the Effective Date.
(xi) "MVNO ACCOUNTS" means a broadband connection and related
services that Clearwire or its affiliate provides, including such user
equipment as Clearwire or its affiliate may provide for such connection
services.
(xii) "ORDER FORM" is a form which elicits such information as is
reasonably required by Clearwire to provide the service, and which does not
contain any provision that modifies the service or any provision that is
inconsistent with this Agreement. It is agreed that Clearwire Order Forms
will be in the form of its standard order forms.
(xiii) "SECTOR" means a directional antenna located at a cell
site that serves a portion of a Cell Site area.
8. INTERFERENCE CONSENTS
Upon advance written notice to Licensee given after the Commencement Date,
Clearwire shall have the right to enter into agreements ("INTERFERENCE
CONSENTS") allowing third party licensees and operators to operate transmitters
that cause greater levels of signal strength within the Licensee's GSA than
otherwise is permitted under Part 27 of FCC Rules in order to coordinate
Clearwire's operations in Licensee's GSA with those of third parties. This right
shall apply only to such Interference Consents ("CONFORMING INTERFERENCE
CONSENTS") as (1) by their terms expire upon the earlier of the expiration or
termination of this Agreement; (2) do not result in or allow operations as may
result in a degradation in the value of the Channels or any impairment of the
FCC License for the Channels that is material or will continue beyond the
expiration or termination of this Agreement; (3) are limited to terms and
conditions providing for fair and reciprocal rights and limitations for and on
the operation of Licensee's facilities and the facilities of the other party in
connection with system coordination inside Licensee's GSA and at Licensee's GSA
boundaries and provisions ancillary thereto, but not channel swapping; (4) do
not cede, grant or provide any part of the Licensee's GSA or channel capacity to
a third party; (5) do not allow the placement of third party transmitters
operating on the frequencies of any of the Channels within the Licensee's GSA,
except for transmitters operated pursuant to Special Temporary Authority for not
more than a total of 180 days plus a renewal period of not more than 180 days,
and in any event ending prior to the expiration or termination of this
Agreement; and (6) do not prevent the construction of facilities sufficient to
qualify the Licensee for a substantial service safe harbor pursuant to the terms
of this Agreement. Third-party rights to use
17
Licensee's GSA or channel capacity other than those matters related above are to
be handled in accordance with the assignment or sublicensing provisions of this
Agreement.
All Interference Consents entered into by Clearwire pursuant to this
Section shall provide that the Licensee has the right to require the third party
to cease operations that required the Interference Consent to exist upon the
expiration or termination of this Agreement, including the right of specific
performance of such requirement and the payment by the third party of attorneys'
fees in enforcing that right, and that such rights shall not be affected or
diminished by any default by Clearwire. Except in connection with a permitted
assignment of this Agreement itself, Clearwire shall have no right or power to
assign any such Interference Consent, it being understood that Clearwire's
rights to enter such Interference Consents is based upon a special relationship
with Licensee. Unless termination results from Licensee's material breach of
this Agreement, Clearwire shall be responsible for any unreimbursed cost or
damages to Licensee as a result of a third party's failure to cease operations
upon expiration or termination of the Agreement, and shall pay Licensee's legal
fees in connection with enforcement of the Interference Consent. The rights in
this paragraph shall survive the expiration or termination of this Agreement for
any cause.
Clearwire shall not enter into any Interference Consent, or any amendment
or supplement thereto, without first giving Licensee and its counsel thirty (30)
days advanced written notice or such lesser time as may be required by the
exigencies of the situation but no less than ten (10) days (the "NOTICE PERIOD")
of Clearwire's intention to enter into the consent, amendment or supplement,
along with a complete and unredacted form of the consent, amendment or
supplement (and any documents to which it refers) and a statement of the Notice
Period applicable thereto. In the event that Clearwire intends to execute an
Interference Consent, or any amendment or supplement thereto, that materially or
substantively differs from the form previously supplied to Licensee, Clearwire
shall once again follow the procedure and requirements of the immediately
preceding sentence as though no notice of the document in the prior form had
been given. During the Notice Period applicable to any proposed Interference
Consent, or any amendment or supplement thereto, Clearwire shall answer
questions and entertain comments and suggestions of the Licensee. The failure of
Licensee to object to any proposed Interference Consent, or any amendment or
supplement thereto, shall not constitute a waiver of this Section 8 or be
construed as Licensee's implied endorsement of such proposed consent, amendment
or supplement.
9. OTHER APPLICATIONS, APPLICATION COSTS; FEES; DE FACTO TRANSFER
AUTHORIZATION APPLICATION
(A) APPLICATION PREPARATION. Clearwire will prepare and submit in its
name all applications, amendments, petitions, requests for waivers, and other
documents necessary for the proper operation of Clearwire Capacity consistent
with this Agreement and Licensee's responsibilities as a FCC licensee. Licensee
will prepare and submit all applications, amendments, petitions, requests for
waivers, and other documents necessary for the modification, maintenance and
renewal of the FCC License that, under FCC Rules, may only be filed by Licensee,
including any such filings reasonably requested by Clearwire that are consistent
with this Agreement and Licensee's responsibilities as a FCC licensee. The
Parties
18
will cooperate in the preparation and submission of all applications,
amendments, petitions, requests for waivers, and other documents necessary to
secure any FCC approval, consent or other action required to effectuate this
Agreement, including the substantial service showing required by [***]. In no
event shall Licensee be required to make any filing or to take any position
before the FCC or other Government Agency that is inconsistent with Licensee's
interests or which Licensee believes in good faith may be construed by the FCC
or other Government Agency as inconsistent with its responsibilities as a FCC
licensee, not submitted in good faith or submitted for a purpose of delay in a
proceeding.
(B) APPLICATION COSTS. Clearwire will, at its own expense, prepare all
applications, notices, certificates, exhibits, consent agreements, approvals or
authorizations that Clearwire submits to the FCC or seeks to have Licensee
submit to the FCC pursuant to the Agreement. Clearwire will also promptly pay or
reimburse Licensee for its reasonable out-of-pocket expenses in connection with
the activities requested or required of Licensee by Clearwire under this
Agreement, including Licensee's expenses associated with the renewal of any FCC
License and with any other filings with, or information requested by, the FCC,
or required of Licensee to remain eligible under FCC Rules to provide Clearwire
Capacity to Clearwire.
(C) FEES AND TAXES. Clearwire will pay any Federal spectrum, federal
regulatory, universal service, number portability fees, payphone fees, E911 fees
and other fees, charges, assessments, impositions and taxes associated with the
FCC License or imposed on Licensee as a result of the licensing, regulation or
use of the capacity of the Channels by Licensee or Clearwire including, without
limitation, any such fees, charges, assessments, impositions and taxes that may
be imposed on or with respect to EBS spectrum or spectrum licenses in the
future. Clearwire shall pay all such fees, charges, assessments, impositions and
taxes upon receipt of notice from the FCC or taxing authority that such fees are
due, or upon receipt of at least thirty (30) days advance written notice from
Licensee that such fees or charges are due in the event that notice is not sent
to Clearwire by the FCC or such taxing authority. Without limiting the
generality of the foregoing, Clearwire shall be liable for and shall pay (and
shall indemnify and hold harmless the Licensee Indemnified parties against) all
sales, use, stamp, documentary, filing, recording, transfer, real estate
transfer, registration, duty or similar fees or taxes or governmental charges
(together with any interest or penalty, addition to tax or additional amount
imposed) as levied by any taxing authority in connection with this Agreement.
(D) FCC LONG TERM DE FACTO TRANSFER LEASE AND EXTENSION APPLICATIONS.
Within ten (10) business days following the execution of this Agreement and
prior to consummating the transfer of de facto control of the Channels, the
Parties shall cooperate as required to prepare and file with the FCC all forms
and related exhibits, certifications and other documents necessary to obtain the
FCC's authorization (the "DE FACTO TRANSFER AUTHORIZATION") of the long term de
facto transfer caused by this Agreement as set forth in FCC Rule 1.9030(e) as
amended from time to time (the "FCC LONG TERM LEASE APPLICATION"). Each Party
shall fully cooperate with the other, and do all things reasonably necessary to
timely submit, prosecute and defend the FCC Long Term Lease Application, and
will promptly file or provide the other Party with all other information which
is required to be provided to the FCC in furtherance of efforts to obtain or
retain such grant. The Parties shall disclose in the FCC Long Term Lease
Application the automatic extension of Clearwire's use rights upon the renewal
of the FCC License. The Parties shall include in any FCC License renewal
application, or
[*** Confidential Treatment Requested]
19
separately request, as necessary, a request to permit Clearwire's use rights for
the renewal term of the FCC License, if the Term will continue during any part
of such FCC License renewal term. The Parties shall prosecute each such original
or renewal application diligently and in good faith, including defending it and
the grant thereof against all petitions to deny, informal objections, petitions
for reconsideration, applications for review, appeals, writs, requests for stay
filed against any such application or its grant, and shall file and prosecute
petitions for reconsideration, applications for review, petitions for appeal,
notices of appeal, writs of certiorari and associated pleadings challenging any
denial of any such application or request. Any fees associated with the filing
of the FCC Long Term Lease Application and applications or requests for renewal
of the De facto Transfer Authorization, and all costs incurred in preparing,
prosecuting or defending any and all petitions for reconsideration, applications
for review, appeals, writs, requests for stay and remands of the grant or denial
of any such original or renewal application and related pleadings, and for
activity (such as oral argument and FCC staff visits) in support thereof, shall
be paid by Clearwire. To the extent Licensee is required to file this Agreement
with the FCC, the Licensee shall first notify and consult with Clearwire, and
will to the extent permitted by the FCC redact all information from the
Agreement which Clearwire reasonably designates as confidential including, but
not limited to, all payment information.
10. TRANSFERS OR ASSIGNMENTS
(A) Assignment and Transfer by Clearwire. Subject to any required FCC
consent or authorization, Clearwire may assign this Agreement to a third party;
provided, however, that Clearwire shall remain responsible for the performance
of the payment obligations of the assignee pursuant to the Agreement, except
that Clearwire shall not be responsible for the performance of the payment
obligations of those assignees whose creditworthiness is equal to or better than
Clearwire's, as measured by each party's respective bond ratings or other
comparable measure, and who sign an agreement with, and reasonably acceptable
to, Licensee to assume the obligations of Clearwire hereunder.
(B) Sublicensing by Clearwire. With any required FCC consent or
authorization, Clearwire may sublicense the use of Clearwire Capacity; provided,
however, that Clearwire shall remain responsible for the performance of the
payment obligations pursuant to this Agreement, except that Clearwire shall not
be responsible for the performance of the payment obligations if and to the
extent the sublicensee agrees with Licensee by agreement in form and substance
reasonably acceptable to Licensee to perform such payment obligations and if the
sublicensee's creditworthiness is equal to or better than Clearwire's, as
measured by each party's respective bond ratings or other comparable measure.
(C) Permitted Assignments by Clearwire: Distinct Service Entity.
Notwithstanding the foregoing but subject to Section 10(d), Clearwire, with
prior notice to Licensee but without the prior consent of Licensee, may: (1)
assign any of its rights under this Agreement as collateral, provided that
Clearwire shall remain responsible for performance of all its obligations under
this Agreement and related obligations under the Master Agreement and further
provided that the assignment shall be subject to the provisions of Section
9-408(d) of the
20
Uniform Commercial Code (Official Text); and (2) sell, assign, sublease,
delegate or transfer this Agreement or any of its rights or obligations
hereunder to any of Clearwire's Affiliates or any entity that acquires all or
substantially all of the assets of the Clearwire subsidiaries that hold the U.S.
assets and operating companies. In the event that an entity (a "SERVICE ENTITY")
other than Clearwire is not the direct provider of any one or more of the Access
Right Royalties, within ten (10) days of Licensee's request, Clearwire shall
cause such Service Entity to execute and to deliver a written undertaking, in
form and substance reasonably acceptable to Licensee, to provide such Access
Right Royalties as it may provide in accordance with the provisions of this
Agreement applicable thereto, including an assumption of the obligations of
Clearwire under Section 7 and to be jointly and severally liable with Clearwire
therefore (a "SERVICE ENTITY AGREEMENT"). No Service Entity Agreement shall be
deemed to relieve Clearwire of any of its Access Right Royalty obligations
hereunder.
(D) PRE-COMMENCEMENT DATE RESTRICTIONS. In no event shall Clearwire
undertake any assignment or sublicensing prior to the Commencement Date.
(E) ASSIGNMENT BY LICENSEE. Licensee may assign the FCC License to any
entity that is eligible under FCC Rules to hold the FCC License, who is
reasonably acceptable to Clearwire and who assumes Licensee's prospective
obligations under this Agreement, whereupon Licensee shall be forever relieved
of such prospective obligations. If FCC consent to the assignment of the De
facto Transfer Authorization is required for the rights of Licensee hereunder to
be assigned to such proposed assignee, the Parties shall promptly join with the
proposed assignee in seeking such consent and shall cooperate in prosecuting
such consent application. Clearwire and Licensee agree that it is reasonable for
Clearwire to reject a proposed assignee where the proposed assignee or its
affiliate competes with Clearwire's offering over EBS or BRS spectrum. In the
event that Licensee desires to assign its FCC License to another entity,
Licensee shall inform Clearwire in writing of the identity of such entity and
within twenty (20) days of such notice Clearwire shall inform Licensee in
writing of whether Clearwire consents to such assignment or refuses to consent
to such assignment and, if it refuses, the reason(s) it is relying upon for such
refusal. Notwithstanding the foregoing, Licensee may, without the prior consent
of Clearwire: (1) assign any of its rights under this Agreement as collateral
and (2) sell, assign, sublease, delegate or transfer this Agreement or any of
its rights or obligations hereunder to any of Licensee's affiliates controlled
by or under common control with Licensee.
11. TERMINATION OF AGREEMENT
(A) This Agreement will automatically terminate with respect to the
FCC License or affected Channel(s) upon the earlier of: (1) the loss or
expiration without renewal of the FCC License; or (2) an FCC Final Order
revoking, terminating or canceling the FCC License, and in either such event
this Agreement shall terminate on the date specified as the expiration,
revocation, termination or cancellation date by any order in that proceeding (as
that date may have been extended by stay or otherwise) or, in the absence of
such specified date, the effective date of the last decision in that proceeding.
21
(B) This Agreement may be terminated by either Party if the other
Party fails to cure a payment default under this Agreement within sixty (60)
days of receipt of written notice from the non-defaulting Party specifying the
payment default.
(C) This Agreement may be terminated by either Party after the
material breach of a non-payment obligation by the other Party or a material
misrepresentation by the other Party and, except as provided in Section 6(d),
the failure or refusal of the breaching Party (i) to diligently commence efforts
to cure such default with reasonable promptness after receipt of written notice
from the non-defaulting Party specifying the default but in no event any later
than thirty (30) days after receipt of such notice, or (ii) to diligently
continue efforts to cure such default after commencing such efforts, or (iii) to
cure such default within one-hundred twenty (120) days of receipt of written
notice from the non-defaulting Party specifying the default. In the event of an
uncured material breach of a non-payment obligation, Licensee shall have the
option, but not the obligation, to cure such breach at Clearwire's expense. A
breach by a Service Entity of a Service Entity Agreement (subject to the
expiration of applicable cure periods in the Service Entity Agreement, which
shall be consistent with those stated in this Agreement) shall be deemed a
breach by Clearwire of this Agreement. In the event of a material breach of this
Agreement by Licensee prior to the Commencement Date, Clearwire's sole recourse
shall be to seek the specific performance of this Agreement by Licensee.
(D) Licensee may terminate this Agreement pursuant to Section 16(b).
(E) If the Commencement Date does not occur by the first (1st)
anniversary of the Effective Date, thereafter either Party may terminate this
Agreement at any time before the Commencement Date by giving written notice of
termination to the other Party.
(F) In the event that the Commencement Date occurs, but the FCC's
grant of the De facto Transfer Authorization is subsequently rescinded and such
rescission has become a Final Order, this Agreement shall be deemed terminated
on the date specified as the required termination date by any order in that
proceeding (as that date may have been extended by stay or otherwise) or, in the
absence of such specified date, the effective date of the last decision in that
proceeding.
(G) In the event of an FCC Final Order denying any application to
allow the continuation or renewal of the De facto Transfer Authorization for a
portion of the Term, this Agreement shall be deemed terminated on the date
specified as the required termination date by any order in that proceeding (as
that date may have been extended by stay or otherwise) or, in the absence of
such specified date, the effective date of the last decision in that proceeding.
(H) The Parties will notify the FCC of the termination of this
Agreement with respect to the FCC License or any of the Channels within ten (10)
calendar days following the termination.
(I) Except as expressly set forth in this Agreement, upon the
expiration or termination of this Agreement, each Party will pay its own fees
and expenses related to this Agreement and the transactions contemplated herein,
and the Parties will have no further liability to each other except by reason of
any breach of this Agreement occurring prior to the date of
22
expiration or termination or after such expiration or termination if the breach
is of a provision that by its terms survives such expiration or termination. Any
termination or expiration of this Agreement, regardless of cause, will not
release either Licensee or Clearwire from any liability arising from any breach
or violation by that Party of the terms of this Agreement prior to the
expiration or termination. The general and procedural provisions of this
Agreement, which may be relevant to enforcing the obligations or duties of the
Parties, as well as any other provisions that by their terms obligate either
party following expiration or termination, will survive the expiration or
termination of this Agreement until the obligations or duties are performed or
discharged in full.
(j) The Parties recognize that, in the event that a Party fails or
refuses to perform any provisions of this Agreement, monetary damages alone will
not be adequate. The non-defaulting Party shall therefore be entitled, in
addition to any other remedies which may be available, including money damages,
to obtain specific performance of the terms of this Agreement. Except as
expressly set forth in this Agreement no remedy conferred by any of the specific
provisions of this Agreement is intended to be exclusive of any other remedy,
and each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute or otherwise. Except as expressly set forth in this Agreement, the
election of any one or more remedies by a Party shall not constitute a waiver of
the right to pursue other available remedies at any time.
12. EXPENSES AND REVENUES
All subsequent documents appended to this Agreement, and any FCC activity
or activity to preserve, obtain or renew licenses shall be reimbursed by
Clearwire, provided that (and except as specified otherwise in this Agreement)
expenses in excess of $1,000 are approved as to reasonableness by Clearwire in
advance, such approval not to be unreasonably withheld, conditioned or delayed;
and provided further that Licensee shall not be required to take any action for
which Licensee may request expense reimbursement from Clearwire until the
Parties have reached agreement on reimbursement of expenses of Licensee related
to such action in excess of $1,000. Except as otherwise provided in this
Agreement, each Party will pay its own expenses incident to any amendments or
modifications to the Agreement, including, but not limited to, all fees and
expenses of their respective legal counsel and any engineering and accounting
expenses. Licensee is entitled to none of the revenue generated from the use of
the Clearwire Capacity, but only the royalties provided for in this Agreement.
13. COMPETITION
Licensee agrees that it will not, during the Term of this Agreement, engage
in building, operating, managing or distributing, on a for-profit basis, a
wireless broadband network in the Market Area, except as allowed by this
Agreement and except for the use of the Educational Reservation and the Access
Royalties in compliance with the provisions hereof applicable to such royalties.
23
14. CONFIDENTIALITY AND NON-DISCLOSURE(13)
(A) CONFIDENTIALITY OF THE TERMS OF THIS AGREEMENT. The terms of this
Agreement that are not otherwise required to be disclosed to the FCC in support
of the De facto Transfer Application, requests for renewals thereof or notices
submitted to the FCC, or as required to be disclosed in filings with the
Securities and Exchange Commission or state securities agencies, will be kept
strictly confidential by the Parties and their agents, which confidentiality
obligation will survive the termination or expiration of this Agreement for a
period of two (2) years. The Parties may make disclosures as required by law,
and to employees, shareholders, agents, attorneys and accountants (collectively,
"AGENTS") as required to perform obligations under the Agreement, provided,
however, that the Parties will cause all Agents to honor the provisions of this
section. In addition, either Party may disclose this Agreement to its
Affiliates, strategic partners, actual or potential investors, lenders,
acquirers, merger partners, and others whom it deems in good faith to have a
need to know such information for purposes of pursuing a transaction or business
relationship with it, so long as it secures an enforceable obligation from such
third party to limit the use and disclosure of this Agreement as provided
herein. The Parties will submit a confidentiality request to the FCC in the
event the FCC seeks from the Parties a copy of this Agreement or any other
confidential information regarding its terms.
(B) NON-DISCLOSURE OF SHARED INFORMATION. As used herein, the term
"CONFIDENTIAL INFORMATION" shall mean all non-public information disclosed
hereunder, whether written or oral, that is designated as confidential or that,
given the nature of the information or the circumstances surrounding its
disclosure, is plainly confidential or by the Parties' practices should be
understood to be confidential. The term Confidential Information does not
include information which: (1) has been or becomes published or is now, or in
the future, in the public domain without breach of this Agreement or breach of a
similar agreement by a third party; (2) prior to disclosure hereunder, is
property within the legitimate possession of the receiving Party; (3) is
lawfully received from a third party having rights therein without restriction
of third party's or the receiving Party's rights to disseminate the information
and without notice of any restriction against its further disclosure; or (4) is
independently developed by the receiving Party through persons who have not had,
either directly or indirectly, access to or knowledge of such Confidential
Information. During the Term, the Parties may supply and/or disclose to each
other Confidential Information relating to the business of the other Party. Each
item of Confidential Information will be kept confidential by the Parties during
the Term and for a period of three (3) years thereafter, but may be disclosed in
the enforcement or seeking of damages with respect to a Party's rights under
this Agreement. The receiving Party will be responsible for any improper use of
the Confidential Information by it or any of its Agents. Without the prior
written consent of the disclosing Party, the receiving Party will not disclose
to any entity or person the Confidential Information, or the fact that the
Confidential Information has been made available to it, except for disclosures
required by law, disclosures authorized by the Party owning the Confidential
Information and disclosures made in the context of the enforcement or seeking of
damages with respect to a Party's rights under this Agreement. Each
----------
(13) If the Licensee is a governmental body subject to an open records, sunshine
or similar law or regulation that requires Licensee to make information
available to the public in an manner or to an extent that would be
inconsistent with this Section 14, revise this Section 14 to be consistent
with such law or regulation.
24
person to whom Confidential Information is disclosed must be advised of its
confidential nature and must agree to abide by the terms of this section.
15. ASSUMPTION OF LIABILITIES
Neither Party is assuming or will be responsible for any of the other's
liabilities or obligations (including but not limited to customer obligations)
except as required by the FCC or this Agreement.
16. FCC-MANDATED OBLIGATIONS
(A) Licensee and Clearwire are familiar with the FCC Rules affecting
secondary markets for spectrum and the provision of EBS, the Communications Act
of 1934, as amended ("COMMUNICATIONS ACT"), the Code of Federal Regulations, and
all other applicable FCC Rules, and agree to comply with all such laws and
regulations.
(B) Effective on the Commencement Date, Clearwire assumes primary
responsibility for complying with the Communications Act, and any FCC Rules that
apply to the Channels and FCC License, and this Agreement may be revoked,
cancelled or terminated, in accordance with Section 11, by Licensee or by the
FCC if Clearwire materially fails to comply with applicable laws and
regulations.
(C) Neither Licensee nor Clearwire will represent itself as the legal
representative of the other before the FCC or any party, but will cooperate with
each other consistent with this Agreement with respect to FCC matters concerning
the Licenses and the Channels.
(D) If the FCC License is revoked, cancelled, terminated or otherwise
ceases to be in effect, Clearwire will have no continuing authority or right to
use the Channels unless otherwise authorized by the FCC.
(E) This Agreement is not an assignment, sale or transfer of the FCC
License itself.
(F) This Agreement will not be assigned to any entity that is
ineligible or unqualified to enter into a use agreement for the Channels under
the FCC Rules.
(G) Licensee will not consent to an assignment, subassignment or
sublicensing of this secondary market arrangement unless such assignment,
subassignment or sublicensing complies with applicable FCC Rules and this
Agreement.
(H) Licensee and Clearwire must each retain a copy of this Agreement
and make it available upon request by the FCC, in accordance with the
confidentiality provisions in Section 14.
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17. LICENSEE'S AUTHORIZATIONS
Licensee shall maintain all necessary qualifications to hold and to obtain
renewal in the ordinary course of the FCC License subject to Clearwire's
obligations under this Agreement, including, without limitation, Clearwire's
obligation to cause Licensee's FCC License to timely meet the substantial
service requirement, as such qualifications may be amended or modified from time
to time (individually an "FCC QUALIFICATION" and collectively referred to as the
"FCC QUALIFICATIONS"), and shall not knowingly or negligently take any action,
or fail to take any action, which action or failure to act creates a material
risk that Licensee shall lose any FCC Qualification; provided, that in the event
that the FCC or any other legal authority shall at any time specify new or
different qualifications or conditions for the maintenance of any FCC
Qualification or shall issue a pronouncement offering a new interpretation of a
FCC Qualification, Clearwire shall reimburse on demand Licensee's reasonable
expenses of taking such action as are required for Licensee to bring itself and
its operations into compliance with such new or different qualifications or
conditions and maintaining such compliance; provided, further, that it shall not
be deemed a breach of this sentence if Licensee loses a FCC Qualification as a
result, in whole or in part, of an act or omission of Clearwire or any failure
of Clearwire to perform its obligations under this Agreement. If, at any time,
Licensee fails, or it appears to Licensee more likely than not that it will
fail, to maintain any one or more of its FCC Qualifications with respect to the
License, Licensee shall give written notice to Clearwire within five (5) days
after Licensee becomes actually aware that (i) it no longer maintains such FCC
Qualifications or (ii) with the passage of time or upon the occurrence of a
future event it will no longer maintain such FCC Qualifications (referred to as
a "Disqualification Event" Licensee shall cooperate with reasonable requests of
Clearwire made from time to time for the purpose of verifying, at Clearwire'
expense, that Licensee maintains its FCC Qualifications. Upon the occurrence of
a Disqualification Event, Licensee shall, at Clearwire's expense, promptly
undertake all reasonable actions to obtain, to the extent permitted by
applicable law, a waiver from the FCC regarding the circumstances giving rise to
such Disqualification Event or to cure the circumstances giving rise to such
Disqualification Event.
18. MUTUAL REPRESENTATIONS AND WARRANTIES
(A) BY LICENSEE TO CLEARWIRE. Licensee hereby represents and warrants
to Clearwire that:
(i) Organization and Good Standing. It is a ____________(14) duly
organized, validly existing and in good standing under the laws of its
state of organization and has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as
now conducted and as proposed to be conducted. It is duly qualified or
authorized to do business as a foreign corporation and is in good standing
under the laws of each jurisdiction in which it owns or leases real
property and each other jurisdiction in which the conduct of its business
or the ownership of its properties requires such qualification or
authorization, except where
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(14) Insert entity type.
26
the failure to be so qualified, authorized or in good standing does not
have and would not reasonably be expected to have a material adverse effect
on the business, operations, properties, assets, condition (financial or
other) or results of operations of Licensee, taken as a whole, other than
changes affecting the broadband wireless business generally ("LICENSEE
MATERIAL ADVERSE EFFECT").
(ii) Authorization of Agreement. It has all requisite power and
authority to enter into, deliver and carry out the transactions
contemplated by this Agreement. This Agreement has been duly and validly
executed and delivered by it and (assuming the due authorization, execution
and delivery by the other parties hereto) this Agreement constitutes the
legal, valid and binding obligations of Licensee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in
a proceeding at law or in equity).
(iii) No Conflict. Except as set forth on the disclosure schedule
attached hereto by Licensee (the "LICENSEE SCHEDULE"):
A. Neither the execution and delivery by Licensee of this
Agreement, nor compliance by Licensee with any of the provisions
hereof will (i) conflict with, or result in the breach of, any
provision of Licensee's certificate or articles of incorporation or
bylaws, (ii) conflict with, violate, result in the breach of,
constitute (with or without due notice, lapse of time or both) a
default under, result in the acceleration of, create in any party the
rights to accelerate, terminate, modify or cancel, or require any
notice, consent or waiver under, any note, bond, mortgage, indenture,
license, agreement or other obligation to which Licensee is a party or
by which Licensee or any of its properties or assets is bound or (iii)
violate any statute, rule, regulation, order or decree of any Federal,
state or local government, or any governmental, regulatory,
legislative, executive, or administrative authority, agency or
commission, or any court, tribunal, or judicial body ("GOVERNMENT
AGENCY") by which Licensee is bound, except in the cases of clauses
(ii) and (iii) for such conflicts, violations, breaches, accelerations
or defaults as would not, individually or in the aggregate, have a
Licensee Material Adverse Effect.
B. No consent, waiver, approval, order, permit or
authorization of, or declaration or filing with, or notification to,
any person, entity or Government Agency is required on the part of
Licensee in connection with the execution and delivery of this
Agreement or the compliance by Licensee with any of the provisions
hereof, except as contemplated herein.
(iv) FCC Licenses. Except as set forth on the disclosure schedule
attached hereto by Licensee (the "LICENSEE SCHEDULE"):
A. Licensee holds the License free and clear of all any
lien, pledge, mortgage, deed of trust, security interest, claim,
lease, charge, option, right of
27
first refusal, easement, servitude, transfer restriction, encumbrance
or any other restriction or limitation whatsoever except for liens for
taxes not then due and payable and generally applicable FCC-imposed
restrictions ("LIENS").
b. Licensee is authorized, by final order, to hold the FCC
License, subject to any pending renewal application listed on the
Licensee Schedule.
c. To the best knowledge of Licensee, the Licensee Schedule
sets forth a true list of interference consents that have been granted
by Licensee with respect to any FCC Licenses and that are germane
under the two-way rules and would have a material impact on the use of
the Channels (excluding routine consents customary in the industry).
(v) Litigation. Except as set forth in the Licensee Schedule and
other than proceedings of general applicability and those related to market
transitions, there is no action, suit, litigation, arbitration proceeding
(including any civil, criminal, administrative, investigative or appellate
proceeding), hearing, inquiry, audit, examination or investigation
commenced, brought, conducted or heard by or before, or otherwise involving
any court or other Government Agency or any arbitrator or arbitration panel
now in progress or pending or, to the knowledge of Licensee, threatened
against Licensee or the assets (including the intellectual property rights)
or the business of Licensee, nor to the knowledge of Licensee, does there
exist any basis therefore, except for immaterial claims brought against
Licensee in the ordinary course of business. Other than orders issued in
licensing proceedings which contain no continuing requirements or
continuing unusual conditions and Orders which are set forth on the
Licensee Schedule, Licensee is not subject to any order, writ, judgment,
injunction, decree, stipulation, determination, or award entered by or with
any Government Agency.
(vi) Compliance with Laws; Permits. To the best knowledge of the
Licensee where and during the time access to the Channels currently subject
to the FCC License has been governed by a third party agreement (and
assuming that the third party agreement and normal conduct by parties
pursuant to this type of agreement comply in all material respects with the
Communications Act and FCC Rules) and except as provided in the Licensee
Schedule, Licensee (a) has complied in all respects with all federal,
state, local and foreign laws, rules, ordinances, codes, consents,
authorizations, registrations, regulations, decrees, directives, judgments
and orders applicable to it and its business with the Channels other than
where noncompliance would not reasonably be expected to have a Licensee
Material Adverse Effect and (b) has all federal, state, and local
governmental permits, authorizations, approvals, licenses, certificates and
consents ("PERMITS") necessary in the conduct of its business as currently
conducted with the Channels and to own and use its assets used with the
Channels in the manner in which such assets are currently owned and used
other than where the failure to possess such Permits would not,
individually or in the aggregate, reasonably be expected to have a Licensee
Material Adverse Effect, such Permits are in full force and effect, and no
violations have been recorded in respect of any such
28
Permit, and no proceeding is pending or, to the best knowledge of Licensee,
threatened to revoke or limit any such Permit.
(vii) Knowledge. Any representation, warranty, covenant,
obligation, or part thereof that states that it is made to the best
knowledge of Licensee is made to its best knowledge after commercially
reasonable investigation and includes all facts which it knew or should
have known as a result of such investigation, including the best knowledge
of Licensee's executive officers and legal counsel after commercially
reasonable investigation.
(B) BY CLEARWIRE TO LICENSEE. Subject to any specific exceptions
identified in the Master Agreement, Clearwire hereby represents and warrants to
Licensee that:
(i) Organization and Good Standing. Clearwire Parent is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Clearwire is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Nevada. Each has all requisite corporate or limited liability
company power and authority to own, lease and operate its properties and to
carry on its business as now conducted. Each of Clearwire and Clearwire
Parent is duly qualified or authorized to do business as a foreign
organization and is in good standing under the laws of each jurisdiction in
which it owns or leases real property and each other jurisdiction in which
the conduct of its business or the ownership of its properties requires
such qualification or authorization, except where the failure to be so
qualified, authorized or in good standing does not have and would not
reasonably be expected to have a material adverse effect on the business,
operations, properties, assets, condition (financial or other) or results
of operations of Clearwire or Clearwire Parent, taken as a whole, other
than changes affecting the broadband wireless business generally
("CLEARWIRE MATERIAL ADVERSE EFFECT").
(ii) Authorization of Agreement. Each of Clearwire Parent and
Clearwire has all requisite corporate or limited liability company power
and authority (i) to enter into, deliver and carry out this Agreement, and
(ii) to enter into and deliver all documents required or necessary to be
executed by it in connection with the consummation of this Agreement. This
Agreement (assuming the due authorization, execution and delivery by
Licensee) constitutes the legal, valid and binding obligations of
Clearwire, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at law or in equity).
(iii) No Conflict. Neither of the execution and delivery by
Clearwire or Clearwire Parent of this Agreement or the Master Agreement,
nor the compliance by Clearwire or Clearwire Parent with any of the
provisions hereof or thereof will (i) conflict with, or result in the
breach of, any provision of the certificate of incorporation,
29
certificate of limited liability company, bylaws or operating agreement of
Clearwire or Clearwire Parent, (ii) conflict with, violate, result in the
breach of, or constitute (with or without due notice, lapse of time or
both) a default under, result in the acceleration of, create in any party
the rights to accelerate, terminate, modify or cancel, or require any
notice, consent or waiver under, any note, bond, mortgage, indenture,
license, agreement or other obligation to which Clearwire or Clearwire
Parent is a party or by which Clearwire or Clearwire Parent or any of its
respective properties or assets are bound or (iii) violate any statute,
rule, regulation, order or decree of any Government Agency by which
Clearwire or Clearwire Parent is bound, except, in the case of clauses (ii)
and (iii), for such conflicts, violations, breaches, accelerations or
defaults as would not, individually or in the aggregate, have a Clearwire
Material Adverse Effect.
(iv) Consents. No consent, waiver, approval, order, permit or
authorization of, or declaration or filing with, or notification to, any
person, entity or Government Agency is required on the part of Clearwire or
Clearwire Parent in connection with the execution and delivery of this
Agreement or the Master Agreement or the compliance by Clearwire or
Clearwire Parent with any of the provisions hereof or thereof.
(v) Litigation. Except as would not reasonably be expected to
have a materially adverse effect on the ability of Clearwire to execute,
deliver and perform this Agreement, (a) there is no Proceeding now in
progress or pending or, to the knowledge of Clearwire, threatened against
Clearwire or Clearwire Parent or the assets or the business of Clearwire or
Clearwire Parent and (b) neither Clearwire nor Clearwire Parent is subject
to any order, writ, injunction or decree of any court or other Government
Agency other than orders issued in licensing proceedings.
(vi) Compliance with Laws; Permits. Each of Clearwire and
Clearwire Parent (a) has complied in all respects with all federal, state,
and local laws, rules, ordinances, codes, consents, authorizations,
registrations, regulations, decrees, directives, judgments and orders
applicable to it and its business other than where noncompliance would not,
individually or in the aggregate, reasonably be expected to have a
Clearwire Material Adverse Effect and (b) has all federal, state, and local
governmental Permits necessary in the conduct of its business as currently
conducted and to own and use its assets in the manner in which such assets
are currently owned and used other than where the failure to possess such
Permits would not, individually or in the aggregate, reasonably be expected
to have a Clearwire Material Adverse Effect, such Permits are in full force
and effect, and no violations have been recorded in respect of any such
Permit, and no proceeding is pending or, to the best knowledge of
Clearwire, threatened to revoke or limit any such Permit.
(vii) Brokers. Neither Clearwire nor any of its directors,
officers, employees or representatives has employed any broker or finder in
connection with this Agreement.
30
19. INDEMNIFICATION
(A) Licensee shall indemnify Clearwire, its Affiliates, and each of
their respective stockholders, directors, officers, employees, agents,
successors and assigns (collectively, the "CLEARWIRE INDEMNIFIED PARTIES") and
hold each of the Clearwire Indemnified parties harmless from and against any and
all Damages based upon, attributable to or resulting from:
(i) the failure of any representation or warranty of Licensee set
forth herein, or any representation or warranty contained in any
certificate delivered by or on behalf of Licensee pursuant to this
Agreement, to be true and correct as of the dates made; or
(ii) the breach of any covenant or other agreement on the part of
the Licensee under this Agreement.
(B) Clearwire shall indemnify the Licensee, its Affiliates, and each
of their respective, agents, successors and assigns (collectively, the "LICENSEE
INDEMNIFIED PARTIES") and hold each of the Licensee Indemnified parties harmless
from and against any and all Damages based upon, attributable to or resulting
from:
(i) the failure of any representation or warranty of Clearwire
set forth herein, or any representation or warranty contained in any
certificate delivered by or on behalf of Clearwire pursuant to this
Agreement, to be true and correct as of the dates made;
(ii) the breach of any covenant or other agreement on the part of
Clearwire under this Agreement;
(iii) the operation of equipment by, the provision of service by
or otherwise related to the activities of Clearwire, any of its Affiliates
or any of its sublicensees or resellers including, without limitation,
damage to health; or
(iv) any forfeitures or fines levied by the FCC against Licensee,
or Loss or impairment of the FCC License, arising from Clearwire's act or
omission.
(C) DETERMINATION OF DAMAGES. As used herein, "DAMAGES" means any and
all losses, claims, demands, liabilities, obligations, actions, suits, orders,
statutory or regulatory compliance requirements, or proceedings asserted by any
Person, and all damages, costs, expenses, assessments, judgments, recoveries and
deficiencies, including interest, penalties, investigatory expenses,
consultants' fees, and reasonable attorneys' fees and costs, of every kind and
description, contingent or otherwise. For purposes of the above, the amount of
Damages in respect of any breach of a representation or warranty shall be
determined without regard to any limitation or qualification as to materiality
set forth in such representation or warranty. As used in this Agreement,
"PERSON," whether or not such term is capitalized, means any individual,
partnership, firm, corporation, limited liability licensee(s), association,
trust, unincorporated organization, or other entity.
31
(D) INDEMNIFICATION PROCEDURES.
(i) In the event that any claim shall be asserted by any Person
in respect of which payment may be sought under this Section 19 (each, a
"CLAIM"), the indemnified party shall reasonably and promptly cause written
notice (a "CLAIM NOTICE") of the assertion of such Claim of which it has
knowledge which is covered by this indemnity to be forwarded to the
indemnifying party. The indemnifying party shall have the right, at its
sole option and expense, to be represented by counsel of its choice, which
must be reasonably satisfactory to the indemnified party, and to defend
against, negotiate, settle or otherwise deal with any Claim which relates
to any Damages indemnified against hereunder. If the indemnifying party
elects to defend against, negotiate, settle or otherwise deal with any
Claim which relates to any Damages indemnified against hereunder, it shall
within five (5) days of delivery of the Claim Notice (or sooner, if the
nature of the Claim so requires) notify the indemnified party of its intent
to do so. If the indemnifying party elects not to defend against,
negotiate, settle or otherwise deal with any Claim which relates to any
Damages indemnified against hereunder, fails to notify the indemnified
party of its election as herein provided or contests its obligation to
indemnify the indemnified party for such Damages under this Agreement, the
indemnified party may defend against, negotiate, settle or otherwise deal
with such Claim. If the indemnified party defends any Claim, then the
indemnifying party shall reimburse the indemnified party for the expenses
of defending such Claim upon submission of periodic bills. If the
indemnifying party shall assume the defense of any Claim, the indemnified
party may participate, at his or its own expense, in the defense of such
Claim; provided, however, that such indemnified party shall be entitled to
participate in any such defense with separate counsel at the expense of the
indemnifying party if, so requested by the indemnifying party to
participate or (ii) in the reasonable opinion of counsel to the indemnified
party, a conflict or potential conflict exists between the indemnified
party and the indemnifying party that would make such separate
representation advisable; and provided, further, that the indemnifying
party shall not be required to pay for more than one such counsel for all
indemnified parties in connection with any Claim. The parties hereto agree
to cooperate fully with each other in connection with the defense,
negotiation, or settlement of any such Claim.
(ii) After any final judgment or award shall have been rendered
by a court, arbitration board or administrative agency of competent
jurisdiction and the expiration of the time in which to appeal therefrom,
or a settlement shall have been consummated, or the indemnified party and
the indemnifying party shall have arrived at a mutually binding agreement
with respect to a Claim hereunder, the indemnified party shall forward to
the indemnifying party notice of any sums due and owing by the indemnifying
party pursuant to this Agreement with respect to such matter.
(iii) The failure of the indemnified party to give reasonably
prompt notice of any Claim shall not release, waive or otherwise affect the
indemnifying party's obligations with respect thereto except to the extent
that the indemnifying party can demonstrate actual loss and prejudice as a
result of such failure.
32
(E) SURVIVAL. Each Party's obligations under this section will survive
the expiration or termination of this Agreement.
20. INFORMATION SHARING OBLIGATIONS AND CONSULTATION REGARDING ACCESS RIGHT
ROYALTIES AND CERTAIN OTHER COVENANTS
(A) OVERVIEW OF CONSULTATION/INFORMATION EXCHANGE REQUIREMENTS.
(i) Guiding Principles. The consultation, governance and
information rights and obligations and the related processes for audit
contained in this Section 20 (collectively, the "ONGOING OBLIGATIONS"), are
intended to preserve the benefits to Licensees set forth in this
Agreement's Sections 6(c) and 7 hereof in light of changes in the wireless
broadband environment over a Term of approximately _______(15) years. By
way of example and not limitation, the Parties recognize that changes to
the technology or architecture of Cell Sites or Sectors, or to the
composition, number or characteristics of Subscribers, could, without
accompanying changes to the provisions of Section 7 result in an adverse
impact on the number of Cost-Free Customer Accounts to which Licensee is
entitled or otherwise impair their value in comparison to the anticipated
circumstances at the time of execution of this Agreement. The Ongoing
Obligations are intended to facilitate good faith negotiation and
resolution of issues arising from changes in circumstances during the Term,
but any failure to comply with the Ongoing Obligations is to be addressed
through the Dispute Resolution Procedures and shall not give rise to a
right to terminate this Agreement.
(ii) Party Representatives. To facilitate the Ongoing
Obligations, each Party shall designate a party representative as provided
in this Section 20(a)(ii) to act as its representative with respect to the
all matters under this Agreement and in particular with respect to matters
governed by Section 20(e) (the "PARTY REPRESENTATIVES"). Notwithstanding
the foregoing in this Section 20(a)(ii), if the rights of Clearwire
hereunder at the outset of a negotiation hereunder are held by Clearwire or
a Clearwire Affiliate and the rights of Licensee hereunder remain held by
the entity that executed this Agreement as the "Licensee" or an Affiliate
of that entity, then the appointment of Party Representatives, including
the number for each, shall be governed by Section 8.01(b) of the Master
Agreement, and if during any negotiations the rights of Clearwire hereunder
are not held by Clearwire or a Clearwire Affiliate or the rights of
Licensee hereunder are no longer held by the entity that executed this
Agreement as the "Licensee" or an Affiliate of that entity, then the
appointment of Party Representatives, including the number for each, shall
be governed by this Section 20(a)(ii) and the Parties shall promptly make
new appointments.
(iii) Relationship Management. To facilitate the management of
the relationship between Licensee and Clearwire, the Licensee shall be
provided with the
----------
(15) Insert number of years remaining.
33
information disclosure provided for in Section 20(b) through Section 20(e)
at the times specified therein. The completeness and accuracy of such
information may be evaluated through the audit process set forth in Section
20(f).
(B) CAPACITY DISCLOSURE.
(i) Initial Capacity Disclosure. Within thirty (30) days of the
later of (i) the commercial launch of a Clearwire Affiliate's broadband
wireless system in the Market Area, and (ii) the Commencement Date (such
later date, the "EBS Relevance Date"), Clearwire shall disclose in writing
to Licensee: (1) the total number of EBS and BRS channels Clearwire
currently is utilizing in the Market Area of the Channels, (2) the number
of Cell Sites in such Market Area, and (3) the number of Sectors in such
Market Area. The information pursuant to (1) and (2) shall be updated at
each Information Sharing Meeting, and the information pursuant to (3) shall
be updated as provided in Section 20(b)(ii).
(ii) Annual Update. By January 31 of each year following the EBS
Relevance Date, Clearwire shall disclose in writing to Licensee: (1) the
number of Sectors in such Market Area, and (2) the number of subscribers in
such Market Area served by Clearwire or any of its Affiliates. All
information shall be as of December 31 of the previous year.
(iii) Data Capacity Measurement. On the [***] and [***]
anniversaries of the EBS Relevance Date, and every [***] years thereafter,
Clearwire shall disclose in writing to Licensee the overall data capacity
of the network in such Market Area as measured by its average throughput.
The average throughput measurement shall be made in such fashion as shall
be agreed by the Party Representatives in consultation with Clearwire
engineers and other technical experts prior to such anniversary, using
metrics that are as consistent as possible with those utilized at the time
of the immediately prior average throughput measurement (on each such
anniversary, the "UPDATED CAPACITY DISCLOSURE").
(C) SYSTEM INFORMATION.
Within thirty (30) days of the EBS Relevance Date, Clearwire shall disclose in
writing to Licensee the system capabilities, services, and feature sets that are
generally provided to Clearwire's or its Affiliate's retail customers and
wholesalers to mass market customers ("SYSTEM SERVICE CAPABILITIES"), which
information can be provided by reference to Clearwire's website to the extent
that it is available to the public there. At such time as System Service
Capabilities are changed for any Market Area, Clearwire shall so notify Licensee
in writing within 30 days of such change. Clearwire will also provide
appropriate supporting information of the change as may be reasonably requested
by Licensee.
(D) PREFERRED CONTENT PROVIDER INFORMATION.
(i) Within thirty (30) days of the later of the EBS Relevance
Date and the date when third-party content is delivered in the Market Area,
Clearwire shall disclose to Licensee in writing the system capabilities,
and/or service or feature sets
[*** Confidential Treatment Requested]
34
that are then being provided to third-party content providers in the Market
Area, and a schedule of the charges, if any, for any of the foregoing,
together with the basis on which such charges are imposed to demonstrate
that the pricing requirements of Section 7(j) are being satisfied.
Clearwire shall advise Licensee of anticipated changes in the price
structure and the effective date of any such change not less than 30 days
before such change shall become effective.
(ii) Clearwire shall disclose in a timely fashion to permit
Licensee to make alternative arrangements if Clearwire anticipates that
there may be limitations in the network capabilities in the Market Area of
the Channels that could cause Clearwire to restrict the use of capabilities
and services pertaining to a Licensee's providing content over the
broadband wireless network in that Market Area. Prior to restricting access
of Licensee as a result of such limitations, as permitted under Section
7(j), Clearwire shall have disclosed in sufficient detail the scope of such
constraints. Clearwire shall promptly advise Licensee if as a result of a
change in technology, business practices, customer dynamics, or otherwise,
the capacity constraint is dissipated at any time, which would reinstate
the obligations of Clearwire under Section 7(j).
(E) CONSULTATION PROCESSES.
(i) Consultation Process Pertaining to Access Right Royalty
Information. As often as necessary, but in no event less than once per
calendar quarter, the Licensee Representatives or their designees shall be
given access to members of Clearwire's management and/or technical staff to
review the process and content of information sharing pursuant to this
Section 20, and to address any questions or concerns about the manner,
timeliness and completeness of the information received, in addition to
questions about its content.
(ii) Process for Altering Definitions/Formulae to Maintain
Integrity of Relationship. At the call of any Party Representative, the
Party Representatives shall meet, together with such other employees or
advisors as may facilitate such meeting, to discuss concerns over the
operation of the formulas and the scope of defined terms as a result of one
or more changes in Clearwire's technology and/or business practices that
individually or collectively produce a material adverse change to the
Access Right Royalties or other material benefits that Licensee receives
pursuant to this Agreement, and to determine if a reformation of this
Agreement should be implemented to prevent or reverse such material adverse
change(s).
A. The Parties agree to share such information and to
provide such technical assistance in collecting and evaluating such
information as may be useful or necessary to facilitate the process
required by Section 20(e)(i) and (ii). In connection with such
consultation, any Party Representative may propose altering the scope
of a term or formula under this Agreement (a "Reformation Proposal")
to achieve the goals set forth in Section 20(a) and to preserve the
Licensee benefits set forth Section 7 or elsewhere in this Agreement.
If the Parties agree on the change, they shall take such action as is
necessary to amend this Agreement. If the Parties
35
cannot agree on a proposed modification in a timely manner, any Party
Representative may invoke the Special Dispute Resolution Procedure
identified for this purpose in Section 21(d)(xii). Any Party
Representative may invoke for the first time Special Dispute
Resolution Procedure set forth above at any time following the
Commencement Date.
B. No Party Representative may invoke the Special Dispute
Resolution Procedure in support of a Reformation Proposal on the same
principal grounds more frequently than every five (5) years during the
Term of this Agreement. By way of example but not limitation: no Party
Representative's Reformation Proposal justified primarily on Clearwire
network technical changes can be pursued through the Special Dispute
Resolution Procedure within five (5) years of the immediately
preceding Special Dispute Resolution Procedure justified primarily on
Clearwire network technical changes. By way of further example and not
limitation: no Party's Representative's Reformation Proposal justified
primarily on Clearwire's changed business practices can be pursued
through the Special Dispute Resolution Procedure within five (5) years
of the immediately preceding Special Dispute Resolution Procedure
justified primarily on Clearwire's changed business practices.
(F) INFORMATION AUDIT RIGHTS.
(i) Licensee may audit the information provided by Clearwire
pursuant to Section 20(b), 20(c), and 20(d). Licensee's audit will be
limited to Clearwire's records and engineering documents that are relevant
and sufficient to verify the information provided by Clearwire. No more
than once per calendar year, Licensee may audit one or more metrics
reported by Clearwire for the Market Area. Clearwire must provide the
underlying source documents within 20 days of a request for audit by a
Licensee.
(ii) The costs incurred by Licensee in performing an audit under
this Section 20(f) shall be borne by the Licensee; provided that, if there
is a discrepancy of 5% or more with respect to a particular metric in the
Market Area, costs of audit of that metric shall be borne by Clearwire and
promptly paid upon submission of an invoice.
21. MISCELLANEOUS
(A) LAWS, RULES AND REGULATIONS. This Agreement is subject to all
laws, rules, regulations and ordinances relative to, among other things, the
subject matter addressed in this Agreement.
(B) FORCE MAJEURE. Other than the failure to pay money when required,
neither Party will be liable for any nonperformance under this Agreement due to
causes beyond its reasonable control that could not have been reasonably
anticipated by the non-performing Party and that cannot be reasonably avoided or
overcome; provided that the non-performing party gives the other Party prompt
written notice of such cause, and in any event, within fifteen (15) calendar
days of its discovery.
36
(C) INDEPENDENT PARTIES. None of the provisions of this Agreement will
be deemed to constitute a partnership, joint venture, or any other such
relationship between the Parties, and neither Clearwire nor Licensee will have
any authority to bind the other in any manner. Neither Party will have or hold
itself out as having any right, authority or agency to act on behalf of the
other Party in any capacity or in any manner, except as may be specifically
authorized in this Agreement.
(D) DISPUTE RESOLUTION.(16)
(i) General. The parties desire to resolve disputes arising out
of this Agreement without litigation. Accordingly, the Parties agree to use
the dispute resolution procedures set forth in this Section 2l(d) (the
"DISPUTE RESOLUTION PROCEDURES") as their sole means of adjudication with
respect to any controversy or claim arising out of or relating to this
Agreement or its breach.
(ii) Dispute Notice. At the written request of any Party (a
"DISPUTE NOTICE"), the Parties to the dispute will within seven business
days of the Dispute Notice, appoint knowledgeable, responsible
representatives to meet and negotiate in good faith to resolve any dispute
arising under this Agreement. The Parties intend that these negotiations be
conducted by business representatives, including at least one senior
executive of each Party to the dispute. The representatives shall meet and
confer, in person or by teleconference, not later than such seventh
business day after the date of the Dispute Notice. The location, format,
frequency, duration and conclusion of these discussions shall be left to
the discretion of the representatives; provided that, the duration shall
not exceed 45 days from the date of the Dispute Notice (an "ACTION DATE")
unless extended by mutual written agreement of the Parties setting forth a
new Action Date. The Dispute Notice and any extension shall specify the
Action Date. The Dispute Notice shall set forth the nature of the dispute,
in reasonable detail. Discussion and correspondence among the
representatives for purposes of these negotiations shall be treated as
confidential information developed for purposes of settlement, exempt from
discovery and production, and shall not be admissible in the arbitration
described below. Documents identified in or provided with such
communications, which are not prepared for purposes of the negotiations,
are not so exempted and may, if otherwise admissible, be admitted in
evidence in the arbitration. If the Parties are unable to resolve any
disputes arising under or relating to this Agreement (each a "DISPUTE")
using the process described in this Section 21(d) within the time period
provided, including without limitation disputes regarding a breach or
default under this Agreement, the Parties shall arbitrate such dispute
pursuant to the arbitration provisions set forth in Section 21(d)(iii) and
as modified by the Special Arbitration provisions Section 21(d)(xii) in the
case of disputes arising under Section 20(e)(ii).
(iii) Arbitration. Any Dispute that has not be resolved within
the time period provided for in Section 21(d)(ii) shall be resolved by a
panel of three Arbitrators. The Dispute Notice shall automatically serve as
a written notice of a
----------
(16) If the Licensee is a governmental agency that is required to conduct
dispute resolution by other means, substitute the other means for this
Section 21(d).
37
request to submit the Dispute for arbitration if there has not been a
resolution of the Dispute by the Action Date, and the Parties agree to
submit the Dispute to a panel of three arbitrators who shall be appointed
within 30 days of the Action Date (the "SUBMISSION PERIOD"). During the
Submission Period, the Parties shall appoint the arbitrators in accordance
with the Commercial Arbitration Rules (then in effect) of the American
Arbitration Association ("AAA"), as modified below. No punitive damages (or
any other amount awarded for the purpose of imposing a penalty) will be
awarded for a breach of this Agreement.
(iv) During the Submission Period, the Parties may submit a
request for discovery to the arbitrators, who shall determine whether the
scope of the requested discovery is appropriate or useful for the
resolution of the Dispute and order the discovery in their discretion;
provided that such discovery process shall be concluded not later than 30
days following the submission date (the "DISCOVERY CLOSE DATE").
(v) The arbitration hearing shall be fixed by the arbitrators to
be not sooner than 20 days nor later than 45 days after the Discovery Close
Date (the "HEARING DATE"). The hearing shall be located at a neutral site
as mutually agreed by the Parties, or if the Parties cannot so agree, then
the location of the arbitration shall be the largest city within the GSA of
the Channels. The Federal Rules of Evidence shall apply to the arbitration
hearing. The Party bringing a particular claim or asserting an affirmative
defense will have the burden of proof with respect thereto. Each Party
shall bear the burden of persuasion with respect to its proposal for
resolution of the matter. The arbitration proceedings and all testimony,
filings, documents and information relating to or presented during the
arbitration proceedings shall be deemed to be information subject to the
confidentiality provisions of this Agreement. The arbitrators will have no
power or authority, pursuant to the rules of the AAA or otherwise, to
relieve the Parties from their agreement hereunder to arbitrate or
otherwise to amend or disregard any provision of this Agreement, including
without limitation the provisions of this Section.
(vi) Each Party shall be permitted to submit a pre-hearing brief
not to exceed 25 pages and such technical supporting material as is
necessary or useful, to be submitted to the arbitrators and the other Party
not later than 5 days before the Hearing Date, and each Party may issue a
response thereto not later than 2 days before the Hearing Date. Following
the arbitration hearing, each Party shall be permitted to submit a
post-hearing brief not to exceed 25 pages within 5 days following the
Hearing Date and a reply brief within 2 days thereafter (the "PLEADING
CLOSE DATE"). Should an arbitrator refuse or be unable to proceed with
arbitration proceedings as called for by this Section, the arbitrator shall
be replaced pursuant to the rules of the AAA. If an arbitrator is replaced
after the arbitration hearing has commenced, then a rehearing shall take
place in accordance with this Section and the rules of the AAA.
(vii) Within fifteen (15) days after the Pleading Close Date, the
arbitrators will prepare and distribute to the Parties a writing setting
forth the arbitration panel's reasons for the determination. The findings
and conclusions and the award, if any, shall be deemed to be confidential
information of the Parties. Neither Party may
38
disclose such information to any third party other than their professional
advisors or as required by law or regulations, except in connection with an
action to enforce the award.
(viii) The Arbitrators are instructed to schedule promptly all
discovery and other procedural steps and otherwise to assume case
management initiative and control to effect an efficient and expeditious
resolution of the Dispute. The arbitrators are authorized to issue monetary
sanctions against either Party if, upon a showing of good cause, such Party
is unreasonably delaying the proceeding.
(ix) Any award rendered by the arbitrators will be final,
conclusive, and binding upon the Parties and any judgment thereon may be
entered and enforced in any court of competent jurisdiction.
(x) The non-prevailing Party to an arbitration shall pay its own
expenses, the fees of each arbitrator, the administrative fee of the AAA,
and the expenses, including without limitation, reasonable attorneys' fees
and costs, and expert and witness fees and costs, incurred by the other
Party to the arbitration. In the case of a decision which partially favors
each Party, expenses shall be paid as determined by the arbitrators. In
connection with any judicial proceeding to compel arbitration pursuant to
this Agreement or to confirm, vacate or enforce any award rendered by the
arbitrators, the prevailing Party in such a proceeding shall be entitled to
recover reasonable attorney's fees and expenses incurred in connection with
such proceedings, in addition to any other relief to which it may be
entitled.
(xi) Notwithstanding anything to the contrary, neither Party
shall have any obligation to arbitrate claims for injunctive relief,
specific performance, or other equitable relief or for the use or
unauthorized disclosure of confidential information, as to which either
Party shall be entitled to seek and obtain relief from a court of competent
jurisdiction; provided that, any and all claims for damages shall remain
subject to arbitration.
(xii) Special Arbitration. With respect to any Dispute arising
under Section 20(e)(ii), the Arbitration procedures set forth in Section
21(d) above shall govern as modified by this Section 21(d)(xii).
39
A. During the first 15 days of the Submission Period each of the
Parties shall designate an arbitrator and unless the third arbitrator has
been selected as provided in the following sentence, the two arbitrators
together shall, within 10 days of their appointment, select the third
arbitrator who shall be an expert in one of the principal areas that is the
subject to the arbitration. If the Parties can agree within the first 15
days of the Submission Period, the third arbitrator shall be a mutually
selected individual with substantial experience in the general subject
matter of the Dispute (the "EXPERT"). No arbitrator shall have been
employed by either Party during the 24 months preceding the hearing date,
unless the other Party consents. The Expert shall serve as the chair of the
panel.
B. During the Submission Period, each Party shall submit to the
each other and the arbitrators, a description of the Dispute and a proposed
resolution, based on the facts known to the Party at the time (an "INITIAL
PROPOSAL").
C. Following discovery and as a part of the Party's brief, each
Party shall make such adjustments, if any, as the Party determines
appropriate to the Initial Proposal.
D. Notwithstanding Section 21(d)(x), in the case of a Special
Arbitration, each Party shall bear its own expenses and the Parties shall
each bear half of the expenses of the arbitration; provided that, the costs
and expenses of the prevailing Party in any court action to compel
arbitration shall be borne by the non-prevailing Party as provided in the
last clause of Section 21(d)(x).
(E) NOTICES.
All notices and other communications under this Agreement shall be in writing
and shall be deemed given when delivered personally or by overnight courier, or
mailed by certified mail, return receipt requested, to the Parties (and shall
also be transmitted by facsimile to the Persons receiving copies thereof) at the
following addresses (or to such other address as a Party may have specified by
notice given to the other Party pursuant to this provision):
(i) CLEAR-WIRE:
Clearwire Spectrum Holdings II LLC
5808 Lake Washington Blvd. N.E.
Suite 300
Kirkland, WA 98033
Attn: [***]
Fax: [***]
With a Copy to:
Clearwire Spectrum Holdings II LLC
5808 Lake Washington Blvd. N.E.
Suite 300
[*** Confidential Treatment Requested]
40
Kirkland, WA 98033
Attn: [***]
Fax: [***]
Davis Wright Tremaine, LLP
2600 Century Square
1501 Fourth Avenue
Seattle, WA 98101
Attn: [***]
Fax: [***]
(ii) LICENSEE
With a Copy to:(17)
Either Party may change its addresses for receipt of notice or payment by
giving notice of such change to the other Party as provided in this Section.
(F) APPLICABLE LAW. The validity, construction and performance of this
Agreement will be governed by and construed in accordance with the laws of the
State of New York.(18)
(G) SEVERABILITY. If any provision of this Agreement is found to be
illegal, invalid or unenforceable, such provision will be enforced to the
maximum extent permissible so as to effect the intent of the Parties, and the
validity, legality and enforceability of the remaining provisions will not in
any way be affected or impaired, unless continued enforcement of the provision
frustrates the intent of the Parties. To the extent that the Parties or the FCC
determine that the provisions of this Agreement are not adequate to enable
Licensee to comply with the regulatory requirements associated with the FCC
License, the Parties will amend these provisions to ensure that the Licensee is
in compliance with its FCC obligations with respect to the FCC License. The
Parties believe that the provisions of this Agreement comply with all current
FCC Rules, and shall express that belief to regulatory agencies and the general
public.
----------
(17) Insert notice address(es) information provided by Licensee.
(18) If the Licensee is a governmental entity whose agreements must be subject
to another State's laws, insert reference to that State's laws in lieu of
New York.
[*** Confidential Treatment Requested]
41
(H) BEST EFFORTS. The Parties acknowledge that there will be many
changes in the course of the Term, in technology, capabilities, and regulatory
environment among other areas, and agree to act in a cooperative manner to
preserve the intentions of the relationships reflected in the Agreements to
their mutual advantage and to use their commercially reasonable best efforts to
maintain that mutual advantage.
(I) NO WAIVER. No delay or failure by either Party in exercising any
right under this Agreement, and no partial or single exercise of that right,
will constitute a waiver of that or any other right. Failure to enforce any
right under this Agreement will not be deemed a waiver of future enforcement of
that or any other right.
(J) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but which collectively
will constitute one and the same instrument. Signatures transmitted by facsimile
will be effective to create such counterparts.
(K) HEADINGS. The headings and captions used in this Agreement are for
convenience only and are not to be considered in construing or interpreting this
Agreement.
(L) CONSTRUCTION. The Parties and their respective counsel have
negotiated this Agreement. This Agreement will be interpreted in accordance with
its terms and without any strict construction in favor of or against either
Party based on draftsmanship of the Agreement or otherwise.
(M) COMPLETE AGREEMENT. This Agreement constitutes the entire
agreement between the Parties with respect to the subject matter addressed, and
supersedes and replaces all prior or contemporaneous understandings or
agreements, written or oral, between the Parties or any of their affiliates
regarding this subject matter other than the Master Agreement. No amendment to
or modification of this Agreement will be binding unless in writing and signed
by a duly authorized representative of each of the Parties.
(N) COOPERATION. The Parties will take and Clearwire shall cause
Clearwire Parent to take such further action and execute such further
assurances, documents and certificates as either Party may reasonably request to
effectuate the purposes of this Agreement.
(O) INSURANCE.
(i) Clearwire shall maintain and shall cause each Service Entity
to maintain and each Service Entity to maintain insurance coverage, and on
all certificates for coverage under general liability, automobile
liability, employer's liability, worker's compensation, and any other
coverages required under local law, shall: (i) name Licensee as an
"Additional Insured" on the liability policies, including without
limitation, as an insured with respect to third-party claims or actions
made or brought directly against Licensee or against Licensee, Clearwire
and/or such Service Entity as co-defendants and arising out of or in
connection with this Agreement or operations; (ii) be written as a primary
policy not contributing with any other coverage which Licensee may carry
for the acts and omissions of Clearwire or such Service Entity and for whom
Clearwire or such Service Entity is responsible; and (iii) stipulate that
42
Licensee shall receive thirty (30) days' prior written notice of any
cancellation in coverage; provided that such cancellation shall not relieve
Clearwire of its continuing obligation to maintain or to cause each such
Service Entity to maintain insurance coverages in accordance with this
Section.
(ii) Clearwire shall maintain and shall cause each Service Entity
to maintain with reputable insurers having a Best Rating of A or better:
A. Commercial general liability insurance with at least
$2,000,000 combined single limit bodily injury and property damage
limits written on an occurrence basis.
B. Full statutory coverage for Workers' Compensation and
Employers Liability with limits as required by law. These policies
will contain waivers of the insurer's subrogation rights against
Licensee where permitted by law.
C. Errors and omissions or professional liability coverage
with a limit of at least $1,000,000 per each claim and $1,000,000
annual aggregate. If Clearwire obtains a claims-made policy, Clearwire
shall maintain continuous coverage in effect at least three (3) years
beyond the expiration or termination of this Agreement through
continuous renewal of the same policy or purchase of extended
discovery period or retroactive insurance dated back to at least the
date of the beginning of this Agreement. This coverage should include
infringement of copyright, trademark, title or slogan, piracy,
plagiarism or unauthorized use of materials. Clearwire may self-insure
this provision as long as Clearwire maintains a minimum net worth of
at least $100 million.
D. All risk property insurance policy coverage in amounts
adequate to cover Licensee's property in Clearwire's care, custody and
control.
Clearwire shall furnish Licensee with certificates of insurance evidencing all
of the insurance referred to herein (including renewals of insurance).
Clearwire's obligations under this Section shall in no way affect or limit the
indemnification, remedy, or warranty provisions set forth in this Agreement.
(P) PUBLICITY. No public release, announcement or other form of
publicity concerning this Agreement or the transactions described in this
Agreement, shall be issued by either Party without the prior consent of the
other Party, except as such release or announcement may be required by law,
regulation or the rules or regulations of any securities exchange, in which case
the Party required to make the release or announcement shall, to the extent
possible, allow the other Party reasonable time to comment on such release or
announcement in advance of such issuance. The Parties shall use reasonable
efforts to consult in good faith with each other with a view to agreeing upon
any press release or public announcement relating to the transactions
contemplated hereby prior to the consummation thereof.
43
AGREED TO:
CLEARWIRE SPECTRUM HOLDINGS II LLC
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
[--LICENSEE--]
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
ATTACHMENTS:
Licensee Schedule
44
EXHIBIT III
FORM OF ESCROW AGREEMENT
ESCROW AGREEMENT
This Escrow Agreement ("Agreement"), dated July 31, 2006, is by and among
the undersigned Licensees Representatives, as agents and representatives of
NACEPF and the Licensees that comprise the ITF Cluster (as such terms are
defined under two Master Royalty And Use Agreements (together, the "Master
Agreement"), dated as of July 31, 2006 by and among Clearwire Corporation, a
Delaware corporation ("Clearwire Parent") and certain affiliates of Clearwire
Parent (collectively, "Clearwire"). and the Licensees identified therein),
Clearwire Parent and Wells Fargo Bank Northwest, N.A., as escrow agent (the
"Escrow Agent"). All terms used but not defined herein shall have the meanings
assigned to such terms in the Master Agreements.
RECITALS
WHEREAS, in connection with the transactions contemplated in the Master
Agreements, Clearwire has agreed to deliver to the Licensees certain shares of
common stock of Clearwire Parent (referred to as "Parent Shares") up to the
number of Parent Shares specified on Schedule A to each of the Master Agreements
are attached hereto and made a part hereof (both such Schedule A referred to
together herein as "Schedule A"), and allocated among the Licensees as reflected
thereon in respect of EBS Spectrum Capacity IUAs to be entered into by Clearwire
with each Licensee and for which authorization of de facto transfer is to be
submitted to the Federal Communications Commission (upon grant thereof, "FCC IUA
Approval");
WHEREAS, the parties desire to have the Parent Shares issued and
outstanding and registered in the names of the applicable Licensees in the
amounts specified on Schedule A as of the Effective Date of the Master
Agreement, but subject to return to Clearwire in certain events if FCC IUA
Approval is not granted by the Final Escrow Release Date (defined herein) and in
certain other circumstances;
WHEREAS, Licensees and Clearwire have agreed that the Parent Shares shall
be placed in escrow to be released to each Licensee as the related EBS Spectrum
Capacity IUA receives FCC IUA Approval (with respect to each such IUA, its
"Commencement Date").
NOW, THEREFORE, in consideration of the Master Agreement and the agreements
contained therein and herein, the parties hereto hereby agree as follows:
ARTICLE I
APPOINTMENT OF ESCROW AGENT
Appointment of Escrow Agent. Licensees Representatives and Clearwire designate
Wells Fargo Bank Northwest, N.A. to act as Escrow Agent hereunder, and Wells
Fargo Bank Northwest, N.A. hereby accepts such appointment and agrees to act as
Escrow Agent, upon the terms and subject to the conditions set forth herein.
ARTICLE II
ESCROW
2.1 Escrow. Clearwire shall cause to be deposited certificates for the
Parent Shares in escrow with the Escrow Agent in the number and in the name of
the respective Licensees as set forth on Schedule A. to be held and distributed
by the Escrow Agent in accordance with the terms and conditions set forth
herein, together with such other securities or amounts as may be distributed in
respect of the Parent Shares or into which the Parent Shares may be converted as
a result of a Capital Change during the Escrow Period (as defined below, the
Additional Escrow). Said certificates shall be issued in the names of the
Licensees, and for that number of shares for each Licensee (as to each Licensee,
an "Allocation"), set forth on Schedule A. Licensees shall deposit with the
Escrow Agent stock powers executed in blank for use in the event there is no
timely Commencement Date in respect of the portion of the Parent Shares
allocable to the related IUA.
2.2 Escrow Period. The escrow period (the "Escrow Period") for the Parent
Shares shall begin on the date hereof and shall terminate on the earlier of (i)
the Final Escrow Release Date, as defined in Section 2.3. or (ii) the date of
release under the terms hereof of the last of the Parent Shares.
2.3 Escrow Release Date. The "Final Escrow Release Date" shall be July 31,
2011. The Final Escrow Release Date may be extended or shortened by a notice
signed by Licensees Representatives and Clearwire and delivered to Escrow Agent
in accordance with Section 4.1 hereof.
2.4 Release of Parent Shares. The Escrow Agent shall distribute each
Allocation of the Parent Shares upon receipt by the Escrow Agent of instructions
to release the shares signed by either of the Licensees Representatives and
Clearwire and delivered to the Escrow Agent in accordance with Section 4.1
hereof (a "Release Notice"), as follows:
a. Upon receiving a Release Notice, the Escrow Agent (i) shall
distribute promptly to the Licensees Representative specified in the Release
Notice the released Allocation and any Additional Escrow (as defined below)
accumulated pro rata with respect to the Allocation, or (ii) shall otherwise
deliver such Allocation and Additional Escrow as instructed in the Release
Notice.
b. Upon the Final Escrow Release Date, the Escrow Agent shall promptly
distribute the remaining Parent Shares and any Additional Escrow to Clearwire.
c. Additional Escrow. All earnings and additional shares accrued on or
attributable to the Parent Shares, arising, without limitation, as a result of
stock splits, stock or cash dividends, recapitalizations and the like (the
"Additional Escrow") shall be promptly deposited with Escrow Agent by Clearwire
and, until disbursement, shall be held with the Parent Shares upon the terms and
conditions set forth herein. The Additional Escrow shall be distributed in
accordance with Section 2.4. Clearwire and the Licensees Representatives shall
provide the Escrow Agent with such taxpayer identification numbers and related
documentation as may be necessary for reporting of distributions of Additional
Escrow.
-2-
2.5 Rights in Respect of Parent Shares. Pursuant to the Master Agreement,
Licensees are to be afford the opportunity to take all actions with respect to
the Parent Shares held in their name as if the Licensee owned the shares,
including (except as provided in the Master Agreement) the exercise of
preemptive rights. Escrow Agent shall timely forward any notices received in
respect to the Parent Shares to the Licensees Representatives, who may exercise
the rights pursuant to the Master Agreement; provided that, the Licensee shall
not be entitled to vote the Parent Shares.
a. Preemptive Rights Procedures.
(i) In the event that Clearwire is required to or otherwise does
offer preemptive rights or substantially similar rights to shareholders, it
shall promptly send a copy of any such notice to the Licensee Representatives in
respect of Parent Shares held in this Escrow and shall recognize the
instructions of Licensee Representatives with respect thereto. Any securities or
other property delivered pursuant to the exercise of the preemptive right during
the time that the Parent Shares with respect to which they were exercised are
held in Escrow (the "Special Property"), such Special Property shall be
registered in the name of the applicable Licensee and delivered to the Escrow
Agent to be delivered to the Licensee with the Parent Shares under the terms
hereof. Any payment made by Licensee to Clearwire for or in respect of such
Special Property (a "Cash Payment") shall be deposited by Clearwire with the
Escrow Agent, who shall invest such Cash Payment in one or more Permitted
Investments. (The Cash Payment together with any earnings thereon from Permitted
Investments thereof is referred to as the "Cash Proceeds.")
(ii) Upon distribution of the Parent Shares to a Licensee
hereunder, the Escrow Agent also shall deliver any Special Property associated
therewith to the Licensee and shall at the same time deliver the related Cash
Proceeds to Clearwire. If for any reason the Parent Shares are to be returned to
Clearwire under the terms hereof, the Escrow Agent shall deliver the Special
Property acquired in respect of such Parent Shares to Clearwire as well, and
shall at the same time deliver the Cash Proceeds to the Licensee.
(iii) The Escrow Agent shall invest the Cash Payment, and any
earnings thereon, in (i) U.S. Government Securities, (ii) time deposits and
certificates of deposit of any institution that is a member of the Federal
Reserve System having capital of not less than $500 million, and (iii) money
market, mutual, or similar funds that invest in such securities referred to in
(i) and (ii) above, as jointly directed in writing by the Licensee and
Clearwire. In the absence of specific joint written instructions from the
Licensee and Clearwire, the Escrow Agent shall invest the Cash Payment in the
Wells Fargo Advantage 100% Treasury Money Market Fund. Any investment made
pursuant to this Section 2.5(a)(iii), shall be referred to as a "Permitted
Investment."
2.6 No Encumbrance on Escrow. Neither Licensees Representatives nor
Clearwire shall transfer, assign, pledge, hypothecate or otherwise encumber the
Parent Shares or the Additional Escrow while they are held by the Escrow Agent.
-3-
ARTICLE III
LIABILITY AND INDEMNIFICATION; FEES AND EXPENSES
3.1 Liability. The Escrow Agent shall not be liable to anyone whatsoever by
reason of any act or failure to act made or omitted by it in good faith, or any
action taken or omitted in reliance upon any instrument, including any written
statement provided for in this Agreement that Escrow Agent shall in good faith
believe to be genuine, or for forgeries, fraud, impersonations or determining
the authority of any representative of the Clearwire or of the Licensees
Representatives, or for any mistake of fact or law with respect to anything
which it may do or refrain from doing in connection herewith, unless caused by
or arising out of its own gross negligence or willful misconduct.
3.2 Indemnity. The Licensees and Clearwire shall indemnify and hold the
Escrow Agent harmless from any and all losses, claims, damages, liability and
expenses (including, without limitation, attorneys' fees) that may arise out of
any action taken or omitted by it as Escrow Agent in accordance with this
Agreement, including, but not limited to, any litigation arising from this
Agreement, except such liability and expense as may result from the gross
negligence or willful misconduct of the Escrow Agent. As between them, Licensees
collectively and Clearwire shall each be responsible for one-half of any
indemnity due to Escrow Agent.
3.3 Reliance. The Escrow Agent shall be entitled to treat as genuine any
letter, paper, facsimile, e-mail or other document or writing furnished or
caused to be furnished to it by any party to this Agreement and believed by it
to be genuine and to have been delivered, mailed, faxed, or e-mailed or signed
and presented by any party to this Agreement. The Escrow Agent is not
responsible for determining and verifying the authority of any party acting or
purporting to act on behalf of any party to this Agreement. The Escrow Agent may
consult with counsel with respect to the Escrow Agent's duties hereunder, and
shall be fully protected in respect to any action taken or suffered by the
Escrow Agent in good faith in accordance with the advice of such counsel.
3.4 Fees and Expenses.
(a) Licensees collectively and Clearwire shall each be responsible for
one-half of the Escrow Agent's compensation for its normal services hereunder in
accordance with the Escrow Agent's fee schedule in effect from time to time,
which may be subject to change in accordance with the reasonable and customary
practice of the Escrow Agent for all its similarly situated clients on an annual
basis. The Escrow Agent's fee for the first year shall be $5.000. payable in
advance.
(b) Licensees collectively and Clearwire each agree to reimburse the Escrow
Agent on demand for all reasonable and customary costs and expenses incurred in
connection with the administration of this Agreement or the escrow created
hereby or the performance or observance of its duties hereunder which are in
excess of its compensation for normal services hereunder, including without
limitation, payment of any reasonable legal fees and expenses incurred by the
Escrow Agent for one outside counsel in connection with resolution of any claim
by any party
-4-
hereunder, with each of the Licensees collectively and Clearwire, responsible
for one-half thereof.
ARTICLE IV
GENERAL PROVISIONS
4.1 Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed given when delivered personally or
mailed by certified mail, return receipt requested, to the parties (and shall
also be transmitted by facsimile to the persons receiving copies thereof) at the
following addresses (or to such other address as a party may have specified by
notice given to the other party pursuant to this provision):
If to Clearwire Parent, to: Clearwire U.S. Corporation
2300 Carillon Point
Kirkland, WA 98033-7353
Attention: [***]
Facsimile No.: [***]
With a copy to: Davis Wright Tremaine LLP
2600 Century Square
1501 Fourth Avenue
Seattle, WA 98101
Attention: [***]
Facsimile No.: [***]
If to Licensees
Representatives, to: [***]
[***]
[***]
[***]
Phone: [***]
Fax: [***]
and
[***]
[***]
[***]
[***]
[***]
Phone: [***]
Fax: [***]
Email: [***]
[Address]
[*** Confidential Treatment Requested]
-5-
With a copy to: [***]
Attention: [***]
Facsimile No.: [***]
If to Escrow Agent to:
[***]
Attention: [***]
Facsimile: [***]
With a copy to:
4.2 Termination. This Agreement shall terminate upon the earlier of (a) the
written express agreement of the Clearwire Parent and the Licensees
Representatives, (b) the distribution of all items held in escrow hereunder, or
(c) the Final Escrow Release Date.
4.3 Amendment. This Agreement may not be amended except by an instrument in
writing executed by all the parties hereto.
4.4 Controversies. The Escrow Agent will not be required to determine any
controversy that may arise concerning the subject matter of this Agreement. The
parties agree that any such controversy shall be resolved pursuant to the
dispute resolution provisions in the Master Agreement. The Escrow Agent may hold
all documents and funds and may wait for settlement of any such controversy,
despite what may be set forth elsewhere in this Agreement. In such event, the
Escrow Agent will not be liable for interest or damage. The Escrow Agent shall
be entitled to rely upon the resolution of any arbitration or other legal
proceeding in order to determine how the escrows hereunder are to be
distributed.
4.5 Resignation of Escrow Agent, The Escrow Agent may resign at any time
upon giving at least 30 days' written notice to the parties hereto; provided
however, that no such resignation shall become effective until the appointment
of a successor escrow agent which shall be accomplished as follows:
a. The parties hereto shall use their best efforts to mutually agree
on a successor escrow agent within 30 days after receiving such notice.
b. If the parties fail to agree upon a successor escrow agent within
such time, the Escrow Agent shall have the right to appoint a successor escrow
agent.
[*** Confidential Treatment Requested]
-6-
4.6 Interpretation. The validity, construction, interpretation and
enforcement of this Agreement shall be determined and governed by the laws of
the State of New York without regard to conflict of laws principles. The
invalidity or unenforceability of any provision of this Agreement or the
invalidity or unenforceability of any provision as applied to a particular
occurrence or circumstances shall not affect the validity or enforceability of
any of the other provisions of this Agreement or the applicability of such
provision, as the case may be. All provisions of the Master Agreement applicable
hereto shall be incorporated herein by reference as if set forth in their
entirety herein.
4.7 Remedies. The rights and remedies of the parties under this Agreement
and the Master Agreement and all other letters, certificates or documents
executed in connection herewith and therewith are cumulative and not exclusive
of any rights, remedies, powers and privileges that may otherwise be available
to the parties hereto.
4.8 Counterparts. This Agreement may be signed in one or more counterparts,
each of which shall be deemed an original and all of which shall constitute one
agreement.
-7-
IN WITNESS WHEREOF, the parties have signed this Agreement on the day and
year first above written.
LICENSEES REPRESENTATIVES:
----------------------------------------
John Schwartz
----------------------------------------
John Primeau
CLEARWIRE CORPORATION, for itself and on
behalf of the Clearwire Affiliates:
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ESCROW AGENT:
Wells Fargo Bank Northwest, N.A
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ESCROW AGREEMENT
SCHEDULE A
ALLOCATIONS
-9-
EXHIBIT IV
JOINDER TO THE AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
DATED MARCH 16, 2004
JOINDER IN STOCKHOLDERS AGREEMENT
This Joinder in Stockholders Agreement ("Joinder") is made and entered into
this ______ day of ___, 2006, by and between Clearwire Corporation, a Delaware
corporation (the "Company"), and the party whose signature appears below (the
"Joining Party").
RECITALS:
WHEREAS, the Joining Party has acquired or intends to acquire shares of capital
stock of the Company; and
WHEREAS, pursuant to Section 13.09 of that certain Amended and Restated
Stockholders Agreement, between the Company and its stockholders, dated as of
March 16, 2004 (the "Stockholders Agreement"), the Joining Party may become a
party to the Stockholders Agreement by execution of an instrument such as this
Joinder.
NOW, THEREFORE, the Joining Party agrees as follows:
1. JOINDER
By execution of this Joinder by the Joining Party and acceptance hereof by
the Company, the Joining Party is and agrees to become a party to, subject to
all the conditions, restrictions, obligations and duties of a Stockholder of the
Company under the Stockholders Agreement, including the restrictions on transfer
of the shares acquired from the Company and the requirement that the Joining
Party vote its shares in accordance with the terms thereof.
2. AGREEMENT TO BE BOUND BY AGREEMENT
This Joinder shall in all respects, including all matters of construction,
validity and performance, be governed by, and construed and enforced in
accordance with, the laws of the State of Delaware, without reference to any
rules governing conflicts of laws.
3. COUNTERPARTS
This Joinder may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one instrument.
COMPANY: JOINING PARTY: North American Catholic
Educational Programming Foundation, Inc.
By: /s/ R. Gerard Salemme By: /s/ John Primeau
--------------------------------- ---------------------------------
Name: R. Gerard Salemme Name: John Primeau
Title: E.V.P. Title: President
Date: 8/2/06 Date: July 31, 2006
1
JOINDER IN STOCKHOLDERS AGREEMENT
This Joinder in Stockholders Agreement ("Joinder") is made and entered into
this 31st day of July, 2006, by and between Clearwire Corporation, a Delaware
corporation (the "Company"), and the party whose signature appears below (the
"Joining Party").
RECITALS:
WHEREAS, the Joining Party has acquired or intends to acquire shares of capital
stock of the Company; and
WHEREAS, pursuant to Section 13.09 of that certain Amended and Restated
Stockholders Agreement, between the Company and its stockholders, dated as of
March 16, 2004 (the "Stockholders Agreement"), the Joining Party may become a
party to the Stockholders Agreement by execution of an instrument such as this
joinder.
NOW, THEREFORE, the Joining Party agrees as follows:
1. JOINDER
By execution of this Joinder by the Joining Party and acceptance hereof by
the Company, the Joining Party is and agrees to become a party to, subject to
all the conditions, restrictions, obligations and duties of a Stockholder of the
Company under the Stockholders Agreement, including the restrictions on transfer
of the shares acquired from the Company and the requirement that the Joining
Party vote its shares in accordance with the terms thereof.
2. AGREEMENT TO BE BOUND BY AGREEMENT
This Joinder shall in all respects, including all matters of construction,
validity and performance, be governed by, and construed and enforced in
accordance with, the laws of the State of Delaware, without reference to any
rules governing conflicts of laws.
3. COUNTERPARTS
This Joinder may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one instrument.
COMPANY: JOINING PARTY: Instructional
Telecommunications Foundation, Inc.
By: /s/ R. Gerard Salemme By: /s/ John Schwartz
--------------------------------- ---------------------------------
Name: R. Gerard Salemme Name: John Schwartz
Title: E.V.P. Title: President
Date: 8/2/06 Date: 7/31/06
1
JOINDER IN STOCKHOLDERS AGREEMENT
This Joinder in Stockholders Agreement ("Joinder") is made and entered into
this 31st day of July, 2006, by and between Clearwire Corporation, a Delaware
corporation (the "Company"), and the party whose signature appears below (the
"Joining Party").
RECITALS:
WHEREAS, the Joining Party has acquired or intends to acquire shares of capital
stock of the Company; and
WHEREAS, pursuant to Section 13.09 of that certain Amended and Restated
Stockholders Agreement, between the Company and its stockholders, dated as of
March 16, 2004 (the "Stockholders Agreement"), the Joining Party may become a
party to the Stockholders Agreement by execution of an instrument such as this
Joinder.
NOW, THEREFORE, the Joining Party agrees as follows:
1. JOINDER
By execution of this Joinder by the Joining Party and acceptance hereof by
the Company, the Joining Party is and agrees to become a party to, subject to
all the conditions, restrictions, obligations and duties of a Stockholder of the
Company under the Stockholders Agreement, including the restrictions on transfer
of the shares acquired from the Company and the requirement that the Joining
Party vote its shares in accordance with the terms thereof.
2. AGREEMENT TO BE BOUND BY AGREEMENT
This Joinder shall in all respects, including all matters of construction,
validity and performance, be governed by, and construed and enforced in
accordance with, the laws of the State of Delaware, without reference to any
rules governing conflicts of laws.
3. COUNTERPARTS
This Joinder may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one instrument.
COMPANY: JOINING PARTY: Portland Regional
Educational Telecommunications Corporation
By: /s/ R. Gerard Salemme By: /s/ John Schwartz
------------------------------- --------------------------------------
Name: R. Gerard Salemme Name: John Schwartz
Title: E.V.P. Title: President
Date: 8/2/06 Date: 7/31/06
1
JOINDER IN STOCKHOLDERS AGREEMENT
This Joinder in Stockholders Agreement ("Joinder") is made and entered into
this 31st day of July, 2006, by and between Clearwire Corporation, a Delaware
corporation (the "Company"), and the party whose signature appears below (the
"Joining Party").
RECITALS:
WHEREAS, the Joining Party has acquired or intends to acquire shares of capital
stock of the Company; and
WHEREAS, pursuant to Section 13.09 of that certain Amended and Restated
Stockholders Agreement, between the Company and its stockholders, dated as of
March 16, 2004 (the "Stockholders Agreement"), the Joining Party may become a
party to the Stockholders Agreement by execution of an instrument such as this
Joinder.
NOW, THEREFORE, the Joining Party agrees as follows:
1. JOINDER
By execution of this Joinder by the Joining Party and acceptance hereof by
the Company, the Joining Party is and agrees to become a party to, subject to
all the conditions, restrictions, obligations and duties of a Stockholder of the
Company under the Stockholders Agreement, including the restrictions on transfer
of the shares acquired from the Company and the requirement that the Joining
Party vote its shares in accordance with the terms thereof.
2. AGREEMENT TO BE BOUND BY AGREEMENT
This Joinder shall in all respects, including all matters of construction,
validity and performance, be governed by, and construed and enforced in
accordance with, the laws of the State of Delaware, without reference to any
rules governing conflicts of laws.
3. COUNTERPARTS
This Joinder may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one instrument.
COMPANY: JOINING PARTY: Twin Cities Schools'
Telecommunications Group, Inc.
By: /s/ R. Gerard Salemme By: /s/ John Schwartz
--------------------------------- ---------------------------------
Name: R. Gerard Salemme Name: John Schwartz
Title: E. V. P. Title: President
Date: 8/2/06 Date: 7/31/06
1
JOINDER IN STOCKHOLDERS AGREEMENT
This Joinder in Stockholders Agreement ("Joinder") is made and entered into
this 31st day of July, 2006, by and between Clearwire Corporation, a Delaware
corporation (the "Company"), and the party whose signature appears below (the
"Joining Party").
RECITALS:
WHEREAS, the Joining Party has acquired or intends to acquire shares of capital
stock of the Company; and
WHEREAS, pursuant to Section 13.09 of that certain Amended and Restated
Stockholders Agreement, between the Company and its stockholders, dated as of
March 16, 2004 (the "Stockholders Agreement"), the Joining Party may become a
party to the Stockholders Agreement by execution of an instrument such as this
Joinder.
NOW, THEREFORE, the Joining Party agrees as follows:
1. JOINDER
By execution of this Joinder by the Joining Party and acceptance hereof by
the Company, the Joining Party is and agrees to become a party to, subject to
all the conditions, restrictions, obligations and duties of a Stockholder of the
Company under the Stockholders Agreement, including the restrictions on transfer
of the shares acquired from the Company and the requirement that the Joining
Party vote its shares in accordance with the terms thereof.
2. AGREEMENT TO BE BOUND BY AGREEMENT
This Joinder shall in all respects, including all matters of construction,
validity and performance, be governed by, and construed and enforced in
accordance with, the laws of the State of Delaware, without reference to any
rules governing conflicts of laws.
3. COUNTERPARTS
This Joinder may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one instrument.
COMPANY: JOINING PARTY: Chicago Instructional
Technology Foundation, Inc.
By: /s/ R. Gerard Salemme By: /s/ John Schwartz
--------------------------------- ---------------------------------
Name: R. Gerard Salemme Name: John Schwartz
Title: E.V.P. Title: President
Date: 8/2/06 Date: 7/31/06
1
JOINDER IN STOCKHOLDERS AGREEMENT
This Joinder in Stockholders Agreement ("Joinder") is made and entered into
this 31st day of July, 2006, by and between Clearwire Corporation, a Delaware
corporation (the "Company"), and the party whose signature appears below (the
"Joining Party").
RECITALS:
WHEREAS, the Joining Party has acquired or intends to acquire shares of capital
stock of the Company; and
WHEREAS, pursuant to Section 13.09 of that certain Amended and Restated
Stockholders Agreement, between the Company and its stockholders, dated as of
March 16, 2004 (the "Stockholders Agreement"), the Joining Party may become a
party to the Stockholders Agreement by execution of an instrument such as this
Joinder.
NOW, THEREFORE, the Joining Party agrees as follows:
1. JOINDER
By execution of this Joinder by the Joining Party and acceptance hereof by
the Company, the Joining Party is and agrees to become a party to, subject to
all the conditions, restrictions, obligations and duties of a Stockholder of the
Company under the Stockholders Agreement, including the restrictions on transfer
of the shares acquired from the Company and the requirement that the Joining
Party vote its shares in accordance with the terms thereof.
2. AGREEMENT TO BE BOUND BY AGREEMENT
This Joinder shall in all respects, including all matters of construction,
validity and performance, be governed by, and construed and enforced in
accordance with, the laws of the State of Delaware, without reference to any
rules governing conflicts of laws.
3. COUNTERPARTS
This Joinder may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one instrument.
COMPANY: JOINING PARTY: Denver Area Educational
Telecommunications Consortium, Inc.
By: /s/ R. Gerard Salemme By: /s/ John Schwartz
--------------------------------- ---------------------------------
Name: R. Gerard Salemme Name: John Schwartz
Title: E.V.P. Title: President
Date: 8/2/06 Date: 7/31/06
1
EXHIBIT V
JOINDER TO THE REGISTRATION RIGHTS AGREEMENT
DATED MARCH 16, 2004
JOINDER
In consideration of the permitted issuance, sale, pledge, or other transfer
to the undersigned of Registrable Securities in the Company, the undersigned
hereby consents and agrees to become a party to and be bound by the Registration
Rights Agreement dated as of the 16th day of March, 2004, as amended, receipt of
a copy of which is hereby acknowledged, as fully as if the undersigned were one
of its original parties, and all of the Registrable Securities owned by the
undersigned will be held in accordance with and restricted by the terms of such
Registration Rights Agreement.
Dated: July 31, 2006
Name of Stockholder: North American Catholic Educational
Programming Foundation, Inc.
Sign Name: /s/ John Primeau
---------------------------------------
Print Name/Title: John Primeau, President
Address: [***]
SSN/EIN: [***]
Approved by the Company:
COMPANY: CLEARWIRE CORPORATION
By: /s/ R. Gerard Salemme
-----------------------------------
Name: R. Gerard Salemme
Title: EVP
Dated: 8/2/06
[*** Confidential Treatment Requested]
1
JOINDER
In consideration of the permitted issuance, sale, pledge, or other transfer
to the undersigned of Registrable Securities in the Company, the undersigned
hereby consents and agrees to become a party to and be bound by the Registration
Rights Agreement dated as of the 16th day of March, 2004, as amended, receipt of
a copy of which is hereby acknowledged, as fully as if the undersigned were one
of its original parties, and all of the Registrable Securities owned by the
undersigned will be held in accordance with and restricted by the terms of such
Registration Rights Agreement.
Dated: 8/2/06
Name of Stockholder: Chicago Instructional Technology
Foundation, Inc.
Sign Name: /s/ John Schwartz
---------------------------------------
Print Name/Title: John Schwartz, President
Address: [***]
SSN/EIN: [***]
Approved by the Company:
COMPANY: CLEARWIRE CORPORATION
By: /s/ R. Gerard Salemme
-----------------------------------
Name: R. Gerard Salemme
Title: EVP
Dated: 8/2/06
[*** Confidential Treatment Requested]
1
JOINDER
In consideration of the permitted issuance, sale, pledge, or other transfer
to the undersigned of Registrable Securities in the Company, the undersigned
hereby consents and agrees to become a party to and be bound by the Registration
Rights Agreement dated as of the 16th day of March, 2004, as amended, receipt of
a copy of which is hereby acknowledged, as fully as if the undersigned were one
of its original parties, and all of the Registrable Securities owned by the
undersigned will be held in accordance with and restricted by the terms of such
Registration Rights Agreement.
Dated: 7/31/06
Name of Stockholder: Denver Area Educational
Telecommunications Consortium, Inc.
Sign Name: /s/ John Schwartz
---------------------------------------
Print Name/Title: John Schwartz, President
Address: [***]
[***]
SSN/EIN: [***]
Approved by the Company:
COMPANY: CLEARWIRE CORPORATION
By: /s/ R. Gerard Salemme
-----------------------------------
Name: R. Gerard Salemme
Title: EVP
Dated: 8/2/06
[*** Confidential Treatment Requested]
1
JOINDER
In consideration of the permitted issuance, sale, pledge, or other transfer
to the undersigned of Registrable Securities in the Company, the undersigned
hereby consents and agrees to become a party to and be bound by the Registration
Rights Agreement dated as of the 16th day of March, 2004, as amended, receipt of
a copy of which is hereby acknowledged, as fully as if the undersigned were one
of its original parties, and all of the Registrable Securities owned by the
undersigned will be held in accordance with and restricted by the terms of such
Registration Rights Agreement.
Dated: 7/31/06
Name of Stockholder: Instructional Telecommunications
Foundation. Inc.
Sign Name: /s/ John Schwartz
---------------------------------------
Print Name/Title: John Schwartz, President
Address: [***]
[***]
SSN/EIN: [***]
Approved by the Company:
COMPANY: CLEARWIRE CORPORATION
By: /s/ R. Gerard Salemme
-----------------------------------
Name: R. Gerard Salemme
Title: EVP
Dated: 8/2/06
[*** Confidential Treatment Requested]
1
JOINDER
In consideration of the permitted issuance, sale, pledge, or other transfer
to the undersigned of Registrable Securities in the Company, the undersigned
hereby consents and agrees to become a party to and be bound by the Registration
Rights Agreement dated as of the 16th day of March, 2004, as amended, receipt of
a copy of which is hereby acknowledged, as fully as if the undersigned were one
of its original parties, and all of the Registrable Securities owned by the
undersigned will be held in accordance with and restricted by the terms of such
Registration Rights Agreement.
Dated: 7/31/06
Name of Stockholder: Portland Regional Educational
Telecommunications Corporation
Sign Name: /s/ John Schwartz
---------------------------------------
Print Name/Title: John Schwartz, President
Address: [***]
[***]
SSN/EIN: [***]
Approved by the Company:
COMPANY: CLEARWIRE CORPORATION
By: /s/ R. Gerard Salemme
-----------------------------------
Name: R. Gerard Salemme
Title: EVP
Dated: 8/2/06
[*** Confidential Treatment Requested]
1
JOINDER
In consideration of the permitted issuance, sale, pledge, or other transfer
to the undersigned of Registrable Securities in the Company, the undersigned
hereby consents and agrees to become a party to and be bound by the Registration
Rights Agreement dated as of the 16th day of March, 2004, as amended, receipt of
a copy of which is hereby acknowledged, as fully as if the undersigned were one
of its original parties, and all of the Registrable Securities owned by the
undersigned will be held in accordance with and restricted by the terms of such
Registration Rights Agreement.
Dated: 7/31/06
Name of Stockholder: Twin Cities Schools' Telecommunications
Group, Inc.
Sign Name: /s/ John Schwartz
---------------------------------------
Print Name/Title: John Schwartz, President
Address: [***]
[***]
SSN/EIN: [***]
Approved by the Company:
COMPANY: CLEARWIRE CORPORATION
By: /s/ R. Gerard Salemme
-----------------------------------
Name: R. Gerard Salemme
Title: EVP
Dated: 8/2/06
[*** Confidential Treatment Requested]
1
EXHIBIT VI
FORM OF CLEARWIRE CERTIFICATE
OFFICER'S CERTIFICATE
OF
CLEARWIRE SPECTRUM HOLDINGS II LLC
This OFFICER'S CERTIFICATE (the "Certificate") is provided pursuant to
Section 4.01(c) of that certain Master Royalty and Use Agreement (the
"Agreement") dated as of July ____, 2006, by and between Clearwire Spectrum
Holdings II LLC, a Nevada limited liability company ("Clearwire"), Clearwire
Corporation, a Delaware corporation, and Chicago Instructional Technology
Foundation, Inc.; Denver Area Educational Telecommunications Consortium, Inc.;
Instructional Telecommunications Foundation, Inc.; Portland Regional Educational
Telecommunications Corporation; Twin Cities Schools Telecommunications Group,
Inc.; North American Catholic Educational Programming Foundation, Inc.; and such
additional Licensees as are identified on Schedule A to the Agreement.
The undersigned hereby certifies that he is duly authorized to execute and
deliver this Certificate on behalf of Clearwire, and further certifies as
follows:
Attached as Exhibit A is a true, complete and correct copy of the
Resolutions of the Members of Clearwire authorizing the execution,
delivery, and performance of the Agreement and other agreements referred to
in the Agreement, which Resolutions have not been amended, superseded or
otherwise modified as of the date of this Certificate.
The individual named below (i) is the officer duly authorized to execute
the Agreement on behalf of Clearwire, (ii) has been duly elected to the
office of Clearwire set forth opposite his name, (iii) is duly qualified
and acting as such officer of Clearwire on the date hereof, and (iv) the
signature appearing opposite his name is his genuine signature.
<TABLE>
<CAPTION>
Name Office Signature
---- ------------------------ ---------
<S> <C> <C>
R. Gerard Salemme Executive Vice President
</TABLE>
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the
date set forth below.
CLEARWIRE SPECTRUM HOLDINGS II LLC
Date: July ___, 2006 By:
------------------------------------
Name: Broady R. Hodder
Title: Vice President, General Counsel
and Secretary
EXHIBIT A
OFFICER'S CERTIFICATE
OF
CLEARWIRE CORPORATION
This OFFICER'S CERTIFICATE (the "Certificate") is provided pursuant to
Section 4.0l(c) of that certain Master Royalty and Use Agreement (the
"Agreement") dated as of July ____, 2006, by and between Clearwire Corporation,
a Delaware corporation ("Clearwire Corporation"), Clearwire Spectrum Holdings
LLC, a Nevada limited liability company, and Chicago Instructional Technology
Foundation, Inc.; Denver Area Educational Telecommunications Consortium, Inc.;
Instructional Telecommunications Foundation, Inc.; Portland Regional Educational
Telecommunications Corporation; Twin Cities Schools Telecommunications Group,
Inc.; North American Catholic Educational Programming Foundation, Inc.; and such
additional Licensees as are identified on Schedule A to the Agreement.
The undersigned hereby certifies that he is duly authorized to execute and
deliver this Certificate on behalf of Clearwire Corporation, and further
certifies as follows:
Attached as Exhibit A is a true, complete and correct copy of the
Resolutions of the Board of Directors of Clearwire Corporation authorizing
the execution, delivery, and performance of the Agreement and other
agreements referred to in the Agreement, which Resolutions have not been
amended, superseded or otherwise modified as of the date of this
Certificate.
The individual named below (i) is the officer duly authorized to execute
the Agreement on behalf of Clearwire Corporation, (ii) has been duly
elected to the office of Clearwire Corporation set forth opposite his name,
(iii) is duly qualified and acting as such officer of Clearwire Corporation
on the date hereof, and (iv) the signature appearing opposite his name is
his genuine signature.
<TABLE>
<CAPTION>
Name Office Signature
---- ------------------------ ---------
<S> <C> <C>
R. Gerard Salemme Executive Vice President
</TABLE>
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the
date set forth below.
CLEARWIRE CORPORATION
Date: July ___, 2006 By:
------------------------------------
Name: Broady R. Hodder
Title: Vice President, General Counsel
and Secretary
EXHIBIT A
EXHIBIT VII
FORM OF LICENSEE CERTIFICATE
OFFICER'S CERTIFICATE
OF
NORTH AMERICAN CATHOLIC EDUCATIONAL PROGRAMMING FOUNDATION, INC.
This OFFICER'S CERTIFICATE (the "Certificate") is provided pursuant to
Section 4.01(c) of that certain Master Royalty and Use Agreement (the
"Agreement") dated as of July__, 2006, by and between Clearwire Spectrum
Holdings II LLC, a Nevada limited liability company, Clearwire Corporation, a
Delaware corporation, and Chicago Instructional Technology Foundation, Inc.;
Denver Area Educational Telecommunications Consortium, Inc.; Instructional
Telecommunications Foundation, Inc.; Portland Regional Educational
Telecommunications Corporation; Twin Cities Schools' Telecommunications Group,
Inc.; North American Catholic Educational Programming Foundation, Inc.
("NACEPF"); and such additional Licensees as are identified on Schedule A to the
Agreement.
The undersigned hereby certifies that he is duly authorized to execute and
deliver this Certificate on behalf of NACEPF, and further certifies as follows:
Attached as Exhibit A is a true, complete and correct copy of the
Resolutions of the board of directors of NACEPF authorizing the execution,
delivery, and performance of the Agreement and other agreements referred to
in the Agreement, which Resolutions have not been amended, superseded or
otherwise modified as of the date of this Certificate.
The individual named below (i) is the officer duly authorized to execute
the Agreement on behalf of NACEPF, (ii) has been duly elected to the office
of NACEPF set forth opposite his name, (iii) is duly qualified and acting
as such officer of NACEPF on the date hereof, and (iv) the signature
appearing opposite his name is his genuine signature.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the
date set forth below.
NORTH AMERICAN CATHOLIC EDUCATIONAL
PROGRAMMING FOUNDATION, INC.
Date: July __, 2006 By:
------------------------------------
Name: John Primeau
Title: President
EXHIBIT A
OFFICER'S CERTIFICATE
OF
NORTH AMERICAN CATHOLIC EDUCATIONAL PROGRAMMING FOUNDATION, INC.
This OFFICER'S CERTIFICATE (the "Certificate") is provided pursuant to
Section 4.03(c) of that certain Master Royalty and Use Agreement (the
"Agreement") dated as of July 31, 2006, by and between Clearwire Spectrum
Holdings II LLC, a Nevada limited liability company, Clearwire Corporation, a
Delaware corporation, and Chicago Instructional Technology Foundation, Inc.;
Denver Area Educational Telecommunications Consortium, Inc.; Instructional
Telecommunications Foundation, Inc.; Portland Regional Educational
Telecommunications Corporation; Twin Cities Schools' Telecommunications Group,
Inc.; North American Catholic Educational Programming Foundation, Inc.
("NACEPF"); and such additional Licensees as are identified on Schedule A to the
Agreement, and regards one or more Individual Use Agreements ("IUAs") executed
on the date hereof.
The undersigned hereby certifies that he is duly authorized to execute and
deliver this Certificate on behalf of NACEPF, and further certifies as follows:
The representations and warranties of NACEPF contained in the IUAs are true
and correct in all material respects at and as of the date hereof (except
that the accuracy of representations and warranties that by their terms
speak as of the date of the Agreement or some other date are true and
correct in all material respects only as of such date).
Attached as Exhibit A is a true, complete and correct copy of the
Resolutions of the board of directors of NACEPF authorizing the execution,
delivery, and performance of the IUAs and other agreements referred to in
the IUAs, which Resolutions have not been amended, superseded or otherwise
modified as of the date of this Certificate.
The individual named below (i) is the officer duly authorized to execute
the IUAs on behalf of NACEPF, (ii) has been duly elected to the office of
NACEPF set forth opposite his name, (iii) is duly qualified and acting as
such officer of NACEPF on the date hereof, and (iv) the signature appearing
opposite his name is his genuine signature.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the
date set forth below.
NORTH AMERICAN CATHOLIC EDUCATIONAL
PROGRAMMING FOUNDATION, INC.
Date: July ___, 2006 By:
------------------------------------
Name: John Primeau
Title: President
EXHIBIT A
Exhibit 10.60
MASTER ROYALTY AND USE AGREEMENT
by and among
CLEARWIRE SPECTRUM HOLDINGS II LLC
and
HISPANIC INFORMATION AND TELECOMMUNICATIONS NETWORK, INC.
Dated as of October 4, 2006
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. RELATIONSHIP SUMMARY.......................................... 6
Section 1.01. Overview............................................... 6
Section 1.02. Overview of Mechanics and Structure of Agreements...... 6
Section 1.03. Scope and Nature of Clearwire Group.................... 8
ARTICLE II. ECONOMIC ROYALTIES........................................... 10
Section 2.01. Aggregate EBS Spectrum Capacity Economic Royalties..... 10
ARTICLE III. ACCESS RIGHT ROYALTIES...................................... 10
Section 3.01. Access Right Royalties................................. 10
Section 3.02. Cost-Free Educational Accounts......................... 10
Section 3.03. Educational Reservation Basic Cost-Free Education
Accounts............................................... 11
Section 3.04. Additional Cost-Free Educational Accounts.............. 11
Section 3.05. Licensee MVNO.......................................... 12
Section 3.06. Access to Educational End User Devices................. 13
Section 3.07. Sharing of Features and Service Sets................... 13
Section 3.08. Preferred Content Provider............................. 13
Section 3.09. [***].................................................. 14
ARTICLE IV. CLOSING MECHANICS; ESCROW.................................... 14
Section 4.01. Deliveries at Execution of this Agreement.............. 14
Section 4.03. EBS Spectrum Capacity IUA Closing(s)................... 15
Section 4.04. Closing Site/Mechanics................................. 16
Section 4.05. Further Assurances..................................... 16
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF LICENSEE.................... 17
Section 5.01. Organization and Good Standing......................... 17
Section 5.02. Authorization of Agreement............................. 17
Section 5.03. No Conflict............................................ 17
Section 5.04. Litigation............................................. 18
Section 5.05. Compliance with Laws; Permits.......................... 18
Section 5.07. Brokers................................................ 18
Section 5.08. Knowledge.............................................. 18
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF CLEARWIRE.................. 19
Section 6.01. Organization and Good Standing......................... 19
Section 6.02. Authorization of Agreement............................. 19
Section 6.05. No Conflict............................................ 19
Section 6.06. Litigation............................................. 20
</TABLE>
[*** Confidential Treatment Requested]
A-2
<TABLE>
<S> <C>
Section 6.07. Compliance with Laws; Permits.......................... 20
Section 6.08. Brokers................................................ 20
ARTICLE VII. COVENANTS................................................... 20
Section 7.01. Consents and Approvals................................. 20
Section 7.02. Notice of Breach....................................... 21
Section 7.04. Maintenance of FCC Qualifications...................... 21
Section 7.05. Assignment of FCC Licenses............................. 22
Section 7.06. Other FCC Requirements................................. 22
Section 7.08. Fees and Taxes......................................... 22
Section 7.09. Best Efforts for Duration of Relationship.............. 22
ARTICLE IX. INDEMNIFICATION.............................................. 22
Section 9.01. Indemnification........................................ 22
Section 9.02. Determination of Damages............................... 23
Section 9.03. Limitations on Indemnification for Breaches of
Representations and Warranties......................... 24
Section 9.04. Indemnification Procedures............................. 24
ARTICLE X. TERMINATION................................................... 25
Section 10.01. Expiration; Termination................................ 25
Section 10.02. Defaults............................................... 25
ARTICLE XI. GENERAL PROVISIONS........................................... 26
Section 11.01. Payment of Sales, Use or Similar Taxes................. 26
Section 11.02. Survival of Representations and Warranties............. 26
Section 11.04. Entire Agreement; Amendments and Waivers............... 26
Section 11.05. Governing Law.......................................... 27
Section 11.06. Table of Contents and Headings......................... 27
Section 11.07. Notices................................................ 27
Section 11.08. Publicity.............................................. 28
Section 11.09. Severability........................................... 28
Section 11.10. Binding Effect; Assignment............................. 28
Section ll.11. Remedies............................................... 28
Section 11.12. Dispute Resolution Procedure........................... 28
Section 11.13. Counterparts........................................... 31
Section 11.14. Confidentiality........................................ 31
Section 11.15. Non-Disclosure of Shared Information................... 31
</TABLE>
-2-
LIST OF EXHIBITS
I. Definitions and Interpretation
II. Form of IUA
III. Form of Stock Pledge Agreement
IV. Form of Clearwire Certificate
V. Form of Licensee Certificate
LIST OF SCHEDULES
A. Schedule of all Licenses, Licensee's data, applicable Geographic Markets
and GSAs, existing use agreements and Initial Spectrum Capacity
B. Licensee Schedule
-3-
MASTER ROYALTY AND USE AGREEMENT
MASTER ROYALTY AND USE AGREEMENT ("Agreement"), dated as of October 4, 2006
(the "Effective Date") by and among Hispanic Information and Telecommunications
Network, Inc. ("Licensee"), and Clearwire Spectrum Holdings II LLC, a Nevada
limited liability company ("Clearwire"). (Each of the foregoing is referred to
as a "Party" and both of the foregoing are referred to collectively as the
"Parties".) Certain defined terms used in this Agreement, and rules of
interpretation applicable to this Agreement, are contained in Exhibit I hereto.
RECITALS:
WHEREAS, the Licensee has been granted certain licenses (as they may be
modified and renewed, the "FCC Licenses") by the Federal Communications
Commission (the "FCC") authorizing it to engineer and operate specified
Educational Broadband Service ("EBS") channels (including any associated J- and
K-Group channels, the "Channels") in the Geographic Markets and covering an area
having the population determined on the basis of 2000 census data, and providing
the number of megahertz of total capacity (measured post-transition, excluding J
and K block spectrum) multiplied by this population number ("MHzPops"), all as
identified on Schedule A;
WHEREAS, subject to the Communications Act of 1934, as amended (the
"Communications Act"), and FCC rules, regulations and policies (the "FCC
Rules"), an EBS station's excess capacity may be used for commercial purposes
(the "Commercial Spectrum Capacity");
WHEREAS, Licensee's ability to provide services to the non-profit community
will be enhanced by expanding the geographic reach of its platform through
making the commercial capacity associated with agreed FCC Licenses available to
Clearwire, and providing services to the non-profit community on Clearwire's
broadband network;
WHEREAS, Clearwire believes that entering into a relationship with Licensee
has several benefits to Clearwire, in securing a source of spectrum capacity for
the future and facilitating the branding of the Clearwire mark through the
services provided by Licensee in the non-profit community;
WHEREAS, Licensee desires to make available to Clearwire, and Clearwire
desires to have access to, the Commercial Spectrum Capacity that is identified
on Schedule A (the "Initial Spectrum Capacity"), and any additional Commercial
Spectrum Capacity of Licensee that is accepted by Clearwire and made subject to
an IUA as provided in this Agreement (the "Future Spectrum Capacity"), all in
accordance with the terms of this Agreement;
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WHEREAS, under this Agreement Licensee receives consideration to facilitate
the transmission of instructional programming to schools and public
organizations and to facilitate instructional broadband spectrum development for
its educational instruction network;
WHEREAS, the bundle of value comprised of the EBS Economic Royalties and
the Access Right Royalties (collectively referred to as the "Total
Consideration") is central to Licensee's efforts to advance the transmission of
its programming and to develop an instructional broadband spectrum network, in
each case utilizing the Clearwire National Platform, including the ability to
use Clearwire as a single source access vendor under the IUAs, and the IUAs and
this Agreement would not have been executed but for all of the elements of the
Total Consideration;
WHEREAS, Clearwire desires to have access to the Commercial Spectrum
Capacity to the extent permitted by FCC Rules and the terms of this Agreement,
for the operation of its business, and the Parties recognize that the success of
Clearwire's business plan depends on its access to the Commercial Spectrum
Capacity (among other factors), and the Licensee desires Clearwire to have full
access rights to the Commercial Spectrum Capacity permitted under FCC Rules and
the terms of this Agreement, to enhance Clearwire's business for the benefit of
Licensee as a shareholder of Clearwire Corporation ("Clearwire Parent"); and
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, and agreements set forth in this
Agreement and for other good and valuable consideration, the sufficiency of
which is hereby acknowledged, the Parties hereto, intending legally to be bound,
agree as follows:
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ARTICLE I.
RELATIONSHIP TERMS
Section 1.01. Overview.
(a) This Agreement, the Individual Use Agreements entered into
pursuant to this Agreement, and the Collateral Documents entered into by the
Parties in connection herewith, describe the arrangement through which Clearwire
and its Affiliates will obtain access to the Initial Spectrum Capacity
authorized by the FCC Licenses identified on Schedule A hereto and any Future
Spectrum Capacity (collectively, when under IUA hereunder, the "EBS Spectrum
Capacity") to be delivered to Clearwire under the terms of this Agreement.
(b) Clearwire is making an initial payment under this Agreement that
exceeds the value of the Initial Spectrum Capacity, but that includes additional
consideration for the Option and the ROFR granted to Clearwire in this
Agreement, and that also constitutes an advance payment toward Future Spectrum
Capacity.
(c) In addition to the Economic Royalties detailed in ARTICLE II,
central to Licensee's grant of access to the Commercial Spectrum Capacity to
Clearwire under an IUA is Clearwire's agreement and covenant to provide the
Access Right Royalties and other benefits as detailed in ARTICLE III and as
provided for in each IUA, which consists of, among other items (i) access to the
Educational Reservation Basic Cost-Free Educational Accounts; (ii) access to the
Additional Cost-Free Educational Accounts; (iii) the Limited Reciprocity rights;
and (iv) the Preferred Content Provider rights, together with technology,
facilities, equipment and other functionality from Clearwire and its Affiliates
all as more specifically set forth in this Agreement and in the IUAs related
thereto.
Section 1.02. Overview of Mechanics and Structure of Agreements.
(a) IUAs for Initial Spectrum Capacity. In exchange for access to the
Initial Spectrum Capacity made available to Clearwire pursuant to Individual Use
Agreements in the form attached as Exhibit II hereto (individually, an "IUA")
executed and delivered as of the Effective Date in accordance with the
applicable closing procedure set forth in ARTICLE IV. Clearwire will provide at
the times and in the manner set forth in each IUA and hereunder, the Economic
Royalties set forth in ARTICLE II, together with the commitment to provide the
bundle of rights and services set forth in ARTICLE III (identified collectively
as the "Access Right Royalties").
(b) Option for Future Spectrum Capacity. Licensee grants Clearwire an
option (the "Option") to enter into IUAs with Licensee in respect of any and all
spectrum (including, but not limited to, the Commercial Spectrum Capacity, EBS
and BRS) ("Spectrum") on FCC Licenses held by Licensee that is Available or that
becomes Available during the Term, at prices
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to be negotiated in good faith based on the fair market value ("FMV") of such
Spectrum at the time the Option is to be exercised, provided, however, that the
negotiated price shall not exceed [***] per MHz POP. The Option shall be
exercisable in Clearwire's sole discretion each time Spectrum of Licensee or its
Affiliates becomes Available during the Term. When Spectrum is acquired by
Licensee or its Affiliates, or becomes Available for use by Clearwire under an
IUA as Future Spectrum Capacity, Licensee shall immediately provide a written
proposal (an "Option Notice") to Clearwire with the same information with
respect to such proposed Commercial Spectrum Capacity as is set forth on
Schedule A for the Initial Spectrum Capacity. Licensee shall also promptly
provide such additional information with respect to the proposal as may be
reasonably requested by Clearwire. If Clearwire is interested in negotiating the
IUA with respect to such proposed Spectrum, Clearwire shall inform Licensee and
the parties shall commence good faith negotiations within ten (10) days after
Licensee's receipt of such notice and shall continue to negotiate in good faith
for a period of not less than [***] provided that Clearwire may terminate the
negotiations at any time during such [***] period before the execution of the
IUA. The negotiations shall include negotiations regarding the applicable FMV
(which shall not, in any case, exceed [***] per MHz POP). If the Parties do not
reach agreement on the FMV for such proposed Spectrum within such thirty-day
period, Clearwire's Option with respect to the specific Spectrum in question
will terminate, but the provisions in Section 1.04 shall still apply with
respect to such Spectrum in accordance with the terms of Section 1.04. Clearwire
has no obligation to accept any proposed Spectrum other than the Initial
Spectrum Capacity, except as provided in Section 1.02(c) with regard to Other
[***] Transactions. If the Parties reach agreement on the terms of the IUA for
Future Spectrum Capacity, the payment required under such IUA shall reduce the
then remaining unapplied Prepaid Royalties Balance. If any IUA for Future
Spectrum Capacity requires a payment that exceeds the then-current balance of
the Prepaid Royalties Balance, Clearwire shall pay the difference to Licensee in
cash at the applicable Subsequent Closing.
(c) [***] Option. With respect to Commercial Spectrum Capacity of the
Licensee in [***] ("Licensee [***] Spectrum"), if Clearwire exercises the Option
for any of Licensee's spectrum that is Available in [***] Licensee shall have
the right to require that all of Licensee [***] Spectrum that is Available be
included in the IUA as long as the price offered to Clearwire for such spectrum
by Licensee is [***] per MHz POP or less; provided that, during the Term, and
for [***] after the Term, if Clearwire enters into any lease (based on a [***]
lease) or purchase transaction for any other BRS or EBS spectrum in the same or
a "Substantially Similar" (as defined below) GSA in [***] (an "Other [***]
Transaction"), or has already entered into or has any such Other [***]
Transaction, Clearwire shall provide the terms of such transaction to Licensee
within seven (7) days of consummation of the transaction, and Licensee shall
have the option to accept the per MHzPOP price in such Other [***] Transaction
if the Other [***] Transaction is for EBS spectrum, or the per MHzPOP price less
[***] for BRS spectrum, and require that Clearwire execute IUAs for any of
Licensee's Available [***] Spectrum in that GSA at that per MHzPOP price (the
"Higher Price"); and further provided if the Other [***] Transaction
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occurs after Licensee and Clearwire have executed IUAs for the Licensee [***]
Spectrum, and the price per MHzPOP paid in the Other [***] Transaction is higher
than that paid to Licensee under the [***] Spectrum IUAs, then Clearwire shall
promptly pay Licensee the difference between that paid to Licensee for the
executed IUAs and that paid pursuant to the Other [***] Transaction for the
Licensee [***] Spectrum in that GSA (the "[***] MFN Right"). In no event will
Licensee be obligated to enter into IUAs for any of Licensee's [***] channels at
the price per MHz Pop of less than [***] For purposes of this paragraph, a
Substantially Similar" GSA means a GSA the covers the same metropolitan are in
[***] In the event of an Other [***] Transaction for any [***] GSA, Licensee
shall receive the Higher price for all MHzPOPs included in License's
Substantially Similar GSA and any overlapping GSAs, provided that Licensee shall
not be entitled to receive the Higher Price for a greater number of MHzPOPs
than contained in the [***] GSA that is the subject of the Other [***]
Transaction. (for example, if Clearwire acquires the [***] group that covers
[***] people ("POPs"), Licensee would be entitled to receive the Higher Price
for the same number of POPs times MHz for which Licensee holds FCC licenses on
the "B" channel Group covering the [***] GSA, plus that number of MHz POPs for
any other adjacent "B" channel groups that overlap the [***] group, not to
exceed the total number of MHz POPs covered by the [***] Group.)
(d) The Option shall be exercisable for any Licensee Spectrum in
Clearwire's sole discretion each time such Licensee Spectrum becomes Available
during the Term; provided that Clearwire's Option to acquire IUAs for Licensee
[***] Spectrum shall remain available to Clearwire and subject to the [***] MFN
Right for not less than [***] without regard to the earlier expiration of the
Term. Any outstanding Options shall lapse automatically upon the expiration of
the Term, except to the extent that Clearwire has previously notified Licensee
of its intention to exercise its Option with respect to such Spectrum prior to
the expiration of the Term.
Section 1.03. Service Affiliates. Clearwire covenants and agrees to cause
the entity providing each of the Access Right Royalties to the Licensee (each a
"Service Affiliate"') to assume the obligations of Clearwire hereunder with
respect to the Access Right Royalties and to be jointly and severally liable
therefore for the purpose of providing a direct contractual relationship between
the Licensee and the Service Affiliates, including any other entity that over
time becomes a Service Affiliate. The Service Affiliate and the Licensee shall
execute such additional agreements as may be required to effectuate the
provision of the applicable Access Right Royalty or other service, consistent
with the terms hereof and the applicable IUA (any such agreement, a "Collateral
Document"). Nothing in this Section 1.03 shall be construed to limit the primary
obligation of Clearwire to provide the Access Right Royalties.
Section 1.04. Right of First Refusal on IUAs. The terms of this Section
1.04 shall apply to all Spectrum held by Licensee or any of its
Affiliates during the Term, unless (1) Licensee has complied with the Section
1.02(b) Option Notice with respect to such Spectrum, and (2) the ROFR Offer (as
defined below) does not call for payment of a lower price, or other terms that
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are more favorable to the third party, than those offered to Clearwire in
connection with the Option referred to in Section 1.02(b). During the Term of
this Agreement (the "ROFR Period"), Clearwire shall have a right of first
refusal to use the Spectrum as set forth in this Section 1.04 and in Section
1.02(b). Upon the receipt by Licensee of any bonafide written offer (a "ROFR
Offer") to purchase, lease, use or otherwise gain any access rights with respect
to any of Licensee's Spectrum that Licensee desires to accept, Licensee shall
transmit a written notice of the ROFR Offer to Clearwire (the "ROFR Offer
Notice"). The ROFR Offer Notice (i) shall contain the name and address of the
Person making the ROFR Offer, the payment structure therefore and a summary of
all material terms of such ROFR Offer, and (ii) shall offer to Clearwire the
option to enter into an IUA upon the terms and subject to the conditions of the
proposed third party use or lease agreement as set forth in the ROFR Offer
Notice. Clearwire shall then have the right for [***] to accept such ROFR Offer.
If Clearwire accepts such ROFR Offer, Clearwire and Licensee shall enter into an
IUA on such terms and conditions. If after such [***] period or upon earlier
written notice Clearwire does not accept such ROFR Offer, its rights hereunder
as to such ROFR Offer shall terminate and Licensee may for a period of [***]
following the expiration of such thirty (30) day period enter into an agreement
with the original offering party on the same terms and conditions as were
offered to Clearwire. If after such [***] period, Licensee does not enter such
an agreement with the original offering party the Clearwire right of first
refusal described in this Section shall again apply for such timing remaining in
the ROFR Period. If the ROFR Offer Notice provides that any consideration is to
be paid by the third person in whole or in part in a form other than cash,
Clearwire accepts the ROFR Offer, and Clearwire is able to provide or procure
comparable non-cash consideration using commercially reasonable efforts,
Clearwire will so provide or procure such non-cash consideration. In the event
Clearwire is unable to provide or procure comparable non-cash consideration,
Clearwire may substitute, in whole or in part, for non-cash consideration an
amount in cash fairly equivalent to the then fair market value of the non-cash
consideration payable by the third person. The ROFR Offer acceptance must
specify the amount of any such substitute cash consideration and the non-cash
consideration for which it is intended to substitute. If Licensee disputes that
the substitute cash consideration specified by Clearwire is in an amount fairly
equivalent to the fair market value of the non-cash consideration payable by the
third person, Licensee must within [***] after the receipt of the ROFR Offer
acceptance provide Clearwire with written notice specifying the amount Licensee
considers to be fairly equivalent to the fair market value of the non-cash
consideration payable by the third person (the "Counter Offer"). The question of
fair market value of the non-cash consideration will be resolved pursuant to
arbitration under this Agreement unless Clearwire gives Licensee written notice
within [***] after its receipt of the Counter-Offer that Clearwire agrees to
enter into an agreement containing the fair market value set forth in the
Counter-Offer.
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ARTICLE II.
ECONOMIC ROYALTIES
Section 2.01. EBS Spectrum Capacity Economic Royalties. Clearwire shall
cause to be paid to the Licensee the amount of [***] (the "Prepaid Royalties")
upon execution of this Agreement. The Prepaid Royalties shall be applied as
provided in Section 1.02(b), against amounts otherwise due from Clearwire to
Licensee with respect to IUAs for Initial Spectrum Capacity and Future Spectrum
Capacity.
Section 2.02. Refunding of Prepaid Royalties. Within five calendar days
after the expiration or termination of the Term of this Agreement for any cause,
Licensee shall refund Clearwire the full balance of Prepaid Royalties less any
portion of the Prepaid Royalties that has been applied against royalties due
under fully executed IUAs for Initial Spectrum Capacity and Future Spectrum
Capacity (at any time the "Prepaid Royalties Balance"); provided that the Term
shall not be deemed to have expired for this purpose during a period that the
Option periods described in Section 1.02(b) have not terminated. Clearwire has
the right, in its sole discretion, to extend the date on which the Prepaid
Royalties Balance must be refunded. If Clearwire decides to grant such an
extension, the Term of this Agreement shall be extended accordingly and the
terms of this Agreement shall continue in full force and effect.
ARTICLE III.
ACCESS RIGHT ROYALTIES
Section 3.01. Access Right Royalties. Clearwire shall provide the Access
Right Royalties described in this ARTICLE III from and after the Commencement
Date of an IUA hereunder. The Access Right Royalties will be provided in a
manner consistent with the way the Access Right Royalties are provided by
Clearwire to third parties under agreements that provide for Access Right
Royalties similar to the Access Right Royalties provided in this Agreement.
Notwithstanding the preceding sentence, the Parties acknowledge that Licensee
currently provides, and intends to provide, a variety of digital educational
services utilizing the spectrum in [***] a market of special importance to
Licensee, and if the Option is exercised with respect to Licensee [***]
Spectrum, Clearwire agrees to (in good faith) consider and use its commercially
reasonable best efforts to enter into a joint venture with Licensee in the
development and delivery of Licensee's services in [***] to Educational End
Users, which services may be different from services provided in other markets,
if such joint venture involves the purchase of services from Clearwire at
greater than Clearwire's lowest wholesale price in the market for such services.
Section 3.02. Cost-Free Educational Accounts.
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(a) Included in the Access Right Royalties provided to Licensee,
Licensee shall be entitled to Cost-Free Educational Accounts as provided in this
Section 3.02, Section 3.03, and Section 3.04.
(b) "Cost-Free Educational Account" means a wireless broadband
connection that Clearwire provides to Licensee without charge or expense to
Licensee. Cost-Free Educational Accounts shall have the same capacity and
characteristics as the highest level of premium mass market retail service
provided on Clearwire's network in a given Market Area. Multiple individuals
that are associated with an Educational End User at the time may share the same
Cost-Free Educational Account through Wi-Fi hotspots, local area networks, and
other means. To the extent not inconsistent with the terms of this Agreement and
the applicable IUA, the Cost-Free Educational Accounts shall be subject to the
terms of Clearwire's then generally applicable Acceptable Use Policy. The
Cost-Free Educational Accounts shall be fully portable anywhere within the
Clearwire National Platform to the extent that Clearwire offers such portability
to any customer.
Section 3.03. Educational Reservation Basic Cost-Free Education Accounts.
(a) In respect of Licensee's educational reservation covering the five
percent (5%) educational spectrum capacity currently required by the FCC Rules
pertaining to the FCC Licenses (the "Educational Reservation"), Licensee shall
be permitted to utilize the Educational Reservation in such locations served by
the Clearwire National Platform on a full time basis as Licensee desires for its
operations. Clearwire and Licensee shall at all times comply with applicable FCC
Rules. Clearwire may not use the Educational Reservation. In the event that the
Parties cannot agree on the application of any new rule or interpretation
regarding the Educational Reservation in their circumstances, the Parties shall
jointly approach the FCC for clarification in a timely fashion and, to the
extent the matter remains unresolved thereafter, shall settle the matter
applying the Dispute Resolution Procedure.
(b) Initially, Clearwire shall provide Licensee [***] Cost-Free
Educational Account per Cell Site per Market Area each a "Basic Cost-Free
Education Account"). The number of Cost-Free Educational Accounts shall be
adjusted upward every [***] proportionate to the growth of the overall data
capacity of Clearwire's network in the Market Area where the EBS system is
located. The growth (if any) in the overall data capacity shall be determined as
measured by its average throughput. The average throughput measurement shall be
made in such fashion as shall be agreed by the Parties, or (if the Parties fail
to reach agreement with respect to such measurement) as determined by
arbitration, using metrics that are as consistent as possible with those
utilized at the time of the immediately prior average throughput measurement.
Section 3.04. Additional Cost-Free Educational Accounts. In addition to,
and not in lieu of, the Cost-Free Educational Accounts provided to Licensee by
Clearwire pursuant to the Educational Reservation as set forth in Section 3.03,
Clearwire shall provide Licensee with
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additional Cost-Free Educational Accounts in the number computed in accordance
with this Section 3.04 (the "Additional Cost-Free Educational Accounts").
(a) Number and Periodic Adjustment. Licensee will have access to
additional spectrum capacity on Clearwire's network in Licensee's Market Area in
the form of Cost-Free Educational Accounts for use on the Clearwire National
Platform equal to the greater of (X) [***] Cost-Free Educational Accounts per
Sector in the Market Area where Licensee holds an FCC License to operate an EBS
system and (Y) the quantity of Cost-Free Educational Accounts determined by
applying the Formula Quantity. The number of Additional Cost Free Educational
Accounts that Clearwire is obligated to provide to Licensee shall be
recalculated and revised [***]
(i) The "Formula Quantity" as of any date, is equal to the
product obtained by multiplying: (a) the Local Channel Ratio by (b) [***] by (c)
the number of subscribers served by Clearwire in the Market Area as of the end
of the previous calendar year. In the event that this product is a fraction, it
shall be rounded up or down to the nearest whole number, where the "Local
Channel Ratio" is the fraction obtained by dividing the number of EBS channels
provided to Clearwire by Licensee under IUA in a given Market Area as of the
date of the calculation by the total number of EBS and BRS channels with
substantially overlapping GSAs then used to provide service in such Market Area
licensed to or under a use agreement with Clearwire (including those of
Licensee) as of that date.
(ii) Educational End Users. Cost-Free Educational Accounts shall
be exclusively for Educational End Users and not for resale, assignment or
transfer by Licensee outside of its Educational End User environment or to
persons who cease to be officially associated with such Educational End User.
(By way of example, a university may resell the service to its students,
faculty, administrators and staff, while such persons are involved with the
university, but shall cease to provide the service if a member of the faculty
terminates employment or a student graduates and ceases to be involved in
university matters.)
(b) Time of Delivery. The Additional Cost-Free Educational Accounts
shall be provided by Clearwire to Licensee pursuant to this Section 3.04(b) upon
the commercial launch of Clearwire's broadband wireless service in any Market
Area where Licensee has an EBS Spectrum Capacity IUA in place with Clearwire, or
the applicable Commencement Date thereof if later.
Section 3.05. Licensee MVNO.
(a) In addition to the right to Cost-Free Educational Accounts,
Licensee shall have the right to resell the Clearwire service in the form of
MVNO Educational Accounts to additional Educational End Users in each Market
Area for use on the Clearwire National Platform. An "MVNO Educational Account"
shall have the identical characteristics as a Cost-Free Educational Account
under Section 3.02(b). except that there shall be a charge to Licensee
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as determined pursuant to this Section 3.05. Clearwire shall sell to Licensee
such services, at a cost equal to the [***] provided by Clearwire to an
arms-length third party in such Market Area or other comparable market pursuant
to any applicable agreement. However, the number of MVNO Educational Accounts is
limited in each Market Area to [***] the number of Cost-Free Educational
Accounts for that Market Area.
(b) Mechanics. The resale of Clearwire's services pursuant to this
Section 3.05 shall be accomplished pursuant to a standard Clearwire wholesale
agreement form drafted in a manner consistent with the terms of this Agreement
and the applicable IUA, which will be provided to any Licensee requesting the
right to resell an MVNO Educational Account to an Educational End User. Such
arrangement shall be executed not later than thirty (30) days after the
availability of such services.
Section 3.06. Access to Educational End User Devices. Clearwire shall also
make any end-user equipment used in the Clearwire National Platform available
for purchase by Licensee at [***] above Clearwire's cost to acquire such
end-user equipment. Equipment provided to Licensee pursuant to this section
shall be used solely by Educational End Users and not for resale.
Section 3.07. Sharing of Features and Service Sets. Licensee shall have
access to, and full use of, system capabilities, services and feature sets that
are generally provided to Clearwire's retail customers or wholesalers to mass
market customers. Licensee shall have access to reasonably necessary support
made available to Clearwire's commercial customers generally, and that is
reasonably necessary for the Licensee to offer services to its Educational End
Users as contemplated by their agreement. The Licensee shall have access to new
capabilities, features and service sets within six months of the time that
Clearwire makes them available to customers generally, but not earlier than the
Commencement Date with respect to any particular IUA.
Section 3.08. Preferred Content Provider.
(a) Scope. In the event that Clearwire provides third party content to
customers over its network in any Market Area where Licensee is a party to an
EBS Spectrum Capacity IUA, Licensee shall be a "Preferred Content Provider" over
such network in that Market Area. As a Preferred Content Provider, Licensee
shall have the same degree of access to, and use of, any system capability,
service or feature set that is provided to premium third party content
providers.
(b) Service Sets and Features. [***] Licensee agrees that the
programming that Licensee supplies to customers through Clearwire's network
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will be educational in nature. Licensee agrees not to resell Clearwire's network
access, features and/or service sets to third parties, except in accordance with
Sections 3.04(a)(i) and 3.05.
(c) Capacity Constraints. Clearwire reserves the right to restrict the
use of the capabilities and services made available to the Licensee as a
Preferred Content Provider under this Section 3.08 if such use is no longer
commercially and technically feasible due to limitations in network
capabilities. Clearwire shall comply with the provisions of ARTICLE III to
ensure timely access to information about capacity usage and permit Licensee a
reasonable opportunity to secure alternative access.
SECTION3.09. [***]
ARTICLE IV.
CLOSING MECHANICS; ESCROW
Section 4.01. Deliveries at Execution of this Agreement. On the Effective
Date of this Agreement, Clearwire and the Licensee shall take the following
actions required of it by subsections (a) through (c) hereof.
(a) Licensee. Licensee shall deliver or cause to be delivered to
Clearwire each of the following, duly executed by an authorized representative
of Licensee: (i) one IUA completed in accordance with this Agreement with
respect to each Market comprising the Initial Spectrum Capacity; (ii) the Stock
Pledge Agreement attached to this Agreement as Exhibit III, and all additional
documents required under the Stock Pledge Agreement; and (iii) the
certificate(s) of Licensee described in Section 4.01(c) Licensee shall have
specified on Schedule 4.01 attached hereto its wire account (each a "Wire
Account"), which Wire Account shall be included in the applicable IUA. Absent
notice of different instructions, all cash payments to be made as provided on
Schedule A, and as otherwise reflected in the applicable IUA or this Agreement
to be paid to Licensee, shall be to such Wire Account in immediately available
funds.
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(b) Clearwire. Clearwire shall deliver or cause to be delivered to the
Licensee each of the following, duly executed by an authorized representative of
Clearwire: (i) one IUA completed in accordance with this Agreement with respect
to each Market comprising the Initial Spectrum Capacity; (ii) its certificate
described in Section 4.01(c); and (iii) the Upfront Royalty provided for in the
applicable EBS Spectrum Capacity IUA as reflected on Schedule A.
(c) Officers Certificates. In connection with the execution of this
Agreement, each Party shall deliver to each other Party, in each case certified
as of the Effective Date of this Agreement by an authorized officer of the
delivering Party, (A) a copy of the resolutions of the board of directors of the
delivering Party authorizing the execution, delivery and performance of this
Agreement and (B) a certificate of incumbency, with signatures of the officers
of such Party authorized to execute and deliver this Agreement.
Section 4.02. EBS Spectrum Capacity IUA Closing(s).
(a) Initial Closing. Subject to the terms and conditions set forth in
this Agreement, the closing of the transactions provided in this Agreement,
including with respect to IUAs for the Initial Spectrum Capacity that are
executed on the date hereof (each an "Initial Closing"), shall take place on the
Effective Date of this Agreement (the "Initial Closing Date").
(b) Subsequent Closings. Subject to the terms and conditions set forth
in this Agreement, the closing of IUAs for Future Spectrum Capacity as provided
in this Agreement shall take place as specified in the applicable IUAs when the
Parties reach agreement on the pricing of such Future Spectrum Capacity IUAs, at
which time an EBS Spectrum Capacity IUA shall be executed (each a "Subsequent
Closing"), which date shall be the Effective Date for that IUA (the "Subsequent
Closing Date").
(c) Closing Conditions.
(i) Conditions to Each Party's Obligations at a Closing. The
respective obligations of each Party to effect execution and closing of an EBS
Spectrum Capacity IUA at the Initial Closing or at any Subsequent Closing shall
be subject to the satisfaction on or prior to the applicable Closing Date of the
following condition with respect to that EBS Spectrum Capacity IUA.
(1) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court or
other Government Agency of competent jurisdiction preventing the consummation of
the transactions contemplated in the applicable IUA or under this Agreement as
it relates to such IUA; provided, however, that prior to invoking this
condition, each Party hereto shall use all commercially reasonable efforts to
have any such injunction or other order vacated.
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(ii) Conditions to the Obligations of Clearwire. The obligations
of Clearwire to effect any Closing of an IUA hereunder shall be subject to the
satisfaction at or prior to the applicable Closing Date of such IUA of each of
the following conditions, any of which may be waived, solely in writing, and
exclusively by Clearwire:
(1) Representations and Warranties. The representations and
warranties of the Licensee contained in the IUA shall be true and correct in all
material respects as of the Effective Date of such IUA.
(2) Officer Certificates. Clearwire shall have received
copies, in each case certified as of the applicable Closing Date by an
authorized officer of Licensee, of (i) the resolutions of the board of directors
of the Licensee, authorizing the execution, delivery and performance of the IUA,
(ii) the signature and incumbency of the officers of the Licensee authorized to
execute and deliver the IUA, and (iii) certifying that the representations and
warranties of the Party to be made under the IUA are true and correct.
(iii) Conditions to Obligations of Licensee. The obligations of
Licensee to effect any Closing of an EBS Spectrum Capacity IUA hereunder shall
be subject to the satisfaction at or prior to the applicable Closing Date of
such IUA of each of the following conditions, any of which may be waived, solely
in writing, and exclusively by Licensee:
(1) Representations and Warranties. The representations and
warranties of Clearwire contained in the IUA shall be true and correct in all
material respects as of the Effective Date of such IUA.
(2) Officer Certificates. Licensee shall have received
copies, in each case certified as of the applicable Closing Date by an
authorized officer of Clearwire, of (i) the resolutions of the board of
directors of Clearwire and each Clearwire Affiliate that is a Party hereto,
authorizing the execution, delivery and performance of the IUA, (ii) the
signature and incumbency of the officers of Clearwire authorized to execute and
deliver the IUA, and (iii) certifying that the representations and warranties of
the Party to be made under the IUA are true and correct.
Section 4.03. Closing Site/Mechanics. Each of the Closings will occur by
electronic delivery procedure agreed by the Parties, provided that the Initial
Closing shall take place at the offices of Davis Wright Tremaine LLP, Seattle,
Washington.
Section 4.04. Further Assurances. Upon the terms and subject to the
conditions of this Agreement, each of the Parties hereto shall use its
reasonable best efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable consistent with
applicable law to consummate and make effective in the most expeditious manner
practicable the Closing of each IUA and compliance with the obligations therein
and herein in respect of each such IUA.
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ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF LICENSEE
Licensee hereby represents and warrants to Clearwire and Clearwire Parent
that:
Section 5.01. Organization and Good Standing. It is a nonprofit corporation
duly organized, validly existing and in good standing under the laws of its
state of organization and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now
conducted and as proposed to be conducted. Except as disclosed in Schedule 5.01,
it is duly qualified or authorized to do business as a foreign corporation and
is in good standing under the laws of each jurisdiction in which it owns or
leases real property or FCC Licenses and each other jurisdiction in which the
conduct of its business or the ownership of its properties requires such
qualification or authorization, except where the failure to be so qualified,
authorized or in good standing does not have and would not reasonably be
expected to have a Licensee Material Adverse Effect.
Section 5.02. Authorization of Agreement. It has all requisite corporate
power and authority (i) to enter into, deliver and carry out the transactions
contemplated by this Agreement (the 'Transactions") and each other agreement,
document, or instrument or certificate contemplated by this Agreement to be
delivered on the date thereof, (ii) to enter into and deliver all documents
required or necessary to be executed by it in connection with the consummation
of the Transactions on the date hereof (collectively the "Licensee Documents"),
and (iii) to consummate the Transactions taking place on the date hereof. This
Agreement has been and the Licensee Documents when delivered will be duly and
validly executed and delivered by it and (assuming the due authorization,
execution and delivery by the other parties hereto and thereto) this Agreement
constitutes and the Licensee Documents will constitute when delivered the legal,
valid and binding obligations of Licensee, enforceable against it in accordance
with their terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
Section 5.03. No Conflict. Except as set forth on Schedule 5.03:
(a) Neither the execution and delivery by Licensee of this Agreement
or the Licensee Documents, nor compliance by Licensee with any of the provisions
hereof or thereof will (i) conflict with, or result in the breach of, any
provision of the Governing Documents of Licensee, (ii) conflict with, violate,
result in the breach of, constitute (with or without due notice, lapse of time
or both) a default under, result in the acceleration of, create in any Party the
rights to accelerate, terminate, modify or cancel, or require any notice,
consent or waiver under, any note, bond, mortgage, indenture, license, agreement
or other obligation to which Licensee is a party or by which Licensee or any of
its properties or assets is bound or (iii) violate any statute,
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rule, regulation, order or decree of any Government Agency or authority by which
Licensee is bound, except in the cases of clauses (ii) and (iii) for such
violations, breaches or defaults as would not, individually or in the aggregate,
have a Licensee Material Adverse Effect.
(b) No consent, waiver, approval, order, permit or authorization of,
or declaration or filing with, or notification to, any Person or Government
Agency is required on the part of Licensee in connection with the execution and
delivery of this Agreement or the Licensee Documents or the compliance by
Licensee with any of the provisions hereof or thereof, except as contemplated
herein or therein.
Section 5.04. Litigation. Except as set forth on Schedule 5.04 and other
than Proceedings of general applicability and those related to market
transitions ("FCC Proceedings"), there is no Proceeding now in progress or
pending or, to the knowledge of Licensee, threatened against Licensee or the
assets (including the intellectual property rights) or the business of Licensee,
nor to the knowledge of Licensee, does there exist any basis therefore, except
for immaterial claims brought against Licensee in the ordinary course of
business.
Section 5.05. Compliance with Laws; Permits. Excepting the markets listed
on Schedule 5.05 and only to the best knowledge of the Licensee, assuming
compliance in all material respects with the Communications Act and FCC Rules
by other parties to a Third Party Agreement where and during the time access to
the Commercial Spectrum Capacity has been governed by such Third Party
Agreement, in respect of all licenses, including those otherwise subject to
Third Party Agreements, Licensee (a) has complied in all respects with all
federal, state, and local laws, rules, ordinances, codes, consents,
authorizations, registrations, regulations, decrees, directives, judgments and
orders applicable to it and its business other than where noncompliance would
not, individually or in the aggregate, reasonably be expected to have a Licensee
Material Adverse Effect and (b) has all federal, state, and local governmental
Permits necessary in the conduct of its business as currently conducted and to
own and use its assets in the manner in which such assets are currently owned
and used other than where the failure to possess such Permits would not,
individually or in the aggregate, reasonably be expected to have a Licensee
Material Adverse Effect, such Permits are in full force and effect, and no
violations have been recorded in respect of any such Permit, and no proceeding
is pending or, to the best knowledge of Licensee, threatened to revoke or limit
any such Permit.
Section 5.06. Brokers. Neither Licensee nor any of its directors, officers,
employees, or representatives has employed any broker or finder in connection
with the Transactions.
Section 5.07. Knowledge. Any representation, warranty, covenant,
obligation, or part thereof that states that it is made to the best knowledge of
Licensee is made to its best knowledge after commercially reasonable
investigation and includes all facts which it knew or should have known as a
result of such investigation, including the best knowledge of Licensee's
executive officers and legal counsel after commercially reasonable
investigation.
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ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF CLEARWIRE
Clearwire hereby represents and warrants to Licensee that:
Section 6.01. Organization and Good Standing. Clearwire Parent is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and Clearwire is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Nevada. Each has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now conducted. Clearwire
is duly qualified or authorized to do business as a foreign corporation and is
in good standing under the laws of each jurisdiction in which it owns or leases
real property and each other jurisdiction in which the conduct of its business
or the ownership of its properties requires such qualification or authorization,
except where the failure to be so qualified, authorized or in good standing does
not have and would not reasonably be expected to have a Clearwire Material
Adverse Effect.
Section 6.02. Authorization of Agreement. Each of Clearwire Parent and
Clearwire has all requisite corporate power and authority (i) to enter into,
deliver and carry out the Transactions, each IUA and each other agreement,
document, or instrument or certificate contemplated by this Agreement, (ii) to
enter into and deliver all documents required or necessary to be executed by it
in connection with the consummation of the Transactions (collectively the
"Clearwire Documents"), and (iii) to consummate the Transactions. This Agreement
has been and the Clearwire Documents will be when delivered duly and validly
executed and delivered by Clearwire and (assuming the due authorization,
execution and delivery by the other parties hereto and thereto) this Agreement
constitutes and the Clearwire Documents will constitute when delivered the
legal, valid and binding obligations of Clearwire, enforceable against it in
accordance with their terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).
Section 6.03. No Conflict.
(a) Neither of the execution and delivery by Clearwire of this
Agreement and of the Clearwire Documents, nor the compliance by Clearwire with
any of the provisions hereof or thereof will (i) conflict with, or result in the
breach of, any provision of the Governing Documents of Clearwire, (ii) conflict
with, violate, result in the breach of, or constitute (with or without due
notice, lapse of time or both) a default under, result in the acceleration of,
create in any Party the rights to accelerate, terminate, modify or cancel, or
require any notice, consent or waiver under, any note, bond, mortgage,
indenture, license, agreement or other obligation to which Clearwire is a party
or by which Clearwire or any of its properties or assets are bound or
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(iii) violate any statute, rule, regulation, order or decree of any Government
Agency by which Clearwire is bound, except, in the case of clauses (ii) and
(iii), for such violations, breaches or defaults as would not, individually or
in the aggregate, have a Clearwire Material Adverse Effect.
(b) No consent, waiver, approval, order, permit or authorization of,
or declaration or filing with, or notification to, any Person or Government
Agency is required on the part of Clearwire in connection with the execution and
delivery of this Agreement or the Clearwire Documents or the compliance by
Clearwire with any of the provisions hereof or thereof, except that in
connection with the execution of the IUAs executed pursuant to this Agreement,
Clearwire will prepare and file spectrum lease applications for approval by the
FCC.
Section 6.04. Litigation. Except as would not reasonably be expected to
have a materially adverse effect on the ability of Clearwire to close hereunder
or as set forth on Schedule 6.04, (a) there is no Proceeding now in progress or
pending or, to the knowledge of Clearwire, threatened against Clearwire or the
assets or the business of Clearwire and (b) Clearwire is not subject to any
order, writ, injunction or decree of any court or other Government Agency.
Section 6.05. Compliance with Laws; Permits. Clearwire (a) has complied in
all respects with all federal, state, and local laws, rules, ordinances, codes,
consents, authorizations, registrations, regulations, decrees, directives,
judgments and orders applicable to it and its business other than where
noncompliance would not, individually or in the aggregate, reasonably be
expected to have a Clearwire Material Adverse Effect and (b) has all federal,
state, and local governmental Permits necessary in the conduct of its business
as currently conducted and to own and use its assets in the manner in which such
assets are currently owned and used other than where the failure to possess such
Permits would not, individually or in the aggregate, reasonably be expected to
have a Clearwire Material Adverse Effect, such Permits are in full force and
effect, and no violations have been recorded in respect of any such Permit, and
no proceeding is pending or, to the best knowledge of Clearwire, threatened to
revoke or limit any such Permit, except that in connection with the execution
of the IUAs executed pursuant to this Agreement, Clearwire will prepare and file
spectrum lease applications for approval by the FCC.
Section 6.06. Brokers. Neither Clearwire nor any of its directors,
officers, employees or representatives has employed any broker or finder in
connection with the Transactions.
ARTICLE VII.
COVENANTS
Section 7.01. Consents and Approvals. Clearwire shall use its commercially
reasonable efforts to obtain, and shall cooperate with Licensee and assist
Licensee in obtaining, all consents, waivers, amendments, modifications,
approvals, authorizations, permits and licenses which are
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required to be obtained by Clearwire and the Licensee to effectuate this
Agreement. Licensee shall use its respective commercially reasonable efforts to
obtain, and shall cooperate with Clearwire and assist Clearwire in obtaining,
all consents, waivers, amendments, modifications, approvals, authorizations,
permits and licenses which are required to be obtained by Clearwire and/or
Licensee to effectuate this Agreement.
Section 7.02. Notice of Breach. Licensee shall promptly give Clearwire
written notice of any matter that becomes known to Licensee which Licensee
determines is reasonably likely to constitute a breach of any representation,
warranty, agreement or covenant of Licensee contained in this Agreement.
Clearwire and Clearwire Parent shall promptly give the Licensee written notice
of any matter that becomes known to them which Clearwire or Clearwire Parent
determines is reasonably likely to constitute a breach of any representation,
warranty, agreement or covenant of Clearwire or Clearwire Parent contained in
this Agreement.
Section 7.03. Maintenance of FCC Qualifications. The provisions of this
Section 7.03 apply only to spectrum that has not been subject to an IUA. Except
as such qualifications may be affected by this Agreement or one or more IUAs
entered into pursuant to this Agreement, Licensee hereby covenants and agrees
that it shall maintain all necessary qualifications to hold and to obtain
renewal in the ordinary course of any FCC License, subject to Clearwire's
obligation to cause Licensee's FCC License to timely meet the substantial
service requirement and to comply with FCC Rules in its use and access to the
licensed spectrum, as such qualifications may be amended or modified from time
to time (individually an "FCC Qualification" and collectively referred to as the
"FCC Qualifications"), and further covenants that it shall not knowingly or
negligently take any action, or fail to take any action, which action or failure
to act creates a material risk that Licensee shall lose any FCC Qualification;
provided, that in the event that the FCC or any other legal authority shall at
any time specify new or different qualifications or conditions for the
maintenance of any FCC Qualification or shall issue a pronouncement offering a
new interpretation of an FCC Qualification, Clearwire shall reimburse on demand
Licensee's reasonable expenses of taking such action as are required for
Licensee to bring itself and its operations into compliance with such new or
different qualifications or conditions; provided, further, that it shall not be
deemed a breach of this sentence if Licensee loses an FCC Qualification as a
result, in whole or in part, of an act or omission of Clearwire or any failure
of Clearwire to perform its obligations under this Agreement or any IUA. If, at
any time, Licensee fails, or it appears to said Licensee more likely than not
that it will fail, to maintain any one or more of its FCC Qualifications with
respect to any of its FCC Licenses or its operations pursuant thereto, Licensee
shall give written notice to Clearwire within five (5) days after Licensee
becomes actually aware that (i) it no longer maintains such FCC Qualifications
or (ii) with the passage of time or upon the occurrence of a future event it
will no longer maintain such FCC Qualifications (referred to as a
"Disqualification Event"). Licensee shall cooperate with reasonable requests of
Clearwire made from time to time for the purpose of verifying, at Clearwire's
expense, that Licensee maintains its FCC Qualifications. Upon the occurrence of
a Disqualification Event, the affected Licensee shall, at Clearwire's expense,
promptly undertake all reasonable actions to obtain, to the extent
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permitted by applicable law, a waiver from the FCC regarding the circumstances
giving rise to such Disqualification Event or to cure the circumstances giving
rise to such Disqualification Event.
Section 7.04. Assignment of FCC Licenses. The provisions of this Section
7.04 apply only to spectrum that has not been subject to an IUA. Licensee may
assign the FCC License to any entity that is eligible under FCC Rules to hold
the FCC License, who is reasonably acceptable to Clearwire and who assumes
Licensee's prospective obligations under this Agreement, whereupon Licensee
shall be forever relieved of such prospective obligations. Clearwire and
Licensee agree that it is reasonable for Clearwire to reject a proposed assignee
where the proposed assignee or its affiliate competes with Clearwire's offering
over EBS or BRS spectrum. In the event that Licensee desires to assign its FCC
License to another entity, Licensee shall inform Clearwire in writing of the
identity of such entity and within twenty (20) days of such notice Clearwire
shall inform Licensee in writing of whether Clearwire consents to such
assignment or refuses to consent to such assignment and, if it refuses, the
reason(s) it is relying upon for such refusal. Notwithstanding the foregoing,
Licensee may, without the prior consent of Clearwire, sell, assign, sublease,
delegate or transfer this Agreement or any of its rights or obligations
hereunder to any of Licensee's affiliates controlled by or under common control
with Licensee.
Section 7.05. Other FCC Requirements. In carrying out this Agreement, the
Parties will comply at all times with applicable laws, as well as rules and
policies of the FCC. The Parties believe that the provisions of this Agreement
comply with all current FCC rules and policies, and agree not to express any
contrary view to regulatory agencies or the general public.
Section 7.06. Fees and Taxes. Until the end of the term of the IUA that is
the last to expire, Clearwire shall pay all fees and taxes (now existing or
hereafter arising) imposed on Licensee as a result of the licensing, regulation
or use of Licensee's EBS Spectrum by Clearwire or Licensee, including, without
limitation, any Federal spectrum, USF and/or regulatory fees that maybe imposed
on EBS Spectrum in the future.
Section 7.07. Best Efforts for Duration of Relationship. The Parties
acknowledge that there will be many changes in the course of the term of the
IUAs in technology, capabilities, and regulatory environment and other relevant
areas, and the Parties covenant and agree to act in a cooperative manner to
preserve the intent of the relationships reflected in this Agreement to their
mutual advantage and to use their commercially reasonable best efforts to
maintain that mutual advantage in accordance with the initial intent of the
Parties.
ARTICLE VIII.
INDEMNIFICATION
Section 8.01. Indemnification
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(a) Licensee shall indemnify Clearwire, its Affiliates, and each of
their respective stockholders (other than Licensee), directors, officers,
employees, agents, successors and assigns (collectively, the "Clearwire
Indemnified Parties") and hold each of the Clearwire Indemnified Parties
harmless from and against any and all Damages based upon, attributable to or
resulting from:
(i) The failure of any representation or warranty of Licensee set
forth in ARTICLE V hereof, or any representation or warranty contained in any
certificate delivered by or on behalf of Licensee pursuant to this Agreement, to
be true and correct as of the dates made; and
(ii) The breach of any covenant or other agreement on the part of
Licensee under this Agreement.
(b) Clearwire shall indemnify the Licensee, its Affiliates, and each
of its agents, successors and assigns (collectively, the "Licensee Indemnified
Parties") and hold the Licensee Indemnified Parties harmless from and against
any and all Damages based upon, attributable to or resulting from:
(i) The failure of any representation or warranty of Clearwire
set forth in ARTICLE VI hereof, or any representation or warranty contained in
any certificate delivered by or on behalf of Clearwire pursuant to this
Agreement, to be true and correct as of the dates made;
(ii) The breach of any covenant or other agreement on the part of
Clearwire under this Agreement; and
(iii) The operation of equipment by, the provision of service by
or otherwise related to the activities of Clearwire, any of its Affiliates or
any of its sublicensees or resellers including, without limitation, damage to
health.
Section 8.02. Determination of Damages. As used herein, "Damages" means any
and all losses, claims, demands, liabilities, obligations, actions, suits,
orders, statutory or regulatory compliance requirements, or proceedings asserted
by any Person, and all damages, costs, expenses, assessments, judgments,
recoveries and deficiencies, including interest, penalties, investigatory
expenses, consultants' fees, and reasonable attorneys' fees and costs, of every
kind and description, contingent or otherwise. For purposes of the above, the
amount of Damages in respect of any breach of a representation or warranty shall
be determined without regard to any limitation or qualification as to
materiality, Licensee(s) Material Adverse Effect, Clearwire Material Adverse
Effect, knowledge or similar language set forth in such representation or
warranty.
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Section 8.03. Limitations on Indemnification for Breaches of
Representations and Warranties. An indemnifying Party shall not have any
liability under Section 8.01(a)(i) or Section 8.01(b)(i) hereof unless the
aggregate amount of Damages to the indemnified Parties finally determined to
arise thereunder based upon, attributable to or resulting from the failure of
any representation or warranty to be true and correct or the breach of any
covenant, exceeds [***] in the aggregate (the "Deductible") and, in such event,
the indemnifying Party shall be required to pay the amount of such Damages
including those used to compute the Deductible.
Section 8.04. Indemnification Procedures
(a) In the event that any claim shall be asserted by any Person in
respect of which payment may be sought under Section 8.01 hereof (regardless of
the Deductible referred to above) (each, a "Claim"), the indemnified Party shall
reasonably and promptly cause written notice (a "Claim Notice") of the assertion
of any Claim of which it has knowledge which is covered by this indemnity to be
forwarded to the indemnifying Party. The indemnifying Party shall have the
right, at its sole option and expense, to be represented by counsel of its
choice, which must be reasonably satisfactory to the indemnified Party, and to
defend against, negotiate, settle or otherwise deal with any Claim which relates
to any Damages indemnified against hereunder. If the indemnifying Party elects
to defend against, negotiate, settle or otherwise deal with any Claim which
relates to any Damages indemnified against hereunder, it shall within five (5)
days of the delivery of the Claim Notice (or sooner, if the nature of the Claim
so requires) notify the indemnified Party of its intent to do so. If the
indemnifying Party elects not to defend against, negotiate, settle or otherwise
deal with any Claim which relates to any Damages indemnified against hereunder,
fails to notify the indemnified Party of its election as herein provided or
contests its obligation to indemnify the indemnified Party for such Damages
under this Agreement, the indemnified Party may defend against, negotiate,
settle or otherwise deal with such Claim. If the indemnified Party defends any
Claim, then the indemnifying Party shall reimburse the indemnified Party for the
expenses of defending such Claim upon submission of periodic bills. If the
indemnifying Party shall assume the defense of any Claim, the indemnified Party
may participate, at his or its own expense, in the defense of such Claim;
provided, however, that such indemnified Party shall be entitled to participate
in any such defense with separate counsel at the expense of the indemnifying
Party if, so requested by the indemnifying Party to participate or in the
reasonable opinion of counsel to the indemnified Party, a conflict or potential
conflict exists between the indemnified Party and the indemnifying Party that
would make such separate representation advisable; and provided, further, that
the indemnifying Party shall not be required to pay for more than one such
counsel for all indemnified Parties in connection with any Claim. The Parties
hereto agree to cooperate fully with each other in connection with the defense,
negotiation, or settlement of any such Claim.
(b) After any final judgment or award shall have been rendered by a
court, arbitration board or administrative agency of competent jurisdiction and
the expiration of the time in which to appeal therefrom, or a settlement shall
have been consummated, or the indemnified Party and the indemnifying Party shall
have arrived at a mutually binding agreement
[*** Confidential Treatment Requested]
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with respect to a Claim hereunder, the indemnified Party shall forward to the
indemnifying Party notice of any sums due and owing by the indemnifying Party
pursuant to this Agreement with respect to such matter.
(c) The failure of the indemnified Party to give reasonably prompt
notice of any Claim shall not release, waive or otherwise affect the
indemnifying Party's obligations with respect thereto except to the extent that
the indemnifying Party can demonstrate actual loss and prejudice as a result of
such failure.
ARTICLE IX.
TERM AND TERMINATION
Section 9.01. Term; Termination. The term of this Agreement (the "Term")
will commence on the Effective Date and will continue until the earlier of (1)
eighteen (18) months after the Effective Date, (2) the date on which Clearwire
has used all of the Prepaid Royalties for accessing Future Spectrum Capacity
pursuant to this agreement, or (3) the date on which Licensee has returned to
Clearwire (in cash) the entire amount of the Prepaid Royalties that has not been
used for accessing Future Spectrum Capacity pursuant to this Agreement.
Clearwire shall have the right, in its sole discretion, to extend the Term at
any time prior to its expiration under clause (1) above; provided, that the Term
shall not extend beyond the first to occur of the events described in clauses
(2) or (3) above except as it pertains to [***]. This Agreement may be
terminated prior to expiration of the Term under any of the following
circumstances: (i) by mutual written agreement of the parties; (ii) by
Clearwire, upon giving written notice to Licensee in the Event of Default;
provided that such Event of Default is not cured (if it is capable of being
cured) within [***] following such notice; (iii) by Licensee, upon giving
written notice to Clearwire in the Event of Default; provided that with respect
to an Event of Default that is a payment default, it is not cured in [***]
following such notice, and with respect to all other Events of Default (that are
of a type capable of being cured) such Event of Default is not cured within
[***] thereof; or (iv) by Clearwire upon written notice to Licensee and to the
extent allowed under law, if Licensee files a petition pursuant to Title 7 or 11
of the United States Bankruptcy Code or is adjudged a debtor after the filing of
an involuntary bankruptcy petition against Licensee, or if Licensee files a
petition for relief pursuant to any state insolvency laws. Upon termination of
this Agreement for any cause, the Prepaid Royalties Balance shall be refunded to
Clearwire, as provided in Section 2.02.
Section 9.02. Defaults. It shall be an "Event of Default" hereunder if
either party fails to perform a material obligation or breaches a material
representation and warranty contained in this Agreement in circumstances where
such failure results in the inability of the other party to exercise its full
rights under this Agreement. In the event of a Loss (as defined in the
applicable IUA), the Parties shall cooperate in seeking special temporary
authority from the FCC to allow Clearwire to continue operating on the Channels
until such time as it can transition its users to other spectrum and minimize
service disruption to its business and other activities.
[*** Confidential Treatment Requested]
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Section 9.03. Survival. The obligations of the parties under this Agreement
that by their nature would continue beyond expiration or termination of this
Agreement shall survive any expiration or termination of this Agreement. Without
limiting the generality of the foregoing, any rights of Clearwire with respect
to any Options or any rights of first refusal shall survive the expiration or
termination of this Agreement if the notice or other event triggering such
Option or right of first refusal occurs (or would have occurred, if Licensee
complied in full with the requirements of this Agreement) prior to expiration or
termination of this Agreement.
ARTICLE X.
GENERAL PROVISIONS
Section 10.01. Payment of Sales, Use or Similar Taxes. Clearwire shall be
liable for and shall pay (and shall indemnify and hold harmless the Licensee(s)
Indemnified Parties against) all sales, use, stamp, documentary, filing,
recording, transfer, real estate transfer, registration, duty or similar fees or
taxes or governmental charges (together with any interest of penalty, addition
to tax or additional amount imposed) as levied by any taxing authority in
connection with the Transactions.
Section 10.02. Survival of Representations and Warranties. The
representations and warranties contained in this Agreement or in any
certificate, document or instrument delivered in connection herewith, shall
survive each of the Closings hereunder for a period of [***] from the Initial
Closing Date or Subsequent Closing Date with respect to the EBS spectrum that
is subject to such Initial Closing or Subsequent Closing, as applicable,
regardless of any investigation made by the Parties hereto. All agreements and
covenants contained herein shall survive indefinitely until, by their respective
terms, they are no longer operative.
Section 10.03. Entire Agreement; Amendments and Waivers. This Agreement
(including the schedules and exhibits hereto), represents the entire
understanding and agreement between the Parties hereto with respect to the
subject matter hereof and can be amended, supplemented or changed, and any
provision hereof can be waived, only by written instrument making specific
reference to this Agreement signed by the Party against whom enforcement of any
such amendment, supplement, modification or waiver is sought. No action taken
pursuant to this Agreement, including without limitation, any investigation by
or on behalf of any Party, shall be deemed to constitute a waiver by the Party
taking such action of compliance with any representation, warranty, covenant, or
agreement contained herein. The waiver by any Party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a further or
continuing waiver of such breach or as a waiver of any other or subsequent
breach. No failure on the part of any Party to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power, or
remedy by such Party preclude any other or further exercise thereof or the
exercise of any other right, power, or remedy.
[*** Confidential Treatment Requested]
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Section 10.04. Governing Law. The validity, meaning and effect of this
Agreement shall be determined in accordance with the laws of the State of New
York applicable to contracts made and to be performed in that state, regardless
of the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
Section 10.05. Table of Contents and Headings. The table of contents and
section headings of this Agreement are for reference purposes only and are to be
given no effect in the construction or interpretation of this Agreement.
Section 10.06. Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally or by overnight courier, or mailed by certified mail, return receipt
requested, to the Parties (and shall also be transmitted by facsimile to the
Persons receiving copies thereof) at the following addresses (or to such other
address as a Party may have specified by notice given to the other Party
pursuant to this provision):
If to Clearwire, to: Clearwire Spectrum Holdings II LLC
5808 Lake Washington Blvd. N.E., Suite 300
Kirkland, WA 98033
ATTENTION: [***]
FACSIMILE NO [***]
With a copy to: Clearwire Corporation
5808 Lake Washington Blvd. N.E., Suite 300
Kirkland, WA 98033
Attention: [***]
Facsimile No. [***]
And a copy to: Davis Wright Tremaine LLP
2600 Century Square
1501 Fourth Avenue
Seattle, WA98101- 1688
Attention: [***]
Facsimile No.: [***]
If to Licensee, to: Hispanic Information and
Telecommunications Network, Inc.
63 Flushing Avenue, Unit 281
Brooklyn, NY 11205
Attention: [***]
FAX: [***]
[*** Confidential Treatment Requested]
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With a copy to: Day, Berry & Howard LLP
875 Third Avenue
New York, NY 10022
Attention: [***]
Fax: [***]
And a copy to: RJGLaw LLC
1010 Wayne Avenue, Suite 950
Silver Spring, MD 20910
ATTENTION: [***]
Fax: [***]
Section 10.07. Publicity. No public release, announcement or other form of
publicity concerning this Agreement or the transactions described in this
Agreement, shall be issued by either Party without the prior consent of the
other Party, except as such release or announcement may be required by law,
regulation or the rules or regulations of any securities exchange, in which case
the Party required to make the release or announcement shall, to the extent
possible, allow the other Party reasonable time to comment on such release or
announcement in advance of such issuance. The Parties shall use reasonable
efforts to consult in good faith with each other with a view to agreeing upon
any press release or public announcement relating to the transactions
contemplated hereby prior to the consummation thereof.
Section 10.08. Severability. If any provision of this Agreement is invalid
or unenforceable, the balance of this Agreement shall remain in effect.
Section 10.09. Binding Effect; Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties and their respective successors and
permitted assigns.
Section 10.10. Remedies. The Parties recognize that, in the event that a
Party should refuse to perform any provisions of this Agreement, monetary
damages alone will not be adequate. The non-defaulting Party shall therefore be
entitled, in addition to any other remedies which may be available, including
money damages, to obtain specific performance of the terms of this Agreement.
Notwithstanding any other provision herein, no remedy conferred by any of the
specific provisions of this Agreement is intended to be exclusive of any other
remedy, and each and every remedy shall be cumulative and shall be in addition
to every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise. The election of any one or more remedies by a
Party shall not constitute a waiver of the right to pursue other available
remedies at any time.
Section 10.11. Dispute Resolution Procedure.
(a) General. The Parties desire to resolve disputes arising out of
this Agreement without litigation. Accordingly, the Parties agree to use the
dispute resolution procedures set forth in this Section 10.11 (the "Dispute
Resolution Procedures") as their sole means of
[*** Confidential Treatment Requested]
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adjudication with respect to any controversy or claim arising out of or relating
to this Agreement or its breach.
(b) Dispute Notice. At the written request of any party (a "Dispute
Notice"), the Parties to the dispute will within seven business days of the
Dispute Notice, appoint knowledgeable, responsible representatives to meet and
negotiate in good faith to resolve any dispute arising under this Agreement. The
Parties intend that these negotiations be conducted by business representatives,
including at least one senior executive of each party to the dispute. The
representatives shall meet and confer, in person or by teleconference, not later
than such seventh business day after the date of the Dispute Notice. The
location, format, frequency, duration and conclusion of these discussions shall
be left to the discretion of the representatives; provided that the duration
shall not exceed 45 days from the date of the Dispute Notice (an "Action Date")
unless extended by mutual written agreement of the Parties setting forth a new
Action Date. The Dispute Notice and any extension shall specify the Action Date.
The Dispute Notice shall set forth the nature of the dispute, in reasonable
detail. Discussion and correspondence among the representatives for purposes of
these negotiations shall be treated as confidential information developed for
purposes of settlement, exempt from discovery and production, and shall not be
admissible in the arbitration described below. Documents identified in or
provided with such communications, which are not prepared for purposes of the
negotiations, are not so exempted and may, if otherwise admissible, be admitted
in evidence in the arbitration. If the Parties are unable to resolve any
disputes arising under or relating to this Agreement (each a "Dispute") using
the process described in this Section 10.11(b) within the time period provided,
including without limitation disputes regarding a breach or default under this
Agreement, the Parties shall arbitrate such dispute pursuant to the arbitration
provisions set forth in Section 10.1l(c).
(c) Arbitration. Any Dispute that has not be resolved within the time
period provided for in Section 10.11(b) shall be resolved by a panel of three
Arbitrators. The Dispute Notice shall automatically serve as a written notice of
a request to submit the Dispute for arbitration if there has not been a
resolution of the Dispute by the Action Date, and the Parties agree to submit
the Dispute to a panel of three Arbitrators who shall be appointed within 30
days of the Action Date (the "Submission Period"). During the Submission Period,
the Parties shall appoint the Arbitrators in accordance with the Commercial
Arbitration Rules (then in effect) of the American Arbitration Authority
("AAA"), as modified below. No punitive damages (or any other amount awarded for
the purpose of imposing a penalty) will be awarded for a breach of this
Agreement.
(i) During the Submission Period, the Parties may submit a
request for discovery to the Arbitrators, who shall determine whether the scope
of the requested discovery is appropriate or useful for the resolution of the
Dispute and order the discovery in their discretion; provided that such
discovery process shall be concluded not later than 30 days following the
submission date (the "Discovery Close Date").
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(ii) The arbitration hearing shall be fixed by the Arbitrators to
be not sooner than 20 days nor later than 45 days after the Discovery Close Date
(the "Hearing Date"). The hearing shall be located in a neutral site as mutually
agreed by the Parties, or if the Parties cannot so agree, then the location of
the arbitration shall be Washington, D.C. The Federal Rules of Evidence shall
apply to the arbitration hearing. The party bringing a particular claim or
asserting an affirmative defense will have the burden of proof with respect
thereto. Each party shall bear the burden of persuasion with respect to its
proposal for resolution of the matter. The arbitration proceedings and all
testimony, filings, documents and information relating to or presented during
the arbitration proceedings shall be deemed to be information subject to the
confidentiality provisions of this Agreement. The Arbitrators will have no power
or authority, pursuant to the rules of the AAA or otherwise, to relieve the
Parties from their agreement hereunder to arbitrate or otherwise to amend or
disregard any provision of this Agreement, including without limitation the
provisions of this Section.
(iii) Each party shall be permitted to submit a pre-hearing brief
not to exceed 25 pages and such technical supporting material as is necessary or
useful, to be submitted to the Arbitrators and the other party not later than 5
days before the Hearing Date, and each party may issue a response thereto not
later than 2 days before the Hearing Date. Following the arbitration hearing,
each party shall be permitted to submit a post-hearing brief not to exceed 25
pages within 5 days following the Hearing Date and a reply brief within 2 days
thereafter (the "Pleading Close Date"). Should an Arbitrator refuse or be unable
to proceed with arbitration proceedings as called for by this Section, the
Arbitrator shall be replaced pursuant to the rules of the AAA. If an Arbitrator
is replaced after the arbitration hearing has commenced, then a rehearing shall
take place in accordance with this Section and the rules of the AAA.
(iv) Within fifteen (15) days after the Pleading Close Date, the
Arbitrators will prepare and distribute to the Parties a writing setting forth
the Arbitration Panel's reasons for the its determination. The findings and
conclusions and the award, if any, shall be deemed to be confidential
information of the Parties. Neither party may disclose such information to any
third party other than their professional advisors or as required by law or
regulations, except in connection with an action to enforce the award.
(v) The Arbitrators are instructed to schedule promptly all
discovery and other procedural steps and otherwise to assume case management
initiative and control to effect an efficient and expeditious resolution of the
Dispute. The Arbitrators are authorized to issue monetary sanctions against
either party if, upon a showing of good cause, such party is unreasonably
delaying the proceeding.
(vi) Any award rendered by the Arbitrators will be final,
conclusive, and binding upon the Parties and any judgment thereon may be entered
and enforced in any court of competent jurisdiction.
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(vii) The non-prevailing party to an arbitration shall pay its
own expenses, the fees of each Arbitrator, the administrative fee of the AAA,
and the expenses, including without limitation, reasonable attorneys' fees and
costs, and expert and witness fees and costs, incurred by the other party to
the arbitration. In the case of a decision which partially favors each party,
expenses shall be paid as determined by the Arbitrators. In connection with any
judicial proceeding to compel arbitration pursuant to this Agreement or to
confirm, vacate or enforce any award rendered by the Arbitrators, the prevailing
party in such a proceeding shall be entitled to recover reasonable attorney's
fees and expenses incurred in connection with such proceedings, in addition to
any other relief to which it may be entitled.
(viii) Notwithstanding anything to the contrary in this
Agreement, neither party shall have any obligation to arbitrate claims for
injunctive relief, specific performance, or other equitable relief or for the
use or unauthorized disclosure of confidential information, as to which either
party shall be entitled to seek and obtain relief exclusively from the state or
federal courts sitting in New York, New York, and each party hereby irrevocably
submits to the jurisdiction of any such court; provided that, any and all claims
for damages shall remain subject to arbitration.
Section 10.12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
Section 10.13. Confidentiality. The terms of this Agreement that are not
otherwise required to be disclosed to the FCC in support of the Defacto
Transfer Application, requests for renewal thereof or notices submitted to the
FCC, or as required to be disclosed in filings with the Securities and Exchange
Commission or state securities agencies, will be kept strictly confidential by
the Parties and their agents, which confidentiality obligation will survive the
termination or expiration of this Agreement for a period of [***]. The Parties
may make disclosures as required by law, and to employees, shareholders, agents,
attorneys and accountants (collectively, "Agents") as required to perform
obligations under the Agreement, provided, however, that the Parties will cause
all Agents to honor the provisions of this section. In addition, either Party
may disclose this Agreement to its Affiliates, strategic partners, actual or
potential investors, lenders, acquirers, merger partners, and others whom it
deems in good faith to have a need to know such information for purposes of
pursuing a transaction or business relationship with it, so long as it secures
an enforceable obligation from such third party to limit the use and disclosure
of this Agreement as provided herein. The Parties will submit a confidentiality
request to the FCC in the event the FCC seeks from the Parties a copy of this
Agreement or any other confidential information regarding its terms.
Section 10.14. Non-Disclosure of Shared Information. As used herein, the
term "Confidential Information" shall mean all non-public information disclosed
hereunder, whether written or oral, that is designated as confidential or that,
given the nature of the information or the circumstances surrounding its
disclosure, is plainly confidential or by the Parties' practices
[*** Confidential Treatment Requested]
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should be understood to be confidential. The term Confidential Information does
not include information which: (1) has been or becomes published or is now, or
in the future, in the public domain without breach of this Agreement or breach
of a similar agreement by a third party; (2) prior to disclosure hereunder, is
property within the legitimate possession of the receiving Party; (3) is
lawfully received from a third party having rights therein without restriction
of third party's or the receiving Party's rights to disseminate the information
and without notice of any restriction against its further disclosure; or (4) is
independently developed by the receiving Party through persons who have not had,
either directly or indirectly, access to or knowledge of such Confidential
Information. During the Term, the Parties may supply and/or disclose to each
other Confidential Information relating to the business of the other Party. Each
item of Confidential Information will be kept confidential by the Parties during
the Term and for a period of three (3) years thereafter, but may be disclosed in
the enforcement or seeking of damages with respect to a Party's rights under
this Agreement. The receiving Party will be responsible for any improper use of
the Confidential Information by it or any of its Agents. Without the prior
written consent of the disclosing Party, the receiving Party will not disclose
to any entity or person the Confidential Information, or the fact that the
Confidential Information has been made available to it, except for disclosures
required by law, disclosures authorized by the Party owning the Confidential
Information and disclosures made in the context of the enforcement or seeking of
damages with respect to a Party's rights under this Agreement. Each person to
whom Confidential Information is disclosed must be advised of its confidential
nature and must agree to abide by the terms of this section. The provisions of
this Section 10.14 and of the confidentiality provisions of the IUA represent
the entire understanding and agreement of the Parties with respect to the
subject matter hereof and thereof and supercede all prior oral or written
agreements between the Parties with respect to such subject matter, including,
without limitation, all non-disclosure agreements.
[THE REMAINDER OF THE PAGE IS INTENTIONALLY LEFT BLANK.]
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Each Party has caused this Master Royalty and Use Agreement to be duly
executed by its duly authorized officer or representative on the date first
above written.
CLEARWIRE SPECTRUM HOLDINGS II LLC
By: /s/ R. Gerard Salemme
------------------------------------
Name: R. Gerard Salemme
Title: E. VP
HISPANIC INFORMATION AND
TELECOMMUNICATIONS NETWORK, INC.
By: /s/ Jose Luis Rodriguez
------------------------------------
Name: Jose Luis Rodriguez
Title: President and CEO
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EXHIBIT I
DEFINITIONS AND INTERPRETATIONS
(a) Index of Definitions. Meanings to the following terms are located
at the following sections with this Agreement:
<TABLE>
<S> <C>
AAA................................................ Section 11.12(c)
Access Right Royalties............................. Section 1.02(a)
Action Date........................................ Section 11.12 (b)
Additional Cost Free Educational Accounts.......... Section 3.04
Affiliate.......................................... Definitions
Agents............................................. Section 11.14
Agreement.......................................... Preamble
Available.......................................... Section L02(b)
Basic Cost-Free Education Account.................. Section 3.03(b)
Basic Trading Area................................. Definitions
Calculation of Time Period......................... Definitions
Cell Site.......................................... Definitions
Channels........................................... Recitals
Claim.............................................. Section 9.04(a)
Class A Common Stock............................... Section 6.03(a)
Class B Common Stock............................... Section 6.03(a)
Clearwire.......................................... Preamble
Clearwire Documents................................ Section 6.02
Clearwire Indemnified Parties...................... Section 9.01(a)
Clearwire Material Adverse Effect.................. Definitions
Clearwire National Platform........................ Definitions
Clearwire Parent................................... Recitals
Closing Date(s).................................... Definitions
Collateral Document................................ Section 1.03
Commencement Date.................................. Section 1.02(a)(i)
Commercial Spectrum Capacity....................... Recitals
Communications Act................................. Recitals
Confidential Information........................... Section 11.15
Cost-Free Educational Account...................... Section 3.02(b)
Cost-Free Educational Accounts..................... Section 3.02
Damages............................................ Section 9.02
De facto Transfer Application...................... Definitions
Deductible......................................... Section 9.03
Default Interest Rate.............................. Definitions
</TABLE>
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<TABLE>
<S> <C>
Discovery Close Date............................... Section 11.12(c)(i)
Dispute............................................ Section 11.12(b)
Dispute Notice..................................... Section 11.12(b)
Dispute Resolution Procedures...................... Section 11.12(a)
Disqualification Event............................. Section 7.04
EBS................................................ Recitals
EBS Spectrum Capacity.............................. Section 1.01 (a)
Educational End User............................... Section 3.02(c)
Educational Reservation............................ Section 3.03(a)
Effective Date..................................... Preamble
Exhibits/Schedules................................. Definitions
Expert............................................. Section 11.12(d) (i)
FCC................................................ Recitals
FCC IUA Approval................................... Definitions
FCC Licenses....................................... Recitals
FCC Proceedings.................................... Section 5.04
FCC Qualifications................................. Section 7.04
FCC Rules.......................................... Recitals
Formula Quantity................................... Section 3.04(a)(i)
Future Spectrum Capacity........................... Recitals
Gender and Number.................................. Definitions
Geographic Market.................................. Section 1.05(b)(ii)
Governing Documents................................ Definitions
Government Agency.................................. Definitions
GSA................................................ Definitions
Hearing Date....................................... Section 11.12(c)(ii)
Herein............................................. Definitions
Including.......................................... Definitions
Initial Closing.................................... Section 4.03(a)
Initial Closing Date............................... Section 4.03(a)
Initial Proposal................................... Section 11.12 (d)(ii)
Initial Spectrum Capacity.......................... Recitals
IUA................................................ Section 1.02(a)
Law................................................ Definitions
LBS/UBS Spectrum................................... Definitions
Licensee........................................... Preamble
Licensee Documents................................. Section 5.02
Licensee [***] Spectrum............................ Section 1.02(c)
Licensee(s) Indemnified Parties.................... Section 9.01 (b)
Licensee(s) Material Adverse Effect................ Definitions
Licensee(s) Schedule............................... Section 5.04
Lien............................................... Definitions
</TABLE>
[*** Confidential Treatment Requested]
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<TABLE>
<S> <C>
Limited CPI Adjustment............................. Definitions
[***].............................................. Section 3.09(a)
Local Channel Ratio................................ Section 3.04(a)(i)
Market Area........................................ Section 3.02(c)
MHzPops............................................ Recitals
Monthly Royalties.................................. Definitions
MVNO Educational Account........................... Section 3.05(a)
Option............................................. Section 1.02
Option Notice...................................... Section 1.02
Other Definitional and Interpretive Matters........ Definitions
Other [***] Transaction............................ Section 1.02(c)
Party.............................................. Preamble
Payment Default.................................... Definitions
Permit............................................. Definitions
Person............................................. Definitions
Pleading Close Date................................ Section 11.12(c)(Hi)
Preferred Content Provider......................... Section 3.08(a)
Preferred Stock.................................... Section 6.03(a)
Prepaid Royalties.................................. Section 2.02
Prime Rate......................................... Section 10.02 (a)
Proceeding......................................... Definitions
ROFR............................................... Section 1.02(c)
Sector............................................. Section 3.02(c), Section 3.02(c)
Securities Act..................................... Definitions
Service Affiliate.................................. Section 1.03(a)
Spectrum........................................... Section 1.02(b)
Submission Period.................................. Section 11.12(c)
Subsequent Closing................................. Section 4.03(b)
Subsequent Closing Date............................ Section 4.03(b)
Third Party Agreement.............................. Section 1.02(b)
Total Consideration................................ Recitals
Upfront Royalty.................................... Definitions, Definitions
Wire Account....................................... Section 4.01 (a)
</TABLE>
[*** Confidential Treatment Requested]
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(b) Definitions. The following terms have the following meanings
throughout this Agreement:
"Affiliate" means, with respect to any entity, any other entity that
directly, or through one or more intermediaries, controls or is controlled by or
is under common control with such first entity, but does not include any entity
that directly or indirectly, or through one or more intermediaries, controls
Clearwire Parent, or any entity that directly or indirectly, or through one or
more intermediaries, is under common control with Clearwire Parent but is not a
direct or indirect subsidiary of Clearwire Parent. As used in this definition,
"control" (including, with correlative meanings, "controlled by" and "under
common control with") shall mean possession, directly or indirectly, of power to
direct or cause the direction of management or policies (whether through
ownership of securities or partnership or other ownership interests, by contract
or otherwise).
"Available" with respect to Commercial Spectrum Capacity means that (A) the
Commercial Spectrum Capacity on the Channels in the Market Area in question is
not encumbered by any Lien, including, but not limited to, any purchase option,
right of first refusal, or other contractual obligation of Licensee (each a
"Third Party Agreement") (excluding interference consents, interference
agreements or similar agreements pertaining to the technical operation of the
Channels granted or entered into prior to the Effective Date of the IUA) and (B)
the Licensee is able to make all of the representations and warranties contained
in the IUA and to perform the applicable covenants in the IUA.
"Basic Trading Area" has the meaning given in the FCC Rules for BRS.
"Cell Site" means a tower, building or other outdoor structure equipped
with one or more antennas to serve the surrounding area.
"Clearwire Material Adverse Effect" means a material adverse effect on the
business, operations, properties, assets, condition (financial or other) or
results of operations of Clearwire, taken as a whole, other than changes
affecting the broadband wireless business generally.
"Clearwire National Platform" means the sum of all Market Areas and all
other areas within the United States where Clearwire and its Affiliates provide
comparable services.
"Closing Date(s)" means the Initial Closing Date or each Subsequent Closing
Date.
"Commencement Date" means the "Commencement Date" under the applicable IUA
entered into pursuant to this Agreement.
"Defacto Transfer Application" has the meaning set forth in the IUA.
"Economic Royalty" means the total royalty set forth on Schedule A.
"Educational End Users" or "EEU" shall be only non-profit and/or
educational entities and/or Social Welfare Agencies that use the services for
their own purposes, provided that Licensee shall not provide such services
pursuant to an RFP or other substantially similar commercially competitive
opportunities (except in [***], where Licensee shall be permitted to do so), and
Licensee shall not provide such services to any entity if such entity already
has an existing business relationship with Clearwire. For this purpose, "Social
Welfare Agencies" (for all locations other than [***]) includes only those
governmental and quasi-governmental agencies and departments that provide as
their primary service public welfare assistance services (such as low-income
housing, food stamps, or domestic violence services) to the public. For all IUAs
for service in [***], "Social Welfare Agencies" shall include any local and
[***] Territorial governmental sector agency. "Social Welfare Agencies" shall
specifically exclude treasury and revenue services departments, law enforcement
agencies, legislatures, office of the mayor and the military; provided that,
with respect to [***] there shall be permitted to provide services to any local
and [***] Territorial governmental sector agency.
"FCC IUA Approval" means the grant of de facto transfer of an IUA by the
FCC.
"Geographic Market" means the larger of (A) the area covered by the GSA of
an EBS system that is listed on Schedule A as amended from time to time, without
regard to any subsequent swap affecting such EBS system after the Effective
Date, or (B) the area described in clause (A) above combined with the area(s)
covered by the substantially overlapping GSA(s) of EBS and/or BRS systems which
Clearwire or its Affiliates have the right to use in that same market.
"Governing Documents" means articles of incorporation, certificate of
incorporation, bylaws, certificate of formation, limited liability company
agreement, or similar governing documents of an entity.
"Government Agency" means any Federal, state or local government or any
foreign, national, provincial, or local government, or any governmental,
regulatory, legislative, executive, or administrative authority, agency or
commission, or any court, tribunal, or judicial body.
"GSA" shall have the meaning set forth in the IUA.
"Law" means the common law and any federal, provincial, state, local, or
foreign statute, law, ordinance, code, rule, regulation, or other requirement or
rule of law.
"LBS/UBS Spectrum" means lower and/or upper band EBS or BRS spectrum,
post-transition, and channels numbered 1,2 or 3, pre-transition, as defined by
the FCC Rules.
[*** Confidential Treatment Requested]
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"Licensee Material Adverse Effect" means a material adverse effect on the
business, operations, properties, assets, condition (financial or other) or
results of operations of Licensee(s), taken as a whole, other than changes
affecting EBS licensees or the broadband wireless business generally.
"Lien" means any lien, pledge, mortgage, deed of trust, security interest,
lease, option, right of first refusal, easement, or encumbrance.
"Limited CPI Adjustment" shall have the meaning set forth in the IUA.
"Market Area" means the network coverage footprint of the network of
Clearwire Parent and its Affiliates which includes all or part of the GSA(s) of
the Channels in the Geographic Market, based on its buildout engineered for
services from time to time once it has commenced commercial operation.
"Monthly Royalties" shall have the meaning set forth in the IUA.
"Payment Default" means the failure to pay an amount due under this
Agreement.
"Permit" means all permits, licenses, franchises, consents, variances,
exemptions, Authorizations and the like issued by Governmental Authorities to or
for the benefit of a Party to the Agreement (as the case may be).
"Person," whether or not such term is capitalized, means any individual,
partnership, firm, corporation, limited liability licensee(s), association,
trust, unincorporated organization, or other entity.
"Proceeding" means any action, suit, litigation, arbitration proceeding
(including any civil, criminal, administrative, investigative or appellate
proceeding), hearing, inquiry, examination or investigation commenced, brought,
conducted or heard by or before, or otherwise involving any court or other
Government Agency or any arbitrator or arbitration panel.
"Securities Act" means the Securities Act of 1933, as amended.
"Sector" means a directional antenna located at a cell site that serves a
portion of a Cell Site area.
"Upfront Royalty" shall have the meaning set forth in the IUA.
(c) Other Definitional and Interpretive Matters. Unless otherwise
expressly provided, for purposes of the Agreement, the following rules of
interpretation shall apply:
(1) Calculation of Time Period. When calculating the period
of time before which, within which or following which any act is to be done or
step taken pursuant
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to this Agreement, the date that is the reference date in calculating such
period shall be excluded. If the last day of such period is a non-Business Day,
the period in question shall end on the next succeeding Business Day.
(2) Exhibits/Schedules. The Exhibits and Schedules to this
Agreement are hereby incorporated and made a part hereof and are an integral
part of this Agreement. Any capitalized terms used in any Exhibit or Schedule
but not otherwise defined therein shall be defined as set forth in this
Agreement.
(3) Gender and Number. Any reference in this Agreement to
gender shall include all genders, and words imparting the singular number only
shall include the plural and vice versa.
(4) Herein. The words such as "herein," "hereinafter,"
"hereof" and "hereunder" refer to this Agreement as a whole and not merely to a
subdivision in which such words appear unless the context otherwise requires.
(5) Including. The word "including" or any variation thereof
means "including, without limitation" and shall not be construed to limit any
general statement that it follows to the specific or similar items or matters
immediately following it.
(d) The Parties hereto have participated jointly in the negotiation
and drafting of this Agreement and, in the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as jointly
drafted by the Parties hereto and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any provision
of this Agreement.
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EXHIBIT II
EDUCATIONAL BROADBAND SERVICE
LONG TERM DE FACTO TRANSFER
INDIVIDUAL USE AGREEMENT
THIS Educational Broadband Service Long Term De facto Transfer Individual
Use Agreement (the "AGREEMENT") is entered into as of [____________________],
2006 (the "EFFECTIVE DATE"), by and between Hispanic Information and
Telecommunications Network, Inc., a New York not-for-profit corporation (the
"LICENSEE"), and Clearwire Spectrum Holdings II LLC, a Nevada limited liability
company ("CLEARWIRE") (with each of Licensee and Clearwire sometimes referred to
individually as a "PARTY" and collectively as "PARTIES").
RECITALS:
WHEREAS the Licensee is authorized by the Federal Communications Commission
("FCC") under the rules, regulations and published policies of the FCC (as they
may be amended, "FCC RULES") to engineer and operate Educational Broadband
Service ("EBS") channels ________________ (including any associated J- or
K-Group channels and any channels exchanged for the listed channels, the
"CHANNELS") under call sign ___________________________ (the "FCC LICENSE") in
the _______________________ area (the "BASIC TRADING AREA"); and
WHEREAS the Parties have agreed to enter into this Agreement for Licensee
to provide Clearwire with access to the capacity on the Channels, which pursuant
to the FCC Rules, can be made available for commercial use, in accordance with
the terms and conditions below, and subject to FCC approval.
THEN, in consideration of the premises and covenants set forth in this
Agreement, and for good and valuable consideration, the sufficiency of which is
acknowledged by the Parties' signatures, the Parties agree as follows:
1. TERM
(A) TERM. Subject to Section 1(b), the term of this Agreement begins
on the Effective Date and ends on [__,_______], 2036 (the "TERM"), unless this
Agreement is terminated earlier in accordance with Section 11. Prior to the
Commencement Date (as defined below), the provisions of this Agreement which are
expressly ineffective before the Commencement Date as well as Sections 3, 4, 7
and 8 shall be ineffective until the Commencement Date, at which time all
provisions of this Agreement shall be fully effective. The other provisions in
this Agreement shall be effective from the Effective Date and until the
termination or expiration of this Agreement. The "COMMENCEMENT DATE" is the day
that the FCC's grant of the De facto Transfer Application appears on Public
Notice.
(B) RENEWAL OF FCC LICENSE AND EXTENSION OF AGREEMENT. In the event
that the FCC License expires during the Term, this Agreement will also expire at
such time unless the FCC License is renewed and FCC authorization for this
Agreement is extended. Licensee and Clearwire will cooperate to timely file a
renewal application for the FCC License,
in conjunction with a request for renewal of the De facto Transfer Authorization
for the next FCC License term. Subject to Section 11, this Agreement will
continue to apply unless the FCC denies by Final Order any application for
renewal of the FCC License or the De facto Transfer Authorization, or the FCC
requires the expiration of this Agreement at an earlier time. "Final Order"
means an order issued by the FCC that can no longer be appealed.
2. ROYALTY COMPENSATION
(A) UPFRONT ROYALTY. On the Commencement Date, the Upfront Royalty of
[___________________] shall be deemed to be paid in full and the remaining
amount of the Additional Cash Payment previously made by Clearwire pursuant to
that Master Royalty and Use Agreement dated September 20, 2006 entered into
between Licensee and Clearwire ("MRUA") shall be reduced by the amount of the
Upfront Royalty specified above.
(B) MONTHLY ROYALTIES. No monthly royalties are due under this
Agreement at any time.
(C) PAYMENT RECEIPT ADDRESS. Absent notice of different instructions
from Licensee, all cash payments to be paid to Licensee shall be paid by check
mailed to the following address, which address maybe changed by Licensee by
notice to Clearwire:
Hispanic Information and Telecommunications Network, Inc.
63 Flushing Avenue
Unit 281
Brooklyn, New York 11205
Attention: Jose Luis Rodriguez
(D) W-9. Within ten (10) days following the execution of this
Agreement, Licensee shall deliver a completed IRS Form W-9 to Clearwire.
3. EXCLUSIVE NEGOTIATION PERIOD
From a time period beginning [***] prior to the end of the Term and ending
[***] prior to the end of the Term, Licensee will negotiate in good faith
exclusively with Clearwire about a possible renewal of this Agreement. During
such period, Licensee and its agents and advisors will not discuss or solicit
other opportunities to enable third parties to make use of the Spectrum subject
to such exclusive negotiating period.
4. FREQUENCY BAND TRANSITION
The Channels covered by this Agreement either have been or will be subject
to relocation to different frequencies and/or to different technical
characteristics in accordance with a transition plan adopted in accordance with
the FCC Rules promulgated in WT Docket No. 03-66 (the "TRANSITION"). In the
event that the Transition is not complete on the Commencement Date, the
remaining provisions of this Section 4 shall be effective and, otherwise, shall
be ineffective. Clearwire and Licensee will cooperate in the Transition in
accordance with FCC Rules, to
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facilitate Clearwire's and Licensee's use of the Channels, consistent with this
Agreement. To the extent that, after the Commencement Date, the FCC allows
Licensee to participate in selecting the entity initiating and/or overseeing the
Transition of the Channels (the "PROPONENT"), then Licensee will designate and
otherwise reasonably promote Clearwire or its designee as Proponent or
co-Proponent and otherwise support Clearwire's interests in the means and
outcome of the Transition to the extent permitted by FCC Rules and consistent
with Licensee's Transition rights thereunder and interests hereunder and after
expiration or termination of this Agreement; provided, however, if Licensee is
obligated by any other agreement relating to other channels in the market to
promote some other party as Proponent or co-Proponent, Licensee's equally
qualified support for both Clearwire and such other party shall fully satisfy
Licensee's obligations in this sentence. Licensee will consult with Clearwire
before adopting, consenting to, or otherwise agreeing to any change of
frequencies or characteristics of the Channels after the Commencement Date other
than those changes specified by FCC Rules. After the Commencement Date, Licensee
will use its commercially reasonable efforts to make Clearwire aware of and to
seek the permission of meeting participants to allow Clearwire to participate in
its scheduled meetings with the Proponent to the extent they concern Transition
of the Channels to channel plans required or allowed as an outcome of the FCC's
transition proceedings, provided that Licensee is aware sufficiently in advance
of the meeting that it will involve that subject matter. In any event, Licensee
will provide Clearwire with a summary report of any meetings or discussions with
such third persons occurring after the Commencement Date in which Clearwire was
not invited to participate. In the event that neither Clearwire nor any third
party initiates and/or completes the Transition of the Channels within the time
frames specified by the FCC, Licensee may, at its sole option, avail itself of
any "self-transition" rights made available pursuant to FCC Rules. Licensee's
reasonable costs of such self-transition will be paid and/or reimbursed by
Clearwire in their entirety.
5. CAPACITY REQUIREMENTS AND USES; CERTAIN LICENSEE ACCESS RIGHT ROYALTIES
(A) CLEARWIRE CAPACITY. On and after the Commencement Date, subject to
FCC Rules and the restrictions imposed thereby, Clearwire will have the right to
use all of the capacity of the Channels other than Licensee's Reserved Capacity,
the Access Right Royalties and Licensee's other rights and benefits granted by
this Agreement ("CLEARWIRE CAPACITY") and, subject to FCC Rules and the power of
the FCC to control the radio frequency spectrum, Licensee shall not use
Clearwire Capacity or enter into any agreement to allow any third party to use
Clearwire Capacity other than as may be contemplated by this Agreement.
(B) LICENSEE'S RESERVED CAPACITY. As used in this Agreement,
"LICENSEE'S RESERVED CAPACITY" means:
(i) Prior to the Commencement Date, all of the Capacity of the
Channels.
(ii) From the Commencement Date until sixty (60) days after
Licensee receives a notice from Clearwire that Clearwire intends to utilize
the capacity of the Channels, the lesser of one Channel and that number of
Channels Licensee used during the last regular school session immediately
preceding the Effective Date (the "LEGACY
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RESERVATION"), which Licensee may use to provide services that further the
educational mission of accredited schools ("LICENSEE'S CAPACITY").
Licensee's operations pursuant to Section 5(b)(i) and (ii) are solely in
furtherance of Licensee's educational charter and are not intended for the
benefit of Clearwire or conducted in exchange for any royalties or other
consideration.
(iii) After the later of the Commencement Date and the date that
any one or more of the Channels is engineered to operate in any digital
modulation (the "LEGACY STOP DATE"), in respect of Licensee's educational
reservation covering the [***] educational spectrum capacity currently
required by the FCC Rules pertaining to the FCC Licenses (the "EDUCATIONAL
RESERVATION"), Licensee shall be permitted to utilize the Educational
Reservation in such locations served by the Clearwire National Platform on
a full time basis as Licensee desires for its operations. Clearwire and
Licensee shall at all times comply with applicable FCC Rules. Clearwire may
not use the Educational Reservation. In the event that the Parties cannot
agree on the application of any new rule or interpretation regarding the
Educational Reservation in their circumstances, the Parties shall jointly
approach the FCC for clarification in a timely fashion and, to the extent
the matter remains unresolved thereafter, shall settle the matter by
applying the Dispute Resolution Procedures.
(C) [***]
(D) SECTION 27.1214(E) AMENDMENTS. To the extent required under
Section 27.1214(e) of FCC Rules, on the date that is [***] after the Effective
Date and every [***] thereafter during the Term, Licensee shall have a period of
sixty (60) days to request a review of its minimum educational use requirements,
in which event and at which time the Parties shall negotiate in good faith an
amendment to this Agreement that accommodates any bona fide changes in
educational needs, technology and other relevant factors. Any such amendment
shall provide, among other terms and conditions agreed to by the Parties: (i)
with respect to Licensee and any Educational End Users (defined below) for whom
Clearwire has provided an Educational Account, Clearwire shall make available
any equipment, services or software upgrades that Clearwire makes generally
available to Clearwire's retail customers subscribing to the same tier of
service in the Market Area over Broadband Radio Service or EBS facilities; (ii)
to the extent such amendment materially increases Clearwire's monthly costs
either to operate its leased capacity or to meet Licensee's changed educational
use requirements, whether or not such costs will be offset by a reduction in the
Monthly Royalties for the
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remainder of the Term, a refund in an amount to be agreed upon by both Parties,
or both; (iii) Clearwire may accommodate changes in Licensee's Reserved Capacity
through any reasonable means available so as to avoid disruption to the advanced
wireless services provided by Clearwire; and (iv) Clearwire shall not be
required to accommodate changes in Licensee's Reserved Capacity in a manner that
has a negative economic impact on Clearwire or Clearwire's commercial operations
under the Agreement. The adjustments set forth in this subsection shall be in
addition to, and not in lieu of, adjustments set forth in other portions of this
Agreement. Neither Party shall have any obligation to enter into any amendment
pursuant to this Section.
(E) CHANNEL SWAPPING; COSTS. With the consent of Licensee, which
consent will not be unreasonably withheld, conditioned, or delayed, Clearwire
may require Licensee to enter into agreements to swap some or all of its
Channels for other channels in the Market (the "Swapped Channels"), and in
connection therewith file any necessary FCC applications to accomplish the swap,
so long as there is no material difference in the geographic service area (or
equivalent service area) ("GSA") and FCC authorized uses of the Swapped Channels
as compared to Licensee's previous Channels, taking into account any overlap(s)
of GSAs of such Channels and Swapped Channels with co-channel GSAs in other
markets. Clearwire agrees to bear all costs and expenses associated with the
implementation of channel swapping, channel loading (as discussed in this
Agreement), and channel shifting (as discussed in this Agreement), including the
reasonable out-of-pocket costs of Licensee's engineering consultants and
attorneys.
6. EQUIPMENT; CONTINUATION OF ACCESS RIGHT ROYALTIES; CONTROL OF OPERATIONS
(A) OPERATION AND MAINTENANCE OF EQUIPMENT. Subject to the last
sentence of this Section 6(a), prior to the Legacy Stop Date (as defined in
Section 5(b)(iii)), Licensee may operate the legacy video transmission equipment
currently in place, if any (including replacements thereto), for the Channels
(the "EBS EQUIPMENT") at each transmission site (including substituted and
additional sites), it being understood that Licensee's operations under this
Section 6(a) are solely for Licensee's educational purposes. If Licensee chooses
not to operate the transmission equipment currently in place or replacements
thereto, then Licensee and Clearwire will cooperate in filing all necessary
applications and notices with the FCC to "go dark" and not transmit on the
Channels for an allowed period of time or notify the FCC that Licensee has
ceased operation. If Clearwire or any of its Affiliates has EBS and/or BRS
spectrum operations in the Market Area of the Channels, then Clearwire will
operate legacy video for Licensee at Clearwire's expense until the earlier of
the Legacy Stop Date and the end of the Transition.
(B) MAINTENANCE OF LEGACY EQUIPMENT. Subject to the last sentence of
Section 6(a), while operating a video system for Licensee's educational purposes
under Section 6(a), it is Licensee's responsibility to operate and maintain its
video equipment.
(C) EQUIPMENT PURCHASE OR LEASE OPTION; TAIL SERVICES AND EQUIPMENT.
(i) Subject to subsection (ii) below, in the event this Agreement
expires or is terminated for any reason other than a default by Licensee,
Licensee shall have the option, upon giving notice to Clearwire within
thirty (30) days of such expiration or
5
termination (the "PURCHASE OPTION PERIOD"), to purchase the whole or any
part, as determined by Licensee, of transmission and reception equipment
(not including any tower rights) then in operation that is used to transmit
Licensee's Reserved Capacity on the Channels, whether such equipment is
dedicated entirely to Licensee's Reserved Capacity or shared (the
"LICENSEE'S SPECIFIED EQUIPMENT"), or equivalent equipment. The price for
such equipment shall be equal to the lesser of the [***] Within thirty (30)
day of each request by Licensee delivered to Clearwire, Clearwire
shall inform Licensee in writing (a "PRICE NOTICE") of the price for such
selected equipment [***]
(ii) If Licensee notifies Clearwire of its desire to acquire
Licensee's Specified Equipment and Additional Equipment-Related Features,
in lieu of selling the Licensee's Specified Equipment and Additional
Equipment-Related Features to Licensee as specified in subsection (i)
above, Clearwire shall have the option instead to lease such to Licensee
for an initial term of one year, renewable annually at the option of
Licensee for as many as nine (9) one-year renewal terms. During the period
of such lease, Clearwire shall
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6
have the right to share the use of Licensee's Specified Equipment and
Additional Equipment-Related Features, so long as such sharing does not
diminish the utility to Licensee. The monthly amount payable by Licensee to
Clearwire to lease these items shall be the lesser of: (x) 0.8% of fair
market value of the Licensee's Specified Equipment and Additional
Equipment-Related Features at the commencement of the initial lease term,
and (y) Clearwire's marginal cost of leasing Licensee's Specified Equipment
and Additional Equipment-Related Features to Licensee.
(iii) For the purposes of this Section 6(c), determinations of
fair market value shall be made by an independent engineering firm selected
by Licensee and subject to approval by Clearwire, and the cost of reaching
such determination shall be shared equally by the Parties.
(iv) For a period of [***] after the expiration or termination of
this Agreement, unless termination resulted from Licensee's breach of this
Agreement, Licensee shall have the right to continue to receive the same
in-kind facilities, services and benefits Licensee received during the
Term, including each of the Access Right Royalties under Section 7, on the
most favorable terms and conditions, including price, as Clearwire or any
of its Affiliates offers such Access Right Royalties, or services and
equipment substantially similar thereto. When Clearwire provides Licensee
with the price and other terms for the Access Right Royalties under this
paragraph, Clearwire will also provide an officer's certificate
certifying that such pricing and other terms meet the requirements of this
Section 6(c) and are the [***] The provisions of this Section 6(c) shall
survive the expiration or termination of this Agreement for any cause,
unless termination is caused by Licensee's breach of this Agreement:
(D) OPERATION OF FACILITIES ON THE CHANNELS TO MEET SUBSTANTIAL
SERVICE REQUIREMENTS. In addition to the foregoing. Clearwire, at its expense,
prior to the FCC-mandated deadline, but in no event later than [***] will
construct, operate and maintain facilities for the Channels that provide
operating transmission and coverage capability sufficient to satisfy minimum
build-out, operational, service or performance requirements applicable to the
Channels or which must be satisfied to avoid a reduction in Channels or their
capacity, including substantial service standards, all as required or prescribed
under then- applicable FCC Rules. In the event Clearwire does not satisfy this
requirement by such date, Licensee shall have the right to either terminate this
Agreement pursuant to Section 11, or construct such facilities as qualify for a
"safe harbor," and Clearwire shall reimburse Licensee's costs of such
construction.
(E) CONTROL OVER OPERATIONS. On and after the Commencement Date,
Clearwire shall exercise such day-to-day operational control over operations on
the Channels as permitted by FCC Rules pertaining to de facto transfer
agreements under its secondary markets rules; provided, however, that Licensee
shall retain such powers of oversight and control as are needed to ensure
compliance with standards of conduct for which Licensee remains accountable to
the FCC or as otherwise reserved by this Agreement. In the event (A) Licensee
becomes aware of an on-going violation or repeated violations by Clearwire of
the Communications Act or the FCC Rules governing its use or Licensee's use of
the Channels (collectively, the "Governing Rules"), or any other violation of
the Governing Rules that might adversely affect
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7
Licensee's rights in the License, might impose unreimbursed liability on
Licensee as licensee of the Channels or might cause the FCC to revoke, cancel,
rescind or materially adversely modify the De facto Transfer Authorization and
(B) after Licensee gives notice to Clearwire of such violation(s), Clearwire
does not immediately, in the case of an on-going violation, begin to cure such
violation and fully effect such cure within thirty (30) days or such period that
the FCC may specifically impose, and in the case of repeated violations, take
steps to prevent such violations in the future and fully effect such steps
within thirty (30) days or such period that the FCC may specifically impose,
such that the violation does not re-occur, Licensee shall be entitled to take
action to force Clearwire to immediately cease such violations), immediately
comply with the Governing Rules and take such preventative steps, all at
Clearwire's expense, and including the right to immediately seek injunctive
relief, and in each case without first giving Clearwire any further notice or
awaiting any further cure period.
7. ACCESS RIGHT ROYALTIES
Clearwire shall provide the access right royalties described in this
Section 7 (the "ACCESS RIGHT ROYALTIES") from and after the later of the
Commencement Date and the first commercial launch by Clearwire of its wireless
services on the Channels or other EBS or BRS channels in the Geographic Market
of the Channels. The Access Right Royalties will be provided in a manner
consistent with the way the Access Right Royalties are provided by Clearwire to
third parties under agreements that provide for Access Right Royalties similar
to the Access Right Royalties provided in this Agreement.
(A) COST-FREE EDUCATIONAL ACCOUNTS. Included in the Access Right
Royalties provided to Licensee, Licensee shall be entitled to Cost-Free
Educational Accounts in respect of the Educational Reservation and the
Additional Cost-Free Educational Accounts as provided in this Section 7.
(i) Educational Reservation Basic Cost-Free Educational Accounts.
A. In respect of Licensee's educational reservation covering
the five percent (5%) educational spectrum capacity currently required
by the FCC Rules pertaining to the FCC Licenses (the "EDUCATIONAL
RESERVATION"), Licensee shall be permitted to utilize the Educational
Reservation in such locations served by the Clearwire National
Platform on a full time basis as Licensee desires for its operations.
Clearwire and Licensee shall at all times comply with applicable FCC
Rules. Clearwire may not use the Educational Reservation. In the event
that the Parties cannot agree on the application of any new rule or
interpretation regarding the Educational Reservation in their
circumstances, the Parties shall jointly approach the FCC for
clarification in a timely fashion and, to the extent the matter
remains unresolved thereafter, shall settle the matter by applying the
Dispute Resolution Procedures.
B. Initially, Clearwire shall provide Licensee [***]
Cost-Free Educational Account per Cell Site in the Market Area (each a
"BASIC COST-FREE EDUCATION ACCOUNT"). The number of Cost-Free
Educational Accounts provided pursuant to this Agreement shall be
adjusted upward every five years proportionate to
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the growth of the overall data capacity of Clearwire's network in the
Market Area of the Channels. The growth (if any) in the overall data
capacity shall be determined in such fashion as shall be agreed by the
Parties in consultation with Clearwire engineers and other technical
experts prior.
(B) ADDITIONAL COST-FREE EDUCATIONAL ACCOUNTS. In addition to, and not
in lieu of, the Cost-Free Educational Accounts provided to Licensee by Clearwire
pursuant to the Educational Reservation as set forth in Section 7(a), Clearwire
shall provide Licensee with additional Cost-Free Educational Accounts in the
number computed in accordance with this Section 7(b) (the "Additional Cost-Free
Educational Accounts").
(i) Number and Periodic Adjustment. Licensee will have access to
additional spectrum capacity on Clearwire's National Platform in the form
of Cost-Free Educational Accounts equal to the greater of (X) [***]
Cost-Free Educational Accounts per Sector in the Market Area of the
Channels and (Y) the quantity of Cost-Free Educational Accounts determined
by applying the Formula Quantity. The number of Additional Cost Free
Educational Accounts that Clearwire is obligated to provide to Licensee
shall be recalculated and revised annually as of January 31 of each
calendar year.
A. Educational End Users. Cost-Free Educational Accounts
shall be exclusively for Educational End Users and not for resale,
assignment or transfer by Licensee outside of its Educational End User
environment or to persons who cease to be officially associated with
such Educational End User. (By way of example, a university may resell
the service to its students, faculty, administrators and staff, while
such persons are involved with the university, but shall cease to
provide the service if a member of the faculty terminates employment
or a student graduates and ceases to be involved in university
matters.)
B. Time of Delivery. The Additional Cost-Free Educational
Accounts shall be provided by Clearwire to Licensee pursuant to this
Section 7(b) upon the commercial launch of Clearwire's broadband
wireless service in the Market Area of the Channels, or the applicable
Commencement Date thereof if later.
(C) LICENSEE MVNO.
(i) In addition to the right to Cost-Free Educational Accounts,
Licensee shall have the right to resell the Clearwire service in the form
of MVNO Educational Accounts to Educational End Users in the Market Area.
An "MVNO EDUCATIONAL ACCOUNT" shall have the identical characteristics as a
Cost-Free Educational Account, except that there shall be a charge to
Licensee as determined pursuant to this Section 7(c). Clearwire shall sell
to Licensee such services, at a cost equal to the lowest wholesale rate
provided by Clearwire to an arms-length third party in the Market Area of
the Channels or other comparable market pursuant to any applicable
agreement. However, the number of MVNO Educational Accounts is limited in
such Market Area to twice the number of Cost-Free Educational Accounts for
such Market Area.
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9
(ii) Mechanics. The resale of Clearwire's services pursuant to
this Section 7(c) shall be accomplished pursuant to a standard Clearwire
wholesale agreement form revised to be consistent with the terms of this
Agreement, which will be provided to Licensee upon its request to resell an
MVNO Educational Account to an Educational End. User. Such arrangement
shall be executed not later than thirty (30) days after the availability of
such services.
(D) ACCESS TO EDUCATIONAL END USER DEVICES. Clearwire shall also make
any end-user equipment used in the Clearwire National Platform available for
purchase by Licensee at [***] above Clearwire's cost to acquire such end-user
equipment. Equipment provided to Licensee pursuant to this section shall be used
solely by Educational End Users and not for resale.
(E) SHARING OF FEATURES AND SERVICE SETS. Licensee shall have access
to, and full use of, system capabilities, services and feature sets that are
generally provided to Clearwire's retail customers or wholesalers to mass-market
customers. Licensee shall have access to reasonably necessary support made
available to Clearwire's commercial customers generally, and that is reasonably
necessary for Licensee to offer services to its Educational End Users as
contemplated by their agreement. Licensee shall have access to new capabilities,
features and service sets within six months of the time that Clearwire makes
them available to customers generally, but not earlier than the Commencement
Date.
(F) ORDERING COST-FREE EDUCATIONAL ACCOUNTS AND ADDITIONAL COST-FREE
EDUCATIONAL ACCOUNTS; DELIVERY AND INSTALLATION. Licensee may activate Cost-Free
Educational Accounts and Additional Cost-Free Educational Accounts at no cost to
Licensee, via submission of a standard Order Form or online ordering to
Clearwire, to the extent consistent with the terms of this Agreement. Clearwire
will fill each such order within the standard delivery interval by which it
activates new service requests for subscribers generally, and shall ship
associated user units to Licensee's requested destination or complete
installation of user equipment which normally is installed by Clearwire, its
Affiliate or a contractor of either of them within the standard installation
interval by which it makes new installations of user units. Licensee shall
comply with all laws and obtain any necessary governmental permits or approvals,
and third party approvals, which are necessary in order for Clearwire to
undertake an installation.
(G) TERMS OF USE. To the extent not inconsistent with the terms of
this Agreement, Licensee's ordering and use of Cost-Free Educational Accounts,
the Additional Cost-Free Educational Accounts and MVNO Accounts, and the use of
such services by Licensee's users and permitted users, shall be governed by the
acceptable use policy and terms of service, and such other policies of general
applicability which apply to such services, which are subject to amendment and
may be found at http://www.clearwire.com or such other URL as may be designated;
provided, however, that financial terms contained in the terms of service shall
not apply to such services. In addition to the foregoing policies, but only to
the extent not inconsistent with the terms of this Agreement, Clearwire may
specify from time to time, in its sole discretion, reasonable and
non-discriminatory procedures for the activation, addition, deletion or
substitution of services to Licensee, its users and permitted users that do not
impose obligations on or detract from the services received by Licensee or its
permitted users.
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(H) EQUIPMENT AND SOFTWARE. For Licensee and any permitted users for
whom Clearwire provides services pursuant to this Section 7, Clearwire shall
make available any equipment, services or software, including upgrades, that
Clearwire makes generally available to Clearwire's or its Affiliate's retail
customers subscribing to the same tier of service in the market(s) where it is
used over BRS or EBS facilities. In the event that any equipment upgrade
involves replacement of equipment, the replaced equipment shall be returned to
Clearwire or its designee and title to the replacement equipment shall transfer
to Licensee or its designee.
(I) TITLE. All equipment provided by Clearwire to Licensee shall be
the property of Licensee or its designee(s), free and clear of all liens and
encumbrances, when paid in full (if any payment is required). Licensee shall
own, and be solely responsible for the maintenance and operation of, all
facilities installed at Licensee's locations and receive sites, including the
sites of its permitted users, subject to manufacturers' warranties.
(J) PREFERRED CONTENT PROVIDER.
(i) Scope. In the event that Clearwire provides third party
content to customers over its network in the Market Area of the Channels,
Licensee may elect to become a "PREFERRED CONTENT PROVIDER" over such
network in such Market Area for such duration as Licensee may select. As a
Preferred Content Provider, Licensee shall have the same degree of access
to, and use of, any system capability, service or feature set that is
provided to premium third party content providers.
(ii) Service Sets and Features. To the extent that Clearwire's or
its Affiliates' most favored program suppliers pay for features and/or
service sets, Licensee shall pay an equal amount for equal features and/or
service sets to the extent that Licensee elects to utilize them. Licensee
agrees that the programming that Licensee supplies to customers through
Clearwire's network will be educational in nature. Licensee agrees not to
resell Clearwire's network access, features and/or service sets to third
parties, except in accordance with Sections 7(b)(i)a. and 7(c).
(iii) Capacity Constraints. Clearwire reserves the right to
restrict the use of the capabilities and services made available to
Licensee as a Preferred Content Provider under this Section 7(j) if such
use is no longer commercially and technically feasible due to limitations
in network capabilities. Clearwire shall comply with the provisions of this
Agreement to ensure timely access to information about capacity usage and
permit Licensee a reasonable opportunity to secure alternative access.
(K) DEFINITIONS.
(i) "ADDITIONAL COST-FREE EDUCATIONAL ACCOUNT" is defined in
Section 7(b).
(ii) "CELL SITE" means a tower, building or other outdoor
structure equipped with one or more antennas to serve the surrounding area.
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(iii) "CLEARWIRE NATIONAL PLATFORM" means all Market Areas and
all other areas within the United States where Clearwire and its Affiliates
provide comparable services.
(iv) "COST-FREE EDUCATIONAL ACCOUNT" means a wireless broadband
connection that Clearwire or its affiliate provides to Licensee without
charge or expense to Licensee. Cost-Free Educational Accounts shall have
the same capacity and characteristics as the highest level of premium mass
market retail service provided on Clearwire or its affiliate's network in
the market where it is used. Multiple individuals that are associated with
an Educational End-User may share the same Cost-Free Educational Account
through Wi-Fi hotspots, local area networks, and other means. To the extent
not inconsistent with the terms of this Agreement, the Cost-Free
Educational Accounts shall be subject to the terms of Clearwire's then
generally applicable Acceptable Use Policy. The Cost-Free Educational
Accounts shall be fully portable anywhere within the Clearwire National
Platform to the extent that Clearwire offers such portability to any
customer.
(v) "EDUCATIONAL END USERS" OR "EEU" shall be only non-profit
and/or educational entities and/or Social Welfare Agencies that use the
services for their own purposes, provided that Licensees shall not provide
such services pursuant to an RFP or other substantially similar
commercially competitive opportunities (unless the Basic Trading Area of
this IUA is in [***], in which case Licensee shall be permitted to provide
such services pursuant to an RFP or other substantially similar
commercially competitive opportunities), and Licensees shall not provide
such services to any entity if such entity already has an existing business
relationship with Clearwire. For this purpose, "SOCIAL WELFARE AGENCIES"
(for all locations other than [***]) includes only those governmental and
quasi-governmental agencies and departments that provide as their primary
service public welfare assistance services (such as low-income housing,
food stamps, or domestic violence services) to the public. If the Basic
Trading Area of this IUA is in [***], "Social Welfare Agencies" shall
include any local and [***] Territorial governmental sector agency. "Social
Welfare Agencies" shall specifically exclude treasury and revenue services
departments, law enforcement agencies, legislatures, office of the mayor
and the military.
(vi) "FORMULA QUANTITY" as of any date, is the product, rounded
up or down to the nearest whole number, obtained by multiplying: (a) the
Local Channel Ratio by (b) [***] and by (c) the number of subscribers
served by Clearwire or any of its affiliates in the Market Area of the
Channels as of the end of the previous calendar year. In the event that
this product is a fraction, it shall be rounded up or down to the nearest
whole number.
(vii) "GEOGRAPHIC MARKET" means the larger of (A) the area
covered by the GSA(s) of the Channels, as amended from time to time,
without regard to any subsequent swap affecting the Channels after the
Effective Date, and (B) such GSA(s) combined with the area(s) covered by
the substantially overlapping GSA(s) of EBS and/or BRS systems which
Clearwire or any of its Affiliates have the right to use in that same
market.
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(viii) "LOCAL CHANNEL RATIO" is the fraction obtained by dividing
the number of Channels as of the date of the calculation by the total
number of EBS and BRS channels in the Market Area of the Channels with
substantially overlapping GSAs then used to provide service in such Market
Area licensed to or under a use agreement with Clearwire or any of its
Affiliates (including those of Licensee) as of that date, in each case
determined without multiplying a channel by the number of times it is
deployed.
(ix) "MARKET AREA" means the network coverage footprint of the
network of Clearwire and its Affiliates which includes all or part of the
GSA(s) of the Channels in the Geographic Market, based on its build-out
engineered for services from time to time once it has commenced commercial
operation.
(x) "MARKET AREA OF THE CHANNELS" is the Market Area of the
Channels as of the Effective Date.
(xi) "MVNO ACCOUNTS" means a broadband connection and related
services that Clearwire or its affiliate provides, including such user
equipment as Clearwire or its affiliate may provide for such connection
services.
(xii) "ORDER FORM" is a form which elicits such information as is
reasonably required by Clearwire to provide the service, and which does not
contain any provision that modifies the service or any provision that is
inconsistent with this Agreement. It is agreed that Clearwire Order Forms
will be in the form of its standard order forms.
(xiii) "SECTOR" means a directional antenna located at a cell
site that serves a portion of a Cell Site area.
8. FCC FILINGS; INTERFERENCE CONSENTS
Upon Clearwire's reasonable request, and within five (5) days of Licensee's
receipt, Licensee shall promptly review, execute and file (if necessary), and,
together with Clearwire, prosecute, all notifications, applications, petitions,
waivers, amendments, and other related documents, including, without limitation
FCC Long Term Lease Applications, necessary to secure FCC approval for
Licensee's and Clearwire's intended uses of the Channels, provided such filings
are consistent with this Agreement and Licensee's legal obligations. Licensee
shall promptly file any requests for extension of construction periods or
performance benchmarks reasonably requested by Clearwire. Licensee shall
promptly, within fifteen (15) business days of its receipt, review and, if
consistent with this Agreement and Licensee's legal obligations, execute and
provide Clearwire any "no objection" letters, interference consent agreements or
retransmission consents that Clearwire may reasonably request, provided that the
action requiring consent does not cause material degradation of Licensee's
signal transmission capabilities. As an illustration, without limiting the
foregoing, interference consent agreements and "no objection letters" that (i)
involve reciprocal limitations on the operations of Licensee's licensed
facilities and other affected facilities, and (ii) waive FCC interference
protection criteria subject to protection from actual harmful interference,
taking into account topography, foliage, ground clutter and other real world
factors limiting signal propagation, shall not be deemed to
13
cause material degradation of Licensee's signal transmission capabilities.
During the Term, Licensee shall not make any filings with any governmental
authority, including the FCC, without prior consultation or coordination with
Clearwire, and Licensee shall not provide any "no objection" letters,
interference consents and/or retransmission consents to any third party without
Clearwire's prior written consent, such consent not to be unreasonably withheld.
9. OTHER APPLICATIONS, APPLICATION COSTS; FEES; DE FACTO TRANSFER
AUTHORIZATION APPLICATION
(A) APPLICATION PREPARATION. Clearwire will prepare and submit in its
name all applications, amendments, petitions, requests for waivers, and other
documents necessary for the proper operation of Clearwire Capacity consistent
with this Agreement and Licensee's responsibilities as a FCC licensee. Licensee
will prepare and submit all applications, amendments, petitions, requests for
waivers, and other documents necessary for the modification, maintenance and
renewal of the FCC License that, under FCC Rules, may only be filed by Licensee,
including any such filings reasonably requested by Clearwire that are consistent
with this Agreement and Licensee's responsibilities as a FCC licensee. The
Parties will cooperate in the preparation and submission of all applications,
amendments, petitions, requests for waivers, and other documents necessary to
secure any FCC approval, consent or other action required to effectuate this
Agreement, including the substantial service showing required by [***]. In no
event shall Licensee be required to make any filing or to take any position
before the FCC or other Government Agency that is inconsistent with Licensee's
interests or which Licensee believes in good faith may be construed by the FCC
or other Government Agency as inconsistent with its responsibilities as a FCC
licensee, not submitted in good faith or submitted for a purpose of delay in a
proceeding.
(B) APPLICATION COSTS. Clearwire will, at its own expense, prepare all
applications, notices, certificates, exhibits, consent agreements, approvals or
authorizations that Clearwire submits to the FCC or seeks to have Licensee
submit to the FCC pursuant to the Agreement. Clearwire will also promptly pay or
reimburse Licensee for its reasonable out-of-pocket expenses in connection with
the activities requested or required of Licensee by Clearwire under this
Agreement, including Licensee's expenses associated with the renewal of any FCC
License and with any other filings with, or information requested by, the FCC,
or required of Licensee to remain eligible under FCC Rules to provide Clearwire
Capacity to Clearwire.
(C) FEES AND TAXES. Clearwire will pay any Federal spectrum, federal
regulatory, universal service, number portability fees, payphone fees, E911 fees
and other fees, charges, assessments, impositions and taxes associated with the
FCC License or imposed on Licensee as a result of the licensing, regulation or
use of the capacity of the Channels by Licensee or Clearwire including, without
limitation, any such fees, charges, assessments, impositions and taxes that may
be imposed on or with respect to EBS spectrum or spectrum licenses in the
future. Clearwire shall pay all such fees, charges, assessments, impositions and
taxes upon receipt of notice from the FCC or taxing authority that such fees are
due, or upon receipt of at least thirty (30) days advance written notice from
Licensee that such fees or charges are due in the event that notice is not sent
to Clearwire by the FCC or such taxing authority. Without limiting the
generality of the foregoing, Clearwire shall be liable for and shall pay (and
shall indemnify and hold harmless the Licensee Indemnified Parties against) all
sales, use, stamp,
14
documentary, filing, recording, transfer, real estate transfer, registration,
duty or similar fees or taxes or governmental charges (together with any
interest or penalty, addition to tax or additional amount imposed) as levied by
any taxing authority in connection with this Agreement.
(D) FCC LONG TERM DE FACTO TRANSFER LEASE AND EXTENSION APPLICATIONS.
Within ten (10) business days following the execution of this Agreement and
prior to consummating the transfer of de facto control of the Channels, the
Parties shall cooperate as required to prepare and file with the FCC all forms
and related exhibits, certifications and other documents necessary to obtain the
FCC's authorization (the "DE FACTO TRANSFER AUTHORIZATION") of the long term de
facto transfer caused by this Agreement as set forth in FCC Rule 1.9030(e) as
amended from time to time (the "FCC LONG TERM LEASE APPLICATION"). Each Party
shall fully cooperate with the other, and do all things reasonably necessary to
timely submit, prosecute and defend the FCC Long Term Lease Application, and
will promptly file or provide the other Party with all other information which
is required to be provided to the FCC in furtherance of efforts to obtain or
retain such grant. The Parties shall disclose in the FCC Long Term Lease
Application the automatic extension of Clearwire's use rights upon the renewal
of the FCC License. The Parties shall include in any FCC License renewal
application, or separately request, as necessary, a request to permit
Clearwire's use rights for the renewal term of the FCC License, if the Term will
continue during any part of such FCC License renewal term. The Parties shall
prosecute each such original or renewal application diligently and in good
faith, including defending it and the grant thereof against all petitions to
deny, informal objections, petitions for reconsideration, applications for
review, appeals, writs, requests for stay filed against any such application or
its grant, and shall file and prosecute petitions for reconsideration,
applications for review, petitions for appeal, notices of appeal, writs of
certiorari and associated pleadings challenging any denial of any such
application or request. Any fees associated with the filing of the FCC Long Term
Lease Application and applications or requests for renewal of the De facto
Transfer Authorization, and all costs incurred in preparing, prosecuting or
defending any and all petitions for reconsideration, applications for review,
appeals, writs, requests for stay and remands of the grant or denial of any such
original or renewal application and related pleadings, and for activity (such as
oral argument and FCC staff visits) in support thereof, shall be paid by
Clearwire. To the extent Licensee is required to file this Agreement with the
FCC, the Licensee shall first notify and consult with Clearwire, and will to the
extent permitted by the FCC redact all information from the Agreement which
Clearwire reasonably designates as confidential including, but not limited to,
all payment information.
10. TRANSFERS OR ASSIGNMENTS
(A) ELIGIBILITY FOR TRANSFER OR ASSIGNMENT. Licensee shall not assign
its interest in this Agreement or the License to any person or entity that is
not eligible or qualified to hold the License or lease the spectrum under
applicable FCC Rules. Clearwire shall not assign its interest in this Agreement
and will not enter into spectrum subleasing arrangements for the spectrum
subject to the License with any person or entity that is not eligible or
qualified to lease the spectrum under applicable FCC Rules.
(B) CLEARWIRE ASSIGNMENT. [***]
[*** Confidential Treatment Requested]
15
[***]
(C) LICENSEE ASSIGNMENT. Subject at all times to Clearwire's right to
purchase the License if the FCC determines to open eligibility for EBS spectrum
(as set forth in Section 21(a) hereof), Licensee may, during the Term, assign
its License or individual Channels to a qualified EBS eligible, or discontinue
EBS operations and surrender its License to the FCC, subject to the following:
Licensee shall notify Clearwire immediately upon making such decision, Licensee
shall not discuss such decision with any third parties without Clearwire's
written consent, and Licensee shall assign any affected Channels or the License
to an FCC-qualified entity designated by Clearwire who will assume the Channels
or License and assume Licensee's obligations under this Agreement (a "Successor
Licensee"). Licensee, Successor Licensee and Clearwire shall cooperate in filing
with the FCC any and all paperwork necessary to assign the license to the
Successor Licensee and receive continued FCC consent, if necessary, to the long
term de facto spectrum leasing arrangement reflected in this Agreement.
(D) CLEARWIRE SUBLEASE. [***]
(E) LICENSEE RELEASE. Upon the valid consummation of the sale,
assignment or transfer of the License to any third party as described in this
Section, the execution by such third party of an assignment and assumption
agreement with respect to this Agreement, and the expiration of any applicable
FCC reconsideration periods for such assignment or transfer: (i) Licensee will
be released and discharged from all obligations to Clearwire arising thereafter;
and (ii) Licensee will not incur any penalties as a result of and will not be
responsible for any of Clearwire's expenses associated with the sale, assignment
or transfer, except that nothing shall release Licensee from any liabilities
incurred prior to the execution of such assignment and assumption agreement.
11. TERMINATION OF AGREEMENT
[*** Confidential Treatment Requested]
16
(A) This Agreement may be terminated prior to expiration of a Term
under any of the following circumstances: (i) by mutual written agreement of the
Parties; (ii) by Clearwire, upon giving written notice to Licensee in the Event
of Default; provided that such Event of Default is not cured (if it is capable
of being cured) within thirty (30) days following such notice; (iii) by
Licensee, upon giving written notice to Clearwire in the Event of Default
provided such Event of Default is not cured (if it is capable of being cured)
within one hundred eighty (180) days thereof; (iv) by Clearwire upon giving
written notice to Licensee within thirty (30) days of a Loss (as hereinafter
defined); (v) by Clearwire upon written notice to Licensee and to the extent
allowed under law, if Licensee files a petition pursuant to Title 7 or 11 of the
United States Bankruptcy Code or is adjudged a debtor after the filing of an
involuntary bankruptcy petition against Licensee, or if Licensee files a
petition for relief pursuant to any state insolvency laws. If the Agreement is
terminated prior to the expected termination date which was disclosed to the
FCC, Licensee shall file a notification with the FCC no later than ten (10) days
after the early termination indicating the date the Agreement was terminated.
(B) It shall be an "Event of Default" hereunder if either party fails
to perform a material obligation or breaches a material representation and
warranty contained in this Agreement in circumstances where such failure results
in the inability of the other party to exercise its full rights under this
Agreement
(C) The term "Loss" means: (1) expiration of the License without
renewal; (2) License termination or revocation by the FCC without reinstatement;
or (3) the unavailability of the Channels for the provision of Clearwire's
Advanced Wireless Services due to regulatory action, including, but not limited
to, FCC denial of the FCC Long Term License Application related to this
Agreement, or reallocation of the Channels for purposes incompatible with
Clearwire's business, or adoption of rules or policies that substantially
frustrate achievement of the purposes of this Agreement. A Loss shall not be
deemed a default by Licensee or Clearwire if the Loss was beyond the reasonable
control of such party, and such party used its best efforts to preserve the
License. In ha the event of a Loss, the Parties shall cooperate in seeking
special temporary authority from the FCC to allow Clearwire to continue
operating on the Channels until such time as it can transition its users to
other spectrum and minimize service disruption to its business and other
activities.
(D) Licensee may terminate this Agreement pursuant to Section 16(b).
(E) If the Commencement date does not occur by the [***] of the
Effective Date, thereafter either Party may terminate this Agreement at any time
before the Commencement Date by giving written notice of termination to the
other Party.
(F) In the event that the Commencement Date occurs, but the FCC's
grant of the De facto Transfer Authorization is subsequently rescinded and such
rescission has become a Final Order, this Agreement shall be deemed terminated
on the date specified as the required termination date by any order in that
proceeding (as that date may have been extended by stay or otherwise) or, in the
absence of such specified date, the effective date of the last decision in that
proceeding.
[*** Confidential Treatment Requested]
17
(G) In the event of an FCC Final Order denying any application to
allow the continuation or renewal of the De facto Transfer Authorization for a
portion of the Term, this Agreement shall be deemed terminated on the date
specified as the required termination date by any order in that proceeding (as
that date may have been extended by stay or otherwise) or, in the absence of
such specified date, the effective date of the last decision in that proceeding.
(H) The Parties will notify the FCC of the termination of this
Agreement with respect to the FCC License or any of the Channels within ten (10)
calendar days following the termination.
(I) Except as expressly set forth in this Agreement, upon the
expiration or termination of this Agreement, each Party will pay its own fees
and expenses related to this Agreement and the transactions contemplated herein,
and the Parties will have no further liability to each other except by reason of
any breach of this Agreement occurring prior to the date of expiration or
termination or after such expiration or termination if the breach is of a
provision that by its terms survives such expiration or termination. Any
termination or expiration of this Agreement, regardless of cause, will not
release either Licensee or Clearwire from any liability arising from any breach
or violation by that Party of the terms of this Agreement prior to the
expiration or termination. The general and procedural provisions of this
Agreement, which may be relevant to enforcing the obligations or duties of the
Parties, as well as any other provisions that by their terms obligate either
party following expiration or termination, will survive the expiration or
termination of this Agreement until the obligations or duties are performed or
discharged in full.
(J) The Parties recognize that, in the event that a Party fails or
refuses to perform any provisions of this Agreement, monetary damages alone will
not be adequate. The non-defaulting Party shall therefore be entitled, in
addition to any other remedies which may be available, including money damages,
to obtain specific performance of the terms of this Agreement. Except as
expressly set forth in this Agreement no remedy conferred by any of the specific
provisions of this Agreement is intended to be exclusive of any other remedy,
and each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute or otherwise. Except as expressly set forth in this Agreement, the
election of any one or more remedies by a Party shall not constitute a waiver of
the right to pursue other available remedies at any time.
12. EXPENSES AND REVENUES
All subsequent documents appended to this Agreement, and any FCC
activity or activity to preserve, obtain or renew licenses shall be reimbursed
by Clearwire, provided that (and except as specified otherwise in this
Agreement) expenses in excess of $1,000 are approved as to reasonableness by
Clearwire in advance, such approval not to be unreasonably withheld, conditioned
or delayed; and provided further that Licensee shall not be required to take any
action for which Licensee may request expense reimbursement from Clearwire until
the Parties have reached agreement on reimbursement of expenses of Licensee
related to such action in excess of $1,000. Except as otherwise provided in this
Agreement, each Party will pay its own expenses incident to any amendments or
modifications to the Agreement, including, but not limited to, all fees and
expenses of their respective legal counsel and any engineering and
18
accounting expenses. Licensee is entitled to none of the revenue generated from
the use of the Clearwire Capacity, but only the royalties provided for in this
Agreement.
13. COMPETITION
During the Term of this Agreement, Licensee shall not, either itself or
with a third party other than Clearwire, engage in any commercial or for-profit
activities utilizing any of the Channels that directly compete with Clearwire or
its affiliates; provided, however, that any relationship between Licensee and
any Permitted End User relating to the use by such Permitted End User of
Advanced Wireless Services shall not be deemed to be in violation of the
foregoing restriction. During the Term of this Agreement, and except as
contemplated herein, Licensee shall not lease, sublease, pledge, encumber or
otherwise permit or grant any current rights with respect to use of the
Channels, in whole or in part. Without limiting the foregoing, Licensee shall
not resell or otherwise provide services to any end user that is not a Permitted
End User.
14. CONFIDENTIALITY AND NON-DISCLOSURE
(A) CONFIDENTIALITY OF THE TERMS OF THIS AGREEMENT. The terms of this
Agreement that are not otherwise required to be disclosed to the FCC in support
of the De facto Transfer Application, requests for renewal thereof or notices
submitted to the FCC, or as required to be disclosed in filings with the
Securities and Exchange Commission or state securities agencies, will be kept
strictly confidential by the Parties and their agents, which confidentiality
obligation will survive the termination or expiration of this Agreement for a
period of two (2) years. The Parties may make disclosures as required by law,
and to employees, shareholders, agents, attorneys and accountants (collectively,
"AGENTS") as required to perform obligations under the Agreement, provided,
however, that the Parties will cause all Agents to honor the provisions of this
section. In addition, either Party may disclose this Agreement to its
Affiliates, strategic partners, actual or potential investors, lenders,
acquirers, merger partners, and others whom it deems in good faith to have a
need to know such information for purposes of pursuing a transaction or business
relationship with it, so long as it secures an enforceable obligation from such
third party to limit the use and disclosure of this Agreement as provided
herein. The Parties will submit a confidentiality request to the FCC in the
event the FCC seeks from the Parties a copy of this Agreement or any other
confidential information regarding its terms.
(B) NON-DISCLOSURE OF SHARED INFORMATION. As used herein, the term
"Confidential Information" shall mean all non-public information disclosed
hereunder, whether written or oral, that is designated as confidential or that,
given the nature of the information or the circumstances surrounding its
disclosure, is plainly confidential or by the Parties' practices should be
understood to be confidential. The term Confidential Information does not
include information which: (1) has been or becomes published or is now, or in
the future, in the public domain without breach of this Agreement or breach of a
similar agreement by a third party; (2) prior to disclosure hereunder, is
property within the legitimate possession of the receiving
19
Party; (3) is lawfully received from a third party having rights therein without
restriction of third party's or the receiving Parry's rights to disseminate the
information and without notice of any restriction against its further
disclosure; or (4) is independently developed by the receiving Party through
persons who have not had, either directly or indirectly, access to or knowledge
of such Confidential Information. During the Term, the Parties may supply and/or
disclose to each other Confidential Information relating to the business of the
other Party. Each item of Confidential Information will be kept confidential by
the Parties during the Term and for a period of three (3) years thereafter, but
may be disclosed in the enforcement or seeking of damages with respect to a
Party's rights under this Agreement. The receiving Party will be responsible for
any improper use of the Confidential Information by it or any of its Agents.
Without the prior written consent of the disclosing Party, the receiving Party
will not disclose to any entity or person the Confidential Information, or the
fact that the Confidential Information has been made available to it, except for
disclosures required by law, disclosures authorized by the Party owning the
Confidential Information and disclosures made in the context of the enforcement
or seeking of damages with respect to a Party's rights under this Agreement.
Each person to whom Confidential Information is disclosed must be advised of its
confidential nature and must agree to abide by the terms of this section.
15. ASSUMPTION OF LIABILITIES
Neither Party is assuming or will be responsible for any of the other's
liabilities or obligations (including but not limited to customer obligations)
except as required by the FCC or this Agreement.
16. FCC-MANDATED OBLIGATIONS
(A) Licensee and Clearwire are familiar with the FCC Rules affecting
secondary markets for spectrum and the provision of EBS, the Communications Act
of 1934, as amended ("COMMUNICATIONS ACT"), the Code of Federal Regulations, and
all other applicable FCC Rules, and agree to comply with all such laws and
regulations.
(B) Effective on the Commencement Date, Clearwire assumes primary
responsibility for complying with the Communications Act, and any FCC Rules that
apply to the Channels and FCC License, and this Agreement may be revoked,
cancelled or terminated, in accordance with Section 11, by Licensee or by the
FCC if Clearwire materially fails to comply with applicable laws and
regulations.
(C) Neither Licensee nor Clearwire will represent itself as the legal
representative of the other before the FCC or any party, but will cooperate with
each other consistent with this Agreement with respect to FCC matters concerning
the Licenses and the Channels.
(D) If the FCC License is revoked, cancelled, terminated or otherwise
ceases to be in effect, Clearwire will have no continuing authority or right to
use the Channels unless otherwise authorized by the FCC.
(E) This Agreement is not an assignment, sale or transfer of the FCC
License itself.
20
(F) This Agreement will not be assigned to any entity that is
ineligible or unqualified to enter into a use agreement for the Channels under
the FCC Rules.
(G) Licensee will not consent to an assignment, subassignment or
sublicensing of this secondary market arrangement unless such assignment,
subassignment or sublicensing complies with applicable FCC Rules and this
Agreement.
(H) Licensee and Clearwire must each retain a copy of this Agreement
and make it available upon request by the FCC, in accordance with the
confidentiality provisions in Section 14.
17. LICENSEE'S AUTHORIZATIONS
Licensee shall maintain all necessary qualifications to hold and to obtain
renewal in the ordinary course of the FCC License subject to Clearwire's
obligations under this Agreement, including, without limitation, Clearwire's
obligation to cause Licensee's FCC License to timely meet the substantial
service requirement, as such qualifications may be amended or modified from time
to time (individually an "FCC QUALIFICATION" and collectively referred to as the
"FCC QUALIFICATIONS"), and shall not knowingly or negligently take any action,
or fail to take any action, which action or failure to act creates a material
risk that Licensee shall lose any FCC Qualification; provided, that in the event
that the FCC or any other legal authority shall at any time specify new or
different qualifications or conditions for the maintenance of any FCC
Qualification or shall issue a pronouncement offering a new interpretation of a
FCC Qualification, Clearwire shall reimburse on demand Licensee's reasonable
expenses of taking such action as are required for Licensee to bring itself and
its operations into compliance with such new or different qualifications or
conditions and maintaining such compliance; provided, further, that it shall not
be deemed a breach of this sentence if Licensee loses a FCC Qualification as a
result, in whole or in part, of an act or omission of Clearwire or any failure
of Clearwire to perform its obligations under this Agreement. If, at any time,
Licensee fails, or it appears to Licensee more likely than not that it will
fail, to maintain any one or more of its FCC Qualifications with respect to the
License, Licensee shall give written notice to Clearwire within five (5) days
after Licensee becomes actually aware that (i) it no longer maintains such FCC
Qualifications or (ii) with the passage of time or upon the occurrence of a
future event it will no longer maintain such FCC Qualifications (referred to as
a "DISQUALIFICATION EVENT"). Licensee shall cooperate with reasonable requests
of Clearwire made from time to time for the purpose of verifying, at Clearwire'
expense, that Licensee maintains its FCC Qualifications. Upon the occurrence of
a Disqualification Event, Licensee shall, at Clearwire's expense, promptly
undertake all reasonable actions to obtain, to the extent permitted by
applicable law, a waiver from the FCC regarding the circumstances giving rise to
such Disqualification Event or to cure the circumstances giving rise to such
Disqualification Event.
18. MUTUAL REPRESENTATIONS AND WARRANTIES
(A) BY LICENSEE TO CLEARWIRE. Licensee hereby represents and warrants
to Clearwire that:
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(i) Organization and Good Standing. It is a nonprofit corporation
duly organized, validly existing and in good standing under the laws of its
state of organization and has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as
now conducted and as proposed to be conducted. It is duly qualified or
authorized to do business as a foreign corporation and is in good standing
under the laws of each jurisdiction in which it owns or leases real
property and each other jurisdiction in which the conduct of its business
or the ownership of its properties requires such qualification or
authorization, except where the failure to be so qualified, authorized or
in good standing does not have and would not reasonably be expected to have
a material adverse effect on the business, operations, properties, assets,
condition (financial or other) or results of operations of Licensee, taken
as a whole, other than changes affecting the broadband wireless business
generally ("LICENSEE MATERIAL ADVERSE EFFECT").
(ii) Authorization of Agreement. It has all requisite corporate
power and authority to enter into, deliver and carry out the transactions
contemplated by this Agreement This Agreement has been duly and validly
executed and delivered by it and (assuming the due authorization, execution
and delivery by the other Parties hereto) this Agreement constitutes the
legal, valid and binding obligations of Licensee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in
a proceeding at law or in equity).
(iii) No Conflict. Except as set forth on the disclosure schedule
attached hereto by Licensee (the "LICENSEE SCHEDULE"):
A. Neither the execution and delivery by Licensee of this
Agreement, nor compliance by Licensee with any of the provisions hereof
will (i) conflict with, or result in the breach of, any provision of
Licensee's certificate or articles of incorporation or bylaws, (ii)
conflict with, violate, result in the breach of, constitute (with or
without due notice, lapse of time or both) a default under, result in the
acceleration of, create in any party the rights to accelerate, terminate,
modify or cancel, or require any notice, consent or waiver under, any note,
bond, mortgage, indenture, license, agreement or other obligation to which
Licensee is a party or by which Licensee or any of its properties or assets
is bound or (iii) violate any statute, rule, regulation, order or decree of
any Federal, state or local government, or any governmental, regulatory,
legislative, executive, or administrative authority, agency or commission,
or any court, tribunal, or judicial body ("GOVERNMENT AGENCY") by which
Licensee is bound, except in the cases of clauses (ii) and (iii) for such
conflicts, violations, breaches, accelerations or defaults as would not,
individually or in the aggregate, have a Licensee Material Adverse Effect.
B. No consent, waiver, approval, order, permit or
authorization of, or declaration or filing with, or notification to, any
person, entity or Government Agency is required on the part of Licensee in
connection with the execution and
22
delivery of this Agreement or the compliance by Licensee with any of the
provisions hereof, except as contemplated herein.
(iv) FCC Licenses. Except as set forth on the disclosure schedule
attached hereto by Licensee (the "LICENSEE SCHEDULE"):
A. To the best knowledge of Licensee, all information set
forth in Schedule A regarding the License is complete and accurate in all
material respects, although Licensee makes no representation as to the
MHzPops associated with the License. Licensee holds the License free and
clear of all any lien, pledge, mortgage, deed of trust, security interest,
claim, lease, charge, option, right of first refusal, easement, servitude,
transfer restriction, encumbrance or any other restriction or limitation
whatsoever except for liens for taxes not then due and payable and
generally applicable FCC-imposed restrictions ("Liens").
B. Licensee is authorized, by final order, to hold the FCC
License, subject to any pending renewal application listed on the Licensee
Schedule.
C. To the best knowledge of Licensee, the Licensee Schedule
sets forth a true list of interference consents that have been granted by
Licensee with respect to any FCC Licenses and that are germane under the
two-way rules and would have a material impact on the use of the Channels
(excluding routine consents customary in the industry).
(v) Litigation. Except as set forth in the Licensee Schedule and
other than proceedings of general applicability and those related to market
transitions, there is no action, suit, litigation, arbitration proceeding
(including any civil, criminal, administrative, investigative or appellate
proceeding), hearing, inquiry, audit, examination or investigation
commenced, brought, conducted or heard by or before, or otherwise involving
any court or other Government Agency or any arbitrator or arbitration panel
now in progress or pending or, to the knowledge of Licensee, threatened
against Licensee or the assets (including the intellectual property rights)
or the business of Licensee, nor to the knowledge of Licensee, does there
exist any basis therefore, except for immaterial claims brought against
Licensee in the ordinary course of business. Other than orders issued in
licensing proceedings which contain no continuing requirements or
continuing unusual conditions and Orders which are set forth on the
Licensee Schedule, Licensee is not subject to any order, writ, judgment,
injunction, decree, stipulation, determination, or award entered by or with
any Government Agency.
(vi) Compliance with Laws; Permits. To the best knowledge of the
Licensee where and during the time access to the Channels currently subject
to the FCC License has been governed by a third party agreement (and
assuming that the third party agreement and normal conduct by parties
pursuant to this type of agreement comply in all material respects with the
Communications Act and FCC Rules) and except as provided in the Licensee
Schedule, Licensee (a) has complied in all respects with all federal,
state, local and foreign laws, rules, ordinances, codes, consents,
authorizations, registrations, regulations, decrees, directives, judgments
and orders applicable to it and its business with
23
the Channels other than where noncompliance would not reasonably be
expected to have a Licensee Material Adverse Effect and (b) has all
federal, state, and local governmental permits, authorizations, approvals,
licenses, certificates and consents ("PERMITS") necessary in the conduct of
its business as currently conducted with the Channels and to own and use
its assets used with the Channels in the manner in which such assets are
currently owned and used other than where the failure to possess such
Permits would not, individually or in the aggregate, reasonably be expected
to have a Licensee Material Adverse Effect, such Permits are in full force
and effect, and no violations have been recorded in respect of any such
Permit, and no proceeding is pending or, to the best knowledge of Licensee,
threatened to revoke or limit any such Permit.
(vii) Brokers. Neither Licensee nor any of its directors,
officers, employees, or representatives has employed any broker or finder
in connection with this Agreement.
(viii) Knowledge. Any representation, warranty, covenant,
obligation, or part thereof that states that it is made to the best
knowledge of Licensee is made to its best knowledge after commercially
reasonable investigation and includes all facts which it knew or should
have known as a result of such investigation, including the best knowledge
of Licensee's executive officers and legal counsel after commercially
reasonable investigation.
(B) BY CLEARWIRE TO LICENSEE. Clearwire hereby represents and warrants
to Licensee that:
(i) Organization and Good Standing. Clearwire is a limited
liability company duly organized, validly existing and in good standing
under the laws of the State of Nevada. Each has all requisite corporate or
limited liability company power and authority to own, lease and operate its
properties and to carry on its business as now conducted. Clearwire is duly
qualified or authorized to do business as a foreign organization and is in
good standing under the laws of each jurisdiction in which it owns or
leases real property and each other jurisdiction in which the conduct of
its business or the ownership of its properties requires such qualification
or authorization, except where the failure to be so qualified, authorized
or in good standing does not have and would not reasonably be expected to
have a material adverse effect on the business, operations, properties,
assets, condition (financial or other) or results of operations of
Clearwire, taken as a whole, other than changes affecting the broadband
wireless business generally ("CLEARWIRE MATERIAL ADVERSE EFFECT").
(ii) Authorization of Agreement. Clearwire has all requisite
corporate or limited liability company power and authority (i) to enter
into, deliver and carry out this Agreement, and (ii) to enter into and
deliver all documents required or necessary to be executed by it in
connection with the consummation of this Agreement. This Agreement
(assuming the due authorization, execution and delivery by Licensee)
constitutes the legal, valid and binding obligations of Clearwire,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to
24
general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(iii) No Conflict. Neither of the execution and delivery by
Clearwire of this Agreement, nor the compliance by Clearwire with any of
the provisions hereof will (i) conflict with, or result in the breach of,
any provision of the certificate of limited liability company or operating
agreement of Clearwire, (ii) conflict with, violate, result in the breach
of, or constitute (with or without due notice, lapse of time or both) a
default under, result in the acceleration of, create in any party the
rights to accelerate, terminate, modify or cancel, or require any notice,
consent or waiver under, any note, bond, mortgage, indenture, license,
agreement or other obligation to which Clearwire is a party or by which
Clearwire or any of its respective properties or assets are bound or (iii)
violate any statute, rule, regulation, order or decree of any Government
Agency by which Clearwire is bound, except, in the case of clauses (ii) and
(iii), for such conflicts, violations, breaches, accelerations or defaults
as would not, individually or in the aggregate, have a Clearwire Material
Adverse Effect.
(iv) Consents. No consent, waiver, approval, order, permit or
authorization of, or declaration or filing with, or notification to, any
person, entity or Government Agency is required on the part of Clearwire in
connection with the execution and delivery of this Agreement or the
compliance by Clearwire with any of the provisions hereof.
(v) Litigation. Except as would not reasonably be expected to
have a materially adverse effect on the ability of Clearwire to execute,
deliver and perform this Agreement, (a) there is no Proceeding now in
progress or pending or, to the knowledge of Clearwire, threatened against
Clearwire or the assets or the business of Clearwire and (b) neither
Clearwire is not subject to any order, writ, injunction or decree of any
court or other Government Agency other than orders issued in licensing
proceedings.
(vi) Compliance with Laws; Permits. Clearwire (a) has complied in
all respects with all federal, state, and local laws, rules, ordinances,
codes, consents, authorizations, registrations, regulations, decrees,
directives, judgments and orders applicable to it and its business other
than where noncompliance would not, individually or in the aggregate,
reasonably be expected to have a Clearwire Material Adverse Effect and (b)
has all federal, state, and local governmental Permits necessary in the
conduct of its business as currently conducted and to own and use its
assets in the manner in which such assets are currently owned and used
other than where the failure to possess such Permits would not,
individually or in the aggregate, reasonably be expected to have a
Clearwire Material Adverse Effect, such Permits are in full force and
effect, and no violations have been recorded in respect of any such Permit,
and no proceeding is pending or, to the best knowledge of Clearwire,
threatened to revoke or limit any such Permit.
(vii) Brokers. Neither Clearwire nor any of its directors,
officers, employees or representatives has employed any broker or finder in
connection with this Agreement.
25
19. INDEMNIFICATION
(A) Licensee shall indemnify Clearwire, its Affiliates, and each of
their respective stockholders, directors, officers, employees, agents,
successors and assigns (collectively, the "CLEARWIRE INDEMNIFIED PARTIES") and
hold each of the Clearwire Indemnified Parties harmless from and against any and
all Damages based upon, attributable to or resulting from:
(i) the failure of any representation or warranty of Licensee set
forth herein, or any representation or warranty contained in any
certificate delivered by or on behalf of Licensee pursuant to this
Agreement, to be true and correct as of the dates made; or
(ii) the breach of any covenant or other agreement on the part of
the Licensee under this Agreement; or
(iii) any Claim brought or threatened against Clearwire by a
third party claiming one or more rights with respect to Clearwire, or by
virtue of Clearwire entering into this Agreement, an alleged breach of a
contractual right of first refusal ("ROFR") commitment or negotiation
commitment of Licensee.
(B) Clearwire shall indemnify the Licensee, its Affiliates, and each
of their respective, agents, successors and assigns (collectively, the "LICENSEE
INDEMNIFIED PARTIES") and hold each of the Licensee Indemnified Parties harmless
from and against any and all Damages based upon, attributable to or resulting
from:
(i) the failure of any representation or warranty of Clearwire
set forth herein, or any representation or warranty contained in any
certificate delivered by or on behalf of Clearwire pursuant to this
Agreement, to be true and correct as of the dates made;
(ii) the breach of any covenant or other agreement on the part of
Clearwire under this Agreement;
(iii) the operation of equipment by, the provision of service by
or otherwise related to the activities of Clearwire, any of its Affiliates
or any of its sublicensees or resellers including, without limitation,
damage to health; or
(iv) any forfeitures or fines levied by the FCC against Licensee,
or loss or impairment of the FCC License, arising from Clearwire's act or
omission.
(C) DETERMINATION OF DAMAGES. As used herein, "DAMAGES" means any and
all losses, claims, demands, liabilities, obligations, actions, suits, orders,
statutory or regulatory compliance requirements, or proceedings asserted by any
Person, and all damages, costs, expenses, assessments, judgments, recoveries and
deficiencies, including interest, penalties, investigatory expenses,
consultants' fees, and reasonable attorneys' fees and costs, of every kind and
description, contingent or otherwise. For purposes of the above, the amount of
Damages in respect of any breach of a representation or warranty shall be
determined without regard to any limitation or qualification as to materiality
set forth in such representation or warranty. As used
26
in this Agreement, "PERSON," whether or not such term is capitalized, means any
individual, partnership, firm, corporation, limited liability licensee(s),
association, trust, unincorporated organization, or other entity.
27
(D) INDEMNIFICATION PROCEDURES.
(i) In the event that any claim shall be asserted by any Person
in respect of which payment may be sought under this Section 19 (each, a
"CLAIM"), the indemnified party shall reasonably and promptly cause written
notice (a "CLAIM NOTICE") of the assertion of such Claim of which it has
knowledge which is covered by this indemnity to be forwarded to the
indemnifying party. The indemnifying party shall have the right, at its
sole option and expense, to be represented by counsel of its choice, which
must be reasonably satisfactory to the indemnified party, and to defend
against, negotiate, settle or otherwise deal with any Claim which relates
to any Damages indemnified against hereunder. If the indemnifying party
elects to defend against, negotiate, settle or otherwise deal with any
Claim which relates to any Damages indemnified against hereunder, it shall
within five (5) days of delivery of the Claim Notice (or sooner, if the
nature of the Claim so requires) notify the indemnified party of its intent
to do so. If the indemnifying party elects not to defend against,
negotiate, settle or otherwise deal with any Claim which relates to any
Damages indemnified against hereunder, fails to notify the indemnified
party of its election as herein provided or contests its obligation to
indemnify the indemnified party for such Damages under this Agreement, the
indemnified party may defend against, negotiate, settle or otherwise deal
with such Claim. If the indemnified party defends any Claim, then the
indemnifying party shall reimburse the indemnified party for the expenses
of defending such Claim upon submission of periodic bills. If the
indemnifying party shall assume the defense of any Claim, the indemnified
party may participate, at his or its own expense, in the defense of such
Claim; provided, however, that such indemnified party shall be entitled to
participate in any such defense with separate counsel at the expense of the
indemnifying party if, so requested by the indemnifying party to
participate or (ii) in the reasonable opinion of counsel to the indemnified
party, a conflict or potential conflict exists between the indemnified
party and the indemnifying party that would make such separate
representation advisable; and provided, further, that the indemnifying
party shall not be required to pay for more than one such counsel for all
indemnified parties in connection with any Claim. The Parties hereto agree
to cooperate fully with each other in connection with the defense,
negotiation, or settlement of any such Claim.
(ii) After any final judgment or award shall have been rendered
by a court, arbitration board or administrative agency of competent
jurisdiction and the expiration of the time in which to appeal therefrom,
or a settlement shall have been consummated, or the indemnified party and
the indemnifying party shall have arrived at a mutually binding agreement
with respect to a Claim hereunder, the indemnified party shall forward to
the indemnifying party notice of any sums due and owing by the indemnifying
party pursuant to this Agreement with respect to such matter.
(iii) The failure of the indemnified party to give reasonably
prompt notice of any Claim shall not release, waive or otherwise affect the
indemnifying party's obligations with respect thereto except to the extent
that the indemnifying party can demonstrate actual loss and prejudice as a
result of such failure.
(E) SURVIVAL. Each Party's obligations under this section will
survive the expiration or termination of this Agreement.
20. MISCELLANEOUS
(A) LAWS, RULES AND REGULATIONS. This Agreement is subject to all
laws, rules, regulations and ordinances relative to, among other things, the
subject matter addressed in this Agreement.
(B) FORCE MAJEURE. Other than the failure to pay money when required,
neither Party will be liable for any nonperformance under this Agreement due to
causes beyond its reasonable control that could not have been reasonably
anticipated by the non-performing Party and that cannot be reasonably avoided or
overcome; provided that the non-performing party gives the other Party prompt
written notice of such cause, and in any event, within fifteen (15) calendar
days of its discovery.
(C) INDEPENDENT PARTIES. None of the provisions of this Agreement will
be deemed to constitute a partnership, joint venture, or any other such
relationship between the Parties, and neither Clearwire nor Licensee will have
any authority to bind the other in any manner. Neither Party will have or hold
itself out as having any right, authority or agency to act on behalf of the
other Party in any capacity or in any manner, except as may be specifically
authorized in this Agreement.
(D) DISPUTE RESOLUTION.
(i) General. The Parties desire to resolve disputes arising out
of this Agreement without litigation. Accordingly, the Parties agree to use
the dispute resolution procedures set forth in this Section 20(d) (the
"DISPUTE RESOLUTION PROCEDURES") as their sole means of adjudication with
respect to any controversy or claim arising out of or relating to this
Agreement or its breach.
(ii) Dispute Notice. At the written request of any Party (a
"DISPUTE NOTICE"), the Parties to the dispute will within seven business
days of the Dispute Notice, appoint knowledgeable, responsible
representatives to meet and negotiate in good faith to resolve any dispute
arising under this Agreement. The Parties intend that these negotiations be
conducted by business representatives, including at least one senior
executive of each Party to the dispute. The representatives shall meet and
confer, in person or by teleconference, not later than such seventh
business day after the date of the Dispute Notice. The location, format,
frequency, duration and conclusion of these discussions shall be left to
the discretion of the representatives; provided that, the duration shall
not exceed 45 days from the date of the Dispute Notice (an "ACTION DATE")
unless extended by mutual written agreement of the Parties setting forth a
new Action Date. The Dispute Notice and any extension shall specify the
Action Date. The Dispute Notice shall set forth the nature of the dispute,
in reasonable detail. Discussion and correspondence among the
representatives for purposes of these negotiations shall be treated as
confidential information developed for purposes of settlement, exempt from
discovery and production, and shall not be admissible in the arbitration
described below. Documents identified in or
29
provided with such communications, which are not prepared for purposes of
the negotiations, are not so exempted and may, if otherwise admissible, be
admitted in evidence in the arbitration. If the Parties are unable to
resolve any disputes arising under or relating to this Agreement (each a
"DISPUTE") using the process described in this Section 20(d) within the
time period provided, including without limitation disputes regarding a
breach or default under this Agreement, the Parties shall arbitrate such
dispute pursuant to the arbitration provisions set forth in Section
20(d)(iii).
(iii) Arbitration. Any Dispute that has not be resolved within
the time period provided for in Section 20(d)(ii) shall be resolved by a
panel of three Arbitrators. The Dispute Notice shall automatically serve as
a written notice of a request to submit the Dispute for arbitration if
there has not been a resolution of the Dispute by the Action Date, and the
Parties agree to submit the Dispute to a panel of three arbitrators who
shall be appointed within 30 days of the Action Date (the "SUBMISSION
PERIOD"). During the Submission Period, the Parties shall appoint the
arbitrators in accordance with the Commercial Arbitration Rules (then in
effect) of the American Arbitration Association ("AAA"), as modified below.
No punitive damages (or any other amount awarded for the purpose of
imposing a penalty) will be awarded for a breach of this Agreement.
(iv) During the Submission Period, the Parties may submit a
request for discovery to the arbitrators, who shall determine whether the
scope of the requested discovery is appropriate or useful for the
resolution of the Dispute and order the discovery in their discretion;
provided that such discovery process shall be concluded not later than 30
days following the submission date (the "DISCOVERY CLOSE DATE").
(v) The arbitration hearing shall be fixed by the arbitrators to
be not sooner than 20 days nor later than 45 days after the Discovery Close
Date (the "HEARING DATE"). The hearing shall be located at a neutral site
as mutually agreed by the Parties, or if the Parties cannot so agree, then
the location of the arbitration shall be Washington, D.C. The Federal Rules
of Evidence shall apply to the arbitration hearing. The Party bringing a
particular claim or asserting an affirmative defense will have the burden
of proof with respect thereto. Each Party shall bear the burden of
persuasion with respect to its proposal for resolution of the matter. The
arbitration proceedings and all testimony, filings, documents and
information relating to or presented during the arbitration proceedings
shall be deemed to be information subject to the confidentiality provisions
of this Agreement. The arbitrators will have no power or authority,
pursuant to the rules of the AAA or otherwise, to relieve the Parties from
their agreement hereunder to arbitrate or otherwise to amend or disregard
any provision of this Agreement, including without limitation the
provisions of this Section.
(vi) Each Party shall be permitted to submit a pre-hearing brief
not to exceed 25 pages and such technical supporting material as is
necessary or useful, to be submitted to the arbitrators and the other Party
not later than 5 days before the Hearing Date, and each Party may issue a
response thereto not later than 2 days before the Hearing Date. Following
the arbitration hearing, each Party shall be permitted to submit a
post-hearing brief not to exceed 25 pages within 5 days following the
Hearing Date and a reply brief within 2 days thereafter (the "PLEADING
CLOSE DATE"). Should an arbitrator refuse or
30
be unable to proceed with arbitration proceedings as called for by this
Section, the arbitrator shall be replaced pursuant to the rules of the AAA.
If an arbitrator is replaced after the arbitration hearing has commenced,
then a rehearing shall take place in accordance with this Section and the
rules of the AAA.
(vii) Within fifteen (15) days after the Pleading Close Date, the
arbitrators will prepare and distribute to the Parties a writing setting
forth the arbitration panel's reasons for its determination. The findings
and conclusions and the award, if any, shall be deemed to be confidential
information of the Parties. Neither Party may disclose such information to
any third party other than their professional advisors or as required by
law or regulations, except in connection with an action to enforce the
award.
(viii) The Arbitrators are instructed to schedule promptly all
discovery and other procedural steps and otherwise to assume case
management initiative and control to effect an efficient and expeditious
resolution of the Dispute. The arbitrators are authorized to issue monetary
sanctions against either Party if, upon a showing of good cause, such Party
is unreasonably delaying the proceeding.
(ix) Any award rendered by the arbitrators will be final,
conclusive, and binding upon the Parties and any judgment thereon may be
entered and enforced in any court of competent jurisdiction.
(x) The non-prevailing Party to an arbitration shall pay its own
expenses, the fees of each arbitrator, the administrative fee of the AAA,
and the expenses, including without limitation, reasonable attorneys' fees
and costs, and expert and witness fees and costs, incurred by the other
Party to the arbitration. In the case of a decision that partially favors
each Party, expenses shall be paid as determined by the arbitrators. In
connection with any judicial proceeding to compel arbitration pursuant to
this Agreement or to confirm, vacate or enforce any award rendered by the
arbitrators, the prevailing Party in such a proceeding shall be entitled to
recover reasonable attorney's fees and expenses incurred in connection with
such proceedings, in addition to any other relief to which it may be
entitled.
(xi) Notwithstanding anything to the contrary, neither Party
shall have any obligation to arbitrate claims for injunctive relief,
specific performance, or other equitable relief or for the use or
unauthorized disclosure of confidential information, as to which either
Party shall be entitled to seek and obtain relief from a court of competent
jurisdiction; provided that, any and all claims for damages shall remain
subject to arbitration.
(E) NOTICES.
All notices and other communications under this Agreement shall be in writing
and shall be deemed given when delivered personally or by overnight courier, or
mailed by certified mail, return receipt requested, to the Parties (and shall
also be transmitted by facsimile to the Persons receiving copies thereof) at the
following addresses (or to such other address as a Party may have specified by
notice given to the other Party pursuant to this provision):
31
(i) CLEARWIRE:
Clearwire Spectrum Holdings II LLC
5808 Lake Washington Blvd. N.E.
Suite 300
Kirkland WA 98033
Attn: [***]
Fax: [***]
With a Copy to:
Clearwire Spectrum Holdings II LLC
5808 Lake Washington Blvd. N.E.
Suite 300
Kirkland WA 98033
Attn: [***]
Fax: [***]
Davis Wright Tremaine, LLP
2600 Century Square
1501 Fourth Avenue
Seattle, WA 98101
Attn: [***]
Fax: [***]
LICENSEE
Hispanic Information and Telecommunications Network, Inc.
63 Flushing Avenue
Unit 281
Brooklyn, New York 11205
Telecopy: [***]
Telephone: [***]
Attention: [***]
With a copy to:
Day, Berry & Howard LLP
875 Third Avenue
New York, NY 10022
Attention: [***]
Fax: [***]
And a copy to:
RJGLaw LLC
1010 Wayne Avenue, Suite 950
[*** Confidential Treatment Requested]
32
Silver Spring, MD 20910
Attention: [***]
FAX: [***]
Either Party may change its addresses for receipt of notice or payment by
giving notice of such change to the other Party as provided in this Section.
(F) APPLICABLE LAW. The validity, construction and performance of this
Agreement will be governed by and construed in accordance with the laws of the
State of New York.
(G) SEVERABILITY. If any provision of this Agreement is found to be
illegal, invalid or unenforceable, such provision will be enforced to the
maximum extent permissible so as to effect the intent of the Parties, and the
validity, legality and enforceability of the remaining provisions will not in
any way be affected or impaired, unless continued enforcement of the provision
frustrates the intent of the Parties. To the extent that the Parties or the FCC
determine that the provisions of this Agreement are not adequate to enable
Licensee to comply with the regulatory requirements associated with the FCC
License, the Parties will amend these provisions to ensure that the Licensee is
in compliance with its FCC obligations with respect to the FCC License. The
Parties believe that the provisions of this Agreement comply with all current
FCC Rules, and shall express that belief to regulatory agencies and the general
public.
(H) BEST EFFORTS. The Parties acknowledge that there will be many
changes in the course of the Term, in technology, capabilities, and regulatory
environment among other areas, and agree to act in a cooperative manner to
preserve the intentions of the relationships reflected in the Agreements to
their mutual advantage and to use their commercially reasonable best efforts to
maintain that mutual advantage.
(I) NO WAIVER. No delay or failure by either Party in exercising any
right under this Agreement, and no partial or single exercise of that right,
will constitute a waiver of that or any other right. Failure to enforce any
right under this Agreement will not be deemed a waiver of future enforcement of
that or any other right.
(J) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but which collectively
will constitute one and the same instrument. Signatures transmitted by facsimile
will be effective to create such counterparts.
(K) HEADINGS. The headings and captions used in this Agreement are for
convenience only and are not to be considered in construing or interpreting this
Agreement.
(L) CONSTRUCTION. The Parties and their respective counsel have
negotiated this Agreement. This Agreement will be interpreted in accordance with
its terms and without any strict construction in favor of or against either
Party based on draftsmanship of the Agreement or otherwise.
[*** Confidential Treatment Requested]
33
(M) COMPLETE AGREEMENT. This Agreement constitutes the entire
agreement between the Parties with respect to the subject matter addressed, and
supersedes and replaces all prior or contemporaneous understandings or
agreements, written or oral, between the Parties or any of their affiliates
regarding this subject matter. No amendment to or modification of this Agreement
will be binding unless in writing and signed by a duly authorized representative
of each of the Parties.
(N) COOPERATION. The Parties will take such further action and execute
such further assurances, documents and certificates as either Party may
reasonably request to effectuate the purposes of this Agreement.
(O) INSURANCE.
(i) Clearwire shall maintain and shall cause each Service Entity
to maintain insurance coverage, and on all certificates for coverage under
general liability, automobile liability, employer's liability, worker's
compensation, and any other coverages required under local law, shall: (i)
name Licensee as an "Additional Insured" on the liability policies,
including without limitation, as an insured with respect to third-party
claims or actions made or brought directly against Licensee or against
Licensee, Clearwire and/or such Service Entity as co-defendants and arising
out of or in connection with this Agreement or operations; (ii) be written
as a primary policy not contributing with any other coverage which Licensee
may carry for the acts and omissions of Clearwire or such Service Entity
and for whom Clearwire or such Service Entity is responsible; and (iii)
stipulate that Licensee shall receive thirty (30) days' prior written
notice of any cancellation in coverage; provided that such cancellation
shall not relieve Clearwire of its continuing obligation to maintain or to
cause each such Service Entity to maintain insurance coverages in
accordance with this Section.
(ii) Clearwire shall maintain and shall cause each Service Entity
to maintain with reputable insurers having a Best Rating of A or better:
A. Commercial general liability insurance with at least
$2,000,000 combined single limit bodily injury and property damage
limits written on an occurrence basis.
B. Full statutory coverage for Workers' Compensation and
Employers Liability with limits as required by law. These policies
will contain waivers of the insurer's subrogation rights against
Licensee where permitted by law.
C. Errors and omissions or professional liability coverage
with a limit of at least $1,000,000 per each claim and $1,000,000
annual aggregate. If Clearwire obtains a claims-made policy, Clearwire
shall maintain continuous coverage in effect at least three (3) years
beyond the expiration or termination of this Agreement through
continuous renewal of the same policy or purchase of extended
discovery period or retroactive insurance dated back to at least the
date of the beginning of this Agreement. This coverage should include
infringement of copyright, trademark, title or slogan, piracy,
plagiarism or unauthorized use of
34
materials. Clearwire may self-insure this provision as long as
Clearwire maintains a minimum net worth of at least $100 million.
D. All risk property insurance policy coverage in amounts
adequate to cover Licensee's property in Clearwire's care, custody and
control.
(iii) Clearwire shall furnish Licensee with certificates of
insurance evidencing all of the insurance referred to herein (including
renewals of insurance). Clearwire's obligations under this Section shall in
no way affect or limit the indemnification, remedy, or warranty provisions
set forth in this Agreement.
(P) PUBLICITY. No public release, announcement or other form of
publicity concerning this Agreement or the transactions described in this
Agreement, shall be issued by either Party without the prior consent of the
other Party, except as such release or announcement may be required by law,
regulation or the rules or regulations of any securities exchange, in which case
the Party required to make the release or announcement shall, to the extent
possible, allow the other Party reasonable time to comment on such release or
announcement in advance of such issuance. The Parties shall use reasonable
efforts to consult in good faith with each other with a view to agreeing upon
any press release or public announcement relating to the transactions
contemplated hereby prior to the consummation thereof.
[remainder of page intentionally left blank]
35
AGREED TO:
CLEARWIRE SPECTRUM HOLDINGS II LLC
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
HISPANIC INFORMATION AND
TELECOMMUNICATIONS NETWORK, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
ATTACHMENTS:
Licensee Schedule
36
LICENSE SCHEDULE
37
SCHEDULE A
SCHEDULE B
EXHIBIT III
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement") is made as of the 4th day of
October, 2006, between Hispanic Information and Telecommunications Network, Inc.
(the "Pledgor"), and Clearwire Corporation, a Delaware corporation (the
"Pledgee").
RECITALS
A. The Pledgee is paying the Pledgor [***] pursuant to the terms of the
Master Royalty and Use Agreement among the Pledgor and Clearwire Spectrum
Holdings II LLC ("Operator"), a subsidiary of the Pledgee, dated as of the date
of this Agreement (as amended, restated, modified, renewed, supplemented or
extended from time to time, the "MRUA"). This payment will be available for
application against upfront royalties for Initial Spectrum Capacity and Future
Spectrum Capacity offered by the Pledgor to Operator from time to time
B. The parties are entering into this Agreement for the purpose of the
Pledgor granting security interests to the Pledgee to secure the obligation of
the Pledgor to repay the Prepaid Royalties Balance as defined in the MRUA.
NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the Pledgor
hereby agrees as follows:
AGREEMENT
1. DEFINITIONS; INTERPRETATION.
(A) CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms have the following meanings:
"Governmental Authority" means the government of the United States or
any state or any foreign country or any political subdivision of any thereof or
any branch, department, agency, instrumentality, court, tribunal or regulatory
authority which constitutes a part or exercises any sovereign power of any of
the foregoing.
"Lien" means, for any person, any security interest, pledge, mortgage,
charge, assignment, hypothecation, encumbrance, attachment, garnishment,
execution or other voluntary or involuntary lien upon or affecting the revenues
of such person or any real or personal property in which such person has or
hereafter acquires any interest.
"Pledged Collateral" has the meaning specified in Section 2.
"Secured Obligations" means:
(i) the obligation of the Pledgor to repay in full the Prepaid
Royalties Balance as provided in the MRUA and all fees, costs, and expenses
incurred by the Pledgee in connection therewith if not repaid in accordance
with the terms of the MRUA;
[*** Confidential Treatment Requested]
PAGE 1 - PLEDGE AGREEMENT
(ii) all obligations of the Pledgor to pay or reimburse the Pledgee or
any affiliate of the Pledgee for all expenses including, without
limitation, attorneys' fees incurred by the Pledgee or any affiliate of the
Pledgee in connection with the enforcement, attempted enforcement, or
preservation of any rights or remedies under this Agreement, including,
without limitation, all such costs and expenses incurred during any
"workout" or restructuring in respect of the MRUA and during any legal
proceeding, including, without limitation, any proceeding under any
applicable bankruptcy, insolvency or other similar debtor relief laws; and
(iii) all interest and fees on any of the foregoing, whether accruing
prior to or after the commencement by or against the Pledgor of any
proceeding under any applicable bankruptcy, insolvency or other similar
debtor relief laws naming the Pledgor as the debtor in such proceeding,
regardless of whether such interest and fees are allowed claims in such
proceeding.
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of Washington; provided, however, in the event
that any Pledged Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State of Washington, the term "UCC"
shall mean the Uniform Commercial Code as in effect in such other jurisdiction
for purposes of the provisions hereof as they relate to such Pledged Collateral.
(B) TERMS DEFINED IN UCC. Terms used in this Agreement that are
defined in the UCC have the meanings given to them in the UCC.
(C) TERMS DEFINED IN THE MRUA. Terms used in this Agreement that are
defined in the MRUA have the meanings given to them in the MRUA.
2. PLEDGE AND GRANT OF SECURITY INTEREST. As security for the payment or
performance, as the case may be, in full of the Secured Obligations, the Pledgor
hereby pledges, assigns, transfers, hypothecates and sets over to the Pledgee,
its successors and assigns, and grants to the Pledgee, its successors and
assigns, a security interest in all of the Pledgor's right, title and interest
in, to and under the following, whether now existing or owned or hereafter
acquired or arising (collectively, the "Pledged Collateral"):
(A) PLEDGED SHARES. Not less than 2,833,334 shares of Class A Common
Stock of Clearwire Corporation, as the number of such Shares may be reduced from
time to time as provided in this Agreement (the "Shares"). The number of Shares
pledged at any time shall have a value equal to, or greater than, the amount of
the Prepaid Royalties Balance. As the Prepaid Royalties Balance decreases,
Shares shall be released from the pledge established by this Agreement,
provided, however, that Clearwire shall not be required to release Shares more
than once per month. Shares shall be valued for all purposes under this
Agreement at $6.00 per share; and
(B) ADDITIONAL INTERESTS, ETC. All certificates, instruments or other
writings representing or evidencing the Pledged Collateral.
(C) CASH PROCEEDS. All cash and non-cash proceeds of the Pledged
Collateral, however and whenever acquired and in whatever form (except for
proceeds of a sale of Pledged
PAGE 2 - PLEDGE AGREEMENT
Collateral that has been released by the Pledgee pursuant to Section 2(a)).
Nothing in this Section 2(c) shall be deemed to imply that the Pledgor is
permitted to sell, transfer or otherwise dispose of the Pledged Collateral,
except for Pledged Collateral that has been released by the Pledgee pursuant to
Section 2(a).
3. DELIVERY OF THE PLEDGED SHARES; CONTINUING SECURITY INTEREST. The
Pledgor hereby agrees that:
(A) DELIVERY OF CERTIFICATES. The Pledgor shall deliver to the Pledgee
all certificates, instruments or other writings representing or evidencing
Pledged Shares. All such certificates shall be delivered (i) simultaneously with
or prior to the execution and delivery of this Agreement, and (ii) in suitable
form for transfer by delivery or shall be accompanied by duly executed
instruments of transfer or assignment satisfactory to the Pledgee.
(B) ADDITIONAL PLEDGED COLLATERAL. If the Pledgor shall receive by
virtue of its being or having been the owner of any Pledged Collateral, any (i)
certificate, including any certificate representing a non-cash dividend or
distribution in connection with any increase or reduction of capital,
reclassification, merger, consolidation, sale of assets, combination of
membership or equity interests, spin-off or split-off, promissory notes or other
instrument; (ii) warrant, option or other right, whether as an addition to,
substitution for, or an exchange for, any Pledged Collateral or otherwise; (iii)
distributions of securities or other equity interests, then the Pledgor shall
forthwith deliver all of the foregoing to the Pledgee to hold as Pledged
Collateral and shall, if received by the Pledgor, be received in trust for the
benefit of the Pledgee, be segregated from the other property or funds of the
Pledgor, and be forthwith delivered to the Pledgee as Pledged Collateral in the
same form as so received, together with duly executed instruments of transfer or
assignment satisfactory to the Pledgee, as further collateral security for the
Secured Obligations ("Additional Pledged Collateral").
(C) CONTINUING SECURITY INTEREST. The Pledgor acknowledges and agrees
that the security interest of the Pledgee in the Pledged Collateral constitutes
continuing collateral security for all of the Secured Obligations.
4. FINANCING STATEMENTS. The Pledgor hereby irrevocably authorizes the
Pledgee at any time and from time to time to file in any relevant jurisdiction
any initial financing statements and amendments thereto that contain the
information required by Article 9 of the UCC or other applicable law of each
applicable jurisdiction for the filing of any financing statement or amendment
in order to perfect and protect the security interest of the Pledgee in the
Pledged Collateral.
5. REPRESENTATIONS AND WARRANTIES OF THE PLEDGOR. The Pledgor represents
and warrants to the Pledgee that:
(A) OWNERSHIP AND AUTHORITY. The Pledgor is the sole legal and
beneficial owner of the Pledged Collateral and has the right, power and
authority to pledge, assign, transfer, hypothecate and set over to the Pledgee
and grant to the Pledgee a security interest in such Pledged Collateral pursuant
hereto and to execute, deliver and perform its obligations in accordance with
the terms of this Agreement.
PAGE 3 - PLEDGE AGREEMENT
(B) AUTHORIZATION OF PLEDGED SHARES. All of the Pledged Shares are
duly authorized and validly issued, are fully paid and nonassessable and are not
subject to the preemptive first-refusal or other similar rights of any person.
All interests hereafter constituting Pledged Collateral will be duly authorized
and validly issued, fully paid and nonassessable and not subject to any
preemptive, first-refusal or other similar rights of any person, except as may
be provided under applicable law.
(C) VALIDITY OF SECURITY INTEREST. This Agreement creates a valid
security interest in favor of the Pledgee, its successors and assigns, in all of
the Pledged Collateral. Upon the taking possession by the Pledgee of the
certificates representing the Pledged Shares and all other certificates and
instruments constituting Pledged Collateral, the Pledgee will have a first
priority perfected security interest in all certificated Pledged Shares and such
certificates and instruments. Except as set forth in this subsection (c), no
action is necessary to perfect or otherwise protect any security interest
granted herein.
(D) ABSENCE OF LIENS AND CLAIMS. Except for the security interest of
the Pledgee created hereby, the Pledged Collateral is free and clear of any
Liens. There exists no "adverse claim" within the meaning of Section 8-102 of
the UCC with respect to any of the Pledged Shares.
(E) NO TRANSFER RESTRICTIONS. Except for restrictions imposed by this
Agreement, and other agreements to which the Pledgee is a party, the Pledged
Collateral is free of contractual restrictions that might prohibit, impair,
delay or otherwise affect the pledge of any Pledged Collateral hereunder or the
sale or disposition thereof pursuant hereto.
(F) NO OTHER PLEDGED COLLATERAL. As of the date of this Agreement, no
other party has possession of any certificates, instruments or other writings
representing or evidencing the Pledged Shares or has any warrants, options or
other rights entitling such party to acquire any interest in the Pledged Shares.
(G) DELIVERY OF CERTIFICATES. The Pledgor has delivered or otherwise
caused the transfer to the Pledgee of all certificates, instruments or other
writings representing, evidencing or constituting Pledged Collateral. The
Pledged Shares are not and shall not be represented or evidenced by any
certificates, instruments or other writings other than those delivered
hereunder.
(H) MARGIN REGULATIONS. The pledge of the Pledged Shares pursuant to
this Agreement does not violate the provisions of Regulation T, U or X of the
Board of Governors of the Federal Reserve System as now and from time to time
hereafter in effect. None of the Pledged Shares constitutes "margin stock"
within the meaning of such term under Regulation U.
(I) CONSENTS. No consent or authorization of, filing with, or other
act by or in respect of, any arbitrator or Governmental Authority and no consent
of any other person is required (i) for the pledge made by the Pledgor or for
the granting of the security interest by the Pledgor pursuant to this Agreement
or for the execution, delivery or performance of this Agreement by the Pledgor
or (ii) for the exercise by the Pledgee of the rights and remedies provided for
in this Agreement.
PAGE 4 - PLEDGE AGREEMENT
(J) POWER. The Pledgor has full power, authority and legal right to
execute, deliver and perform this Agreement.
(K) AUTHORIZATION. The execution, delivery and performance by the
Pledgor of this Agreement have been duly authorized, do not require any approval
or the consent of any third party, do not contravene any law, regulation, rule
or order binding on it and do not contravene the provisions of or constitute a
default under any material indenture, mortgage, contract or other agreement or
instrument to which the Pledgor is a party or by which the Pledgor or any of its
properties may be bound or affected.
(L) GOVERNMENT APPROVALS, ETC. No approval, authorization or consent
of, or filing or registration with the United States or any state thereof or any
other Governmental Authority or any agency, court or regulatory authority which
constitutes a part of any of the foregoing, is required for the making and
performance by the Pledgor of this Agreement or in connection with any of the
transactions contemplated hereby.
(M) BINDING OBLIGATIONS, ETC. This Agreement has been duly executed
and delivered by the Pledgor and constitutes the legal, valid and binding
obligations of the Pledgor enforceable against the Pledgor in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, similar laws affecting creditors' rights generally or general
principles of equity.
The foregoing representations and warranties shall survive the execution and
delivery of this Agreement.
6. COVENANTS. So long as any of the Secured Obligations shall remain unpaid
or unsatisfied, the Pledgor shall:
(A) DEFENSE OF PLEDGED COLLATERAL. At the Pledgor's own cost and
expense, take any and all actions necessary to defend title to the Pledged
Collateral against all persons and to defend the Pledgee's security interest in
the Pledged Collateral and the priority thereof against any Lien.
(B) DISPOSITION OF PLEDGED COLLATERAL. Not make or permit to be made
any sale, transfer or other disposition of any of the Pledged Collateral or
grant any option, warrant or other right or interest with respect to, any of the
Pledged Collateral, except with the prior written consent of the Pledgee.
(C) NO LIENS. Not make or permit to be made an assignment, pledge or
hypothecation of any of the Pledged Collateral or create or permit to exist any
Lien upon or with respect to any of the Pledged Collateral other than the
security interest of the Pledgee created hereby.
(D) COMPLIANCE WITH SECURITIES LAWS. File all reports and other
information now or hereafter required to be filed by the Pledgor with the
Securities and Exchange Commission (including any Governmental Authority
succeeding to any of its principal functions, the "SEC") and any other state,
federal or foreign agency in connection with the Pledgor's ownership of the
Pledged Shares.
PAGE 5 - PLEDGE AGREEMENT
7. FURTHER ASSURANCES. The Pledgor agrees, at its own expense, to execute,
acknowledge, deliver and cause to be duly filed all such further instruments and
documents and take all such actions as the Pledgee may from time to time request
to better assure, preserve, protect and perfect the security interest of the
Pledgee in the Pledged Collateral and the rights and remedies of the Pledgee
hereunder, including, without limitation, the payment of any fees and taxes
required in connection with the execution and delivery of this Agreement, the
granting of such security interest and the filing of any financing statements or
other documents in connection herewith or therewith. Without limiting the
generality of the foregoing, the Pledgor further agrees that it shall,
concurrently with the execution of this Agreement and at any time and from time
to time thereafter (a) procure, execute and deliver to the Pledgee all
endorsements, financing statements, assignments and other instruments of
transfer requested by the Pledgee, (b) deliver to the Pledgee immediately upon
receipt the originals of all Pledged Shares and all certificates, instruments or
other writings representing, evidencing or constituting Pledged Collateral, and
(c) take all steps reasonably required to maintain the Pledgor's continued
performance under the MRUA. The Pledgor agrees that it will use its best efforts
to take such action as shall be necessary in order that all representations and
warranties hereunder shall be true and correct with respect to such Pledged
Shares within thirty (30) days after the date it has been notified by the
Pledgee of the specific inaccuracy of a representation or warranty.
8. REGISTRATION IN NOMINEE NAME; DENOMINATIONS. The Pledgee shall have the
right (in its sole and absolute discretion) to hold the Pledged Shares in its
own name as pledgee, the name of its nominee (as pledgee or as sub-agent) or the
name of the Pledgor, endorsed or assigned in blank or in favor of the Pledgee.
The Pledgor will promptly give to the Pledgee copies of any material notices or
other communications received by it with respect to Pledged Shares registered in
the name of the Pledgor. The Pledgee shall at all times have the right to
exchange the certificates representing Pledged Shares for certificates of
smaller or larger denominations for any purpose consistent with this Agreement.
9. VOTING RIGHTS; DIVIDENDS.
(A) PRIOR TO THE OCCURRENCE OF AN EVENT OF DEFAULT. So long as no Event of
Default shall exist or result therefrom (and, in the case of subparagraph (i)
below, so long as written notice has not been given by the Pledgee to the
Pledgor):
(I) VOTING RIGHTS. The Pledgor shall be entitled to exercise any and
all voting and other consensual rights pertaining to the Pledged Shares or
any part thereof for any purpose not inconsistent with the terms of this
Agreement; provided, however, that the Pledgor shall not exercise or shall
refrain from exercising any such right if, in the judgment of the Pledgee,
such action would have a material adverse effect on the value of the
Pledged Collateral or any part thereof or the interest of the Pledgee
therein; and, provided, further, that the Pledgor shall give the Pledgee at
least five business days' prior written notice of the manner in which it
intends to exercise, or the reasons for refraining from exercising, any
such right.
(II) DISTRIBUTIONS. The Pledgor shall be entitled to receive and
retain any and all dividends or distributions paid in respect of the
Pledged Shares, except the following: (A) distributions paid or payable
other than in cash in respect of, and instruments and
PAGE 6 - PLEDGE AGREEMENT
other property received, receivable or otherwise distributed in respect of,
or in exchange for, any Pledged Shares; (B) distributions paid or payable
in cash in respect of any Pledged Shares in connection with a partial or
total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus; and (C) cash paid, payable or
otherwise distributed in redemption of, or in exchange for, any Pledged
Shares; all of which shall be forthwith delivered to the Pledgee to hold
as, Pledged Collateral and shall, if received by the Pledgor, be received
in trust for the benefit of the Pledgee, be segregated from the other
property or funds of the Pledgor, and be forthwith paid over or otherwise
delivered to the Pledgee as Pledged Collateral in the same form as so
received, together with duly executed instruments of transfer or assignment
satisfactory to the Pledgee, as further collateral security for the Secured
Obligations.
(III) PROXIES, ETC. The Pledgee shall execute and deliver (or cause to
be executed and delivered) to the Pledgor all such proxies and other
instruments as the Pledgor may request for the purpose of enabling the
Pledgor to exercise the voting and other rights which it is entitled to
exercise pursuant to subparagraph (i) above and to receive the dividends or
distributions which it is authorized to receive and retain pursuant to
subparagraph (ii) above.
(B) UPON THE OCCURRENCE OF AN EVENT OF DEFAULT. Upon the occurrence and
during the continuance of an Event of Default:
(I) VOTING RIGHTS. All rights of the Pledgor to exercise the voting
and other consensual rights which it would otherwise be entitled to
exercise pursuant to Section 9(a)(i) above shall cease upon written notice
thereof from the Pledgee, and all such rights shall thereupon become vested
in the Pledgee, who shall thereupon have the sole right to exercise such
voting and other consensual rights.
(II) DISTRIBUTIONS. All rights of the Pledgor to receive the
distributions which it would otherwise be authorized to receive and retain
pursuant to Section 9(a)(ii) above shall cease, and all such rights shall
thereupon become vested in the Pledgee, who shall thereupon have the sole
right to receive and hold as Pledged Collateral such dividends. All
dividends or distributions which are received by the Pledgor contrary to
the provisions of this subparagraph (ii) shall be received in trust for the
benefit of the Pledgee, shall be segregated from other funds of the Pledgor
and shall be forthwith paid over or otherwise delivered to the Pledgee as
Pledged Collateral in the same form as so received, together with duly
executed instruments of transfer or assignment satisfactory to the Pledgee,
as further collateral security for the Secured Obligations.
(III) PROXIES, ETC. In order to permit the Pledgee to exercise the
voting and other rights which it may be entitled to exercise pursuant to
subparagraph (i) above, and to receive all dividends and distributions
which it may be entitled to receive under subparagraph (ii) above, the
Pledgor shall, if necessary, upon written notice of the Pledgee, from time
to time execute and deliver to the Pledgee appropriate proxies, dividend
payment orders and other instruments as the Pledgee may request.
PAGE 7 - PLEDGE AGREEMENT
10. APPOINTMENT OF PLEDGEE. So long as any Secured Obligation remains
unpaid, the Pledgor does hereby designate and appoint the Pledgee its true and
lawful attorney coupled with an interest and with power irrevocable, after an
Event of Default has occurred and is continuing, for the purpose of carrying out
the provisions of this Agreement and taking any action and executing any
instrument that the Pledgee may deem necessary or advisable to accomplish the
purposes hereof, including, without limitation, all of the following: (i)
receive, endorse and collect all instruments made payable to the Pledgor
representing any principal or interest payment or other distribution in respect
of the Pledged Collateral or any part thereof and to give full discharge for the
same; (ii) perfect or continue perfected, maintain the priority of or provide
notice of the Pledgee's security interest in the Pledged Collateral; (iii)
execute any and all endorsements, assignments or other documents and instruments
necessary to sell, lease, assign, convey or otherwise transfer title in or
dispose of the Pledged Collateral; and (iv) execute any and all such other
documents and instruments, and do any and all acts and things for and on behalf
of the Pledgor, which the Pledgee may deem necessary or advisable to maintain,
protect, realize upon and preserve the Pledged Collateral and the Pledgee's
security interest therein and to accomplish the purposes of this Agreement. The
acceptance of this appointment by the Pledgee shall not obligate it to perform
any duty, covenant or obligation required to be performed by the Pledgor under
or by virtue of the Pledged Collateral or to take any action in connection
therewith. All expenses incurred by the Pledgee in connection with exercising
any of its rights under this Section shall bear interest at a per annum rate
equal to eighteen percent (18%) (the "Default Rate") from the date incurred
until repaid by the Pledgor. All amounts described in this Section shall be
repayable by the Pledgor on demand and the Pledgor's obligation to make such
repayment shall constitute an additional Secured Obligation.
11. NO RESPONSIBILITY FOR CERTAIN ACTIONS. Notwithstanding any provision
contained in this Agreement, the Pledgee shall have no responsibility for (a)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Pledged Collateral, whether
or not the Pledgee has or is deemed to have knowledge of such matters, or (b)
taking any necessary steps to preserve any rights against any third parties with
respect to any Pledged Collateral.
12. EVENTS OF DEFAULT. The occurrence of any of the following events shall
constitute an "Event of Default":
(a) The Pledgor's failure to repay the Prepaid Royalties Balance as
required under the terms of the MRUA;
(b) any representation or warranty made or deemed made by the Pledgor
under or in connection with this Agreement shall prove to have been incorrect in
any material respect when made or deemed made; or
(c) the Pledgor shall fail to perform or observe any other material
covenant, obligation or term of this Agreement.
13. REMEDIES.
PAGE 8 - PLEDGE AGREEMENT
(A) GENERAL REMEDIES. If an Event of Default shall occur, and upon the
expiration of any applicable notice and cure period under the MRUA, the Pledgee
shall have, in addition to all other rights and remedies granted to it in this
Agreement, or the MRUA, all rights and remedies of a secured party under the UCC
(whether or not the UCC is in effect in the jurisdiction where such rights and
remedies are asserted) or other laws to the extent applicable, provided,
however, that except for specific performance of its rights hereunder, and
except for the Pledged Collateral, Clearwire shall not have recourse against the
Pledgor or its assets in respect of the Prepaid Royalties Balance. Without
limiting the generality of the foregoing, the Pledgor agrees that the Pledgee
may:
(i) require the Pledgor to assemble all or any part of the Pledged
Collateral and make it available to the Pledgee at any place and time
designated by the Pledgee; and
(ii) subject to the requirements of laws affecting the offering and
sale of securities, sell, resell, assign, transfer or otherwise dispose of
any or all of the Pledged Collateral at public or private sale or at any
broker's board or on any securities exchange, by one or more contracts, in
one or more lots or parcels, at the same or different times, for cash or
credit, or for future delivery without assumption of any credit risk, all
as the Pledgee deems advisable; provided, however, that, except as
otherwise required under Section 9A-608 and/or Section 9A-615 of the UCC,
the Pledgor shall be credited with the net proceeds of sale only when such
proceeds are finally collected by the Pledgee.
(B) SALE OF PLEDGED COLLATERAL. Each purchaser at any sale pursuant to
this Agreement shall hold the property sold absolutely, free from any claim or
right on the part of the Pledgor, and the Pledgor hereby waives, to the fullest
extent permitted by applicable laws, all rights of redemption, stay and
appraisal which the Pledgor now has or may at any time in the future have under
any rule of law or statute now existing or hereafter enacted. The Pledgee shall
be authorized at any such sale to restrict the prospective bidders or purchasers
to persons who will represent and agree that they are purchasing the Pledged
Collateral for their own account for investment and not with a view to the
distribution or sale thereof. Neither the Pledgee's compliance with the UCC or
any other applicable law, in the conduct of any sale made pursuant to this
Agreement, nor its disclaimer of any warranties relating to the Pledged
Collateral, shall be considered to adversely affect the commercial
reasonableness of such sale. The Pledgee shall give the Pledgor ten (10) days'
written notice (which the Pledgor agrees is reasonable notice within the meaning
of Section 9A-612 of the UCC) of the Pledgee's intention to make any sale of
Pledged Collateral. The Pledgee shall not be obligated to make any sale of any
Pledged Collateral if it shall determine not to do so, regardless of the fact
that notice of sale of such Pledged Collateral shall have been given. The
Pledgee may, without notice or publication, adjourn any public or private sale
or cause the same to be adjourned from time to time by announcement at the time
and place fixed for sale, and such sale may, without further notice, be made at
the time and place to which the same was so adjourned. To the fullest extent
permitted by applicable laws, the Pledgee may bid for or purchase the Pledged
Collateral or any part thereof offered for sale and may make payment on account
thereof by using any claim then due and payable to the Pledgee from the Pledgor
as a credit against the purchase price and the Pledgee, upon compliance with the
terms of sale, hold, retain and dispose of such property without further
accountability to the Pledgor therefor. For purposes hereof, a written agreement
to purchase the Pledged Collateral or any portion thereof shall be treated as a
sale thereof; the Pledgee shall be free to carry out such sale pursuant to such
PAGE 9 - PLEDGE AGREEMENT
agreement and the Pledgor shall not be entitled to the return of the Pledged
Collateral or any portion thereof subject thereto, notwithstanding the fact that
after the Pledgee shall have entered into such an agreement all Events of
Default shall have been remedied and the Secured Obligations paid in full. To
the fullest extent permitted by applicable laws, any sale pursuant to the
provisions of this subsection (b) shall be deemed to conform to the commercially
reasonable standards as provided in Section 9A-610(b) of the UCC.
(C) WAIVER OF RIGHTS TO PURCHASE. The Pledgor, for itself and its
successors and assigns, does hereby irrevocably waive and release all
preemptive, first-refusal and other similar rights of the Pledgor to purchase
any or all of the Pledged Shares upon any sale thereof by the Pledgee under this
Agreement, whether such right to purchase arises under any agreement, by
operation of law or otherwise.
(D) EXEMPT SALES TRANSACTIONS. The Pledgor recognizes that, by reason
of certain provisions contained in the Securities Act of 1933, as from time to
time amended (the "Securities Act") and applicable state securities laws, the
Pledgee may be compelled, with respect to any sale of all or any part of the
Pledged Shares, to limit purchasers to those who will agree, among other things,
to acquire such securities for their own account, for investment, and not with a
view to the distribution or resale thereof. The Pledgor acknowledges and agrees
that any such sale may result in prices and other terms less favorable to the
seller than if such sale were a public sale without such restrictions and
notwithstanding such circumstances, agrees that any such sale shall be deemed to
have been made in a commercially reasonable manner. The Pledgee shall be under
no obligation to delay the sale of any of the Pledged Shares for the period of
time necessary to permit the Pledgor to register such securities for public sale
under the Securities Act, or under applicable state or foreign government
securities laws, even if the Pledgor would agree to do so. If the Pledgee
determines to exercise its right to sell any or all of the Pledged Shares, upon
written request, the Pledgor shall and shall cause the Companies to, from time
to time, furnish to the Pledgee all such information as the Pledgee may request
in order to determine the number of shares and other instruments included in the
Pledged Shares which may be sold by the Pledgee as exempt transactions under the
Securities Act and rules of the SEC thereunder, as the same are from time to
time in effect.
(E) RETENTION OF PLEDGED COLLATERAL. The Pledgee may, after providing
the notices required by Section 9A-505(2) of the UCC or otherwise complying with
any requirement of applicable law, accept or retain the Pledged Collateral or
any part thereof in satisfaction of the Secured Obligations. Unless and until
the Pledgee shall have provided such notices, however, the Pledgee shall not be
deemed to have retained any Pledged Collateral in satisfaction of any Secured
Obligations for any reason.
(F) DUTY OF CARE. Except for the exercise of reasonable care in the
custody of any Pledged Collateral in its possession and the accounting for
moneys actually received by it hereunder, the Pledgee shall have no duty as to
any Pledged Collateral or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any Pledged
Collateral. The Pledgee shall be deemed to have exercised reasonable care in the
custody and preservation of Pledged Collateral in its possession if such Pledged
Collateral is accorded treatment substantially equal to that which the Pledgee
accords its own similar property. Neither the Pledgee nor any of its affiliates,
directors, officers, employees, counsel, agents and
PAGE 10 - PLEDGE AGREEMENT
attorneys-in-fact shall be liable for failure to demand, collect or realize upon
all or any part of the Pledged Collateral or for any delay in doing so or shall
be under any obligation to sell or otherwise dispose of any Pledged Collateral
upon the request of the Pledgor or otherwise.
(G) APPLICATION OF PROCEEDS. The cash proceeds actually received from
the sale or other disposition or collection of the Pledged Collateral, and any
other amounts received in respect of the Pledged Collateral the application of
which is not otherwise provided for herein, shall be applied: first to payment
of any costs, expenses and fees, including, without limitation, attorneys' fees
(including allocated costs of in-house counsel), incurred by the Pledgee in
connection with sale or other disposition or collection of Pledged Collateral;
second, to payment of any all costs, expenses and fees, including, without
limitation, attorneys' fees (including allocated costs of in-house counsel),
payable to the Pledgee under this Agreement; third, to payment in full of the
Secured Obligations (to the extent not included in clause first or second
above); and fourth, the balance, if any, after all of the Secured Obligations
have been indefeasibly paid in full, to the Pledgor or as otherwise required by
law. The Pledgee shall have absolute discretion as to the time of application of
any such proceeds, moneys or balances in accordance with this Agreement. The
Pledgor shall remain liable to the Pledgee for any deficiency which exists after
any sale or other disposition or collection of the Pledged Collateral.
14. CERTAIN WAIVERS. The Pledgor waives, to the fullest extent permitted by
applicable laws, (a) any right of redemption with respect to the Pledged
Collateral, whether before or after sale hereunder, and all rights, if any, of
marshalling of the Pledged Collateral or other collateral or security for the
Secured Obligations; (b) any right to require the Pledgee (i) to proceed against
any person, (ii) to exhaust any other collateral or security for any of the
Secured Obligations, (iii) to pursue any remedy in the Pledgee's power, or (iv)
to make or give any presentments, demands for performance, notices of
nonperformance, protests, notices of protests or notices of dishonor in
connection with any of the Pledged Collateral; and (c) all claims, damages, and
demands against the Pledgee arising out of the repossession, retention, sale or
application of the proceeds of any sale of the Pledged Collateral.
15. AMENDMENTS AND WAIVERS. Any provision of this Agreement may be amended
or waived if, and only if, such amendment or waiver is in writing and signed (in
the case of an amendment) by Pledgor and Pledgee or (in the case of a waiver) by
the party against whom the waiver is to be effective. No failure or delay by
either party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies provided herein are cumulative and not
exclusive of any right or remedy provided by law.
16. NOTICES. All notices or other communications hereunder shall be in
writing and shall be deemed to have been duly given or made upon delivery if
delivered personally (by courier service or otherwise), as evidenced by written
receipt or other written proof of delivery (which may be a printout of the
tracking information of a courier service that made such delivery), in each case
to the applicable addresses set forth below (or such other address which either
party may from time to time specify):
PAGE 11 - PLEDGE AGREEMENT
If to Pledgor: Hispanic Information and
Telecommunications Network, Inc.
63 Flushing Avenue, Unit 281
Brooklyn, NY 11205
Attention: [***]
Fax: [***]
With a copy to: Day, Berry & Howard LLP
875 Third Avenue
New York, NY 10022
Attention: [***]
Fax: [***]
RJGLaw LLC
1010 Wayne Avenue, Suite 950
Silver Spring, MD 20910
Attention: [***]
Fax: [***]
If to Pledgee: Clearwire Corporation
5808 Lake Washington Blvd. NE,
Suite 300
Kirkland, WA 98303
Attention: [***]
Facsimile: [***]
With a copy to: Davis Wright Tremaine LLP
1501 Fourth Avenue
2600 Century Square
Seattle, WA 98101
Attention: [***]
Facsimile: [***]
Pledgor hereby agrees that such notice shall be deemed to meet any requirements
of reasonable notice contained in the UCC or other applicable law.
17. COSTS AND EXPENSES. Pledgor and Pledgee shall pay their own costs and
expenses incurred by them, including the fees and out-of-pocket expenses of
their own legal counsel, in connection with the preparation, negotiation and
filing of this Agreement. Pledgor shall pay to Pledgee or its agents on demand
each cost and expense (including, but not limited to, the reasonable fees and
disbursements of counsel to Pledgee or its agents, whether internal or external
and whether retained for advice, for litigation or for any other purpose)
incurred by Pledgee or its agents either directly or indirectly in connection
with endeavoring to (a) collect any amount owing pursuant to this Agreement, or
negotiate or document a workout or restructuring; (b) enforce or realize upon
any guaranty, endorsement or other assurance, any collateral or other security,
or any subordination, directly or indirectly securing or otherwise directly or
indirectly applicable in any such amount; or (c) preserve or exercise any right
or remedy of Pledgee or its agents pursuant to
[*** Confidential Treatment Requested]
PAGE 12 - PLEDGE AGREEMENT
this Agreement. All such amounts shall be repayable by the Pledgor on demand and
shall bear interest at the Default Rate until repaid, and the Pledgor's
obligation to make such repayment shall constitute an additional Secured
Obligation.
18. SURVIVAL OF COVENANTS. All covenants, agreements, representations and
warranties made by Pledgor hereunder shall survive the execution and delivery of
this Agreement and the Pledged Shares hereunder.
19. SEVERABILITY. The unenforceability or invalidity of any provision or
provisions of this Agreement shall not render any other provision or provisions
hereof or thereof unenforceable or invalid.
20. ADDITIONAL DOCUMENTS. Pledgor shall at Pledgee's request, from time to
time, at Pledgor's sole cost and expense, execute, re-execute, deliver and
redeliver any and all documents, and do and perform such other and further acts,
as may reasonably be required by Pledgee to enable Pledgee to perfect, preserve,
and protect its security interest in the Pledged Collateral and its rights and
remedies under this Agreement or granted by law and to carry out and effect the
intents and purposes of this Agreement.
21. ASSIGNMENT. This Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective successors heirs, executors and
permitted assigns. This Agreement may not be assigned by Pledgor. Pledgee may
transfer or assign the MRUA or this Agreement to any of its affiliates.
22. COUNTERPARTS. This Agreement may be executed and delivered (including
by facsimile transmission) in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
23. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of Washington, without reference
to the choice of law principles thereof. PLEDGOR IRREVOCABLY AGREES THAT,
SUBJECT TO PLEDGEE'S SOLE AND ABSOLUTE DISCRETION, ALL ACTIONS OR PROCEEDINGS IN
ANY WAY ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER DOCUMENTS OR THE
LOAN RELATED HERETO SHALL BE LITIGATED IN COURTS HAVING SITUS WITHIN THE COUNTY
OF KING, STATE OF WASHINGTON. PLEDGOR HEREBY CONSENTS AND SUBMITS TO THE
JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SUCH COUNTY AND
STATE. PLEDGOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE
VENUE OF ANY LITIGATION BROUGHT AGAINST PLEDGOR BY PLEDGEE IN ACCORDANCE WITH
THIS SECTION.
24. WAIVER OF JURY TRIAL. PLEDGOR AND PLEDGEE HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY PLEDGOR AND
PLEDGEE MAY HAVE IN ANY ACTION OR PROCEEDING, IN LAW OR IN EQUITY, IN CONNECTION
WITH THIS AGREEMENT OR THE TRANSACTIONS RELATED HERETO. PLEDGOR REPRESENTS AND
WARRANTS THAT NO REPRESENTATIVE OR AGENT OF PLEDGEE HAS REPRESENTED, EXPRESSLY
OR
PAGE 13 - PLEDGE AGREEMENT
OTHERWISE, THAT PLEDGEE WELL NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
THIS JURY TRIAL WAIVER. PLEDGOR ACKNOWLEDGES THAT PLEDGEE HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE PROVISIONS OF THIS
SECTION.
25. NO INCONSISTENT REQUIREMENTS. The Pledgor acknowledges that this
Agreement and the other documents may contain covenants and other terms and
provisions variously stated regarding the same or similar matters, and agrees
that all such covenants, terms and provisions are cumulative and all shall be
performed and satisfied in accordance with their respective terms.
26. CONFIDENTIALITY. This Agreement is confidential and is subject to the
terms of the other written agreements between the Pledgor and the Pledgee
relating to confidentiality.
[Remainder of Page Intentionally Left Blank]
PAGE 14 - PLEDGE AGREEMENT
IN WITNESS WHEREOF, the Pledgor and Pledgee have caused this Agreement to
be executed by their respective officers or agents thereunto duly authorized as
of the date first above written.
PLEDGOR: Hispanic Information and
Telecommunications Network, Inc.
By: /s/ Jose Luis Rodriguez
------------------------------------
Name: Jose Luis Rodriguez
Title: President and CEO
PLEDGEE: Clearwire Corporation
By: /s/ R. Gerard Salemme
------------------------------------
Name: R. Gerard Salemme
Title: Executive VP
PAGE 15 - PLEDGE AGREEMENT
EXHIBIT IV
OFFICER'S CERTIFICATE
OF
CLEARWIRE SPECTRUM HOLDINGS II LLC
This OFFICER'S CERTIFICATE (the "Certificate") is provided pursuant to the
Master Royalty and Use Agreement (the "Agreement") dated as of September 20,
2006, by and between Clearwire Spectrum Holdings II LLC, a Nevada limited
liability company ("Clearwire"), and Hispanic Information and Telecommunications
Network, Inc.
The undersigned hereby certifies that he is duly authorized to execute and
deliver this Certificate on behalf of Clearwire, and further certifies as
follows:
Attached as Exhibit A is a true, complete and correct copy of the
Resolutions of the Members of Clearwire authorizing the execution,
delivery, and performance of the Agreement and other agreements referred to
in the Agreement, which Resolutions have not been amended, superseded or
otherwise modified as of the date of this Certificate.
The individual named below (i) is the officer duly authorized to execute
the Agreement on behalf of Clearwire, (ii) has been duly elected to the
office of Clearwire set forth opposite his name, (iii) is duly qualified
and acting as such officer of Clearwire on the date hereof, and (iv) the
signature appearing opposite his name is his genuine signature.
<TABLE>
Name Office Signature
---- ------ ---------
<S> <C> <C>
</TABLE>
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the
date set forth below.
CLEARWIRE SPECTRUM HOLDINGS II LLC
Date: By:
------------------------ ------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT A
EXHIBIT V
OFFICER'S CERTIFICATE
OF
HISPANIC INFORMATION AND
TELECOMMUNICATIONS NETWORK, INC.
This OFFICER'S CERTIFICATE (the "Certificate") is provided pursuant to the
Master Royalty and Use Agreement (the "Agreement") dated as of September 20,
2006, by and between Clearwire Spectrum Holdings II LLC, a Nevada limited
liability company and Hispanic Information and Telecommunications Network, Inc.
("HITN").
The undersigned hereby certifies that he is duly authorized to execute and
deliver this Certificate on behalf of HITN, and further certifies as follows:
Attached as Exhibit A is a true, complete and correct copy of the
Resolutions of the Board of Directors of HITN authorizing the execution,
delivery, and performance of the Agreement and other agreements referred to
in the Agreement, which Resolutions have not been amended, superseded or
otherwise modified as of the date of this Certificate.
The individual named below (i) is the officer duly authorized to execute
the Agreement on behalf of HITN, (ii) has been duty elected to me office of
HITN set forth opposite his name, (iii) is duly qualified and acting as
such officer of HITN on the date hereof, and (iv) the signature appearing
opposite his name is his genuine signature.
<TABLE>
Name Office Signature
---- ------ ---------
<S> <C> <C>
</TABLE>
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the
date set forth below.
HISPANIC INFORMATION AND
TELECOMMUNICATIONS NETWORK, INC.
Date: By:
------------------------ ------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT A
Exhibit 10.61
================================================================================
MEMBERSHIP INTEREST PURCHASE AGREEMENT
between
JAMES K. BAUMANN
ROXANE L.GOOGIN,
ELIZABETH NEUSTADT,
AS CUSTODIAN FOR RACHEL NEUSTADT,
MARTIN A. RUBIN,
JAMES H. WIESENBERG
and
CLEARWIRE SPECTRUM HOLDINGS II LLC
Dated as of August 9, 2006
================================================================================
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1 DEFINITIONS ................................................... 1
ARTICLE 2 PURCHASE AND SALE OF INTERESTS ................................ 6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLERS ..................... 8
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PURCHASER ................... 17
ARTICLE 5 COVENANTS AND OTHER AGREEMENTS ................................ 19
ARTICLE 6 CONDITIONS TO CLOSING ......................................... 24
ARTICLE 7 TERMINATION ................................................... 25
ARTICLE 8 SURVIVAL AND REMEDIES ......................................... 27
ARTICLE 9 MISCELLANEOUS ................................................. 32
LICENSEE ................................................................ 39
MARKET .................................................................. 39
CALL SIGN & CHANNELS .................................................... 39
LICENSE TERM ............................................................ 39
</TABLE>
EXHIBIT A Form of Escrow Agreement
EXHIBIT B Form of Assignment of LLC Interest
i
MEMBERSHIP INTEREST PURCHASE AGREEMENT
This MEMBERSHIP INTEREST PURCHASE AGREEMENT, dated as of August 9, 2006
(the "Effective Date"), is among James K. Baumann, Roxane I. Googin, Elizabeth
Neustadt as custodian for Rachel Neustadt, Martin A. Rubin and James H.
Wiesenberg (each a "Seller" and collectively the "Sellers"), Clearwire Spectrum
Holdings II LLC, a Nevada limited liability company ("Purchaser"), and
Clearwire Corporation, a Delaware corporation ("Clearwire"), the parent
corporation of Purchaser, for the limited purpose of its obligations in Article
2, making its representations and warranties in Section 4.2, and the provisions
of Articles 6, 7 and 9. All Sellers, Clearwire and Purchaser may be referred to
herein collectively as "Parties;" any one of Purchaser, Clearwire or a Seller
may be referred to herein individually as a "Party;" and Purchaser and Clearwire
may be referred to collectively herein as the "Clearwire Parties."
RECITALS
A. The Sellers own one hundred percent (100%) of the limited liability
company interests (the "Interests") of [***] a Delaware limited liability
company (the "Company");
B. Sellers desire to sell to Purchaser, and Purchaser desires to purchase
from Sellers, the Interests for the purchase price and upon the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, conditions and agreements hereinafter
set forth, Purchaser, Clearwire and each Seller, severally and not jointly,
agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set
forth or referenced below:
"Accredited Investor" means as this term is defined in Rule 501(a) of
Regulation D as promulgated by the U.S. Securities and Exchange Commission under
the Securities Act.
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, alone or through one or more intermediaries, controls,
is controlled by or is under common control with that Person; provided that no
Seller shall be deemed to be an Affiliate of any other Seller based upon his or
her ownership of a share of the Interests or other relationship with the
Company. For purposes of this definition, "control" (including the terms
"controlling" and "controlled") means the power to direct or cause the direction
of the management and policies of a Person, directly or indirectly, whether
through the ownership of securities or partnership or other ownership interests,
by contract or otherwise.
[*** Confidential Treatment Requested]
1
"Agreement" means this Membership Interest Purchase Agreement and all
Exhibits and Schedules hereto, as amended, supplemented or otherwise modified
from time to time in accordance with the terms hereof.
"Amended and Restated Stockholders Agreement" means the Amended and
Restated Stockholders Agreement, dated March 16, 2004, by and among Clearwire
and Clearwire's stockholders.
"Assets" is defined in Section 3.8.
"Benefit Plan" is defined in Section 3.15.
"Bereny" is defined in Section 2.3(b).
"BRS" means Broadband Radio Service, formerly known as MDS.
"Business Day" means any day, other than a Saturday or Sunday, on which
commercial banks and foreign exchange markets are open for business in Seattle,
Washington.
"Channels" means the BRS channels licensed under a License.
"Claim" is defined in Section 8.5(a).
"Clearwire" is defined in the preamble.
"Clearwire Certificate" is defined in Section 2.3(e).
"Clearwire Parties" is defined in the preamble.
"Clearwire Stock" is defined in Section 2.3(c).
"Closing" is defined in Section 2.5.
"Closing Date" is defined in Section 2.5.
"Company" is defined in Recital A.
"Confidential Information" means any and all information regarding the
business, finances, operations, products, services and customers of the
Purchaser and its Affiliates, in written or oral form or in any other medium.
"Consents" means all consents and approvals of Governmental Authorities or
other third parties necessary to authorize, approve or permit the Parties hereto
to consummate the Transactions.
"Contract" is defined in Section 3.9.
2
"Current Clearwire Price" shall be defined as the lower of (i) Six Dollars
($6.00) per share; (ii) the value per share of Clearwire Stock as determined by
the board of directors of Clearwire Corporation from time to time, as in effect
on the Closing Date; (iii) the price per share of Clearwire Stock in the then
most recently completed funding round of Clearwire Corporation in which Eight
Million (8,000,000) or more shares were sold or, if such funding round did not
include common stock but did include preferred stock or other convertible
securities, the price per share of common stock, based on converting such
preferred stock or other convertible securities to common stock pursuant to the
applicable conversion rights; and (iv) if Clearwire Stock is then listed on a
national securities exchange or on the Nasdaq Stock Market, then the average
closing price of the Clearwire Stock on such national securities exchange or on
the Nasdaq Stock Market for each trading day during the ten (10) calendar days
immediately preceding the Closing Date; in the case of each of items (i) through
(iv) subject to appropriate adjustment in the event of a stock split, stock
dividends, other distribution or recapitalization of Clearwire Stock between the
Effective Date and the time of Closing.
"Damages" means any and all losses, claims, demands, liabilities,
obligations, actions, suits, orders, statutory or regulatory compliance
requirements, or proceedings asserted by any Person (including any Party), and
all damages, costs, expenses, assessments, judgments, recoveries and
deficiencies, including interest, penalties, investigatory expenses, reasonable
consultants' fees, and reasonable attorneys' fees and costs, of every kind and
description, contingent or otherwise.
"Disclosure Memorandum" means that certain Confidential Private Placement
Memorandum of Clearwire dated June 23, 2006, as updated by that certain
Supplement to Confidential Private Placement Memorandum dated June 30, 2006.
"Down Payment Advance" is defined in Section 2.3(a).
"EBS" means Educational Broadband Service, formerly know as ITFS.
"Effective Date" is defined in the preamble.
"Employee" is defined in Section 3.15.
"Escrow Agreement" is defined in Section 2.2.
"Exchange Act" is defined in Section 3.17.
"FCC" means the Federal Communications Commission or any successor agency
thereto.
"FCC Application" is defined in Section 5.6.
"FCC Rules" means Title 47 of the Code of Federal Regulations, as amended
at any time and from time to time, and FCC decisions, published policies,
reports and orders issued pursuant to the adoption of such regulations.
3
"Final Order" means an action or decision of the FCC as to which (i) no
request for a stay or similar request is pending, no stay is in effect, the
action or decision has not been vacated, reversed, set aside, annulled or
suspended and any deadline for filing such request that may be designated by
statute or regulation has passed, (ii) no petition for rehearing or
reconsideration or application for review is pending and the time for the filing
of any such petition or application has passed, (iii) the FCC does not have the
action or decision under reconsideration on its own motion and the time
designated by statute or rale within which it may effect such reconsideration
has passed, and (iv) no appeal is pending including other administrative or
judicial review, or in effect and any deadline for filing any such appeal that
may be designated by statute or rule has passed.
"Governmental Authority" means a Federal, state or local court,
legislature, governmental agency (including the United States Department of
Justice), commission or regulatory or administrative authority or
instrumentality.
"Holdback Amount" means Seven Hundred Thousand Dollars ($700,000) in cash.
"Holdback Period" means the period commencing on the Closing Date and
ending on the first (1st) anniversary of the Closing Date.
"Interests" is defined in Recital A.
"Intellectual Property Rights" is defined in Section 3.12.
"Knowledge", as regards any entity, means the actual knowledge of fact of
that entity, which includes that of managing members in that entity, if the
Party is a limited liability company, and, in each case, excludes knowledge
based upon opinion.
"Law" means applicable common law and any statute, ordinance, code or other
law, rule, permit, permit condition, regulation, order, decree, technical or
other standard, requirement or procedure enacted, adopted, promulgated, applied
or followed by any Governmental Authority.
"Legal Proceeding" shall mean any action, suit, litigation, arbitration
proceeding (including any civil, criminal, administrative, investigative or
appellate proceeding), hearing, inquiry, audit, examination or investigation
commenced, brought, conducted or heard by or before, or otherwise involving any
court or other Governmental Authority or any arbitrator or arbitration panel,
but excluding rule makings and legislation of general applicability and market
transitions of BRS and EBS spectrum.
"Licenses" is defined in Section 3.7.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest, right of first refusal or right of others therein, or
encumbrance of any nature whatsoever in respect of such asset other than (1)
liens for taxes not yet due and payable (for which Sellers shall be responsible)
and (2) rights and restrictions imposed by FCC Rules or the Communications Act
of 1934, as amended.
4
"Party" or "Parties" is defined in the preamble.
"Permits" is defined in Section 3.16.
"Person" means any general partnership, limited partnership, limited
liability company, corporation, joint venture, trust, business trust,
Governmental Authority, cooperative, association, other entity, or individual,
and the heirs, executors, administrators, legal representatives, successors, and
assigns of such person as the context may require.
"Pre-Closing Tax Period" is defined in Section 8.4.
"Purchase Price" is defined in Section 2.3.
"Purchaser" is defined in the preamble.
"Purchaser Indemnified Parties" is defined in Section 8.2.
"Reasonable Efforts" means the efforts that a reasonably prudent person or
entity desirous of achieving a result would use in similar circumstances to
ensure that such result is achieved lawfully; provided, however, that an
obligation to use Reasonable Efforts under this Agreement does not require the
Party subject to that obligation to take actions or incur costs that would
result in a materially adverse change in the benefits such Party expects to
realize from this Agreement
"Registration Rights Agreement" means the Registration Rights Agreement,
dated March 16, 2004, as amended, by and among Clearwire and Clearwire's
stockholders.
"Regulation S" means Regulation S under the Securities Act.
"Reservation Claims" is defined in Section 8.6(d).
"Securities Act" means the Securities Act of 1933, as amended.
"Sellers" is defined in the preamble.
"Seller Indemnified Parties" is defined in Section 8.3.
"Seller Material Adverse Effect" means any material adverse change having,
or any event or condition which has had, or could reasonably be expected to
have, a material adverse effect on the ability of Sellers to consummate the
Transactions or on the Assets (other than a FCC Rule change affecting BRS
channel 2 authorizations generally).
"Solvent" is defined in Section 3.18.
"Straddle Period" is defined in Section 8.4.
"Subsidiary" means any Person of which a majority of the outstanding voting
securities or other voting equity interests are owned, directly or indirectly,
by the Company.
5
"Tax" or "Taxes" means any taxes, assessment, duties, fees, levies,
imposts, deductions, or withholdings, including income, gross receipts, ad
valorem, value added, excise, real or personal property, asset, sales, use,
license, payroll, transaction, capital, net worth and franchise taxes, estimated
taxes, withholding, employment, social security, workers compensation, utility,
severance, production, unemployment compensation, occupation, premium, windfall
profits, transfer and gains taxes, or other governmental charges of any nature
whatsoever, imposed by any Taxing Authority of any government or country or
political subdivision of any country, and any liabilities with respect thereto,
including any penalties, additions to tax, fines or interest thereon and
includes any liability for Taxes of another person by contract or as a
transferee or successor.
"Tax Return" means any report, return, statement, estimate, declaration,
notice, form or other information required to be supplied to a Taxing Authority
in connection with Taxes.
"Taxing Authority" shall mean the Internal Revenue Service and any other
Governmental Authority responsible for the administration of any Tax.
"Towers" means any towers or other "antenna structures" as defined by the
FCC in Part 17 of the FCC Rules.
"Transactions" means the transactions contemplated by this Agreement.
"Updated Clearwire Certificate" is defined in Section 2.3(e).
ARTICLE 2
PURCHASE AND SALE OF INTERESTS
Section 2.1 Purchase and Sale. On the terms and subject to the conditions
of this Agreement, at the Closing, each Seller shall sell, assign, transfer,
convey and deliver to Purchaser free and clear of all Liens, and Purchaser shall
purchase from such Seller, the portion of the Interests owned by that Seller.
The obligation of the Sellers under the preceding sentence of this Section 2.1
is several and not joint.
Section 2.2 Purchase Price. The aggregate purchase price (the "Purchase
Price") for the Interests shall be an amount equal to [***] provided, however,
that on the Closing Date to the extent the Company has any liabilities that are
not being paid off at Closing (and evidence provided to Purchaser of such
pay-offs), excluding liabilities arising under the Licenses after Closing and
the Transition Liability (as defined below), the Purchase Price shall be
adjusted downwards in an amount equal to the amount of such outstanding
liabilities.
Section 2.3 Payment of Purchase Price.
(a) Purchaser shall advance to Sellers a portion of the Purchase
Price equal to [***] "Down Payment Advance" payable by wire transfer to one
or more accounts specified by Sellers, upon the later of (i) receipt by
Purchaser of a completed IRS Form W-8 or W-9 from
[*** Confidential Treatment Requested]
6
each of the Sellers and (ii) five (5) Business Days following the full
execution of this Agreement. The Down Payment Advance shall be applied
against the Purchase Price dollar-for-dollar at the Closing. The Down
Payment Advance shall be non-refundable except as specifically provided in
Section 7.2(a).
(b) At the Closing, pursuant to the Escrow Agreement by and
between Purchaser and Sellers, the form of which is attached hereto as
Exhibit A (the "Escrow Agreement") Purchaser shall deposit the Holdback
Amount for the Holdback Period to cover Claims pursuant to Section 8.6.
(c) At the Closing, Purchaser shall pay Sellers and, on behalf of and
at the direction of Sellers, Matthew S. Bereny as broker for Sellers
("Bereny"), an aggregate amount of [***] of the Purchase price, or, if the
Down Payment Advance is not paid, [***] of the Purchase Price, in
immediately available funds via wire transfer to accounts-designated by
Sellers and Bereny. The portion of such aggregate amount payable to any one
of the Sellers or Bereny shall be equal to the product of (i) the decimal
shown opposite such person's name in the table in Section 2.3(d) and (ii)
such aggregate amount
(d) At the Closing, Clearwire shall issue to each person shown on
the following table such number of shares of Clearwire's Class A Common
Stock(including any different class of stock as to which existing Class A
shares may have been converted "Clearwire Stock") as equals the quotient
obtained by dividing (A)the product of (i) the decimal shown opposite such
person's name in the table and (ii) [***] by(B) [***]
Table
<TABLE>
<S> <C>
James K. Baumann 0.12350
Matthew S. Bereny 0.02500
Roxane I. Googin 0.25175
Elizabeth Neustadt, as Custodian for 0.25175
Rachel Neustadt
Martin A. Rubin 0.04750
James H. Wiesenberg 0.30050
</TABLE>
If at the time of Closing, Bereny or any Seller is not an Accredited
Investor, then the portion of the Purchase Price payable to Bereny or such
Seller, as applicable, shall be payable in all cash in immediately available
funds via wire transfer to an account designated by Bereny or such Seller, as
applicable. The number of shares of the Clearwire Stock shall be adjusted, if
necessary to account for any stock split, cash dividend, stock dividend, or
other distribution or recapitalization in respect of Clearwire's issued and
outstanding stock between now and the Closing. No fractional shares of Class A
Common Stock shall be issued pursuant to this Section 2.3.
[*** Confidential Treatment Requested]
7
(e) In the event the Current Clearwire Price falls below $6.00 per
share: (i) Clearwire shall deliver to Sellers a certificate of Clearwire
executed by an officer of Clearwire, certifying as to the Current Clearwire
Price, which certificate shall be delivered to Sellers no later than ten (10)
days prior to Closing (the "Clearwire Certificate") and (ii) each Seller may
elect to receive his or her portion of Four Million Two Hundred Thousand Dollars
in immediately available funds rather than shares of Clearwire Stock, which such
election must be delivered in writing to Clearwire at least two (2) days prior
to the Closing Date, and in the absence of such election, such Seller shall be
deemed to have elected to receive Clearwire Stock at $6.00 per share. In the
event that the Current Clearwire Price changes between the date Clearwire
delivers the Clearwire Certificate to the Sellers and the Closing Date,
Clearwire shall deliver to Sellers an updated Clearwire Certificate, certifying
as to the Current Clearwire Price (an "Updated Clearwire Certificate"). If
Clearwire delivers an Updated Clearwire Certificate to Sellers within four (4)
days of the Closing Date, the Closing Date shall be postponed to the first
business day that is four (4) more days after the delivery of the Updated
Clearwire Certificate, unless the Parties shall agree otherwise.
Section 2.4 Federal Income Tax Treatment; Purchase Price Allocation. The
Parties acknowledge that pursuant to Revenue Ruling 99-6, the transaction
contemplated by this Agreement will be treated for Federal income tax purposes
as (a) a sale of membership interests in the Company from the Sellers'
perspective and (b) a purchase of all of the Assets (as defined below) by
Purchaser for purposes of establishing Purchaser's tax basis and holding period
in the Assets. The Parties further acknowledge and agree that for purposes of
Section 1060 of the Internal Revenue Code of 1986, as amended, and applicable
regulations, for purposes of calculating Purchaser's basis in the Assets and the
character of the gain recognized by Sellers on the sale of the Interests, the
entire Purchase Price shall be allocated to the Licenses, which constitute Class
VI assets.
Section 2.5 Closing. Upon the terms and subject to the conditions hereof,
the closing of the sale of the Interests (the "Closing") shall take place at the
offices of Davis, Wright Tremaine LLP, in Washington, DC, within five (5)
Business Days following the date on which the last condition under ARTICLE 6 has
been satisfied or waived (the 'Target Closing Date"), or at such other time and
place as the Parties may mutually agree; provided, however, the Sellers may
extend the date of Closing to January 3, 2007 by written notice to Purchaser
delivered before the Target Closing Date in the event that the Target Closing
Date would precede January 3, 2007. The date on which Closing occurs is called
the "Closing Date."
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller hereby severally, and not jointly, represents and warrants to
Purchaser as follows; it being understood that a representation and warranty as
to Sellers or the Interests shall be limited to a representation and warranty of
such Seller as to his or her self or his or her share of the Interests, and not
as to any other Seller or the share of the Interests of any other Seller even
though a representation and warranty may apply on its face to all Sellers or the
entire Interests:
8
Section 3.1 Organization; Good Standing. The Company is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware, and has all requisite limited liability company power and
authority to own, lease and operate its properties and to carry on its business
as now conducted. The Company is duly qualified or authorized to do business as
a foreign company and is in good standing under the laws of each state in which
it conducts business. Section 3.1 of the Disclosure Schedule sets forth all of
the jurisdictions in which the Company conducts business.
Section 3.2 Authorization; Enforceability. Such Seller has all requisite
power and authority to execute and deliver this Agreement and each other
agreement, document or instrument or certificate contemplated by this Agreement
to be signed by such Seller and to consummate the Transactions. This Agreement
has been duly executed and delivered by such Seller and is a legal, valid and
binding obligation of such Seller, enforceable against such Seller in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights, to general equity principles and FCC Consent.
Section 3.3 No Conflicts or Consents. Neither the execution, delivery and
performance by such Seller of this Agreement, nor the consummation of the
Transactions by such Seller, will (i) conflict with, or result in the breach of,
any provision of the certificate of formation or limited liability company
agreement of the Company; (ii) constitute, with or without the giving of notice
or passage of time or both, a breach, violation or default by such Seller, the
Company or any of their respective Affiliates, create a Lien, or give rise to
any right of termination, modification, cancellation, prepayment or
acceleration, under (x) any Law or license (subject to receipt of Consent of the
FCC) or (y) any note, bond, mortgage, indenture, lease, agreement or other
instrument, in each case which is applicable to or binding upon the Company,
such Seller or any of the Assets; (iii) require any Consent, other than the
Consent of the FCC; or (iv) violate any Law by which such Seller or the Company
is bound.
Section 3.4 Capitalization.
(a) Such Seller owns the share of the Interests set forth opposite his
or her name on Section 3.4 of the Disclosure Schedule. Such Seller owns his
or her respective share of the Interests free and clear of all Liens. All
the outstanding Interests are duly authorized and validly issued and were
not issued in violation of any preemptive rights. With respect to the
Company, there are no: (a) other equity interests in the Company; (b)
outstanding or authorized option, warrant, right, call or commitment
relating to the equity interests in the Company, nor any outstanding
securities or obligations convertible into or exchangeable for, or giving
any Person any right to subscribe for or acquire from it, any equity
interests in the Company; (c) outstanding obligations of the Company to
repurchase, redeem or otherwise acquire any equity interests in the
Company; (d) authorized or outstanding membership interest or unit
appreciation plan (or similar plan), profit participation or similar rights
with respect to the Company; (e) voting trusts, proxies or other
9
agreements among holders of equity interests in the Company; and (f)
preemptive or other subscription rights with respect to any other equity
interests of the Company.
(b) Section 3.4 of the Disclosure Schedule contains a list of all
distributions made by the Company during 2006 in respect of the Interests
of the Company through the date hereof.
Section 3.5 Subsidiaries. The Company has no Subsidiaries.
Section 3.6 Absence of Undisclosed Liabilities. Except as disclosed on
Section 3.6 of the Disclosure Schedule and liabilities arising under the
Licenses, the Company does not have any liabilities or obligations (whether
accrued, absolute, contingent, unliquidated or otherwise, whether due or to
become due).
Section 3.7 FCC Matters.
(a) The Company validly holds the Licenses, permits and authorizations
set forth on Section 3.7 of the Disclosure Schedule. Section 3.7 of the
Disclosure Schedule sets forth a true and correct list of the licenses
granted by the FCC authorizing the Company (the "Licenses") to construct
and operate BRS Channels in the markets listed therein. True and complete
copies of the Licenses have been delivered to Purchaser. There is no
condition outside of the ordinary course imposed on any of the Licenses by
the FCC except those that are either set forth on the face of the Licenses,
as issued by the FCC, or contained in the FCC Rules applicable generally to
incumbent BRS licenses. The applications listed on Section 3.7 of the
Disclosure Schedule are all of the applications that are now pending at the
FCC for the modification or renewal of the Licenses or otherwise filed by
the Company. No Person other than the Company has any right, interest or
claim in or to the Licenses. The Licenses have been granted to the Company
by Final Order and are in full force and effect.
(b) Excluding proceedings of general applicability and the market
transition of BRS and EBS spectrum (a "Transition"), there is not pending
or, to the Knowledge of such Seller, threatened against the Company or the
Licenses any application, action, petition, objection or other pleading, or
any proceeding with the FCC or any other Governmental Authority, which (i)
questions or contests the validity of, or seeks the revocation, forfeiture,
non-renewal or suspension of, any of the Licenses, (ii) seeks the
imposition of any modification or amendment with respect to any of the
licenses, (iii) which would adversely affect the ability of such Seller to
consummate the Transactions or (iv) seeks the payment of a fine, sanction,
penalty, damages or contribution in connection with the use of the
Licenses. To such Seller's Knowledge and excluding proceedings of general
applicability and any Transition, there are no facts or circumstances
existing that would give rise to any such application, action, petition,
objection or other pleading, or proceeding with the FCC or any other
Governmental Authority. There is no unsatisfied adverse FCC order or
10
ruling outstanding against such Seller or any of the Licenses. Such Seller
is not a party to any complaint or proceeding at the FCC regarding any of
the Licenses.
(c) Except as described in Section 3.7(c) of the Disclosure Schedule,
the Company has not agreed to accept or allow any electromagnetic
interference from any other FCC licensees, permittees or applicants with
respect to the Licenses and/or Channels, and no such licensees, permittees
or applicants have agreed to accept electromagnetic interference from the
Company with respect to their respective facilities.
(d) The Company is in compliance with all applicable Laws except for
any non-compliance that, individually or in the aggregate, will not have a
Seller Material Adverse Effect. Since acquiring the Licenses, the Company
has complied in all material respects with FCC Rules applicable to the
Licenses, including without limitation the Communications Act of 1934, as
amended. Since the issuance of the Licenses, the Company has complied in
all material respects with all of the terms and conditions of the Licenses.
The Licenses are free and clear of all Liens and are unimpaired by any acts
or omissions of the Company, its agents, assignees and licensees. Except as
set forth in Section 3.7(c) of the Disclosure Schedule, all material
documents required to be filed at any time by the Company with the FCC with
respect to the Licenses have been timely filed or the time period for such
filing has not lapsed. All such documents filed since the date that the
Licenses were issued to the Company are correct in all material respects.
All amounts owed to the FCC in connection with the Licenses have been
timely paid.
(e) The facilities subject to the Licenses for which certification of
completion of construction has been filed with the FCC are not operating.
None of the facilities subject to the Licenses is (a) authorized pursuant
to an authorization which is presently subject to challenge before the FCC
or any court of competent jurisdiction or (b) subject to any lease,
sublease or any agreement to make it available to a third party. None of
the facilities subject to the Licenses are operating pursuant to special
temporary or developmental authority.
(f) The Company does not lease any Towers for the market area
covered by the Licenses.
Section 3.8 Title to Assets; Condition of Assets. As of the Closing Date,
the Company shall have no assets other than the Licenses and the books and
records of the Company (collectively, the "Assets").
Section 3.9 Contracts. Sellers have disclosed on Section 3.9 of the
Disclosure Schedule any indenture, mortgage, guaranty, lease, license or other
contract, agreement or understanding, written or oral to which the Company is a
party (each a "Contract"). Each of the Contracts will be terminated or assigned
to the Sellers in advance of Closing. No Contract, or any of them, requires the
consent of a party thereto in order to be effectively terminated or assigned to
Sellers on or prior to Closing. Neither the Company nor, to the
11
Knowledge of such Seller, any other party to any of the Contracts has failed to
comply with or is in material breach or material default thereunder. Except as
set forth on Section 3.9 of the Disclosure Schedule, to the Knowledge of such
Seller, no condition exists or event has occurred and is continuing as of the
date hereof and the Closing which, with or without the lapse of time or the
giving of notice, or both, would constitute a material default by any party
under any Contract or give rise to any Lien or right of termination,
modification, cancellation, prepayment, suspension, limitation, revocation or
acceleration against the Company under any such Contract. Other than as
described in Section 3.9 of the Disclosure Schedule, none of such Contracts are
with any Person that is an officer, manager, member (or any family member of
such Person) or Affiliate of Sellers.
Section 3.10 Taxes.
(a) The Company has timely filed all Tax Returns that it was required
to file under applicable laws and regulations. All such Tax Returns are true,
correct, accurate and complete in all material respects. The Company has paid
all Taxes which have been imposed upon the Company or upon any of the assets,
income or franchises of the Company (whether or not shown on any Tax Return). No
claim has ever been made by any Taxing Authority in a jurisdiction where the
Company does not file Tax Returns, but the Company is or may be subject to
taxation by that jurisdiction. There exists no proposed tax assessment against
the Company. The Tax Returns of the Company have never been audited by a Taxing
Authority and the Company has received no notice of any such audit. The Company
has not waived any statute of limitations with respect to Taxes or agreed to any
extension of time with respect to any Tax assessment or deficiency. There are no
Liens for Taxes upon any of the Company's assets.
(b) The Company has withheld and paid over to the appropriate Taxing
Authority all Taxes required to have been withheld and paid over in connection
with any amounts paid or owing to any employee, independent contractor,
creditor, member, or other third party.
(c) The Company has at all times been treated and properly classified
as a partnership for federal income tax purposes, and has never filed, or had
filed on its behalf, any election to be treated as an association taxable as a
corporation for federal income tax purposes.
(d) Sellers have delivered to Purchaser true, complete and correct
copies of the Tax Returns for the Company for the tax years 2003, 2004 and 2005.
12
Section 3.11 Litigation. Except as set forth on Section 3.11 of the
Disclosure Schedule and excluding investigations not revealed to the Company or
any Seller, there is no Legal Proceeding now in progress or pending or
threatened against the Company, such Seller, the Assets or the business of the
Company, nor to the Knowledge of such Seller does there exist any basis
therefore. The Company is not subject to any order, writ, injunction or decree
of any court or any federal, state, municipal or other domestic or foreign
Governmental Authority.
Section 3.12 Intellectual Property. The Company does not own or possess any
patents, trademarks, service marks, trade names, copyrights, trade secrets,
information and other proprietary rights and processes (collectively
"Intellectual Property Rights").
Section 3.13 Books and Records. The records of the Company are materially
true but may not reflect all meetings of and resolutions of, or written consents
by, the members or managers (or committee thereof) since the day of company
formation. The books and records of the Company accurately reflect the assets,
liabilities, business, financial condition and results of operations of the
Company. All books and records of the Company have been made available, or will
be delivered prior to Closing, to Purchaser.
Section 3.14 Employees. The Company (a) currently has no employees, (b)
shall have no employees as of the Closing Date, and (c) and shall have satisfied
all obligations owed to its employees, including, without limitation, for any
wages, salaries, commissions, bonuses or other direct compensation for any
services performed as of the Closing Date or amounts required to be reimbursed
by them by the Closing Date. There are no plans, arrangements or agreements
pursuant to which any employee or other Person may be entitled to any
compensation or payment based upon or as a result of the Transactions other than
as described in Section 3.20 of the Disclosure Schedule. The Company has been at
all times in compliance in all material respects with all applicable federal,
state and local laws, rules and regulations respecting employment, employment
practices, labor, terms and conditions of employment and wages and hours. The
Company is not bound by or subject to (and none of its assets or properties are
bound by or subject to any written or oral, express or implied, commitment or
arrangement with any employee.
Section 3.15 Employee Benefit Plans.
(a) The Company does not have and never has had a plan, program or
policy providing for compensation, severance, termination pay, performance
awards, equity or equity-related awards, fringe benefits or other material
employee benefits of any kind, whether formal or informal, funded or unfunded,
written or oral and whether or not legally binding, which is now or has ever
been sponsored, maintained, contributed to or required to be contributed to by
the Company or pursuant to which the Company has any liability, contingent or
otherwise, including, but not limited to, any "employee benefit plan" within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") (each a "Benefit Plan"). The Company does not sponsor,
maintain, contribute to, nor is required to contribute to, nor has the Company
ever sponsored, maintained, contributed to or been required to contribute to, or
incurred or could incur any
13
liability to any Benefit Plan which provides, or has any liability to provide,
life insurance, medical, severance or other employee welfare benefits to any
current, former or retired employee, officer, consultant, independent
contractor, agent or director of the Company upon his or her retirement or
termination of employment, except as required by Code Section 4980B. The Company
does not have any plan or commitment, whether legally binding or not, to
establish any new Benefit Plan, or to modify or terminate any Benefit Plan.
(b) The Company is not nor ever has been (i) a member of a "controlled
group of corporations," under "common control" or a member of an "affiliated
service group" within the meaning of Code Sections 414(b), (c) or (m), (ii)
required to be aggregated under Code Section 414(o), or (iii) under "common
control," within the meaning of Section 4001(a)(14) of ERISA, or any regulations
promulgated or proposed under any of the foregoing Sections, in each case with
any entity other than the Company.
Section 3.16 Compliance with Laws; Permits. Except as provided on Section
3.16 of the Disclosure Schedule, the Company (a) has complied in all respects
with all Laws applicable to it and its business other than where noncompliance
would not, individually or in the aggregate, reasonably be expected to have a
Seller Material Adverse Effect and (b) has all federal, state, local and foreign
governmental permits, authorizations, approvals, licenses, certificates or
consents ("Permits") necessary in the conduct of its business as currently
conducted and to own and use its assets in the manner in which such assets are
currently owned and used other than where the failure to possess such Permits
would not, individually or in the aggregate, reasonably be expected to have a
Seller Material Adverse Effect, such Permits are in full force and effect, no
violations have been recorded in respect of any such Permit except as stated
Section 3.7(c) of the Disclosure Schedule, and no proceeding is pending or
threatened to revoke or limit any such Permit. Section 3.16 of the Disclosure
Schedule sets form a list of all material Permits and the expiration dates
thereof.
Section 3.17 Absence of Changes. Except as set forth on Section 3.17 of the
Disclosure Schedule, since December 31, 2005, the Company has conducted its
business in the ordinary course and there has not been (a) any material adverse
change having, or any event or condition which has had, or could reasonably be
expected to have, a Seller Material Adverse Effect; (b) any waiver of any
valuable right of the Company, the cancellation of any valuable right of the
Company, or the cancellation of any material debt or claim held by the Company;
(c) any payment or declaration of dividends on, or other distribution with
respect to, or any direct or indirect redemption or acquisition of, any
securities of the Company; (d) any issuance of any stock, bonds or other
securities of the Company or any split, combination or reclassification of the
Company's membership interests; (e) any sale, assignment or transfer of any
tangible or intangible assets of the Company, except in the ordinary course of
business, and assets which are not, individually or in the aggregate, material;
(f) any loan by the Company to any officer, manager or member of the Company
(other than advances to such persons in the ordinary course of business in
connection with travel and travel related expenses); (g) any damage, destruction
or loss (whether or not covered by insurance) materially and adversely affecting
the Assets; (h) any change in the accounting or Tax methods, practices or
policies or in any Tax election of the Company: (i) any indebtedness incurred
for borrowed money other than in the ordinary course of
14
business; (j) any amendment to or termination of any material agreement to which
the Company is a party (other than amendments to or terminations of agreements
pursuant to or contemplated by this Agreement); (k) any satisfaction or
discharge of any lien, claim, or encumbrance or payment of any obligation by the
Company, except in the ordinary course of business; (1) any material change in
any compensation arrangement or agreement with any employee, officer, manager or
member the Company, (m) any mortgage, pledge, transfer of a security interest
in, or Lien, created by the Company, with respect to any of its material
properties or assets, except liens for taxes not yet due or payable; or (n) any
agreement or commitment (contingent or otherwise) to do any of the foregoing.
Section 3.18 Solvency. Such Seller and the Company are Solvent. For
purposes of this Agreement, "Solvent" means as to such Seller and the Company
that (a) the fair value of such Party's property is greater than the amount of
its liabilities (whether subordinated, contingent, unmatured, unliquidated or
otherwise); (b) the present fair saleable value of such Party's property is not
less than the amount that will be required to pay the probable liability of such
Party on its debts as they become absolute and matured; (c) such Party is able
to realize upon his or its property and pay its debts and other liabilities as
they mature in the normal course of business; (d) such Party docs not intend to,
and does not believe that will, incur debts or liabilities beyond its ability to
pay as such debts and liabilities mature; and (e) such Party is not engaged in
business or a transaction for which its property would constitute unreasonably
small capital.
Section 3.19 Related Party Transactions. Section 3.19 of the Disclosure
Schedule sets forth all obligations and transactions (i) between the Company and
the Company's Affiliates, and (ii) between the Company and any of the officers,
managers, equity holders or employees, or any of the affiliates or associates
(each term as defined in the Securities Exchange Act of 1934, as amended (the
"Exchange Act")') of the Company. Except as set forth on Section 3.19 of the
Disclosure Schedule, no officer or manager of the Company or any parent, child
or spouse of any of such persons, or any trust, partnership or corporation in
which any of such persons has or has had an interest) has or has had, directly
or indirectly, (x) any interest or involvement in any entity which furnished or
sold, or furnishes or sells, services or products which the Company furnishes or
sells, or proposes to furnish or sell, or (y) any interest or involvement in any
entity which purchases from or sells or furnishes to, the Company, any goods or
services; provided, that ownership of no more than one percent of the
outstanding voting stock of a publicly traded corporation in and of itself shall
not be deemed an interest in any entity for purposes of this Section 3.19.
Except as set forth on Section 3.19 of the Disclosure Schedule, no Affiliate of
the Company (a) owns any property or right, tangible or intangible, which is
used in the business of the Company or (b) has any claim or cause of action
against the Company. Except as described on Section 3.19 of the Disclosure
Schedule, each transaction set forth on Section 3.19 of the Disclosure Schedule
is on terms that are (i) consistent with past practice of the Company and (ii)
at least as favorable to the Company as would be available with independent
third parties dealing at arms' length.
Section 3.20 Brokers. Neither Sellers nor the Company or any of their
respective Affiliates has employed any broker or finder or incurred any
liability for any brokerage or finder's fees or commissions in connection with
the Transactions, except Bereny and James
15
H. Wiesenberg who, upon the Closing, will be entitled to the commission
described in Section 3.20 of the Disclosure Schedule.
Section 3.21 Securities Representations.
(a) Such Seller is an Accredited Investor. Such Seller is acquiring
the Clearwire Stock for its own account, for investment purposes only and
not with a view to the distribution (as such term is interpreted for
purposes of Section 2(11) of the Securities Act) thereof. Such Seller
understands that the Clearwire Stock has not been registered under the
Securities Act as of the Effective Date and cannot be sold or otherwise
transferred unless subsequently registered under the Securities Act or an
exemption from such registration is available.
(b) Such Seller is knowledgeable and experienced in the
telecommunications industry and in investments in telecommunications
enterprises, and is capable of evaluating the risks and merits of the
transactions contemplated by this Agreement, including the acquisition of
shares of Clearwire Stock. Such Seller has received the Disclosure
Memorandum from Purchaser in sufficient time prior to entering into this
Agreement. Such Seller and its representatives have had sufficient
opportunity to ask questions of and receive answers from Purchaser and
Clearwire concerning the business of Clearwire, its operations, assets and
liabilities, and have had what such Seller considers to be reasonable
access to information about Clearwire. Such Seller and its representatives
have had an opportunity to review all documents and records concerning
Clearwire and its business that such Seller has requested. Such Seller has
conducted its own independent assessment, analysis and investigation with
respect to Clearwire and its business at the time of entering into this
Agreement and has agreed to enter into this Agreement and to accept
Clearwire Stock as partial payment of the Purchase Price based solely on
this assessment, analysis and investigation, and the representations and
warranties of Purchaser set forth in this Agreement and the information
contained in the Disclosure Memorandum.
(c) Such Seller is aware that Clearwire is a speculative enterprise,
that certain of the information disclosed to it contain forward looking
statements which involve risks and uncertainties, and that Clearwire's
actual results may differ significantly from the results discussed in these
forward looking statements. Such Seller further acknowledges that the value
of Clearwire's respective assets is inherently uncertain and is dependent
upon market, technological, and regulatory developments concerning feasible
and allowable uses. Each Seller represents and warrants to Purchaser and
Clearwire that it has assessed these factors independently and has agreed
to enter into this Agreement without reliance upon or expectation of any
disclosures of any kind from Purchaser or Clearwire, except as set forth in
this Agreement and the Disclosure Memorandum and as contemplated by Section
3.21(b).
(d) Such Seller is aware that the shares of Clearwire Stock issued in
connection with this Agreement will be "restricted securities" within the
meaning of
16
Rule 144(a)(3)(i) and 144(a)(3)(ii) and that such shares may be resold or
otherwise transferred pursuant to an effective registration statement under
the Securities Act or an exemption from such registration. Such Seller
acknowledges that all certificates representing shares of Clearwire Stock
issued in this transaction will bear a legend reflecting such status.
(e) For purposes of application of state securities law, such Seller
is a resident of the state or foreign country indicated opposite his or her
name on Section 3.4 of the Disclosure Schedule.
(f) With respect to any Seller who is not a resident of the United
States, such Seller makes the following representations, warranties and
covenants:
(i) such Seller is not a "U.S." person (as defined in Regulation
S) and is not acquiring the Clearwire Stock for the account
or benefit of any U.S. person;
(ii) such Seller will not engage in hedging transactions with
regard to Clearwire's securities unless conducted in
compliance with the Securities Act;
(iii) such Seller will not resell any of Clearwire's securities
unless in accordance with the provisions of Regulation S and
in accordance with applicable state securities laws in the
United States, or pursuant to an available exemption from
registration under the Securities Act; provided that such
Seller provides an opinion of counsel or other evidence of
exemption, in form reasonably satisfactory to U.S. counsel
to Clearwire; and
(iv) such Seller acknowledges that Clearwire will refuse to
register any transfer of any of the Clearwire Stock not made
in accordance with the provisions of Regulation S, pursuant
to registration under the Securities Act, or pursuant to an
available exemption from registration.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND CLEARWIRE
Section 4.1 Purchaser hereby represents and warrants to each Seller and
Bereny as follows:
(a) Existence; Authorization. Purchaser is lawfully existing and in
good standing under the laws of the State of Nevada, has all requisite power and
authority to enter into this Agreement and to perform the obligations to be
performed by it under this Agreement. The execution and delivery of this
Agreement, and the performance by
17
Purchaser of its obligations hereunder, have been duly authorized by all
necessary action on the part of Purchaser.
(b) Enforceability. This Agreement has been duly executed and
delivered by Purchaser and is a legal, valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles. Each other agreement, document, instrument or
certificate contemplated by this Agreement to be delivered by Purchaser to
any one or more Sellers or Bereny, if and when so delivered, will be duly
executed and delivered by Purchaser, and a legal, valid and binding obligation
of Purchaser enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
(c) No Conflicts or Consents. Neither the execution, delivery and
performance by Purchaser of this Agreement, nor the consummation of the
Transactions by Purchaser, will (i) constitute, with or without the giving of
notice or passage of time or both, a breach, violation or default by Purchaser
or any of its Affiliates, or give rise to any right of termination,
modification, cancellation, prepayment or acceleration under (x) any Law or
license (subject to receipt of Consent of the FCC), or (y) any note, bond,
mortgage, indenture, lease, agreement or other instrument, in each case which is
applicable to or binding upon Purchaser; or (ii) will require any Consent, other
than the Consent of the FCC.
(d) Brokers. Purchaser has not employed any broker or finder or
incurred any liability for any brokerage or finder's fees or commissions in
connection with the Transactions.
(e) FCC, Qualifications. Purchaser is legally, technically,
financially and otherwise qualified to acquire and hold the Licenses under FCC
Rules and the Communications Act of 1934, as amended.
(f) Proceedings. There is no Legal Proceeding pending or, to the
Knowledge of Purchaser, threatened against Purchaser or Clearwire, or
Purchaser's or Clearwire's property or assets, that would reasonably be expected
to have an adverse effect on Purchaser's ability to consummate the Transactions,
or which seeks to prevent or challenge the Transactions.
4.2 Clearwire Representations and Warranties. Clearwire hereby represents
and warrants to each Seller and Bereny as follows:
(a) Existence Authorization. Clearwire is lawfully existing and in
good standing under the laws of the State of Delaware, has all requisite power
and authority to issue the Clearwire Stock as contemplated by this Agreement,
and to perform the obligations to be performed by it under this Agreement. The
performance by Clearwire of its obligations hereunder, have been duly authorized
by all necessary action on the part of Clearwire.
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(b) Enforceability. This Agreement has been duly executed and
delivered by Clearwire and is a legal, valid and binding obligation of
Clearwire, enforceable against Clearwire in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles. Each other agreement, document, instrument or
certificate contemplated by this Agreement to be delivered by Clearwire, or to
be entered into with Clearwire by joinder of any one or more Sellers or Bereny,
if and when so delivered, will be duly executed and delivered by Clearwire, and
a legal, valid and binding obligation of Clearwire, enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
(c) No Conflicts or Consents. Neither the execution, delivery and
performance by Clearwire of this Agreement, nor the consummation of the
Transactions by Clearwire, will (i) constitute, with or without the giving of
notice or passage of time or both, a breach, violation or default by Clearwire
or any of its Affiliates, or give rise to any right of termination,
modification, cancellation, prepayment or acceleration under (x) any Law or
license (subject to receipt of Consent of the FCC), or (y) any note, bond,
mortgage, indenture, lease, agreement or other instrument, in each case which is
applicable to or binding upon Clearwire; or (ii) will require any Consent, other
than the Consent of the FCC.
(d) Securities to be Issued to Sellers and Bereny. When issued by
Clearwire to Sellers and Bereny pursuant to this Agreement, the Clearwire Stock
will be duly issued, fully paid and non-assessable, free of liens, encumbrances,
rights of third parties, and restrictions on transfer other than restrictions on
transfer and rights of third parties under this Agreement and as may exist under
the Amended and Restated Stockholders Agreement to which each Seller and Bereny
will be a party by joinder, the Registration Rights Agreement to which each
Seller and Bereny will be a party by joinder, and applicable securities laws.
Clearwire's Board of Directors has approved the issuance of the Clearwire Stock
pursuant to this Agreement in accordance with Clearwire's certificate of
incorporation, Clearwire's bylaws and the Delaware General Corporation Law.
(e) Proceedings. There is no Legal Proceeding pending or, to the
Knowledge of Clearwire, threatened against Purchaser or Clearwire, or
Clearwire's property or assets, that would reasonably be expected to have an
adverse effect on Clearwire's ability to consummate the Transactions, or which
seeks to prevent or challenge the Transactions.
ARTICLE 5
COVENANTS AND OTHER AGREEMENTS
Section 5.1 Consummation of Transactions. From and after the date of this
Agreement, each Party shall use its Reasonable Efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things necessary, proper
or advisable and consistent with applicable Law to perform its obligations under
this Agreement and to consummate the Transactions as soon as reasonably
practicable.
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Section 5.2 Certain Notices. Prior to the Closing, each Party shall
promptly notify each other Party in reasonable detail:
(a) upon such Party obtaining Knowledge of the commencement of, or the
impending or threatened commencement of, or of any facts that would give
rise to, any claim, action or proceeding brought to enjoin the consummation
of the Transactions, or against or relating to (i) the notifying Party or
its properties or assets, which could materially adversely affect the
Transactions or its ability to perform its obligations hereunder, or (ii)
the Assets or their use;
(b) upon such Party obtaining Knowledge of the occurrence of, or the
impending or threatened occurrence of, or any facts that would give rise
to, any event which could cause or constitute a material breach of any of
its representations, warranties, covenants or agreements contained in this
Agreement, and shall use Reasonable Efforts to prevent or promptly remedy
such breach; and
(c) upon such Party obtaining Knowledge of the occurrence or existence
of any event, condition, circumstance or state of facts, which has had or
could have a material adverse effect on the Transactions or its ability to
perform its obligations hereunder, or which could materially adversely
affect the Assets or their use.
Section 5.3 Confidentiality. Pursuant to this Agreement and the performance
thereof, Sellers may receive certain Confidential Information. Each Seller
agrees not to use for himself or herself, except in performance of the Agreement
and for reliance for purposes of deciding to enter into or close this Agreement,
or disclose to any Person this Agreement or any Confidential Information, except
(a) information that was gained independent of Sellers' relationship with
Purchaser and became publicly available through no breach of any obligation of
confidentiality by Sellers; (b) information that is communicated to a third
party with the prior written consent of Sellers; (c) information that is
required to be disclosed pursuant to the lawful order of a government agency or
disclosure that is required by operation of law, but in such event, only to the
extent such disclosure is required and, to the extent reasonably practicable,
prior written notice must be given to allow Purchaser to seek a protective order
or other appropriate remedy; or (d) disclosure in a proceeding seeking to
enforce this Agreement or any other agreement executed pursuant to the terms of
this Agreement, to seek damages related to the breach of any such agreements or
as required to obtain FCC consent to the Transactions. In the event of a beach
or threatened breach of the terms of this section, Purchaser shall be entitled
to seek an injunction prohibiting any such breach. Any such injunctive relief
shall be in addition to, and not in lieu of, any appropriate relief in the way
of money damages or any other remedies available at law or in equity. Each
Seller acknowledges and agrees that the financial terms of this Agreement may be
required to be separately stated in the consolidated financial statements of
Purchaser and/or its Affiliates and that the disclosure by Purchaser or its
Affiliates of such financial statements shall not be a breach of this Agreement
Purchaser may disclose this Agreement to its affiliates, strategic partners,
actual or potential investors, lenders, acquirers, merger partners; and others
whom Purchaser deems in good faith to have a need to know such information for
purposes of
20
pursuing a transaction or business relationship with Purchaser. The duties under
this Section shall survive the Closing for a period of one (1) year.
Section 5.4 Further Assurances. Prior to, at and following the Closing,
each Party shall forthwith upon request execute and deliver such documents and
take such actions as may reasonably be requested by any other Party in order to
effectuate the purposes of this Agreement; provided, however, that no Party
shall be required to take any action after the Closing which would subject it,
its partners, officers, directors or shareholders to any further liability or
obligation, except as expressly provided in this Agreement.
Section 5.5 FCC Qualifications. Sellers hereby covenant and agree that
prior to the Closing they shall cause the Company to maintain all necessary
qualifications to hold and to obtain renewal in the ordinary course of the
Licenses, and further covenant that they shall not knowingly or negligently take
any action, or fail to take any action, which action or failure to act creates a
material risk that the Company would not be qualified to hold the Licenses or
that the FCC would revoke the Licenses; provided, however, that Purchaser shall
be responsible for the Transition Liability as defined in and pursuant to
Section 5.13.
Section 5.6 Consents. The Parties shall use Reasonable Efforts and shall
cooperate to prepare and file with Governmental Authorities and other Persons,
no later than ten (10) days following the Effective Date, all applications,
notices, petitions and other documentation necessary or advisable to obtain the
Consents (it being understood that the failure to file within such period shall
not constitute a material breach of this Agreement). Each Party shall furnish to
the other Party all information concerning such Party and its Affiliates
reasonably required for inclusion in any application to be made in connection
with the Transactions or to determine compliance with FCC Rules. Neither any one
or more of the Sellers nor the Company shall be required to bear any expense of
seeking or assisting Purchaser in seeking any Consent to the Closing that
Purchaser may require for it to consummate the Transactions but which neither
any Seller nor Company may require for it to consummate the Transactions. Each
Seller and Purchaser will use Reasonable Efforts to prepare all application
forms and related exhibits, certifications and other documents necessary to
secure the Consent of the FCC to the Transactions (collectively, the "FCC
Application") and to file the FCC Application within ten (10) Business Days
following the Effective Date. Each Seller and Purchaser will promptly and
diligently prepare, file and prosecute all necessary amendments, briefs,
pleadings, petitions for reconsideration, applications for review, waiver
requests, documents and supporting data, and take all such actions and give all
such notices as may be required or requested by the FCC or as may be appropriate
to expedite the grant of the FCC Application without conditions materially
adverse to any Seller, Company or Purchaser. If any person or entity petitions
the FCC to deny the FCC Application, or if the FCC grants such application and
any person or entity petitions for reconsideration or review of such grant
before the FCC or appeals or applies for review in any judicial proceeding, then
each Seller and Purchaser will use their respective Reasonable Efforts to oppose
such petition before the FCC or defend such grant by the FCC. If the FCC denies
the FCC Application or grants such application with conditions materially
adverse to any Seller or Purchaser, then if requested to do so by any Party,
each Seller and Purchaser will use their respective Reasonable Efforts to secure
reconsideration or review of
21
such action. If the Closing has not occurred within 180 days following the date
of the grant of the FCC Application, each Seller and Purchaser shall use
Reasonable Efforts to obtain such extensions of the effectiveness of such grant
as is reasonably necessary to permit the scheduling of Closing pursuant to this
Agreement Purchaser will be responsible for the payment of all FCC Application
filing fees incurred in connection with this Section 5.6.
Section 5.7 Seller Affirmative Covenants. Sellers shall use Reasonable
Efforts to cause the Company (a) to carry on its business with respect to the
Licenses as currently conducted and only in the ordinary course of business; (b)
preserve the Licenses intact; (c) comply with all Laws applicable to the
Licenses; and (d) maintain in full force and effect the Licenses and other
licenses necessary to preserve Sellers' ability to consummate the Transactions.
Section 5.8 Seller Negative Covenants. No Seller shall, and each Seller
shall cause the Company not to, (a) sell, transfer, assign, lease, modify or
dispose of any material Assets or of the spectrum to be covered by the Licenses
or any interests therein or portion thereof, or negotiate therefor, other than
Company's rights against George Bott with respect to a Buffalo BRS station and
the Company's bank account; or (b) create, incur or suffer to exist any Lien or
other liability on any Assets or the spectrum to be covered by the Licenses or
any interest therein; (c) sell, assign or otherwise transfer the Interests or
any rights therein; (d) grant any options or other rights in or with respect to
the Interests; (e) create or allow to be created any lien on the Interests; or
(f) enter into any agreement, arrangement or understanding to, or otherwise
offer or commit to do any of the foregoing.
Section 5.9 Access. Between the date of this Agreement and the Closing
Date, Sellers shall cause the Company, during normal business hours, to (a) give
Purchaser and its representatives and advisors access to all books, records,
offices and other facilities and properties of the Company; (b) permit Purchaser
and its representatives and advisors to make such inspections thereof as
Purchaser may reasonably request; and (c) cause the officers and advisors of the
Company to furnish Purchaser with such financial and operating data and other
information with respect to the Company as Purchaser may from time to time
reasonably request other than information protected by the attorney-client
privilege.
Section 5.10 Publicity. Neither Sellers nor Purchaser shall issue any press
release or public announcement concerning this Agreement or the transactions
contemplated hereby without obtaining the prior written approval of the other
Party hereto, which approval will not be unreasonably withheld or delayed,
unless disclosure is otherwise required by applicable Law, provided that, to the
extent required by applicable Law, the Party intending to make such release
shall use its Reasonable Efforts consistent with such applicable Law to consult
with the other Party with respect to the text thereof.
Section 5.11 Tax Returns. Sellers shall timely prepare and file a final
year Form 1065 for the Company for the fiscal year ending on the Closing Date
and shall deliver a copy of such Form 1065 to Purchaser. Sellers shall timely
prepare and submit to Purchaser for review, approval, and filing (A) any sales
and use Tax returns with respect to the Pre-Closing Tax Period that are required
to be filed after the Closing Date, (B) any property Tax Returns
22
with respect to the Pre-Closing Tax Period that are required to be filed after
the Closing Date, and (C) any excise Tax Returns with respect to the Pre-Closing
Tax Period that are required to be filed after the Closing Date. Sellers shall
make such revisions to the Tax Returns described in the preceding sentence as
are reasonably requested by Purchaser.
Section 5.12 Cooperation on Tax Matters. Purchaser, the Company, and
Sellers shall cooperate fully, as and to the extent reasonably requested by the
other party, in connection with the filing of Tax Returns and any audit,
litigation or other proceeding with respect to Taxes. Such cooperation shall
include the retention and (upon the other party's request) the provision of
records and information reasonably relevant to any such audit, litigation, or
other proceeding and making employees (other than counsel) available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. The Company, Sellers, and Purchaser agree (A)
to retain all books and records with respect to Tax matters pertinent to the
Company relating to any taxable period beginning before the Closing Date until
the expiration of the statue of limitations (and, to the extent notified by
Purchaser or Sellers, any extensions thereof) of the respective taxable periods,
and to abide by all record retention agreements entered into with any Taxing
Authority, and (B) to give the other party reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if the
other party so requests, the Company or Sellers, as the case may be, shall allow
the other party to take possession of such books and records. Purchaser and
Sellers further agree, upon request, to use their best efforts to obtain any
certificate or other document from any Taxing Authority or any other person as
may be necessary to mitigate, reduce or eliminate any Tax that could be imposed
(including with respect to the transaction contemplated hereby).
Section 5.13 Transition Liability. The Parties acknowledge that the FCC
requires BRS licensees, including the Company, to reimburse certain costs of
proponent-driven Transitions of EBS spectrum and self-Transitions of EBS
spectrum. To the extent the Company is assessed or incurs any costs payable
under FCC Rules 27.1237 and 27.1238 (or any successors thereto) prior to Closing
or prior to the termination of this Agreement (the "Transition Liability"),
Purchaser shall pay for such Transition Liability on behalf of the Company.
Sellers shall provide Purchaser with at least thirty (30) days notice of the
requirement to pay any Transition Liability. Sellers shall provide Purchaser
with notices received from any proponent or self-Transitioning EBS licensee
concerning the calculation or payment of any Transition Liability. In the event
that Purchaser determines in good faith that a requested payment is not a
Transition liability, Sellers shall cause the Company, at Purchaser's expense,
to join with Purchaser in contesting such requested payment within any period
allowed by the FCC for such contest, but (i) Purchaser shall pay the uncontested
amount when due; (ii) Purchaser shall be responsible for any interest, late fees
or FCC-imposed forfeitures related to any contest or delay in making such
requested payment; and (iii), if the making of the requested payment is a
requirement for the grant of the consent of the FCC to the transfer of control
of Company, Purchaser shall make the requested payment under protest so as not
to delay the grant of such consent.
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ARTICLE 6
CONDITIONS TO CLOSING
Section 6.1 Conditions to the Obligations of All Parties. Each Party's
obligation to consummate the Transactions contemplated by this Agreement are
subject to the satisfaction or waiver, on or prior to the Closing Date, of each
of the following conditions, as applicable to the Party specified:
(a) The FCC shall have granted the FCC Application, such grant shall
have become a Final Order, and such Final Order shall be in full force and
effect; and all other notices, filings and Consents required to be made or
obtained prior to the closing by either Party or any of its respective
Affiliates with any Governmental Authority in connection with the execution
and delivery of this Agreement and the consummation of the Transactions
shall have been made or obtained without imposition of conditions outside
of the ordinary course.
(b) No preliminary or permanent injunction or other order, decree
or ruling issued by a Governmental Authority, nor any Law promulgated or
enacted by any Governmental Authority, shall be in effect that would impose
material limitations on the ability of either Party to consummate the
Transactions.
Section 6.2 Conditions to the Obligations of Sellers. Each Seller's
obligation to consummate the Transactions contemplated by this Agreement is
subject to the satisfaction or waiver, on or prior to the Closing Date, of each
of the following conditions:
(a) The representations and warranties of Purchaser and Clearwire
contained herein shall be true and correct in all material respects (except
for representations and warranties that are qualified as to materiality,
which shall be true and correct) as of the Closing as if made on and as of
the Closing Date (except that representations and warranties that are made
as of a specific date need be so true and correct only as of such date).
(b) The covenants and agreements of Purchaser and Clearwire to be
performed under this Agreement on or prior to the Closing shall have been
duly performed in all material respects.
(c) Purchaser and Clearwire shall have delivered the Purchase Price
to sellers and Bereny in accordance with Section 2.3.
(d) Purchaser and Clearwire shall have delivered to Sellers a
certificate of Purchaser and Clearwire dated the Closing Date certifying
that the conditions specified in Section 6.2(a) and (b) have been met.
(e) the Amended and Restated Stockholders Agreement, and
the Registration Rights Agreement shall be in full force and effect, and,
upon the Closing, Sellers and Bereny shall be parties to such agreements by
delivering joinders to Clearwire.
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Section 6.3 Conditions to the Obligations of Purchaser and Clearwire.
Purchaser's and Clearwire's obligations to consummate the Transactions
contemplated by this Agreement are subject to the satisfaction or waiver on or
prior to the Closing Date of each of the following conditions:
(a) The representations and warranties of each Seller contained
herein shall be true and correct in all material respects (except for
representations and warranties that are qualified as to materiality, which
shall be true and correct) as of the Closing as if made on and as of the
Closing Date (except that representations and warranties that are made as
of a specific date need be so true and correct only as of such date).
(b) The covenants and agreements of each Seller to be performed
under this Agreement on or prior to the Closing shall have been duly
performed in all material respects.
(c) Each Seller (and Bereny, but only with respect to the deliveries
in clause (v)) shall have delivered to the Purchaser the following:
(i) an instrument of conveyance signed in blank and transferring
his or her share of the Interests to Purchaser, substantially in the
form of Exhibit B hereto;
(ii) such other instruments and documents as Purchaser may
reasonably require to vest in Purchaser all right, title and interest
of Sellers in and to the Interests;
(iii) a certificate of such Seller dated the Closing Date and
certifying that the conditions with respect to such Seller specified
in Section 6.3(a) and (b) have been met;
(iv) written resignations of each of the officers and managers of
the Company, effective as of the Closing Date; and
(v) a joinder to the Amended and Restated Stockholders Agreement,
(ii) a completed Stockholder Questionnaire as provided by Clearwire
prior to the Closing and (iii) a joinder to the Registration Rights
Agreement.
ARTICLE 7
TERMINATION
Section 7.1 Termination. This Agreement may be terminated at any time:
(a) by mutual written consent of Purchaser and Sellers;
25
(b) by either Purchaser or Sellers if (A) there shall be any Law that
makes consummation of the Transactions illegal or otherwise prohibited, or
(B) any judgment, injunction, order or decree of any court or other
Governmental Entity having competent jurisdiction enjoining Purchaser and
Sellers from consummating the Transaction is entered and such judgment,
injunction or order shall have become final and non-appealable;
(c) by Sellers holding no less than a fifty-one percent (51%) of the
Interests upon the occurrence of a material breach of any representation,
warranty or covenant in this Agreement by either Clearwire or Purchaser if
such breach is not cured within fifteen (15) days following written notice
by any Seller to Purchaser which notice shall describe the breach;
(d) by Purchaser upon the occurrence of a material breach of any
representation, warranty or covenant in this Agreement by any one or more
Sellers if such breach is not cured within fifteen (15) days following
written notice by Purchaser to all Sellers which notice shall describe the
breach; or
(e) by Purchaser or Sellers holding not less than fifty-one percent
(51%) of the Interests if the Closing has not occurred on or before the
first anniversary of the Effective Date, provided that the failure to close
on or before such date is not the fault of the Party or Parties seeking
termination.
Section 7.2 Effect of Termination. In the event of a termination of this
Agreement prior to the Closing, neither Party shall have any liability or
further obligation to the other, except that
(a) Sellers shall return the Down Payment Advance to Purchaser, within
five (5) Business Days of such termination, only if this Agreement is
terminated (i) pursuant to Section 7.1(a); (ii) by Purchaser pursuant to
Section 7.1(b), provided that the Law, judgment, injunction, order or
decree thereunder is not initiated by Purchaser and is not caused by the
misconduct of Purchaser, (iii) by Purchaser pursuant to Section 7.1(d); or
(iv) by Purchaser pursuant to Section 7.1(e), provided that the failure to
close on or before the date set forth therein is the fault of any Seller;
(b) nothing herein will relieve a Party from liability for any breach
by such Party of this Agreement; and
(c) the last sentence of Section 2.3(a) and the provisions of this
ARTICLE 7, ARTICLE 8 and ARTICLE 9 shall survive the termination of this
Agreement. Whether or not Closing occurs, all costs and expenses incurred
in connection with this Agreement and the Transactions shall be paid by the
Party incurring such expenses.
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ARTICLE 8
SURVIVAL AND REMEDIES
Section 8.1 Survival.
(a) The representations and warranties contained in this Agreement and
in any Closing certificate as to representations and warranties or covenant
compliance shall survive the Closing until the earlier of [***] after the
Closing Date and the termination of this Agreement, and shall expire at
such time. The covenants and other agreements contained in this Agreement
which by their terms do not expire on or before the Closing shall survive
the Closing until the earlier of (i) one (1) year after the Closing Date
and (ii) the termination of this Agreement and shall expire at such time.
Sellers' obligation to indemnify Purchaser pursuant to Section 8.2 shall
survive the Closing for a period of one (1) year after Closing.
Notwithstanding anything to the contrary in this Agreement: (i) the
representations, warranties, covenants, and indemnities made by Sellers
regarding Taxes shall terminate [***] after the applicable statute of
limitations expires with respect to the Taxes which are the subject of such
claim, (ii) the representations, warranties and indemnities made by Sellers
in Section 3.4(a) shall survive indefinitely, and (iii) Sellers' obligation
to indemnify Purchaser pursuant to Section 8.2(d) below shall survive
indefinitely.
(b) Purchaser's obligation to indemnify Sellers pursuant to Section
8.3 shall survive the Closing for a period of one (1) year after Closing;
provided, however, Purchaser's obligation to indemnify Sellers' pursuant to
Section 8.3(c) and (d) below shall survive indefinitely.
(c) Notwithstanding anything to the contrary in this Agreement, no
party shall be entitled to any Damages pursuant to Section 8.2 or Section
8.3 or to make any claims for breach hereunder unless notice of the Claim
for such Damages or breach has been made to the other party within the
applicable survival periods or Claim period set forth in this Section 8.1;
provided, however, so long as the indemnified party provides notice to the
other party within the applicable survival periods set forth in this
Section 8.1, a Party's obligation to indemnify the other party pursuant to
this Article 8 or obligation to remedy such breach shall survive until such
obligation is fulfilled despite the expiration of the applicable survival
period.
(d) The survival of representations, warranties and covenants binding
on or benefiting any Party in the Amended and Restated Stockholders
Agreement and the Registration Rights Agreement shall be governed by such
agreements.
Section 8.2 Seller Indemnification. Subject to the limitations set forth in
Section 8.6(c) hereof, each Seller shall indemnify Purchaser, its representative
members, managers, officers, employees, agents, successors and assigns (the
"Purchaser Indemnified Parties") and hold the Purchaser Indemnified Parties
harmless from and against any and all Damages based upon, attributable to or
resulting from:
[*** Confidential Treatment Requested]
27
(a) the failure of any representation or warranty of such Seller set
forth in this Agreement, or any representation or warranty contained in any
certificate delivered by such Seller pursuant to this Agreement, to be true
and correct as of the dates made;
(b) the breach of any covenant or other agreement on the part of such
Seller under this Agreement;
(c) the ownership and operation of the Assets prior to the Closing
(other than the Transition Liability); and
(d) any matter disclosed on Section 3.11 of the Disclosure Schedule or
any matter related to the disclosure on Section 3.9 of the Disclosure
Schedule with respect to the Company's 50% interest in [***].
Section 8.3 Purchaser Indemnification. Purchaser shall indemnify each
Seller and his or her agents, successors and assigns (the "Seller Indemnified
Parties") and hold each Seller Indemnified Parties harmless from and against any
and all Damages based upon, attributable to or resulting from:
(a) the failure of any representation or warranty of Purchaser set
forth in this Agreement, or any representation or warranty contained in any
certificate delivered by pursuant to this Agreement, to be true and correct
as of the dates made;
(b) the breach of any covenant or other agreement on the part of
Purchaser under this Agreement;
(c) the ownership and operation of the Assets or Interests after the
Closing; and
(d) the Transition Liability.
Section 8.4 Tax Matters. Subject to the limitations set forth in Section
8.6(c) hereof, each Seller shall indemnify each of the Purchaser Indemnified
Parties and hold them harmless from and against, any Losses attributable to (i)
all Taxes (or the non-payment thereof) of the Company for all taxable periods
ending on or before the Closing Date and for that portion through the end of the
Closing Date for any taxable period that includes (but does not end on) the
Closing Date ("Pre-Closing Tax Period"), and (ii) any and all Taxes of any
person (other than the Company) imposed on the Company as a transferee or
successor, by contract or any Law, which Taxes relate to an event or transaction
occurring on or prior to the Closing Date. In the case of any taxable period
that includes (but does not end on) the Closing Date (a "Straddle Period"), the
amount of any Taxes based on or measured by income or receipts of the Company
for the Pre-Closing Tax Period shall be determined based on an interim closing
of the books as of the close of business on the Closing Date and the amount of
other Taxes of the Company for a Straddle Period which relate to the Pre-Closing
Tax Period shall be deemed to be the amount of such Tax for the entire taxable
period multiplied by a fraction the numerator of which is the number of days in
the taxable period
[*** Confidential Treatment Requested]
28
ending on the Closing Date and the denominator of which is the number of days in
such Straddle Period; provided, however, that any property or ad valorem Taxes
associated with assets that are or have been disposed of by the Company on or
prior to the Closing Date shall be deemed attributable solely to the Pre-Closing
Tax Period.
Section 8.5 Indemnification Procedures.
(a) In the event that any claim shall be asserted by any Person in
respect of which payment may be sought under Section 8.2 or Section 8.3
hereof (each, a "Claim"), the indemnified party shall reasonably and
promptly cause written notice of the assertion of any Claim of which it has
knowledge which is covered by this indemnity to be forwarded to the
indemnifying party, describing with specificity the facts giving rise to
the asserted right Notwithstanding anything to the contrary in this
Agreement, in order for the indemnified party to be entitled to
indemnification hereunder, notice of such claim must given by the
indemnified party to the indemnifying party prior to the expiration of the
applicable survival periods set forth in Section 8.1. The indemnifying
party shall have the right, at its sole option and expense, to be
represented by counsel of its choice, which must be reasonably satisfactory
to the indemnified party, and to defend against, negotiate, settle or
otherwise deal with any Claim which relates to any Damages indemnified
against hereunder. If the indemnifying party elects to defend against,
negotiate, settle or otherwise deal with any Claim which relates to any
Damages indemnified against hereunder, it shall within twenty (20) days (or
sooner, if the nature of the Claim so requires) notify the indemnified
party of its intent to do so. If the indemnifying party elects not to
defend against, negotiate, settle or otherwise deal with any Claim which
relates to any Damages indemnified against hereunder, fails to notify the
indemnified party of its election as herein provided or contests its
obligation to indemnify the indemnified party for such Damages under this
Agreement, the indemnified party may defend against, negotiate, settle or
otherwise deal with such Claim. If the indemnified party defends any Claim,
then the indemnifying party shall reimburse the indemnified party for the
reasonable expenses of defending such Claim upon submission of periodic
bills. If the indemnifying party shall assume the defense of any Claim, the
indemnified party may participate, at its own expense, in the defense of
such Claim; provided, however, that such indemnified party shall be
entitled to participate in any such defense with separate counsel at the
reasonable expense of the indemnifying party if (i) so requested by the
indemnifying party to participate or (ii) in the reasonable opinion of
counsel to the indemnified party, a conflict or potential conflict exists
between the indemnified party and the indemnifying party that would make
such separate representation advisable; and provided, further, that the
indemnifying party shall not be required to pay for more than one such
counsel for all indemnified parties in connection with any Claim. The
Parties hereto agree to cooperate fully with each other in connection with
the defense, negotiation, or settlement of any such Claim. The indemnifying
party or parties shall not, without the express written consent of the
indemnified party or parties, settle or compromise any Claim, or consent to
the entry of any judgment against the indemnified party or parties that
does not include an unconditional term thereof giving the indemnified
29
party or parties a full and complete release from all liability with
respect to such Claim.
(b) Notwithstanding anything to the contrary in Section 8.5(a) above,
the following procedure shall apply to any Claim with respect to Taxes that
is subject to indemnification pursuant to this ARTICLE 8. Purchaser will,
as to any Taxes in respect of which Sellers have agreed to indemnify the
Purchaser Indemnified Parties pursuant to this ARTICLE 8, promptly inform
Sellers of and permit the participation of Sellers in, at Sellers' sole
cost and expense, any investigation, audit, or other proceeding by or with
the Internal Revenue Service or any other Taxing Authority empowered to
administer or enforce such a Tax and will not consent to the settlement or
final determination in such investigation, audit or other proceeding
without the prior written consent of all Sellers, which shall not be
unreasonably withheld.
(c) After any final judgment or award shall have been rendered by a
court, arbitration board or administrative agency of competent jurisdiction
and the expiration of the time in which to appeal therefrom, or a
settlement shall have been consummated, or the indemnified party and the
indemnifying party shall have arrived at a mutually binding agreement with
respect to a Claim hereunder, the indemnified party shall forward to the
indemnifying party notice of any sums due and owing by the indemnifying
party pursuant to this Agreement with respect to such matter.
(d) The failure of the indemnified party to give reasonably prompt
notice of any Claim shall not release, waive or otherwise affect the
indemnifying party's obligations with respect thereto except to the extent
that the indemnifying party can demonstrate actual loss and prejudice as a
result of such failure; provided, however, that in order to be entitled to
indemnification hereunder, notice of such claim must given to the
indemnifying party prior to the expiration of the applicable survival
periods set forth in Section 8.1.
Section 8.6 Escrow and Set Off from Holdback Amount; Several Liability of
Sellers.
(a) On the Closing Date, Purchaser and Sellers shall execute and
deliver and shall cause U.S. Bank or other domestic bank acceptable to the
Parties to execute and deliver as escrow agent (the "Escrow Agent"), the escrow
agreement substantially in the form of Exhibit A (the "Escrow Agreement"). The
Escrow Agreement shall be dated as of the Closing Date. The escrow established
under the Escrow Agreement shall hold the Holdback Amount. Sellers shall be
entitled to direct the investment of the Holdback Amount and to withdraw and
keep the accrued earnings (if any) on the Holdback Amount. The parties hereto
acknowledge and agree that all Sellers shall pay all origination and periodic
escrow administration fees to the Escrow Agent, but each Party shall pay any
wire transfer expenses associated with payments to such Party. If U.S. Bank
declines to serve as the Escrow Agent, either Party shall be entitled to delay
the Closing until such time as a replacement escrow agent and escrow agreement
can be established, but in no event more than thirty (30) days from the
scheduled Closing Date, and the Parties shall mutually select a
30
replacement Escrow Agent from among domestic banks having assets not less than
U.S. Bank and, in that event, the substitute Escrow Agent's form of escrow
agreement, modified to express the information in Attachments I and II of
Exhibit A and the applicable fees, shall be substituted for Exhibit A.
(b) In the event that a Purchaser Indemnified Party receives a Claim
during the Holdback Period pursuant to Section 8.5 for which it is entitled to
indemnification pursuant to this Article 8, and Purchaser notifies Sellers of
the Claim as required by Section 8.5 during that period, Purchaser may classify
the whole or a portion of the Holdback Amount as reserved in such notice to
Sellers. The amount that may be reserved for any such Claim shall not exceed the
lesser of (i) the amount asserted in the Claim provided to Purchaser, plus a
reasonable estimate of additional indemnified expenses associated therewith
(such as reasonable attorneys' fees), (ii) Purchaser's good faith estimate of
the Damages in connection with such Claim as stated in the notice to Sellers,
and (iii) the amount of the Holdback Amount remaining in escrow. In the event of
any such reservation, Purchaser shall promptly notify Sellers of the amount
reserved and the basis upon which such amount was determined.
(c) Within five (5) days after any then pending Claim is resolved in
accordance with Section 8.5, (i) Purchaser and Sellers shall join in providing
the Escrow Agent with joint written and uniform instructions or (ii) Purchaser
may provide Escrow Agent with a final, non-appealable written determination by a
court or governmental authority to pay the applicable Purchaser Indemnified
Parties from the amount reserved for that Claim the Damages, if any, determined
with respect to that Claim.
(d) At the end of the Holdback Period, Purchaser shall provide Sellers
with a summary of all pending Claims for which reserves have been established
pursuant to Section 8.6(b) ("Reservation Claims"), adjusted to eliminate the
portion or whole of any reservation to the extent that the associated Claim has
been resolved favorably to the associated Purchaser Indemnified Party or has
been reduced. Within five (5) Business Days after expiration of the Holdback
Period, Purchaser and Sellers shall provide the Escrow Agent with joint written
and uniform instructions to pay to the order of Sellers the amount (if any) by
which the Holdback Amount then in escrow exceeds the Reservation Claims. Upon
final resolution of any Reservation Claims, the procedure set forth in Section
8.6(c) shall be followed and upon final resolution of all Reservation Claims,
the remaining Holdback Amount, if any, shall be distributed to Sellers. All
amounts due to Sellers under this Section 8.6 shall be paid via wire transfer in
immediately available funds to the accounts designated by Sellers.
(e) Once the Holdback Amount is depleted, Purchaser may recover
against Sellers in accordance with this Article 8 for all Claims properly
asserted prior to the time barred by Section 8.1; provided, however, in no event
shall Damages collected by any one or more of Purchaser Indemnified Parties
against any Seller, whether for indemnification or for a direct claim by
Purchaser against Sellers, exceed the amount of the product of such Seller's
percentage interest in the Interests described in Section 3.4 of the Disclosure
Schedule and the Purchase Price.
31
Section 8.7 Remedies. IN NO EVENT SHALL ANY PARTY BE LIABLE FOR INDIRECT,
SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING OUT OF A BREACH OF THIS
AGREEMENT, EVEN IF ADVISED AT THE TIME OF BREACH OF THE POSSIBILITY OF SUCH
DAMAGES.
ARTICLE 9
MISCELLANEOUS
Section 9.1 Entire Agreement. This Agreement constitutes the entire
agreement between the Clearwire Parties, on the one hand, and the Sellers, on
the other hand, pertaining to the subject matter hereof and thereof and
supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the Clearwire Parties
and the Sellers with respect to the subject matter hereof and thereof.
Section 9.2 Amendments and Waivers. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed (in the case of an amendment) by Sellers and Clearwire Parties or (in the
case of a waiver) by the Party against whom the waiver is to be effective. No
failure or delay by any Party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
Section 9.3 Remedies Cumulative. Except as otherwise provided herein, all
rights, powers and remedies provided under this Agreement or otherwise available
in respect hereof at law or in equity shall be cumulative and not alternative,
and the exercise or beginning of the exercise of any thereof by a Party shall
not preclude the simultaneous or later exercise of any other such right, power
or remedy by such Party. Each of the Clearwire Parties and the Sellers
acknowledges that its obligations subject to this Agreement are unique and the
loss to any Person within the other due to a failure to perform any such
obligation could not be easily measured with damages. Each of the Clearwire
Parties and the Sellers shall be entitled to injunctive relief and specific
enforcement of this Agreement in a court of equity without proof of specific
monetary damages, showing that monetary damages would resolve the harm or
showing of irreparable harm, but without waiving any right thereto, in the event
of breach of this Agreement by the other.
Section 9.4 Assignment. This Agreement shall be binding upon and shall
inure to the benefit of the Parties and their respective successors and
permitted assigns. This Agreement may not be assigned by any Party without the
prior written consent of the other Parties.
Section 9.5 Notices. All notices or other communications hereunder shall be
in writing and shall be deemed to have been duly given or made (i) upon delivery
if delivered personally (by courier service or otherwise), as evidenced by
written receipt or other written proof of delivery (which may be a printout of
the tracking information of a courier service that made such delivery), or (ii)
upon confirmation of dispatch if sent by facsimile
32
transmission, (which confirmation shall be sufficient if shown by evidence
produced by the facsimile machine used for such transmission), in each case to
the applicable addresses set forth below (or such other address which either
Party may from time to time specify):
If to Sellers or any Seller:
James K. Baumann
[***]
Facsimile: [***]
Roxane I. Googin
c/o Matthew S. Bereny
[***]
Facsimile: [***]
Elizabeth Neustadt, as
Custodian for Rachel Neustadt
c/o Matthew S. Bereny
[***]
Facsimile: [***]
Martin A. Rubin
CEO & President
Smart City
[***]
Facsimile: [***]
James H. Wiesenberg
[***]
Facsimile: [***]
With a copy of any communication or notice to any Seller to:
Kilpatrick Stockton LLP
607 14th Street, N.W., Suite 900
[***]
Facsimile: [***]
[*** Confidential Treatment Requested]
33
and to:
Matthew S. Bereny
Baywood Management
[***]
If to Purchaser or Clearwire:
Clearwire Spectrum Holdings II LLC
5808 Lake Washington Blvd. N.E.
Suite 300
Kirkland, WA 98033
Attention: [***]
Facsimile: [***]
With a copy to:
Clearwire Spectrum Holdings II LLC
5808 Lake Washington Blvd. N.E.
Suite 300
Kirkland, WA 98033
Attention: [***]
Facsimile: [***]
Davis Wright Tremaine LLP
2600 Century Square
1501 Fourth Avenue
Seattle, WA 98101
Attn: [***]
Facsimile: [***]
Section 9.6 Governing Law; Jurisdiction; Waiver of Jury Trial.
(a) This Agreement shall be governed by, and construed in accordance with,
the internal laws of the State of New York, without reference to the choice of
law principles thereof. Each Party hereto irrevocably consents to the exclusive
jurisdiction and venue of any court within the District of Columbia in
connection with any matter based upon or arising out of this Agreement or the
matters contemplated herein, agrees that process may be served upon them in any
manner authorized by the laws of the District of Columbia for such persons and
waives and covenants not to assert or plead any objection which it might
otherwise have to such jurisdiction, venue or process.
[*** Confidential Treatment Requested]
34
(b) THE PARTIES HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR
THE TRANSACTIONS.
Section 9.7 Expenses. Except as otherwise expressly provided in this
Agreement, whether or not the Transactions are consummated, the Parties shall
bear their respective expenses (including, but not limited to, all compensation
and expenses of counsel, financial advisors, consultants, actuaries and
independent accountants) incurred in connection with this Agreement and the
Transactions. All filing fees required to be paid to any Governmental Authority
in connection with satisfying the conditions set forth in ARTICLE 5 will be
borne by Purchaser.
Section 9.8 Payment of Sales, Use or Similar Taxes. Purchaser shall be
liable for and shall pay (and shall indemnify and hold harmless the Seller
Indemnified Parties against) all sales, use, stamp, documentary, filing,
recording, transfer, real estate transfer, registration, duty or similar fees or
taxes or governmental charges (together with any interest or penalty, addition
to tax or additional amount imposed) as levied by any Taxing Authority in
connection with the transactions contemplated by this Agreement.
Section 9.9 Invalidity. In the event that any of the provisions contained
in this Agreement or in any other instrument referred to herein, shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement or such other instrument and such provision will be
ineffective only to the extent of such invalidity, illegality or
unenforceability, unless the consummation of the Transactions is impaired
thereby.
Section 9.10 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
Section 9.11 Headings. The headings of the Articles and Sections herein are
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
[SIGNATURE PAGE FOLLOWS]
35
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the
date first above written.
SELLERS:
By: /s/ James K. Baumann
------------------------------------
Name: James K Baumann
By: /s/ Roxane I. Googin
------------------------------------
Name: Roxane I. Googin
By: /s/ Elizabeth Neustadt
------------------------------------
Name: Elizabeth Neustadt, as
Custodian for Rachel Neustadt
By: /s/ Martin A. Rubin
------------------------------------
Name: Martin A. Rubin
By: /s/ James H. Wiesenberg
------------------------------------
Name: James H. Wiesenberg
PURCHASER:
CLEARWIRE SPECTRUM HOLDINGS II LLC
By: /s/ Benjamin Wolff
------------------------------------
Name: Benjamin Wolff
Title: Co-President & CSO
CLEARWIRE:
CLEARWIRE CORPORATION
By: /s/ Benjamin Wolff
------------------------------------
Name: Benjamin Wolff
Title: Co-President & Co-CEO
DECLARATION AND CONSENT OF SPOUSE
The undersigned (a) consents to the execution of this Agreement by Roxane
Googin who is the undersigned's spouse, and to consummation of the transactions
contemplated by this Agreement by my spouse, and (b) agrees that the actions and
obligations of my spouse under this Agreement shall be binding upon the
undersigned's marital community. The undersigned declares that the undersigned
has the opportunity to fully and carefully read this Agreement and to seek the
advice of independent counsel with respect to the Agreement and this Consent.
/s/ Illegible
-------------
DECLARATION AND CONSENT OF SPOUSE
The undersigned (a) consents to the execution of this Agreement by JAMES H.
WIESENBERG Who is the undersigned's spouse, and to consummation of the
transactions contemplated by this Agreement by my spouse, and (b) agrees that
the actions and obligations of my spouse under this Agreement shall be binding
upon the undersigned's marital community. The undersigned declares that the
undersigned has had the opportunity to fully and carefully read this Agreement
and to seek the advice of independent counsel with respect to the Agreement and
this Consent.
/s/ Susan Wiesenberg
----------------------------------------
LICENSES
[***]
[*** Confidential Treatment Requested]
39
EXHIBIT A
FORM OF
ESCROW AGREEMENT
[Attached]
40
ESCROW AGREEMENT
Pursuant to this Escrow Agreement, dated ___________________, the Depositors
identified below (the "Depositors") hereby establish an Escrow Account (the
"Account") with U.S. Bank National Association a national banking association
(the "Agent"), to be maintained and administered in accordance with the
following terms and conditions:
The funds and/or property described on Schedule I attached hereto and
incorporated herein (the "Assets") will be deposited in the Account upon
delivery Thereof to the Agent in the manner and at the time(s) specified in the
said Schedule I. The Agent is hereby authorized and directed by each of the
Depositors, as their escrow agent, to hold, deal with and dispose of the Assets
as provided in the Instructions set forth in Schedule II attached hereto and
incorporated herein; subject, however, to the terms and conditions set forth
below, which in all events, shall govern and control over any contrary or
inconsistent provisions contained in Schedules I or II attached hereto.
1. AGENT'S DUTIES. Agent's duties and responsibilities shall be limited to
those expressly set forth in this Escrow Agreement, and Agent shall not be
subject to, or obliged to recognize, any other agreement between any or all of
the Depositors or any other persons even though reference thereto may be made
herein; provided, however, this Agreement may be amended at any time or times by
an instrument in writing signed by all the parties hereto. Agent shall not be
subject to or obligated to recognize any notice, direction or instruction of any
or all of the parties hereto or of any other person, except as expressly
provided for and authorized in Schedule II and in performing any duties under
the Escrow Agreement ("Agreement"), Agent shall not be liable to any Party for
consequential damages, (including, without limitation lost profits) losses, or
expenses, except for gross negligence or willful misconduct on the part of the
Agent; provided, however that neither the foregoing nor anything else in this
Escrow Agreement shall relieve Agent from its duty to deliver the Assets in
accordance with the terms of this Agreement or shall relieve Agent from
liability for loss or depletion of the Assets due to it's gross negligence or
willful misconduct.
2. COURT ORDERS OR PROCESS. If any controversy arises between or among the
Parties to this Agreement, or with any other Party, concerning the subject
matter of this Agreement, its terms or conditions, Agent will not be required to
determine the controversy or to take any action regarding it. Agent may hold all
documents and funds and may wait for settlement of any such controversy by final
appropriate legal proceedings or other means as, in Agent's discretion, Agent
may require, despite what may be set forth elsewhere in this Agreement. In such
event, Agent will not be liable for interest or damage. Agent is authorized, in
its sole discretion, to comply with orders issued or process entered by any
court with respect to the Account, the Assets or this Escrow Agreement, without
determination by the Agent of such court's jurisdiction in matter. If any Assets
are at any time attached, garnished, or levied upon under any court order, or in
case the payment, assignment, transfer, conveyance or delivery of any such
property shall be stayed or enjoined by any court order, or in case any order,
judgment or decree shall be made or entered by any court affecting such property
or any part thereof, then in any such events Agent is authorized, in its sole
discretion, to rely upon and comply with any such order, writ, judgment or
decree which it is advised by legal counsel of its own choosing is binding upon
it; and if Agent complies with any such order writ, judgment or decree, it shall
not be liable to any of the Depositors or to any other person, firm or
corporation by reason of such compliance even though such order, writ, judgment
or decree may be subsequently reversed, modified, annulled, set aside or
vacated.
Page 1
3. AGENT'S ACTIONS AND RELIANCE. Agent shall not be personally liable far
any act taken or omitted by it hereunder if taken or omitted by it in good faith
and in the exercise of its own best judgment. Agent shall also be fully
protected in relying upon any written notice, instruction, direction,
certificate or document which in good faith it believes to be genuine.
4. COLLECTIONS. Unless otherwise specifically indicated in Schedule II,
Agent shall proceed as soon as practicable to collect any checks, interest due,
matured principal or other collection items with respect to Assets at any time
deposited in the Account. All such collections shall be subject to the usual
collection procedures regarding items received by Agent for deposit or
collection. Agent shall not be responsible for any collections with respect to
Account Assets if Agent is not registered as record owner thereof or otherwise
is not entitled to request or receive payment thereof as a matter of legal or
contractual right. All collection payments shall be deposited to the Account,
except as otherwise provided in Schedule II. Agent shall not be required or have
a duty to notify anyone of any payment or maturity under the terms of any
instrument, security or obligation deposited in the Account, nor to take any
legal action to enforce payment of any check, instrument or other security
deposited in the Account. The Account is a safekeeping escrow account, and no
interest shall be paid by Agent on any money deposited or held therein, except
as provided in Section 6 hereof.
5. AGENT RESPONSIBILITY. Agent shall not be responsible or liable for the
sufficiency or accuracy of the form, execution, validity or genuineness of
documents, instruments or securities now or hereafter deposited in the Account,
or of any endorsement thereon, or for any lack of endorsement thereon, or for
any description therein. Registered ownership of or other legal title to Assets
deposited in the Account shall be maintained in the name of Agent, or its
nominee, only if expressly provided in Schedule II. Agent may maintain
qualifying Assets in a Federal Reserve Bank or in any registered clearing agency
(including, without limitation, the Depository Trust Company) as Agent may
select, and may register such deposited Assets in the name of Agent or its agent
or nominee on the records of such Federal Reserve Bank or such registered
clearing agency or a nominee of either. Agent shall not be responsible or liable
in any respect on account of the identity, authority or rights of the persons
executing or delivering or purporting to execute or deliver any such document,
security or endorsement or this Escrow Agreement.
6. INVESTMENTS. Unless directed in writing otherwise, Escrow Agent is
hereby directed to invest funds in the U.S. Bank Money Market Savings account.
Depositors acknowledge that the U. S. Bank Money Market account is a U. S. Bank
National Association ("U.S. Bank") interest-bearing money market deposit account
designed to meet the needs of U.S. Bank's Corporate Trust Services Escrow Group
and other Corporate Trust customers of U.S. Bank. Selection of this investment
includes authorization to place funds on deposit with U.S. Bank. U. S. Bank uses
the daily balance method to calculate interest on this account (actual/365 or
366). This method applies a daily periodic rate to the principal balance in the
account each day. Interest is accrued daily and credited monthly to the account.
Interest rates currently offered on the accounts are determined at U. S. Bank's
discretion and may be tiered by customer deposit amount. The owner of the
accounts is U. S. Bank as Agent for its trust customers. U.S. Bank's trust
department performs all account deposits and withdrawals. Each customer's
deposit is insured by the Federal Deposit Insurance Corporation up to $100,000.
Any and all interest earned on the Proceeds after the deposit shall be added to
the Proceeds and shall become a part thereof. Escrow Agent shall thereafter
hold, maintain and utilize the Proceeds pursuant to the terms and conditions of
this Agreement. Depositors shall provide Escrow Agent with a W-9 or W-8 IRS tax
form prior to the disbursement of interest and Escrow Agent will file the
appropriate 1099 or other required forms pursuant to Federal and applicable
state laws. A statement of citizenship will be provided if requested by Escrow
Agent. Escrow
Page 2
Agent shall not be responsible for maximizing the yield on the Proceeds. Escrow
Agent shall not be liable for losses, penalties or charges incurred upon any
sale or purchase of any such investment.
7. NOTICES/DIRECTIONS TO AGENT. Notices and directions to Agent from
Depositors, or from other persons authorized to give such notices or directions
as expressly set forth in Schedule II, shall be in writing and signed by an
authorized representative as identified pursuant to Schedule II, and shall not
be deemed to be given until actually received by Agent's employee or officer who
administers the Account. Agent shall not be responsible or liable for the
authenticity or accuracy of notices or directions properly given hereunder if
the written form and execution thereof on its face purports to satisfy the
requirements applicable thereto as set forth in Schedule II, as determined by
Agent in good faith without additional confirmation or investigation.
8. BOOKS AND RECORDS. Agent shall maintain books and records regarding its
administration of the Account, and the deposit, investment, collections and
disbursement or transfer of Assets, shall retain copies of all written notices
and directions sent or received by it in the performance of its duties
hereunder, and shall afford each Depositor reasonable access, during regular
business hours, to review and make photocopies (at Depositor's cost) of the
same.
9. DISPUTES AMONG DEPOSITORS AND/OR THIRD PARTIES. In the event Agent is
notified of any dispute, disagreement or legal action between or among any of
the Depositors, and/or any third parties, relating to or arising in connection
with the Account, the Assets or the performance of the Agent's duties under this
Agreement, the Agent shall be authorized and entitled, subject to Section 2
hereof, to suspend further performance hereunder, to retain and hold the Assets
then in the Account and take no further action with respect thereto until the
matter has been fully resolved, as evidenced by written notification signed by
all Depositors and any other parties to such dispute, disagreement or legal
action.
10. NOTICE BY AGENT. Any notices which Agent is required or desires to give
hereunder to any of the Depositors shall be in writing and may be given by
mailing the same to the address indicated below opposite the signature of such
Depositor (or to such other address as said Depositor may have theretofore
substituted therefor by written notification to Agent), by United States
certified or registered mail, postage prepaid. For all purposes hereof any
notice so mailed shall be as effectual as though served upon the person of the
Depositor to whom it was mailed at the time it is deposited in the United States
mail by Agent whether or not such undersigned thereafter actually receives such
notice. Whenever under the terms hereof the time for Agent's giving a notice or
performing an act falls upon a Saturday, Sunday, or holiday, such time shall be
extended to the next business day.
11. LEGAL COUNSEL. If Agent believes it to be reasonably necessary to
consult with counsel concerning any of its duties in connection with the account
or this Escrow Agreement, or in case Agent becomes involved in litigation on
account of being escrow agent hereunder or on account of having received
property subject hereto, then in either case, its costs, expenses, and
reasonable attorney's fees shall be paid by the parties on an equal basis.
12. AGENT COMPENSATION. Agent shall be paid a fee for its services as set
forth on Schedule III attached hereto and incorporated herein, which shall be
subject to increase upon notice sent to Depositors, and reimbursed for its
reasonable costs and expenses incurred; provided, however, that only increases
as are generally applicable to escrow accounts shall be applied and increases in
any 12 month period shall not exceed five percent (5%). If Agent's fees, or
reasonable costs or expenses, provided for herein, are not promptly paid, Agent
shall have the right to sell such portion of the Assets held in the Account as
Page 3
necessary and reimburse itself therefor from the proceeds of such sale or from
the cash held in the Account. In the event that the conditions of this Agreement
are not promptly fulfilled, or if Agent renders any service not provided for in
this Agreement, or if the Parties request a substantial modification of its
terms, or if any controversy arises, or if Agent is made a Party to, or
intervenes in, any litigation pertaining to this escrow or its subject matter,
Agent shall be reasonably compensated for such extraordinary services and
reimbursed for all costs, attorney's fees, including allocated costs of in-house
counsel, and expenses occasioned by such default, delay, controversy or
litigation and Agent shall have the right to retain all documents and/or other
things of value at any time held by Agent in this escrow until such
compensation, fees, costs, and expenses are paid. The Parties jointly and
severally promise to pay these sums upon demand. Unless otherwise provided, the
Parties each will pay one-half of all Agent's usual charges and Agent may deduct
such sums from the funds deposited. The Depositors and their respective
successors and assigns agree jointly and severally to indemnify and hold Agent
harmless against any and all losses, claims, damages, liabilities, and expenses,
including reasonable costs of investigation, counsel fees, including allocated
costs of in-house counsel and disbursements that may be imposed on Agent or
incurred by Agent in connection with the performance of his/her duties under
this Agreement, including but not limited to any litigation arising from this
Agreement or involving its subject matter. Agent shall have a first lien on the
property and papers held under this Agreement for such compensation and
expenses.
13. AGENT RESIGNATION. It is understood that Agent reserves the right to
resign at any time by giving written notice of its resignation, specifying the
effective date thereof, to the Depositors. Within 30 days after receiving the
aforesaid notice, the Depositors agree to appoint a successor escrow agent to
which Agent may transfer the Assets then held in the Account, less its unpaid
fees, costs and expenses. If a successor escrow agent has not been appointed and
has not accepted such appointment by the end of the 30-day period, Agent may
apply to a court of competent jurisdiction for the appointment of a successor
escrow agent, and the costs, expenses and reasonable attorney's fees which Agent
incurs in connection with such a proceeding shall be paid by the Depositors.
14. ESCROW TERMINATION. This Escrow Agreement shall terminate as provided
in Schedule II.
15. GOVERNING LAW. This Escrow Agreement shall be construed, enforced, and
administered inaccordance with the laws of the State of Washington.
The undersigned Agent hereby agrees to hold, deal with and dispose of the
Assets at any time deposited to the Account in accordance with the foregoing
Escrow Agreement.
16. AUTOMATIC SUCCESSION Any company into which the Agent may be merged or
with which it may be consolidated, or any company to whom Agent may transfer a
substantial amount of its Escrow business, shall be the Successor to the Agent
without the execution or filing of any paper or any further act on the part of
any of the Parties, anything herein to the contrary notwithstanding.
17. DISCLOSURE: The parties hereto hereby agree not to use the name of U.S.
BANK NATIONAL ASSOCIATION to imply an association with the transaction other
than that of a legal escrow agent.
18. BROKERAGE CONFIRMATIONS The parties acknowledge that to the extent
regulations of the Comptroller of Currency or other applicable regulatory entity
grant a right to receive brokerage confirmations of security transactions of the
escrow, the parties waive receipt of such confirmations, to
Page 4
the extent permitted by law. The Escrow Agent shall furnish a statement of
security transactions on its regular monthly reports.
19. COUNTERPARTS: This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be one and the same instrument.
The exchange of copies of this Agreement and of signature pages by facsimile
transmission shall constitute effective execution and delivery of this Agreement
as to the parties and may be used in lieu of the original Agreement for all
purposes. Signatures of the parties transmitted by facsimile shall be deemed to
be their original signatures for all purposes.
IN WITNESS WHEREOF, the undersigned have affixed their signatures and hereby
adopt as part of this instrument Schedules I, II, and III, which are
incorporated by reference.
DEPOSITOR:
CLEARWERE SPECTRUM HOLDINGS II, LLC ("Purchaser")
By:
---------------------------------
Its: Hope Cochran, its Vice President
Tax I.D.
----------------------------
Notice:
5808 Lake Washington Blvd. N.E.
Suite 300
Kirkland, WA 98033-7353
Attention: [***]
Facsimile No.: [***]
With a copy to:
Clearwire Spectrum Holdings LLC
5808 Lake Washington Blvd. N.E.
Suite 300
Kirkland, WA 98033-7353
Attention: [***]
Facsimile No.: [***]
With a copy to:
Davis Wright Tremaine, LLP
2600 Century Square
1501 Fourth Avenue
Seattle, WA 98101
Attn: [***]
Facsimile: [***]
DEPOSITORS (collectively, "Sellers"):
By:
---------------------------------
Name: [***]
Tax I.D. [***]
[*** Confidential Treatment Requested]
Page 5
By:
---------------------------------
Name: [***]
Tax I.D. [***]
By:
---------------------------------
Name: [***]
Tax I.D. [***]
By:
---------------------------------
Name: [***]
Tax I.D. [***]
By:
---------------------------------
Name: [***]
Tax I.D. [***]
Notice for all Sellers:
Kilpatrick Stockton LLP
607 14th Street, N.W., Suite 900
Washington, DC 20005
Attention: [***]
Facsimile: [***]
With a copy to:
Matthew S. Bereny
[***]
[***] 420
[***]
Facsimile: [***]
U.S. BANK NATIONAL ASSOCIATION,
as Agent
By:
---------------------------------
Its:
--------------------------------
Notice:
U.S. Bank Corporate Trust Services
60 Livingston Avenue, EP-MN-WS3T
St. Paul, MN 55L07-2292
Attn: [***]
[*** Confidential Treatment Requested]
Page 6
(651)495-3808 With Fax Copy to:
(651) 495-8087 (fax) [***]
[*** Confidential Treatment Requested]
Page 7
EXHIBIT B
FORM OF
ASSIGNMENT OF LLC INTEREST
THIS ASSIGNMENT OF LLC INTEREST (this "LLC Interest Assignment") is
delivered by [____________________], an individual (the "Assignor") effective
the__day of __________________200____, to Clearwire Spectrum Holdings II LLC, a
Nevada limited liability company ("Assignee"), pursuant to that certain
Membership Interest Purchase Agreement, dated as of August 9, 2006, by and among
Clearwire Spectrum Holdings II LLC, James K. Baumann, Roxane I. Googin,
Elizabeth Neustadt as custodian for Rachel Neustadt, Martin A. Rubin and James
H. Wiesenberg.
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Assignor hereby assigns, grants, transfers and delivers
unto Assignee all of Assignor's rights, title and interest in and to [HIS/HER]
entire one hundred percent (100%) limited liability company interest (the "LLC
Interest") in [***], a Delaware limited liability company (the "Company"). This
LLC Interest Assignment shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns.
This LLC Interest Assignment shall be governed by and interpreted according
to the laws of the State of New York.
Assignor has delivered this LLC Interest Assignment on the date first above
written.
ASSIGNOR:
By:
------------------------------------
Name:
----------------------------------
[*** Confidential Treatment Requested]
41
EXHIBIT 10.62
CONFIDENTIAL
PURCHASE AGREEMENT
between
SPEEDNET LLC
and
CLEARWIRE SPECTRUM HOLDINGS II LLC
and
CLEARWIRE CORPORATION
Dated as of August 8, 2006
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 DEFINITIONS................................................... 1
ARTICLE 2 PURCHASE AND SALE OF ASSETS................................... 5
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER...................... 8
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PURCHASER................... 15
ARTICLE 5 COVENANTS AND OTHER AGREEMENTS................................ 16
ARTICLE 6 CONDITIONS TO CLOSING......................................... 20
ARTICLE 7 POST CLOSING COVENANTS........................................ 22
ARTICLE 8 TERMINATION................................................... 22
ARTICLE 9 SURVIVAL AND REMEDIES......................................... 23
ARTICLE 10 MISCELLANEOUS................................................. 26
</TABLE>
SCHEDULES AND EXHIBITS
Exhibit A Capital Expenditure Budget
Exhibit B-1 Licenses
Exhibit B-2 Leases
Exhibit B-3 Assigned Contracts
Exhibit B-4 Equipment
Exhibit B-5 Excluded Contracts
Exhibit B-6 Other Excluded Assets
Exhibit C Form of Warrant
Exhibit D Form of Instrument of Assignment for Licenses
Exhibit E Form of Assignment and Assumption for Leases or Assigned Contracts
Exhibit F Form of Bill of Sale for Tangible Assets
Exhibit G Form of Non-Competition Agreement
Exhibit H Form of Investor Letter
i
Disclosure Schedules
ii
PURCHASE AGREEMENT
This PURCHASE AGREEMENT, dated as of August 8, 2006 (the "Effective Date"),
is among Speednet LLC, a limited liability company organized under the laws of
Michigan ("Seller"), Clearwire Spectrum Holdings II LLC, a Nevada limited
liability company ("Purchaser") and Clearwire Corporation, a Delaware
corporation ("Clearwire"). Seller, Purchaser and Clearwire may be referred to
herein as "Parties" or each a "Party."
A. Seller holds certain assets, including licenses granted by the FCC
authorizing Seller to construct and operate Broadband Radio Service, formerly
known as Multipoint Distribution Service ("BRS"), channels (the "Seller
Channels"), and lease agreements pursuant to which Seller leases the excess
capacity on certain channels (the "Leased Channels, and together with the Seller
Channels, the "Channels") under certain licenses granted by the FCC authorizing
the construction and operation of BRS.
B. Seller desires to sell substantially all of its assets and assign
certain of its liabilities relating to and including licenses and leases for BRS
to Purchaser, and Purchaser desires to purchase such assets and assume such
liabilities on the terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, conditions and agreements hereinafter
set forth, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Defined Terms. As used in this Agreement, the following terms
shall have the meanings set forth or referenced below:
"Accredited Investor" means as this term is defined in Rule 501(a) of
Regulation D as promulgated by the U.S. Securities and Exchange Commission under
the Securities Act.
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, alone or through one or more intermediaries, controls,
is controlled by or is under common control with that Person. For purposes of
this definition, "control" (including the terms "controlling" and "controlled")
means the power to direct or cause the direction of the management and policies
of a Person, directly or indirectly, whether through the ownership of securities
or partnership or other ownership interests, by contract or otherwise.
"Agreement" means this Purchase Agreement and all Exhibits and Schedules
hereto, as amended, supplemented or otherwise modified from time to time in
accordance with the terms hereof.
1
"Approved Capital Expenditures" means capital expenditures described in the
capital budget attached hereto as Exhibit A, provided, however, Purchaser will
not unreasonably withhold its consent to proposed increases in the capital
expenditures constituting Approved Capital Expenditures after December 1, 2006.
"Business Day" means any day, other than a Saturday or Sunday, on which
commercial banks and foreign exchange markets are open for business in Seattle,
Washington.
"Confidential Information" means any and all information regarding the
business, finances, operations, products, services and customers of a Party or
any of its Affiliates, in written or oral form or in any other medium.
"Consents" means all consents and approvals of Governmental Authorities or
other third Persons necessary to authorize, approve or permit the Parties hereto
to consummate the Transactions.
"Damages" means any and all losses, claims, demands, liabilities,
obligations, actions, suits, orders, statutory or regulatory compliance
requirements, or proceedings asserted by any Person, and all damages, costs,
expenses, assessments, judgments, recoveries and deficiencies, including
interest, penalties, investigatory expenses, consultants' fees, and reasonable
attorneys' fees and costs, of every kind and description, contingent or
otherwise.
"Disclosure Schedules" means schedules delivered by Seller to Purchaser in
connection with the execution and delivery of this Agreement containing certain
information and data required to be disclosed by this Agreement. The Disclosure
Schedules shall identify the information and data disclosed with reference to
the sections of this Agreement and shall be attached to and form a part of this
Agreement.
"Employee Plan" means an "employee benefit plan," as defined in Section
3(3) of ERISA, or any other qualified or non-qualified current or deferred
compensation (other than base salary and base wages), bonus, incentive
compensation, stock right, stock option, stock appreciation right, severance
pay, retirement, pension, profit-sharing, stock bonus, salary continuation,
tuition assistance, dependent care assistance, legal assistance, vacation,
fringe benefit (cash and non-cash), group or individual health, medical, dental,
vision, disability, life insurance or survivor benefit or similar plan, policy
or arrangement, which covers any employee, or beneficiary of any employee,
whether active or retired.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"FCC" means the Federal Communications Commission or any successor agency
thereof.
"FCC Rules" means Title 47 of the Code of Federal Regulations, as amended
at any time and from time to time, and FCC decisions, policies, reports and
orders issued pursuant to the adoption of such regulations.
2
"Final Order" means an action or decision of the FCC as to which (i) no
request for a stay or similar request is pending, no stay is in effect, the
action or decision has not been vacated, reversed, set aside, annulled or
suspended and any deadline for filing such request that may be designated by
statute or regulation has passed, (ii) no petition for rehearing or
reconsideration or application for review is pending and the time for the filing
of any such petition or application has passed, (iii) the FCC does not have the
action or decision under reconsideration on its own motion and the time within
which it may effect such reconsideration has passed, and (iv) no appeal is
pending including other administrative or judicial review, or in effect and any
deadline for filing any such appeal that may be designated by statute or rule
has passed.
"GAAP" means generally accepted accounting principles, consistently
applied.
"Governmental Authority" means a Federal, state or local court,
legislature, governmental agency (including the United States Department of
Justice), commission or regulatory or administrative authority or
instrumentality.
"Intellectual Property Rights" means any and all (a) patents and patent
applications, including without limitation, continuations, substitutes and
divisions of such applications and all priority rights resulting from such
applications and rights in any inventions, whether or not patented, patent
pending or patentable; (b) copyrights, copyright applications, copyright
registrations, and rights associated with works of authorship; (c) trademarks,
service marks and any and all rights in words, names, symbols, devices, or
combination thereof, used by a person to identify and distinguish the goods or
services of such person from the goods and services of others and all
applications or registrations for any of the foregoing and all divisions and
renewals thereof, and all goodwill symbolized thereby; (d) software, trade
secrets and rights in know-how, designs, formulae, inventions, products rights
or technology of any nature, and other confidential or proprietary information;
and (e) other intellectual property, industrial property or proprietary rights.
"Law" means applicable common law and any statute, ordinance, code or other
law, rule, permit, permit condition, regulation, order, decree, technical or
other standard, requirement or procedure enacted, adopted, promulgated, applied
or followed by any Governmental Authority.
"Lessor" means the applicable lessor under a Lease.
"Lien" means, with respect to any Asset, any mortgage, lien, pledge,
charge, security interest, right of first refusal or right of others therein, or
encumbrance of any nature whatsoever in respect of such Asset.
"Maximum Debt Amount" means, with respect to the MBDA Loan, an amount of
principal, interest and other charges outstanding as of the Closing Date equal
to [***] plus the amount of any advances made pursuant to the MBDA Loan
(and interest accruing thereon) between the Effective Date and the Closing Date
that are used to pay Approved Capital Expenditures.
[*** Confidential Treatment Requested]
3
"Minimum Debt Amount" means, with respect to the MBDA Loan, an amount of
principal, interest and other charges outstanding as of the Closing Date equal
to [***] plus the amount of any advances made pursuant to the MBDA Loan
(and interest accruing thereon) between the Effective Date and the Closing Date
that are used to pay Approved Capital Expenditures.
"Person" means any general partnership, limited partnership, limited
liability company, corporation, joint venture, trust, business trust,
Governmental Authority, cooperative, association, other entity, or individual,
and the heirs, executors, administrators, legal representatives, successors, and
assigns of such person as the context may require.
"Securities Act" means the Securities Act of 1933, as amended.
"Tax" or "Taxes" means any taxes, assessment, duties, fees, levies,
imposts, deductions, or withholdings, including income, gross receipts, ad
valorem, value added, excise, real or personal property, asset, sales, use,
license, payroll, transaction, capital, net worth and franchise taxes, estimated
taxes, withholding, employment, social security, workers compensation, utility,
severance, production, unemployment compensation, occupation, premium, windfall
profits, transfer and gains taxes, or other governmental charges of any nature
whatsoever, imposed by any Taxing Authority of any government or country or
political subdivision of any country, and any liabilities with respect thereto,
including any penalties, additions to tax, fines or interest thereon and
includes any liability for Taxes of another person by contract or as a
transferee or successor.
"Tax Return" means any report, return, statement, estimate, declaration,
notice, form or other information required to be supplied to a taxing authority
in connection with Taxes.
"Taxing Authority" shall mean the Internal Revenue Service and any other
Governmental Authority responsible for the administration of any Tax.
"Tower Leases" means any contract, agreement or arrangement relating to the
use by Seller of Towers or other transmission/reception equipment on the Tower
Sites.
"Tower Sites" means any real property, rooftop or other building location
used or occupied by Seller on which Towers used by Seller are located.
"Tower Subleases" means any contract, agreement or arrangement under which
Seller is a lessor, sublessor or licensor of, or makes available for use to any
Person, any Tower Site or portion thereof that is the subject of a Tower Lease.
"Towers" means any towers or other "antenna structures" as defined by the
FCC in Part 17 of the FCC Rules.
"Transactions" means the transactions contemplated by this Agreement.
[*** Confidential Treatment Requested]
4
Section 1.2 Other Defined Terms. Additional terms are defined throughout
this Agreement.
ARTICLE 2
PURCHASE AND SALE OF ASSETS
Section 2.1 Purchase and Sale. On the terms and subject to the conditions
of this Agreement, at the Closing, Seller shall sell, assign, transfer, convey
and deliver to Purchaser or Purchaser's designees, and Purchaser shall purchase
from Seller all of Seller's right, title and interest as of the Closing Date in
and to all of Seller's tangible and intangible assets and properties
(collectively, the "Assets"), except for the Excluded Assets (as defined below),
including, without limitation, the following assets, free and clear of all
Liens:
(a) The licenses granted by the FCC authorizing Seller to construct
and operate Channels in certain markets listed on Exhibit B-1, which based
on the zip code database approved by Purchaser cover the minimum number of
households per Channel associated with each such Channel listed therein
(the "Seller Licenses"); Seller does not represent or warrant the accuracy
of the zip code database and any inaccuracy in the zip code database will
not give rise to any claim or Purchase Price Adjustment on behalf of
Purchaser or Seller;
(b) The leases pursuant to which Seller leases the spectrum on certain
Leased Channels pursuant to FCC licenses granted to the applicable Lessor
(the "Underlying FCC Licenses" and together with the Seller Licenses, the
"Licenses") for use in the markets listed on Exhibit B-2, which based on
the zip code database approved by Purchaser cover the minimum number of
households per Channel associated with each Channel listed therein
("Leases"); Seller does not represent or warrant the accuracy of the zip
code database and any inaccuracy in the zip code database will not give
rise to any claim or Purchase Price Adjustment on behalf of Purchaser or
Seller;
(c) All contracts, leases, equipment leases, Tower Leases, Tower
Subleases, subleases, licenses, purchase orders, software license
agreements, customer/subscriber contracts, supplier contracts, and other
contracts and agreements to which Seller is a party and listed and
described on Exhibit B-3, and further including all rights, claims,
privileges of Seller arising under all warranties, representations and
guarantees (express, implied or otherwise) made by suppliers or others in
connection with the Assets (the "Assigned Contracts");
(d) All equipment, furniture, tools, spare parts, machinery, fixtures
and computer hardware used or held for use by Seller, including without
limitation that network equipment and spare parts used in connection with
the operation of the Channels as listed on Exhibit B-4 (collectively, the
"Equipment");
(e) All Intellectual Property Rights owned by or licensed to Seller or
in which Seller has any right, title or interest, whether by license,
permission,
5
releases or otherwise, including without limitation, all goodwill
associated therewith (collectively, the "IP Assets"); and
(f) All accounts receivable and other amounts due to Seller from
customers of Seller (the "Accounts Receivable").
Section 2.2 Excluded Assets. Seller shall not sell, assign, transfer,
convey or deliver to Purchaser, and Purchaser shall not purchase, assume or
otherwise acquire from Seller, any right, title or interest in or to the
following assets and properties:
(a) Cash on hand, bank accounts, cash equivalents, deposits, prepaid
items or instruments in existence on the Closing Date;
(b) Seller's minute books, tax returns and other entity documents;
(c) All Employee Plans administered, maintained or contributed to by
Seller;
(d) Subject to the provisions of Article 7, all of Seller's rights in
and to the name "Speednet" and all derivations thereof;
(e) The contracts and agreements of Seller listed in Exhibit B-5; and
(f) The assets of Seller listed in Exhibit B-6.
Section 2.3 Liabilities. On the terms and subject to the conditions of this
Agreement and if requested by Seller, Purchaser shall assume, effective as of
the Closing (a) subject to the provisions of Section 2.5(c), certain
indebtedness and related obligations of Seller (the "MBDA Loan") to the Michigan
Broadband Development Authority (the "MBDA") described in Section 2.3 of the
Disclosure Schedules (provided that in no event shall Purchaser be required to
assume an obligation to pay the MBDA an amount in excess of the Maximum Debt
Amount), (b) the liabilities of Seller under the Assigned Contracts to be
performed or accruing under the terms thereof after the Closing Date, and (c)
the trade accounts payable of Seller to the payees listed in Section 2.3 of the
Disclosure Schedules, in an amount not to exceed [***] (collectively, the
"Assumed Liabilities"), and from and after the Closing, Purchaser shall pay,
perform and discharge when due the Assumed Liabilities. Except for the Assumed
Liabilities, Purchaser shall not assume, or be obligated or liable for, any
liabilities of Seller, or any of its Affiliates, predecessors, assignors, or
transferors, including any liabilities under the Assigned Contracts incurred
and/or to be performed under the terms thereof on or before the Closing Date
(the "Excluded Liabilities"), whether in connection with the Transactions or
otherwise, all of which shall be retained and paid, performed and discharged
when due by Seller or one of Seller's Affiliates.
Section 2.4 Purchase Price. In consideration for the sale of the Assets,
Seller shall receive the following (the "Consideration"):
[*** Confidential Treatment Requested]
6
(a) Subject to adjustment, as set forth in Section 2.5 below, an
amount equal to $1,500,000 (the "Cash Consideration"), payable in
immediately available funds at Closing to an account designated by Seller.
(b) Subject to adjustment as set forth in Section 2.5, 2,033,000
shares of Clearwire's Class A Common Stock ("Clearwire Stock"); and
(c) A warrant (the "Warrant") to purchase 1,130,000 shares of
Clearwire Stock at a price of $7.50 per share, exercisable commencing on
the day after the first anniversary of Closing and ending on the fifth
anniversary of Closing, in substantially the form attached hereto as
Exhibit C.
Section 2.5 Adjustment
(a) The number of shares of the Clearwire Stock issuable at Closing
shall be adjusted, if necessary, to account for any stock split, cash
dividend, stock dividend, or other recapitalization in respect of
Clearwire's issued and outstanding stock between the Effective Date and the
Closing.
(b) If the MBDA Loan is not prepaid as described in paragraph (c)
below, and if the outstanding balance of principal, interest and other
charges owing under the MBDA Loan on the Closing Date exceeds the sum of
[***] plus the Approved Capital Expenditures, the amount of the Cash
Consideration shall be reduced by the amount of such excess. If the MBDA
Loan is not prepaid as described in paragraph (c) below, and if the
outstanding balance of principal, interest and other charges owing under
the MBDA Loan (less any Approved Capital Expenditures) is less than [***]
the amount of the Cash Consideration shall be increased by the amount of
such deficiency.
(c) Purchaser acknowledges that the consent of MBDA is required for
the assignment and assumption of the MBDA Loan. If MBDA refuses to consent
to such assignment and assumption, imposes conditions on such consent that
are unacceptable to Purchaser acting reasonably, or refuses to release
Seller and Robert F. Liggett from all of their obligations in connection
with the MBDA Loan, Purchaser shall, on the terms and subject to the
conditions set forth in this Agreement, cause the MBDA Loan to be prepaid
contemporaneously with Closing; provided that (i) one-half the amount of
any prepayment penalty assessed by MBDA in connection with such prepayment
shall be deducted from the Cash Consideration; (ii) if the outstanding
balance of principal, interest and other charges owing under the MBDA Loan
on the Closing Date exceeds the sum of $6,300,000 plus the Approved Capital
Expenditures, the amount of the Cash Consideration shall be reduced by the
amount of such excess; and (iii) in no event shall Purchaser be required to
prepay an amount in excess of the Maximum Debt Amount, and if the
outstanding balance of principal, interest and other charges owing under
the MBDA Loan on the Closing Date exceeds the Maximum Debt Amount, Seller
shall be responsible for prepaying such excess.
[*** Confidential Treatment Requested]
7
(d) Seller may elect, by written notice to Purchaser at least 10 days
prior to the Closing Date, to increase the Cash Consideration by an amount
not to exceed [***] in which case the number of shares of Clearwire Stock
issuable to Seller shall be reduced to be equal to the difference between
[***] and the amount of the increase in the Cash Consideration, divided by
[***].
Section 2.6 Purchase Price Allocation. Purchaser and Seller agree that the
Consideration (and all other capitalizable costs including, without limitation,
the amount of the MBDA Loan that is assumed or paid by Purchaser upon Closing)
shall be allocated as set forth in Schedule 2.6. This allocation is intended to
comply with the allocation method required by Section 1060 of the Code and
applicable regulations under Code Sections 1060 and 338. The Parties shall
cooperate to comply with all substantive and procedural requirements of Section
1060 and applicable regulations under Code Sections 1060 and 338. Purchaser and
Seller agree that they will not take nor will they permit any affiliated person
to take, for income tax purposes, any position inconsistent with such
allocation; provided, however, that Purchaser's cost for the Assets may differ
from the total amount allocated hereunder to reflect the inclusion in the total
cost of items (for example, capitalized acquisition costs) not included in the
total amount so allocated.
Section 2.7 Closing; Attorneys Fees. Upon the terms and subject to the
conditions hereof, the closing of the sale of the Assets (the "Closing") shall
take place at the offices of Davis Wright Tremaine LLP, 2600 Century Square,
1501 Fourth Avenue, Seattle, WA 98101, within five (5) Business Days following
the date on which the last condition under Article 6 has been satisfied or
waived, or at such other time and place as the Parties may mutually agree. The
date on which Closing occurs is called the "Closing Date." On the Closing Date,
or within two (2) Business Dates after the Closing Date, Purchaser will
reimburse Seller for Seller's attorneys' fees incurred in connection with this
Agreement and the transaction described in this Agreement, up to a maximum of
[***].
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser that except as set forth in the
Disclosure Schedules, the following statements are true and correct:
Section 3.1 Authorization. Seller is lawfully existing and in good standing
under the laws of the State of Michigan, and has all requisite power and
authority to enter into this Agreement and to perform the obligations to be
performed by it under this Agreement. The execution and delivery of this
Agreement, and the performance by Seller of its obligations hereunder, have been
duly authorized by all necessary action on the part of Seller.
Section 3.2 Enforceability. This Agreement and each other agreement,
document or instrument or certificate contemplated by this Agreement has been
duly executed and delivered by Seller and is a legal, valid and binding
obligation of Seller,
[*** Confidential Treatment Requested]
8
enforceable against Seller in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
Section 3.3 No Conflicts or Consents. Neither the execution, delivery and
performance by Seller of this Agreement, nor the consummation of the
Transactions by Seller, will, except where no material adverse effect will
result, (a) constitute, with or without the giving of notice or passage of time
or both, a breach, violation or default by Seller or any of its Affiliates,
create a Lien, or give rise to any right of termination, modification,
cancellation, prepayment or acceleration, under (i) any Law or license (subject
to receipt of Consent of the FCC) or (ii) any note, bond, mortgage, indenture,
lease, agreement or other instrument, in each case which is applicable to or
binding upon Seller or any of the Assets; (b) require any Consent, other than
the Consent of the FCC or the Consent of any third party to any Assigned
Contracts as listed on Section 3.6 of the Disclosure Schedules; or (c) violate
any Law by which Seller is bound.
Section 3.4 FCC Matters.
(a) Seller validly holds the Licenses, permits and authorizations set
forth on Exhibit B-1. True and complete copies of the Licenses have been
delivered to Purchaser. There is no condition outside of the ordinary
course imposed on any of the Licenses by the FCC except those that are
either set forth on the face of the Licenses, as issued by the FCC, are
contained in the FCC Rules applicable generally to the stations of the
type, nature and class or location of the stations identified by the call
signs listed on Exhibit B-1. The Licenses constitute all authorizations
from the FCC necessary or required for and/or used in the operation of the
Channels in the market areas identified on Exhibit B-1 as of the Effective
Date. The applications related to the Licenses that are listed on Section
3.4(a) of the Disclosure Schedules are all of the applications that are now
pending at the FCC regarding the Licenses or the Seller. No Person other
than Seller, or the applicable Lessor, has any right, title, interest or
claim in or to the Licenses. The Licenses have been granted to Seller, or
the applicable Lessor, by Final Order and are (and will be on the Closing
Date) in full force and effect.
(b) There is not pending or, to the knowledge of Seller, threatened
against Seller or the Licenses any application, action, petition, objection
or other pleading, or any proceeding with the FCC or any other Governmental
Authority, which (i) questions or contests the validity of, or seeks the
revocation, forfeiture, non-renewal or suspension of, any of the Licenses,
(ii) seeks the imposition of any modification or amendment with respect to
any of the Licenses, (iii) which would adversely affect the ability of
Seller to consummate the Transactions or (iv) seeks the payment of a fine,
sanction, penalty, damages or contribution in connection with the use of
the Licenses. To Seller's knowledge, there are no facts or circumstances
existing that would give rise to any such application, action, petition,
objection or other pleading, or proceeding with the FCC or any other
Governmental Authority. There is no unsatisfied adverse FCC order or ruling
outstanding against Seller, or, to Seller's knowledge, any Lessor or any of
the
9
Licenses. Neither Seller nor, to Seller's knowledge, any Lessor is a party
to any pending complaint or proceeding at the FCC regarding any of the
Licenses.
(c) Except as set forth in Section 3.4(c) of the Disclosure Schedule,
neither Seller nor, to Seller's knowledge, any Lessor has agreed to accept
or allow any electromagnetic interference from any other FCC licensees,
permittees or applicants with respect to the Licenses and/or Channels, and
no such licensees, permittees or applicants have agreed to accept
electromagnetic interference from Seller or any Lessor with respect to
their respective facilities.
(d) Seller and, to Seller's knowledge, all Lessors are in compliance
with all applicable Laws except for any non-compliance that, individually
or in the aggregate, will not have a material adverse effect on Seller or
on Seller's ability to consummate the Transactions. Since the filing of the
initial application for the Licenses, Seller and, to Seller's knowledge,
all Lessors have complied in all material respects with FCC Rules
applicable to the Licenses, including without limitation the Communication
Act of 1934, as amended. Since the issuance of the Licenses, Seller and, to
Seller's knowledge, all Lessors have complied in all material respects with
all of the terms and conditions of the Licenses. The Licenses are free and
clear of all Liens and are unimpaired by any acts or omissions of Seller,
any Lessor or their respective agents, assignees and licensees. All
material documents required to be filed at any time by Seller, to Seller's
knowledge, or any Lessor with the FCC with respect to the Licenses have
been timely filed or the time period for such filing has not lapsed. All
such documents filed since the date that the Licenses were issued to Seller
or since Seller became lessee under the Leases are correct in all material
respects. All amounts owed to the FCC in connection with the Licenses have
been timely paid.
(e) The facilities subject to the Licenses for which certification of
completion of construction has been filed with the FCC are operating and
have been operated by Seller, in material compliance with the Licenses
therefore and the FCC Rules. Seller is not transmitting from or otherwise
operating any facility that is not the subject of a license of the FCC.
None of the facilities operated by Seller subject to the Licenses is (i)
authorized pursuant to an authorization which is subject to challenge
before the FCC or any court of competent jurisdiction or (ii) subject to
any lease, sublease or any agreement to make it available to a third
Person. None of the facilities subject to the Licenses are operated by
Seller pursuant to special temporary or developmental authority.
(f) Section 3.4(f) of the Disclosure Schedules sets forth a true and
complete list of the following information in relation to each of the Tower
Leases and Subleases: (i) the expiration date of such Tower Lease or
Sublease, (ii) the name of the lessee or other counterparty to such Tower
Lease and Sublease, (iii) the address or location of the leased premises or
Tower Site, and (iv) the monthly, quarterly or annual rent, as applicable,
payable under such Tower Lease or Sublease. True and complete copies of the
Tower Leases and Subleases have been provided to Purchaser. To the
knowledge of Seller, all of the Towers located
10
on the Tower Sites are obstruction-marked and lighted to the extent
required by, and in accordance with, the rules and regulations of the
Federal Aviation Administration (the "FAA") and the FCC Rules. To the
knowledge of Seller, appropriate notification to the FAA and registration
with the FCC has been made for each Tower located on the Tower Sites and
owned, leased or used by Seller where required by the rules and regulations
of the FAA or the FCC Rules, as applicable.
(g) The information set forth on Exhibit B-2 is true and correct in
all material respects; provided, Seller makes no representation or warranty
with respect to the number of households per Channel listed therein. True
and complete copies of the Leases, together with all amendments, waivers
and notices thereto (whether written or oral), have been provided to
Purchaser. The Leases are in full force and effect, are free from any
claims, liabilities or Liens and are unimpaired by any acts or omissions of
Seller, its agents, assignees and licensees. Seller has valid leasehold
interests in the Leases and will effectively convey to Purchaser valid
leasehold interests in all of the Leases. Since entering into the Leases,
Seller has complied in all material respects with all of the terms and
conditions of the Leases. Seller's operations and activities pursuant to
the Leases have been at all times conducted in material compliance with the
Communications Act of 1934, as amended, and the FCC Rules.
(h) Seller has paid all Taxes and other charges assessed against the
Assets, including but not limited to, against any EBS transmission
facilities. Seller has also paid all other Taxes, assessments and fees due
from Seller or any Lessor as a result of the use of capacity on the
Channels by Seller and the provision of services by Seller or any of
Seller's sublessees over the Channels, including but not limited to any
regulatory fees and required contributions of any Lessor to the Universal
Service Fund under the Telecommunications Act of 1996 and the FCC Rules,
except for Taxes, assessments or fees, if any, with respect to services
provided by Lessors to Lessors themselves and to any educational
institution or not-for-profit organization or site with which Lessors are
working in furtherance of educational goals approved by Lessors.
Section 3.5 Title to Assets; Condition of Assets. Seller has good and
marketable title to all of the Assets, free and clear of any Liens except for
Liens for taxes not yet due and payable. The Assets are owned by, or leased to,
Seller and are sufficient for the conduct of the business and operation of
Seller as presently conducted. The Equipment is in good operating condition,
ordinary wear and tear excepted, and is suitable for the purposes for which it
is intended.
Section 3.6 Contracts.
(a) Exhibit B-3 contains a complete list by category of all of the
Assigned Contracts including all amendments, modifications, supplements,
notices and waivers to such contracts affecting the obligations of any
party thereunder and identifies which if any of such Assigned Contracts
require the
11
consent of a party thereto in order to be assigned to Purchaser in the
Transactions. Accurate and complete copies of all Assigned Contracts have
been delivered or made available to Purchaser. Each of the Assigned
Contracts is valid, binding on Seller and, to the knowledge of Seller, each
other party thereto and in full force and effect, enforceable by Seller in
accordance with its terms. Seller has not assigned, pledged, transferred,
or otherwise disposed of or granted any Lien on its rights, titles and
interests under any of the Assigned Contracts to any other Person, nor, to
the knowledge of Seller, has any other party to the Assigned Contracts so
assigned, pledged, transferred, granted any Lien on, or otherwise disposed
of any of its rights, title and interests thereunder. Neither Seller nor,
to the knowledge of Seller, any other party to any of the Assigned
Contracts has failed to comply with or is in material breach or material
default thereunder. To the knowledge of Seller, no condition exists or
event has occurred and is continuing as of the date hereof and the Closing
which, with or without the lapse of time or the giving of notice, or both,
would constitute a material default by any party under any Assigned
Contract or give rise to any Lien or right of termination, modification,
cancellation, prepayment, suspension, limitation, revocation or
acceleration against Seller under any such Assigned Contract. Seller has
not received any notice of termination, or intent to terminate, with
respect to any Assigned Contract, and to the knowledge of Seller, no party
to any Assigned Contract has threatened to terminate any Assigned Contract.
Other than the contracts and agreements listed in Exhibit B-3, Seller is
not a party to any material contracts relating to the Assets for which
Purchaser would be liable for performance thereunder. None of the Assigned
Contracts are with any Person that is an officer, director, stockholder,
member (or family member of such Person) or Affiliate of Seller.
(b) No Assigned Contract includes or provides for: (i) a covenant not
to compete in any geographical area or in any line of business; (ii) a
lease, sublease or similar agreement with any Person under which Seller is
a lessor, sublessor or licensor of, or makes available for use to any
Person, any Asset; or (iii) the sale of any Asset or any right, title or
interest therein or the grant of any preferential rights (including options
and rights of first refusal) to purchase any Asset or requiring the Consent
of any third party to the transfer thereof.
Section 3.7 Taxes. All Tax Returns required to be filed by Seller have been
timely filed, and Seller is not the beneficiary of any extension of time within
which to file any Tax Return. All such Tax Returns are true, complete and
correct. All Taxes owed by Seller (whether or not shown on any Tax Return) have
been paid, including, without limitation with respect to any EBS transmission
facilities. Seller has withheld and paid to the appropriate Taxing Authority all
Taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, member or other third
party. Seller has not waived any statute of limitations in respect to Taxes or
agreed to any extension of time with respect to an assessment or deficiency of
Taxes. No adjustment relating to any Tax Returns filed by Seller has been
proposed by any Taxing Authority and remains unresolved. There are no Tax Liens
on any of the Assets, other than Liens for Taxes that are not yet due and
payable.
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Section 3.8 Financial Statements. Seller has furnished to Purchaser copies
of (a) the reviewed financial statements described in Section 3.8(a) of the
Disclosure Schedules (the "Reviewed Financial Statements"), (b) the unreviewed
financial statements described in Section 3.8(b) of the Disclosure Schedules
(the "Interim Financial Statements" and collectively with the Reviewed Financial
Statements, the "Financial Statements"), and (c) the customer data and
information described in Section 3.8(c) of the Disclosure Schedules (the
"Customer Data"). The Customer Data is true and correct in all material
respects. The Reviewed Financial Statements have been prepared in conformity
with GAAP applied on a consistent basis from year to year (except as noted
otherwise therein); and are true and correct in all material respects and
present fairly in all material respects the financial condition of Seller and
the results of operations and changes in cash flow of Seller for the periods to
which each relates. The Interim Financial Statements have been prepared in
conformity with GAAP applied on a consistent basis from year to year (except as
noted otherwise therein), subject to normal recurring year-end adjustments (the
effect of which will not, individually or in the aggregate, be material) and the
absence of notes (which, if presented, would not differ materially from those
included in the Reviewed Financial Statements), and are true and correct in all
material respects and present fairly in all material respects the financial
condition of Seller and the results of operations and changes in cash flow of
Seller for the periods to which each relates.
Section 3.9 No Material Changes. Since the date of the Interim Financial
Statements, the Assets have been operated in the ordinary course and consistent
with past practice, and there have not been any material adverse changes in the
results of operations, financial condition, assets, liabilities or business of
Seller.
Section 3.10 Intellectual Property. Section 3.10 of the Disclosure
Schedules contains an accurate and complete list of all (i) registrations and
applications for any IP Assets, and (ii) each software program owned or used by
Seller that is material to Seller's business (other than off-the-shelf,
pre-packaged commercially available third-party software used internally by
Seller). Seller has good and marketable title to the IP Assets, free and clear
of any Liens. To Seller's knowledge, Seller is not infringing upon, violating or
otherwise acting adversely to the right or claimed right of any Person in any
Intellectual Property Rights. No IP Asset is the subject of any injunction,
citation, award, judgment, order or decree. To Seller's knowledge, no person is
violating, infringing or misappropriating, or has violated, infringed or
misappropriated, at any time, any IP Asset. Seller has not granted any licenses,
options or other rights in any IP Assets to any person. Seller is not obligated
or under any liability to make payments by way of royalties, fees or otherwise
to any owner, licensor of, other claimant to, or party to any option, license or
agreement of any kind with respect to, any IP Asset. Seller has taken all
reasonable measures to protect the secrecy, confidentiality and value of all
trade secrets that are owned, used or held by Seller. None of the IP Assets is
owned by or registered in the name of any current or former owner, member,
manager, officer, employee, salesman, agent, customer, representative or
contractor.
Section 3.11 Accounts Receivable. The Accounts Receivable of Seller arose
from bona fide transactions in the ordinary course of business. The services
involved
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have, in all material respects, been provided to the account obligor, and such
Accounts Receivable constitute valid and enforceable claims. The Accounts
Receivable are collectible at their full amounts, less (a) any reserve for
doubtful accounts shown on the Interim Financial Statements for Accounts
Receivable created prior to the date of the Interim Financial Statements and (b)
[***].
Section 3.12 Employees. Section 3.12 of the Disclosure Schedules contains a
true and complete list of the persons employed by Seller as of the date of this
Agreement (the "Current Employees"), their respective dates of hire by Seller,
current positions, current compensation under Seller's existing employment
policies, and the amount and nature of any severance obligations that Seller
would have to them in the event of their termination of employment by Seller.
Seller is not delinquent in the payments to any of the Current Employees for any
wages, salaries, commissions, bonuses or other direct or indirect compensation
for any services performed by them to the date of this Agreement or for any
amounts required to be reimbursed to the Current Employees.
Section 3.13 Litigation. There is no legal proceeding now in progress or
pending or, to the knowledge of the Seller, threatened against Seller or any of
the Assets or the Assigned Contracts or the business of Seller, nor to the
knowledge of Seller does there exist any basis therefor. Seller is not subject
to any order, writ, injunction or decree of any court or any federal, state,
municipal or other domestic or foreign Governmental Authority.
Section 3.14 Employee Plans. No Employee Plan administered, maintained or
contributed to by Seller is a money purchase plan or a defined benefit plan or a
"multi-employer plan" as defined in Section 3(37) of ERISA, nor has Seller been
obligated to make a contribution to any multi-employer plan within the past five
years.
Section 3.15 Brokers. Neither Seller nor any of its Affiliates has employed
any broker or finder or incurred any liability for any brokerage or finding fees
or commissions in connection with the Transactions.
Section 3.16 Securities Representations.
(a) Seller is an Accredited Investor. Seller is acquiring the
Clearwire Stock and the Warrant for its own account, for investment
purposes only and not with a view to the distribution (as such term is used
in Section 2(11) of the Securities Act) thereof. Seller understands that
the Clearwire Stock and the Warrant have not been registered under the
Securities Act and cannot be sold or otherwise transferred unless
subsequently registered under the Securities Act or an exemption from such
registration is available.
(b) Seller is knowledgeable and experienced in the telecommunications
industry and is capable of evaluating the risks and merits of the
transactions contemplated by this Agreement, including the acquisition of
Clearwire Stock and the Warrant, and making an informed decision with
respect thereto. Seller and its representatives have had sufficient
opportunity to ask
[*** Confidential Treatment Requested]
14
questions of and receive answers from Purchaser and Clearwire concerning
the business of Clearwire, its operations, assets and liabilities. Seller
and its representatives have had an opportunity to review all documents and
records concerning Clearwire and its business that Seller has requested.
Seller has conducted its own independent assessment, analysis and
investigation with respect to Clearwire and its business at the time of
entering into this Agreement and has agreed to enter into this Agreement
and to accept Clearwire Stock and the Warrant as partial consideration for
the sale of the Assets based solely on this assessment, analysis and
investigation, and the representations and warranties of Purchaser set
forth in this Agreement.
(c) Seller is aware that Clearwire is a speculative enterprise, that
certain of the information disclosed to it contain forward looking
statements which involve risks and uncertainties, and that Clearwire's
actual results may differ significantly from the results discussed in these
forward looking statements. Seller further acknowledges that the value of
Clearwire's assets is inherently uncertain and is dependent upon market,
technological, and regulatory developments concerning feasible and
allowable uses. Seller represents and warrants to Purchaser and Clearwire
that it has assessed these factors independently and has agreed to enter
into this Agreement without reliance upon or expectation of any disclosures
of any kind from Purchaser or Clearwire, except as set forth in this
Agreement.
(d) For purposes of application of state securities law, Seller is a
resident of the State of Michigan.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller that the following statements
are true and correct:
Section 4.1 Existence; Authorization. Purchaser is lawfully existing and in
good standing under the laws of the State of Nevada, has all requisite power and
authority to enter into this Agreement and to perform the obligations to be
performed by it under this Agreement. Clearwire is lawfully existing and in good
standing under the laws of the State of Delaware, and has all requisite power
and authority to enter into this Agreement and to perform the obligations to be
performed by it under this Agreement. The execution and delivery of this
Agreement, and the performance by Purchaser and Clearwire of their respective
obligations hereunder, have been duly authorized by all necessary action on the
part of Purchaser and Clearwire.
Section 4.2 Enforceability. This Agreement has been duly executed and
delivered by Purchaser and Clearwire is a legal, valid and binding obligation of
Purchaser and Clearwire, enforceable against Purchaser and Clearwire in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and
15
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
Section 4.3 No Conflicts or Consents. Neither the execution, delivery and
performance by Purchaser and Clearwire of this Agreement, nor the consummation
of the Transactions by Purchaser, will require any Consent, other than the
Consent of the FCC.
Section 4.4 Brokers. Neither Purchaser nor Clearwire has employed any
broker or finder or incurred any liability for any brokerage or finder's fees or
commissions in connection with the Transactions.
Section 4.5 Disclosure. Clearwire has provided Seller with a copy of
Clearwire's Form S-1 filed with the Securities and Exchange Commission, with all
exhibits (the "Securities Filing") and Private Placement Memorandum as
Supplemented dated as of June 30, 2006 (the "Placement Memorandum"). The
Securities Filing and Placement Memorandum did not, as of its date, contain any
untrue statement of a material fact or omit to state any material fact necessary
to prevent the statements made from being misleading in light of the
circumstances under which they were made. The financial statements included in
the Securities Filing and Placement Memorandum were prepared in accordance with
GAAP (except, in the case of unaudited statements, as to the absence of
footnotes and except for normal and non-material year-end adjustments and other
non-material adjustments permitted by GAAP) applied on a consistent basis during
the periods involved; and are true and correct in all material respects and
present fairly in all material respects the financial position of Clearwire as
of the dates thereof and the results of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
recurring year-end audit adjustments, none of which would be material in amount
or scope).
Section 4.6 No Material Changes. Since the date of the financial statements
set forth in the Placement Memorandum, there have not been any material adverse
changes in the results of operations, financial condition, assets, liabilities,
or business of Purchaser.
ARTICLE 5
COVENANTS AND OTHER AGREEMENTS
Section 5.1 Consummation of Transactions. From and after the date of this
Agreement, each Party shall use its reasonable best efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable and consistent with applicable Law to perform its
obligations under this Agreement and to consummate the Transactions as soon as
reasonably practicable.
Section 5.2 Certain Notices. Each Party shall promptly notify the other
Parties in reasonable detail:
(a) upon the commencement of, or the impending or threatened
commencement of, or upon obtaining knowledge of any facts that would give
rise to, any claim, action or proceeding brought to enjoin the consummation
of the
16
Transactions, or against or relating to (i) the notifying Party or its
properties or assets, which could materially adversely affect the
Transactions or its ability to perform its obligations hereunder, or (ii)
the Assets or their use;
(b) upon the occurrence of, or the impending or threatened occurrence
of, or upon obtaining knowledge of any facts that would give rise to, any
event which could cause or constitute a material breach of any of its
representations, warranties, covenants or agreements contained in this
Agreement (and in such case such Party shall use commercially reasonable
efforts to prevent or promptly remedy such breach); and
(c) upon the occurrence or existence of any event, condition,
circumstance or state of facts known to the notifying Party, which has had
or could have a material adverse effect on the Transactions or its ability
to perform its obligations hereunder, or could materially adversely affect
the Assets or their use.
Section 5.3 Confidentiality. Pursuant to this Agreement and the performance
thereof, each Party (in such capacity, a "Recipient") may receive certain
Confidential Information of the other Parties (in such capacity, a "Disclosing
Party"). The Recipient shall not use for itself, except in performance of the
Agreement, or disclose to any Person this Agreement or any Confidential
Information of the Disclosing Party, except (a) information that was gained
independent of the Recipient's relationship with the Disclosing Party and became
publicly available through no breach of any obligation of confidentiality by the
Recipient; (b) information that is communicated to a third Person with the prior
written consent of the Disclosing Party; or (c) information that is required to
be disclosed pursuant to the lawful order of a Governmental Authority or
disclosure that is required by operation of Law, but in such event, only to the
extent such disclosure is required and, to the extent reasonably practicable,
prior written notice must be given to allow the Disclosing Party to seek a
protective order or other appropriate remedy. In the event of a breach or
threatened breach of the terms of this section, the Disclosing Party shall be
entitled to seek an injunction prohibiting any such breach. Any such injunctive
relief shall be in addition to, and not in lieu of, any appropriate relief in
the way of money damages or any other remedies available at law or in equity.
Seller acknowledges and agrees that the terms of this Agreement may be required
to be separately stated in the consolidated financial statements of Clearwire
and/or its Affiliates and that the disclosure by Clearwire or its Affiliates of
such financial statements shall not be a breach of this Agreement. Purchaser and
Clearwire may disclose this Agreement to their respective Affiliates, strategic
partners, actual or potential investors, lenders, acquirers, merger partners;
and others whom Purchaser or Clearwire deem in good faith to have a need to know
such information for purposes of pursuing a transaction or business relationship
with Purchaser or Clearwire.
17
Section 5.4 Further Assurances. Each Party shall forthwith upon request
execute and deliver such documents and take such actions as may reasonably be
requested by any other Party in order to effectuate the purposes of this
Agreement.
Section 5.5 FCC Qualifications and Filings. Seller hereby covenants and
agrees that prior to the Closing it shall maintain all necessary qualifications
to hold and to obtain renewal in the ordinary course of the Licenses, and
further covenants that it shall not knowingly or negligently take any action, or
fail to take any action, which action or failure to act creates a material risk
that Seller or the applicable Lessor would not be qualified to hold the Licenses
or that the FCC would revoke the Licenses. Once the transaction described in
this Agreement has been completed, Purchaser will prepare and file the required
consummation notice with the FCC within the required 30 day period thereafter
and will provide a copy of such filing to Seller.
Section 5.6 Consents. The Parties shall use commercially reasonable efforts
and shall cooperate to prepare and file with Governmental Authorities and other
Persons, no later than ten (10) days following the Effective Date, all
applications, notices, petitions and other documentation necessary or advisable
to obtain the Consents (it being understood that the failure to file within such
period shall not constitute a breach of this Agreement). Each Party shall
furnish to the other Parties all information concerning such Party and its
Affiliates reasonably required for inclusion in any application to be made in
connection with the Transactions or to determine compliance with FCC Rules. Any
fees associated with the filing of such applications, notices, or petitions
shall be paid by Purchaser. After the Effective Date and prior to the Closing,
Seller shall use commercially reasonable efforts to obtain a Consent to
assignments to Purchaser of all of the Assigned Contracts requiring Consent.
Section 5.7 Seller Affirmative Covenants. Between the date hereof and the
Closing Date, Seller shall (a) carry on its business as currently conducted and
only in the ordinary course of business; (b) preserve the Licenses and Leases
intact; (c) comply in all material respects with all Laws; (d) maintain in full
force and effect the Licenses, Assigned Contracts, Leases and other licenses
necessary to preserve Seller's ability to consummate the Transaction; (e)
maintain and preserve the Equipment and the IP Assets; (f) maintain its books,
accounts and records in the usual and regular manner, in accordance with GAAP;
and (g) diligently pursue and defend all applications for assignment of the
Licenses and Leases from Seller to Purchaser.
Section 5.8 Seller Negative Covenants. Seller shall not, and shall not
enter into, any agreement, arrangement or understanding to, or otherwise offer
or commit to (a) sell, transfer, assign, lease, modify or dispose of any Assets
or of the spectrum to be covered by the Licenses or Leases or any interests
therein or portion thereof, or negotiate therefore; (b) create, incur or suffer
to exist any Lien or other liability on any Assets or the spectrum to be covered
by the Licenses or any interest therein; or (c) amend any Lease or Assigned
Contract.
Section 5.9 Access. Between the date of this Agreement and the Closing
Date, Seller shall, during normal business hours (a) give Purchaser and its
representatives and
18
advisors access to its books, records, offices and other facilities and
properties; (b) permit Purchaser and its representatives and advisors to make
such inspections thereof as they may reasonably request; and (c) cause its
officers and advisors to furnish Purchaser with such financial and operating
data and other information with respect to Seller as Purchaser may from time to
time reasonably request. Between the date of this Agreement and the Closing
Date, Purchaser shall, during normal business hours give Seller and its legal
counsel access to Purchaser's data room, containing information Clearwire makes
available to its potential investors.
Section 5.10 Publicity. No Party shall issue any press release or public
announcement concerning this Agreement or the transactions contemplated hereby
without obtaining the prior written approval of the other Parties hereto, which
approval will not be unreasonably withheld or delayed, unless disclosure is
otherwise required by applicable Law, provided that, to the extent required by
applicable Law, the Party intending to make such release shall use its
commercially reasonable efforts consistent with such applicable Law to consult
with the other Parties with respect to the text thereof.
Section 5.11 "Market Stand-off" Agreement. To the extent all other
shareholders holding shares in an amount equal to or less than Seller are
requested by Clearwire or an underwriter of capital stock or other securities of
Clearwire in connection with Clearwire's initial public offering, Seller agrees
not to sell or otherwise transfer or dispose of any capital stock or other
securities of Clearwire held by Seller during the 180 day period following such
initial public offering. If requested by a managing underwriter in connection
with Seller's initial public offering, Seller shall execute a separate agreement
to the foregoing effect. Clearwire may impose stop-transfer instructions with
respect to the shares (or securities) subject to the foregoing restriction until
the end of such period.
Section 5.12 Employees. Effective immediately before Closing, Seller shall
terminate all of its employees and fully satisfy all obligations owing to them
or make adequate provision therefor. In particular, but not by way of
limitation, Seller shall be responsible for payment when due of all salaries,
wages, accrued vacation and other leave rights, fringe benefits, health benefits
and severance pay rights which are accrued or earned and unpaid as of the
Closing under the terms of its employment arrangement with each such employee;
and with respect to those of Seller's employees who are salaried, its usual and
customary policies concerning compensation, vacation and severance. Seller shall
give all notices and shall provide all continuation coverages that may be
required by the provisions of the Omnibus Budget Reconciliation Act of 1989.
Seller shall comply with all applicable provisions of the Worker Adjustment and
Retraining Notification Act of 1988, and any similar state Law. Following
Closing, Purchaser may offer employment to each or some of the employees
terminated by Seller and Seller agrees to cooperate with Purchaser in
introducing Purchaser to any or all employees. Purchaser may offer employment to
any employees of Seller with no obligation to recognize any past service of
employees to Seller. Within fourteen (14) days prior to the Closing Date,
Purchaser will provide Seller with a list of those employees to whom Purchaser
intends to make offers of employment.
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ARTICLE 6
CONDITIONS TO CLOSING
Section 6.1 Conditions to the Obligations of Both Parties. Each Party's
obligation to consummate the Transactions is subject to the satisfaction or
waiver, on or prior to the Closing Date, of each of the following conditions, as
applicable to the Party specified:
(a) The FCC shall have approved the application for consent to the
assignment of the Seller Licenses and Leases to Purchaser (or its designee)
without imposition of conditions outside of the ordinary course, such
approval shall have become a Final Order, and such Final Order shall be in
full force and effect; and all other notices, filings and Consents required
to be made or obtained prior to the Closing by any Party or any of its
respective Affiliates with any Governmental Authority in connection with
the execution and delivery of this Agreement and the consummation of the
Transactions shall have been made or obtained.
(b) No preliminary or permanent injunction or other order, decree or
ruling issued by a Governmental Authority, nor any Law promulgated or
enacted by any Governmental Authority, shall be in effect that would impose
material limitations on the ability of any Party to consummate the
Transactions.
Section 6.2 Conditions to the Obligations of Seller. Seller's obligation to
consummate the Transactions is subject to the satisfaction or waiver on or prior
to the Closing Date of each of the following conditions:
(a) The representations and warranties of Purchaser contained herein
shall be true and correct in all material respects (except for
representations and warranties that are qualified as to materiality, which
shall be true and correct) as of the Closing as if made on and as of the
Closing Date (except that representations and warranties that are made as
of a specific date need be so true and correct only as of such date), and
Seller shall have received a certificate to such effect dated the Closing
Date and executed by a duly authorized officer of Purchaser.
(b) The covenants and agreements of Purchaser and Clearwire to be
performed under this Agreement on or prior to the Closing shall have been
duly performed in all material respects, and Seller shall have received a
certificate to such effect dated the Closing Date and executed by a duly
authorized officer of Purchaser and Clearwire.
(c) Purchaser and Clearwire having delivered to Seller the
Consideration for the Assets pursuant to Section 2.4.
(d) Clearwire shall have countersigned the instruments described in
Section 6.3(h).
20
(e) If the MBDA Loan is not prepaid in connection with the Closing,
Robert Liggett shall have been released from any personal guarantees he may
have given to the MBDA to secure repayment of the MBDA Loan, and Purchaser
and Clearwire shall have executed and delivered such documents and
instruments as may be required by MBDA in connection with the assignment
and assumption of the MBDA Loan.
Section 6.3 Conditions to the Obligations of Purchaser. Purchaser's and
Clearwire's obligations to consummate the Transactions are subject to the
satisfaction or waiver on or prior to the Closing Date of each of the following
conditions:
(a) The representations and warranties of Seller contained herein
shall be true and correct in all material respects (except for
representations and warranties that are qualified as to materiality, which
shall be true and correct) as of the Closing as if made on and as of the
Closing Date (except that representations and warranties that are made as
of a specific date need be so true and correct only as of such date), and
Purchaser shall have received a certificate to such effect dated the
Closing Date and executed by a duly authorized officer of Seller.
(b) The covenants and agreements of Seller to be performed under this
Agreement on or prior to the Closing shall have been duly performed in all
material respects, and Purchaser shall have received a certificate to such
effect dated the Closing Date and executed by a duly authorized officer of
Seller.
(c) Seller shall have executed and delivered to Purchaser (or its
designee) an Instrument of Assignment and Assumption with respect to the
Seller Licenses in the form of Exhibit D.
(d) Seller shall have executed and delivered to Purchaser (or its
designee) an Assignment and Assumption with respect to the Leases and
Assigned Contracts and Assumed Liabilities, if necessary, in the form of
Exhibit E.
(e) Seller shall have obtained a completed IRS Form W-9 from the
lessor of each Lease.
(f) Seller shall have executed and delivered to Purchaser (or its
designee) a Bill of Sale with respect to the tangible Assets in the form of
Exhibit F.
(g) Seller and Robert Liggett shall have executed and delivered to
Purchaser a Non-Competition Agreement in the form of Exhibit G.
(h) Seller shall have executed and delivered to Purchaser (i) a
joinder to the Amended and Restated Stockholders Agreement, dated March 16,
2004 (the "Stockholders Agreement"), by and among Clearwire and Clearwire's
stockholders; (ii) a completed Stockholder Questionnaire as provided by
21
Clearwire prior to the Closing; and (iii) a joinder to the Registration
Rights Agreement, dated March 16, 2004, by and among Clearwire and
Clearwire's stockholders.
(i) Seller shall have obtained Consents to assignment of the Assigned
Contracts in form reasonably acceptable to Purchaser and without the
imposition of new conditions or requirements that are not acceptable to
Purchaser.
(j) Seller shall have delivered to Purchaser a completed IRS Form W-9.
(k) Purchaser shall have received from the MBDA such written
assurances as it may require regarding the outstanding balance of
principal, interest and other charges under the MBDA Loan, including a
certification that such outstanding balance does not exceed the Maximum
Debt Amount.
(l) Purchaser shall have received such documentation from Seller as it
may reasonably require regarding the application of proceeds of the MBDA
Loan used to pay for Approved Capital Expenditures.
ARTICLE 7
POST CLOSING COVENANTS
Section 7.1 Use of Name. Effective upon Closing, Seller grants a
non-exclusive license to Purchaser to use the trade name "Speednet" and
derivations thereof ("Seller's Trade Name"), as follows: For a period of [***]
after the Closing Date, Purchaser may continue to operate the Assets using
Seller's Trade Name. After the end of such [***] period, such license shall
terminate and Purchaser shall discontinue using and will dispose of all items of
stationery, business cards and literature bearing Seller's Trade Name, provided
that Purchaser will not be required to remove or discontinue using any Seller's
Trade Name that is affixed to any Assets to be used in the homes of customers or
on properties or in premises from which Purchaser will provide service following
Closing, where such removal or discontinuation is impracticable for Purchaser.
ARTICLE 8
TERMINATION
Section 8.1 Termination. This Agreement may be terminated at any time:
(a) by mutual written consent of Purchaser and Seller;
(b) by either Purchaser or Seller if (i) there shall be any Law that
makes consummation of the Transactions illegal or otherwise prohibited, or
(ii) any judgment, injunction, order or decree of any court or other
Governmental Entity having competent jurisdiction enjoining Purchaser and
Seller from
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consummating the Transaction is entered and such judgment, injunction or
order shall have become final and non-appealable;
(c) by Purchaser and Clearwire upon the occurrence of a material
breach of any representation, warranty or covenant in this Agreement by
Seller if such breach is not cured within [***] following written notice by
Purchaser and Clearwire which notice shall describe the breach; or
(d) by Seller upon the occurrence of a material breach of any
representation, warranty or covenant in this Agreement by Purchaser or
Clearwire if such breach is not cured within [***] following written notice
by Seller which notice shall describe the breach; or
(e) by Purchaser or Seller if the Closing has not occurred on or
before a date that is [***] after the Effective Date, provided that the
failure to close on or before such date is not the fault of the terminating
Party.
Section 8.2 Effect of Termination. In the event of a termination of this
Agreement, neither Party shall have any liability or further obligation to the
other, except that
(a) nothing herein will relieve a Party from liability for any breach
by such Party of this Agreement; and
(b) the provisions of this Article 8, Article 9 and Article 10 shall
survive the termination of this Agreement. Whether or not Closing occurs,
all costs and expenses incurred in connection with this Agreement and the
Transactions shall be paid by the Party incurring such expenses.
Section 8.3 Joint Venture. Purchaser and Seller acknowledge and agree that
they jointly bid on and have been awarded certain EBS and BRS Spectrum leases
covering Southeastern Lower Michigan and have agreed to jointly develop such
market. The Parties have negotiated and substantially completed the terms of the
joint venture as set forth in the SC Broadband LLC Operating Agreement (the "JV
Agreement"), the most recent draft of which was Seller's draft document number
207358 v9, on which Purchaser has not yet provided comments or proposed
revisions. In the event the Transaction does not close for any reason the
parties will proceed with the joint venture substantially on the terms and
conditions set forth in the JV Agreement and use their best efforts to negotiate
resolution to the remaining open issues under the JV Agreement and to complete
the JV Agreement as soon as practicable.
ARTICLE 9
SURVIVAL AND REMEDIES
Section 9.1 Survival. The representations and warranties contained in this
Agreement shall survive the Closing until [***] after the Closing Date and shall
expire at such time, except for claims for indemnity with respect to which
notice has been given to the Party to be charged prior to such expiration date.
The
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covenants and other agreements contained in this Agreement shall survive the
Closing until the date or dates specified therein or the expiration of the
applicable statute of limitations (including any waivers or extensions thereof)
with respect to such matters, whichever is later.
Section 9.2 Seller Indemnification. Seller shall indemnify Purchaser, its
representatives members, managers, officers, employees, agents, successors and
assigns (the "Purchaser Indemnified Parties") and hold the Purchaser Indemnified
Parties harmless from and against any and all Damages based upon, attributable
to or resulting from:
(a) the failure of any representation or warranty of Seller set forth
in this Agreement, or any representation or warranty contained in any
certificate delivered by pursuant to this Agreement, to be true and correct
as of the dates made;
(b) the breach of any covenant or other agreement on the part of
Seller under this Agreement;
(c) the Excluded Liabilities;
(d) use of Seller's Trade Name in Michigan following the Closing; and
(e) the ownership and operation of the Assets prior to the Closing.
Section 9.3 Purchaser Indemnification. Purchaser shall indemnify Seller,
its managers, members, officers, employees, agents, successors and assigns (the
"Seller Indemnified Parties") and hold the Seller Indemnified Parties harmless
from and against any and all Damages based upon, attributable to or resulting
from:
(a) the failure of any representation or warranty of Purchaser set
forth in this Agreement, or any representation or warranty contained in any
certificate delivered by pursuant to this Agreement, to be true and correct
as of the dates made;
(b) the breach of any covenant or other agreement on the part of
Purchaser under this Agreement;
(c) the Assumed Liabilities; and
(d) the ownership and operation of the Assets following the Closing.
Section 9.4 Indemnification Procedures.
(a) In the event that any claim shall be asserted by any Person in
respect of which payment may be sought under Section 9.2 or Section 9.3
hereof (each, a "Claim"), the indemnified party shall reasonably and
promptly cause written notice of the assertion of any Claim of which it has
knowledge which is
24
covered by this indemnity to be forwarded to the indemnifying party. The
indemnifying party shall have the right, at its sole option and expense, to
be represented by counsel of its choice, which must be reasonably
satisfactory to the indemnified party, and to defend against, negotiate,
settle or otherwise deal with any Claim which relates to any Damages
indemnified against hereunder. If the indemnifying party elects to defend
against, negotiate, settle or otherwise deal with any Claim which relates
to any Damages indemnified against hereunder, it shall within ten (10) days
(or sooner, if the nature of the Claim so requires) notify the indemnified
party of its intent to do so. If the indemnifying party elects not to
defend against, negotiate, settle or otherwise deal with any Claim which
relates to any Damages indemnified against hereunder, fails to notify the
indemnified party of its election as herein provided or contests its
obligation to indemnify the indemnified party for such Damages under this
Agreement, the indemnified party may defend against, negotiate, settle or
otherwise deal with such Claim. If the indemnified party defends any Claim,
then the indemnifying party shall reimburse the indemnified party for the
expenses of defending such Claim upon submission of periodic bills. If the
indemnifying party shall assume the defense of any Claim, the indemnified
party may participate, at its own expense, in the defense of such Claim;
provided, however, that such indemnified party shall be entitled to
participate in any such defense with separate counsel at the expense of the
indemnifying party if (i) so requested by the indemnifying party to
participate or (ii) in the reasonable opinion of counsel to the indemnified
party, a conflict or potential conflict exists between the indemnified
party and the indemnifying party that would make such separate
representation advisable; and provided, further, that the indemnifying
party shall not be required to pay for more than one such counsel for all
indemnified parties in connection with any Claim. The Parties hereto agree
to cooperate fully with each other in connection with the defense,
negotiation, or settlement of any such Claim.
(b) After any final judgment or award shall have been rendered by a
court, arbitration board or administrative agency of competent jurisdiction
and the expiration of the time in which to appeal therefrom, or a
settlement shall have been consummated (with the consent of all Parties,
which consent will not be unreasonably withheld), or the indemnified party
and the indemnifying party shall have arrived at a mutually binding
agreement with respect to a Claim hereunder, the indemnified party shall
forward to the indemnifying party notice of any sums due and owing by the
indemnifying party pursuant to this Agreement with respect to such matter.
(c) The failure of the indemnified party to give reasonably prompt
notice of any Claim shall not release, waive or otherwise affect the
indemnifying party's obligations with respect thereto except to the extent
that the indemnifying party can demonstrate actual loss and prejudice as a
result of such failure.
Section 9.5 Limitations
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(a) No indemnity claim shall be payable by an indemnifying party
pursuant to this Article 9 unless and until the aggregate indemnity claims
asserted against the indemnifying party under this Article 9 equals the
Liability Threshold. Once the Liability Threshold is reached, the
indemnified party shall be entitled to the benefit of the indemnity to the
extent of all Damages both above and below the Liability Threshold. The
Liability Threshold shall be equal to [***]; provided, however, there shall
be disregarded for all purposes and neither party shall have any liability
under this Article 9 for any claim which is less than $10,000.
(b) Purchaser shall not be liable to indemnify the Seller Indemnitees
to the extent that the aggregate indemnification liability with respect
thereto exceeds [***]. Seller shall not be liable to indemnify the
Purchaser Indemnitees to the extent that the aggregate indemnification
liability with respect thereto exceeds [***].
(c) Any determination of damages incurred by an indemnified party
shall be subject to the following:
(i) Such damages shall be net of any insurance proceeds
recoverable by the indemnified party (and/or its affiliates and assigns)
with respect to such claim; and
(ii) An indemnified party shall not be entitled to make any
claims for indemnification with respect to breaches of any representations
and warranties which as to which such party had actual knowledge prior to
Closing.
(d) The limitations contained in this Section 9.5 shall not apply to
any claims for indemnity alleging (i) fraud or willful misconduct, (ii)
liability for payment of Taxes, (iii) liability of Seller for payment or
performance of Retained Liabilities, (iv) liability of Purchaser for
payment or performance of Assumed Liabilities, (v) liability for breach of
any of the covenants contained in Article 5 hereof, and (vi) liability of
Seller for breach of the representations and warranties contained in
Section 3.4 and 3.5.
Section 9.6 Remedies. IN NO EVENT SHALL ANY PARTY BE LIABLE FOR INDIRECT,
SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING OUT OF A BREACH OF THIS
AGREEMENT, EVEN IF ADVISED AT THE TIME OF BREACH OF THE POSSIBILITY OF SUCH
DAMAGES.
ARTICLE 10
MISCELLANEOUS
Section 10.1 Entire Agreement. This Agreement constitutes the entire
agreement between the Parties pertaining to the subject matter hereof and
thereof and supersedes all prior and contemporaneous agreements, understandings,
negotiations and
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discussions, whether oral or written, of the Parties with respect to the subject
matter hereof and thereof.
Section 10.2 Amendments and Waivers. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed (in the case of an amendment) by Seller and Purchaser or (in the case of
a waiver) by the Party against whom the waiver is to be effective. No failure or
delay by any Party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
Section 10.3 Remedies Cumulative. Except as otherwise provided herein, all
rights, powers and remedies provided under this Agreement or otherwise available
in respect hereof at law or in equity shall be cumulative and not alternative,
and the exercise or beginning of the exercise of any thereof by a Party shall
not preclude the simultaneous or later exercise of any other such right, power
or remedy by such Party.
Section 10.4 Assignment. This Agreement shall be binding upon and shall
inure to the benefit of the Parties and their respective successors and
permitted assigns. This Agreement may not be assigned by any Party without the
prior written consent of the other Parties; provided, however, that (a)
Purchaser may, at any time prior to Closing, assign this Agreement or
Purchaser's right to receive assignment of the Assets, or any of them, to an
Affiliate of Purchaser, without the consent of Seller, and (b) Seller may at any
time after the Closing assign all or any portion of the Clearwire Shares to any
Person who is an Accredited Investor if (i) such assignment is a permitted
transfer under the Stockholders Agreement, and (ii) the Person executes and
delivers to Clearwire an investor letter in the form attached hereto as Exhibit
H, together with the documents, instruments and opinions referred to therein;
and (b) Seller may assign the Warrant on the terms set forth therein.
Section 10.5 Notices. All notices or other communications hereunder shall
be in writing and shall be deemed to have been duly given or made (a) upon
delivery if delivered personally (by courier service or otherwise), as evidenced
by written receipt or other written proof of delivery (which may be a printout
of the tracking information of a courier service that made such delivery), or
(b) upon confirmation of dispatch if sent by facsimile transmission (which
confirmation shall be sufficient if shown by evidence produced by the facsimile
machine used for such transmission), in each case to the applicable addresses
set forth below (or such other address which any Party may from time to time
specify):
If to Seller:
[***]
Attention: [***]
Facsimile: [***]
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If to Purchaser or Clearwire:
Clearwire Spectrum Holdings II LLC
5808 Lake Washington Blvd. N.E.
Suite 300
Kirkland, WA 98033
Attention: [***]
Facsimile: [***]
With copies to:
Clearwire Spectrum Holdings II LLC
5808 Lake Washington Blvd. N.E.
Suite 300
Kirkland, WA 98033
Attention: Legal Department
Facsimile: [***]
Davis Wright Tremaine, LLP
2600 Century Square
1501 Fourth Avenue
Seattle, WA 98101
Attn: [***]
Facsimile: [***]
Section 10.6 Governing Law; Waiver of Jury Trial.
(a) This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of Delaware, without reference to the
choice of law principles thereof.
(b) THE PARTIES HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR
THE TRANSACTIONS.
Section 10.7 Expenses. Except as otherwise expressly provided in this
Agreement, whether or not the Transactions are consummated, the Parties shall
bear their respective expenses (including, but not limited to, all compensation
and expenses of counsel, financial advisors, consultants, actuaries and
independent accountants) incurred in connection with this Agreement and the
Transactions.
Section 10.8 Invalidity. In the event that any of the provisions contained
in this Agreement or in any other instrument referred to herein, shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement or such other instrument and such provision will be
ineffective only to the extent of such invalidity,
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illegality or unenforceability, unless the consummation of the Transactions is
impaired thereby.
Section 10.9 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
Section 10.10 Headings. The headings of the Articles and Sections herein
are inserted for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the
date first above written.
SPEEDNET LLC
By: /s/ John Ogren
------------------------------------
Name: John Ogren
----------------------------------
Title: President & CEO
---------------------------------
CLEARWIRE SPECTRUM HOLDINGS II LLC
By: /s/ R. Gerard Salemme
------------------------------------
Name: R. GERARD SALEMME
----------------------------------
Title: Executive Vice President
---------------------------------
CLEARWIRE CORPORATION
By: /s/ R. Gerard Salemme
------------------------------------
Name: R. GERARD SALEMME
----------------------------------
Title: Executive Vice President
---------------------------------
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EXHIBIT A
CAPITAL EXPENDITURES BUDGET
[***]
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EXHIBIT B-1
SELLER LICENSES
[***]
<TABLE>
<S> <C> <C> <C> <C> <C>
[***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***]
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
[***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
</TABLE>
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EXHIBIT B-2
LEASES
LEASED CHANNELS:
<TABLE>
<S> <C> <C> <C> <C> <C>
[***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***]
[***] [***] [***] [***] [***] [***]
</TABLE>
[***]
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EXHIBIT B-3
ASSIGNED CONTRACTS
See contracts and agreements which are listed in Schedules 3.6(a), 3.4(b) and
3.4(f), which are incorporated herein by reference
EXHIBIT B-4
EQUIPMENT
[***]
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EXHIBIT B-5
EXCLUDED CONTRACTS AND AGREEMENTS
[***]
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EXHIBIT B-6
ADDITIONAL EXCLUDED ASSETS
None
EXHIBIT C
THIS WARRANT AND THE SHARES OF CLASS A COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT (TOGETHER THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, (THE "1933 ACT") AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE WTTH RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF
COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE
COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT
FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
No.___________
Issued:_____________, 2006
WARRANT TO PURCHASE
SHARES OF CLASS A COMMON STOCK OF
CLEARWIRE CORPORATION
(VOID AFTER______________,2011)
This certifies that Speednet LLC or its permitted assigns (the "Holder"),
for value received, is entitled to purchase from Clearwire Corporation, a
Delaware corporation (the "Company"), having a place of business at 5808 Lake
Washington Blvd. NE, Kirkland, WA 98033, One Million One Hundred Thirty Thousand
(1,130,000) fully paid and nonassessable shares of the Company's Class A Common
Stock (the "Common Stock").
The exercise price per share of this Warrant is Seven and 50/100 Dollars
($7.50) (subject to adjustment pursuant to the terms hereof, the "Stock Purchase
Price") payable as hereinafter provided.
This Warrant may be exercised in whole or in part (but if in part, it may
not be exercised more than three (3) separate times by each Holder and each time
for no less than 60,000 shares) at any time prior to (i) the expiration of the
Exercise Period; or (ii) a Liquidity Event, as defined herein occurring prior to
the Commencement Date, (the "Expiration Date"), upon surrender to the Company at
its principal office (or at such other location as the Company may advise the
Holder in writing) of this Warrant properly endorsed with the Subscription Form
attached hereto as Exhibit A duly filled in and signed (the "Subscription
Form"), and if applicable, upon payment in cash of the aggregate Stock Purchase
Price for the number of shares for which this Warrant is being exercised
determined in accordance with the provisions hereof. The Stock Purchase Price
and the number of shares purchasable hereunder are subject to adjustment as
provided in Section 3 of this Warrant. The "Exercise Period" means the period
beginning on _________________________, 2007 (the "Commencement Date"), and
ending on the fourth anniversary of the Commencement Date;
provided, that the Exercise Period shall also include the fifteen-day period
immediately prior to a Liquidity Event if the Liquidity Event occurs prior to
the Commencement Date.
1. EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
1.1 GENERAL. This Warrant is exercisable at the option of the Holder, at
any time or from time to time up to three (3) times during the Exercise Period
for all or any part of the shares of Common Stock (but not for a fraction of a
share) which may be purchased hereunder. Holder shall pay the aggregate Stock
Purchase Price for each exercise in cash. Each exercise with respect to less
than the number of shares to which the Holder is entitled under this Warrant
shall have the same effect as cancellation of the original Warrant and issuance
of a new Warrant evidencing the right to purchase the remaining number of shares
not yet exercised.
1.2 NET EXERCISE. In lieu of exercising this Warrant by payment of the
Stock Purchase Price in cash, the Holder may elect to receive shares of Common
Stock equal to the value of this Warrant (or the portion thereof being
exercised) by surrender of this Warrant to the Company at its principal office
(or at such other location as the Company may advise the Holder in writing)
together with a properly endorsed Subscription Form (a "Net Exercise"). Upon
such Net Exercise, the Company shall issue to such Holder a number of shares of
Common Stock computed using the following formula:
Y(A-B)
X = ------
A
Where
X = The number of shares of Common Stock to be issued to the Holder.
Y = The number of shares of Common Stock purchasable under this Warrant
or, if only a portion of the Warrant is being exercised, the
portion of the Warrant being cancelled (at the date of such
calculation).
A = The fair market value of one (1) share of Common Stock
(at the date of such calculation).
B = The Exercise Price (as adjusted to the date of such calculation).
For purposes of this Section 1.2, the fair market value of a share of
Common Stock shall mean the average of the closing price of the Common Stock
quoted in the over-the-counter market in which the Common Stock is traded or the
closing price quoted on any exchange or electronic securities market on which
the Common Stock is listed, whichever is applicable, as published in The Wall
Street Journal for the twenty (20) trading days prior to the date of
determination of fair market value (or such shorter period of time during which
such shares of Common Stock were traded over the counter or on such exchange).
If the Common Stock is not traded on the over-the-counter market on an exchange
or an electronic securities market or being sold to the public in such initial
public offering, this Warrant may not be exercised on a Net Exercise basis.
2
1.3 ISSUANCE OF CERTIFICATES. The Company agrees that the shares of Common
Stock purchased under this Warrant shall be and are deemed to be issued to the
Holder, as directed by Holder as the record owner of such shares as of the close
of business on the date on which the Holder surrenders this Warrant, properly
endorsed, and the completed, executed Subscription Form, at the offices of the
Company, upon payment made for such shares as set forth in this Warrant.
Certificates for the shares of Common Stock so purchased, together with any
other securities or property to which the Holder hereof is entitled upon such
exercise, shall be delivered to the Holder hereof by the Company at the
Company's expense within a reasonable time (not to exceed five (5) business
days) after the rights represented by this Warrant have been so exercised. Each
stock certificate so delivered shall be in such denominations of Common Stock as
may be requested by the Holder hereof and shall be registered in the name of
such Holder or, subject to the provisions of Section 7, such Holder's designee.
1.4 STOCKHOLDERS AGREEMENT. Contemporaneously with the issuance of this
Warrant, the Holder agrees to become a party to the stockholders agreement in
effect as of the date of issuance of this Warrant by execution of a joinder in
the form requested by the Company. The Company has provided the Holder with a
copy of the stockholders agreement currently in effect, agrees to provide the
Holder with any amendments thereto or any new stockholders agreement upon the
request of the Holder, and agrees to provide the Holder with the stockholder's
agreement then in effect immediately prior to the Exercise Period.
1.5 MARKET STAND-OFF. If requested by the Company, or an underwriter of
capital stock or other securities of the Company in connection with the
Company's initial public offering, the Holder agrees not to sell or otherwise
transfer or dispose of any capital stock or other securities of the Company held
by the Holder during the 180 day period following such initial public offering.
If requested by a managing underwriter in connection with the Company's initial
public offering, the Holder shall execute a separate agreement to the foregoing
effect. The Company may impose stop-transfer instructions with respect to the
shares (or securities) subject to the foregoing restriction until the end of
such period. Nothing in this Section 1.5 will preclude the exercise of this
Warrant in accordance with its terms.
2. SHARES TO BE FULLY PAID; RESERVATION OF SHARES. The Company covenants and
agrees that all shares of Common Stock that may be issued upon the exercise of
the rights represented by this Warrant will, upon issuance, be duly authorized,
validly issued, fully paid and nonassessable and free from all preemptive rights
of any stockholder and free of all taxes, liens and charges with respect to the
issue thereof. The Company further covenants and agrees that, during the period
within which the rights represented by this Warrant may be exercised, the
Company will at all times have authorized and reserved or, shall upon request of
the Holder authorize and reserve, for the purpose of issue or transfer upon
exercise of the subscription rights evidenced by this Warrant, a sufficient
number of shares of authorized but unissued Common Stock, or other securities
and property, when and as required to provide for the exercise of the rights
represented by this Warrant. The Company will take all such action as may be
necessary to assure that such shares of Common Stock may be issued as provided
herein without violation of any applicable law or regulation, or of any
requirements of any domestic securities exchange upon which the Common Stock may
be listed, including, but not limited to, amending its Certificate of
Incorporation to provide sufficient reserves of shares of Common Stock;
provided,
3
however, that the Company shall not be required to effect a registration under
Federal or State securities laws with respect to such exercise. The Company will
not take any action that would result in any adjustment of the Stock Purchase
Price (as set forth in Section 3 hereof) if the total number of shares of Common
Stock issuable after such action upon exercise of all outstanding warrants and
options, together with all shares of Common Stock then outstanding, would exceed
the total number of shares of Common Stock then authorized by the Company's
Certificate of Incorporation.
3. ADJUSTMENT OF STOCK PURCHASE PRICE AND NUMBER OF SHARES. The Stock Purchase
Price and the number of shares purchasable upon the exercise of this Warrant
shall be subject to adjustment from time to time upon the occurrence of certain
events described in this Section 3. Upon each adjustment of the Stock Purchase
Price, the Holder of this Warrant shall thereafter be entitled to purchase, at
the Stock Purchase Price resulting from such adjustment, the number of shares
obtained by multiplying the Stock Purchase Price in effect immediately prior to
such adjustment by the number of shares purchasable pursuant hereto immediately
prior to such adjustment, and dividing the product thereof by the Stock Purchase
Price resulting from such adjustment.
3.1 SUBDIVISION OR COMBINATION OF STOCK. In case the Company shall at any
time split or subdivide its outstanding shares of Common Stock into a greater
number of shares, by stock split, stock dividend, recapitalization or otherwise,
the Stock Purchase Price in effect immediately prior to such split or
subdivision shall be proportionately reduced, and conversely, in case the
outstanding shares of Common Stock of the Company shall be combined into a
smaller number of shares, the Stock Purchase Price in effect immediately prior
to such combination shall be proportionately increased.
3.2 DIVIDENDS IN COMMON STOCK, OTHER STOCK, PROPERTY, RECLASSIFICATION. If
at anytime or from time to time the Holders of Common Stock (or any shares of
stock or other securities at the time receivable upon the exercise of this
Warrant) shall have received or become entitled to receive, without payment
therefor:
3.2.1 Common Stock or any shares of stock or other securities that are
at any time directly or indirectly convertible into or exchangeable for Common
Stock, or any rights or options to subscribe for, purchase or otherwise acquire
any of the foregoing by way of dividend or other distribution;
3.2.2 Any cash paid or payable otherwise than as a cash dividend out
of current earnings; or
3.2.3 Common Stock or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification, combination of
shares or similar corporate rearrangement (other than (i) shares of Common Stock
issued as a stock split, adjustments in respect of which shall be covered by the
terms of Section 3.1 above or (ii) an event for which adjustment is otherwise
made pursuant to Section 3.3 below);
4
then in each such case, the Holder hereof shall, upon the exercise of this
Warrant, be entitled to receive, in addition to the number of shares of Common
Stock receivable thereupon, and without payment of any additional consideration
therefor, the amount of stock and other securities and property (including cash
in the cases referred to in clauses 3.2.2 and 3.2.3 above) which such Holder
would hold on the date of such exercise had he or it been the holder of record
of such Common Stock as of the date on which holders of Common Stock received or
became entitled to receive such shares or all other additional stock and other
securities and property.
3.3 REORGANIZATION, REDASSIFICATION OR RECAPITALIZATION. If any
recapitalization, reclassification or capital reorganization of the capital
stock of the Company shall be effected in such a way that holders of Common
Stock shall be entitled to receive stock, securities, or other assets or
property (a "Restructuring"), then, as a condition of such Restructuring, lawful
and adequate provisions shall be made whereby the Holder hereof shall thereafter
have the right to purchase and receive (in lieu of or in addition to the shares
of the Common Stock of the Company immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby) such shares of
stock, securities or other assets or property as may be issued or payable with
respect to or in exchange for a number of outstanding shares of such Common
Stock equal to the number of shares of such stock immediately theretofore
purchasable and receivable upon the exercise of the rights represented hereby
and appropriate provision shall be made with respect to the rights and interests
of the Holder of this Warrant to the end that the provisions hereof (including,
without limitation, provisions for adjustments of the Stock Purchase Price and
of the number of shares purchasable and receivable upon the exercise of this
Warrant) shall thereafter be applicable, as nearly as may be, in relation to any
shares of stock, securities or assets thereafter deliverable upon the exercise
hereof. The foregoing provisions of this Section shall similarly apply to
successive reclassifications, capital reorganizations and changes of shares of
Common Stock and to successive consolidations, mergers, sales or conveyances.
3.4 NOTICE OF ADJUSTMENT. Upon any adjustment of the Stock Purchase Price,
any increase or decrease in the number of shares purchasable upon the exercise
of this Warrant or any change in the securities or other property deliverable
upon exercise of this Warrant, the Company shall give written notice thereof, by
first class mail, postage prepaid, addressed to the registered Holder of this
Warrant at the address of such Holder as shown on the books of the Company. The
notice shall be signed by the Company's President and shall state the Stock
Purchase Price resulting from such adjustment, the increase or decrease, if any,
in the number of shares purchasable at such price upon the exercise of this
Warrant or the amount of securities or other property deliverable upon such
exercise, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
3.5 OTHER NOTICES. If at any time:
3.5.1 the Company shall declare any cash dividend upon its Common
Stock;
3.5.2 the Company shall declare any dividend upon its Common Stock
payable in stock or make any special dividend or other distribution to the
holders of its Common Stock;
5
3.5.3 there shall be any Restructuring;
3.5.4 there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
3.5.5 there shall be an initial public offering of Company securities;
then, in any one or more of said cases, the Company shall give, by first class
mail, postage prepaid, overnight courier or facsimile, addressed to the Holder
of this Warrant at the address of such Holder as shown on the books of the
Company, (a) at least fifteen (15) days' prior written notice of the date on
which the books of the Company shall close or a record shall be taken for such
dividend, distribution or subscription rights or for determining rights to vote
in respect of any such Restructuring, dissolution, liquidation or winding-up,
and (b) in the case of any such Restructuring, dissolution, liquidation,
winding-up or public offering, at least fifteen (15) days' prior written notice
of the date when the same shall take place; provided, however, that if any
response on the part of the Holder is otherwise required, the Holder shall make
its best efforts to respond to such notice as early as possible after the
receipt thereof. Any notice given in accordance with the foregoing clause (a)
shall also specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Common Stock shall be
entitled thereto. Any notice given in accordance with the foregoing clause (b)
shall also specify the date on which the holders of Common Stock shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such Restructuring, dissolution, liquidation, winding-up or
public offering, as the case may be.
3.6 CERTAIN EVENTS. If any change in the outstanding Common Stock of the
Company or any other event occurs as to which the other provisions of this
Section 3 are not strictly applicable or if strictly applicable would not fairly
protect the purchase rights of the Holder of the Warrant in accordance with such
provisions, the Board of Directors of the Company shall make an adjustment in
the number and class of shares available under the Warrant, the Stock Purchase
Price or the application of such provisions, so as to protect such purchase
rights as aforesaid. The adjustment shall be such as will give the Holder of the
Warrant upon exercise for the same aggregate Stock Purchase Price the total
number, class and kind of shares as it would have owned had the Warrant been
exercised prior to the event and had it continued to hold such shares until
after the event requiring adjustment.
3.7 NONCIRCUMVENTION. The Company hereby covenants and agrees that the
Company will not, by amendment of its Certificate of Incorporation, Bylaws or
through any reorganization, transfer of assets, consolidation, merger,
amalgamation, scheme or plan of arrangement, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, and will at all times in
good faith carry out all the provisions of this Warrant and take all action as
may be required to protect the rights of the Holder. Without limiting the
generality of the foregoing, the Company (i) shall not increase the par value of
any Class A Common Shares receivable upon the exercise of this Warrant above the
Exercise Price then in effect, (ii) shall take all such actions as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable Class A Common Shares upon the exercise of this
Warrant, and (iii) shall, so long
6
as this Warrant is outstanding, take all action necessary to reserve and keep
available out of its authorized and unissued Class A Common Shares, solely for
the purpose of effecting the exercise of this Warrant, the number of Class A
Common Shares as shall from time to time be necessary to effect the exercise of
this Warrant then outstanding (without regard to any limitations on exercise).
4. ISSUE TAX. The issuance of certificates for shares of Common Stock upon the
exercise of the Warrant shall be made without charge to the Holder of the
Warrant for any issue tax (other than any applicable income taxes) in respect
thereof; provided, however, that the Company shall not be required to pay any
tax that may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than that of the then Holder of the
Warrant being exercised.
5. CLOSING OF BOOKS. The Company will at no time close its transfer books
against the transfer of any warrant or of any shares of Common Stock issued or
issuable upon the exercise of any warrant in any manner that interferes with the
timely exercise of this Warrant.
6. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing contained in
this Warrant shall be construed as conferring upon the Holder hereof the right
to vote or to consent or to receive notice as a stockholder of the Company or
any other matters or any rights whatsoever as a stockholder of the Company. No
dividends or interest shall be payable or accrued in respect of this Warrant
other interest represented hereby or the shares purchasable hereunder until, and
only to the extent that, this Warrant shall have been exercised. No provision
hereof in the absence of affirmative action by the Holder to purchase shares of
Common Stock, and no mere enumeration herein of the rights or privileges of the
Holder hereof, shall give rise to any liability of such Holder for the Stock
Purchase Price or as a stockholder of the Company, whether such liability is
asserted by the Company or by its creditors.
7. TRANSFER RESTRICTIONS. Subject to compliance with applicable federal and
state securities laws, this Warrant and all rights hereunder are transferable,
in whole but not in part, without charge to the Holder hereof (except for
transfer taxes), upon surrender of this Warrant properly endorsed and in
compliance with such provisions, to a Qualified Transferee, provided that prior
to the transfer, the Company receives an opinion of counsel to such transferees
in form and substance reasonably satisfactory to the Company stating that the
transfer is exempt from the registration and prospectus delivery requirements of
the 1933 Act. "Qualified Transferee" means a proposed transferee that meets all
of the following requirements: (a) the proposed transferee is an "accredited
investor" as such term is defined under Regulation D of the Act; (b) the
proposed transferee is not a competitor of the Company, as reasonably determined
by the Company; and (c) the Company has not reasonably and in good faith
concluded that providing. such proposed transferee any information to which a
stockholder of the Company is entitled is likely to threaten the proprietary
nature of such information or the Company's business objectives or competitive
positioning. Notwithstanding the foregoing, Speednet LLC, the initial Holder of
this Warrant, may transfer this Warrant in part to not more than six (6)
transferees, as described in Exhibit C attached hereto, provided that i) such
transferees are Qualified Transferees, or ii) if such transferees are Qualified
Transferees in all respects except being accredited investors, then such
tranferees provide to the Company an opinion of counsel to such
7
transferees in form and substance reasonably satisfactory to the Company stating
that the transfer is exempt from the registration and prospectus delivery
requirements of the 1933 Act. The Company will maintain a register (the "Warrant
Register") containing the names and addresses of the Holder or Holders. Any
Holder of this Warrant or any portion thereof may change its address as shown on
the Warrant Register by written notice to the Company requesting such change.
Any notice or written communication required or permitted to be given to the
Holder may be delivered or given by mail to such Holder as shown on the Warrant
Register and at the address shown on the Warrant Register. Until this Warrant is
transferred on the Warrant Register of the Company, the Company may treat the
Holder as shown on the Warrant Register as the absolute owner of this Warrant
for all purposes, notwithstanding any notice to the contrary. This Warrant may
not be transferred or assigned without compliance with all applicable federal
and state securities laws by the transferor and the transferee. The Holder
further agrees not to make any disposition of all or any portion of this Warrant
unless and until the transferee has agreed in writing for the benefit of the
Company to be bound by Section 1.5 and this Section 7 to the extent such section
is then applicable.
8. LIQUIDITY EVENT. A Liquidity Event, for purposes of this Agreement, shall be
defined as any one or more of the following: (a) the expiration of any lockup
period imposed by the underwriters on the Common Stock to be issued under this
Warrant in connection with the first underwritten registered public offering of
the Company, or if there is no such lockup period, then the closing of such
offering; or (b) a transaction in which all of the shares of the Company's
Common Stock is exchanged for unrestricted securities that are listed on a
recognized securities exchange or NASDAQ National Market; or (c) a Change of
Control of the Company not otherwise included in (a) or (b). The Company shall,
if practicable, give the Holder at least fifteen (15) days' prior written notice
of a Liquidity Event in accordance with the provisions of Section 3.4. A "Change
of Control" means (i) a sale of all or substantially the assets of the Company
or (ii) the transfer by the Company's stockholders by means of a merger,
consolidation, reorganization, recapitalization or otherwise, of more than 50%
of the voting power of the Company.
9. RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF WARRANT. The rights and
obligations of the Company, of the holder of this Warrant and of the holder of
shares of Common Stock issued upon exercise of this Warrant, referred to in
Section 7, shall survive the exercise of this Warrant.
10. MODIFICATION AND WAIVER. The terms of this Warrant may be amended, or the
observance of any term of this Warrant may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Holder of this Warrant.
11. NOTICES. Any notice, request or other document required or permitted to be
given or delivered to the Holder hereof or the Company shall be delivered or
shall be sent by first-class mail, postage prepaid, to the Holder at its address
as shown on the Warrant Register or to the Company at the address indicated
therefor in the first paragraph of this Warrant, or such other address as either
may from time to time provide to the other.
8
12. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description headings of the
several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant This Warrant shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of Delaware.
13. LOST WARRANTS. The Company represents and warrants to the Holder hereof that
upon receipt of evidence reasonably satisfactory to the Company of the loss,
theft, destruction, or mutilation of this Warrant and, in the case of any such
loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory
to the Company, or in the case of any such mutilation upon surrender and
cancellation of such Warrant, the Company, at its expense, will make and deliver
a new Warrant, of like tenor, in lieu of the lost, stolen, destroyed or
mutilated Warrant.
14. FRACTIONAL SHARES. No fractional shares shall be issued upon exercise of
this Warrant. The Company shall, in lieu of issuing any fractional share, pay
the Holder entitled to such fraction a sum in cash equal to such fraction
multiplied by the then effective Fair Market Value of the Common Stock.
[SIGNATURE PAGE FOLLOWS]
9
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
by its duly authorized officer as of the date first written above.
CLEARWIRE CORPORATION
a Delaware corporation
By:
------------------------------------
Title:
---------------------------------
10
EXHIBIT A
SUBSCRIPTION FORM
Date:_____________, 20___
Clearwire Corporation
_____________________________________
_____________________________________
Ladies and Gentlemen:
The undersigned hereby elects to exercise (in whole or in part, as described
below) the warrant issued to it by Clearwire Corporation (the "Company") and
dated _____________________, 2006, Warrant No. ______(the "Warrant") as follows
(check one):
[ ] to purchase thereunder ________________ shares of the Class A Common Stock
of the Company (the "Shares") at a purchase price of $7.50 per Share, or
an aggregate purchase price of ________________________________
($_______________) (the "Purchase Price"), which shall be paid as
described in Section 1.1 or Section 1.2 of the Warrant.
[ ] Net Exercise the attached Warrant with respect to ____________________
shares.
The undersigned also makes the representations set forth on the attached Exhibit
B of the Warrant.
Very truly yours,
----------------------------------------
By:
------------------------------------
Title:
---------------------------------
EXHIBIT B
INVESTMENT REPRESENTATIONS
THIS AGREEMENT MUST BE COMPLETED, SIGNED AND RETURNED TO CLEARWIRE CORPORATION
ALONG WITH THE SUBSCRIPTION FORM BEFORE THE COMMON STOCK ISSUABLE UPON EXERCISE
OF THE WARRANT DATED _____________________, 2006, WILL BE ISSUED.
_________________________________
Clearwire Corporation
_____________________________________
_____________________________________
Ladies and Gentlemen:
The undersigned, ________________________________ ("Purchaser"), intends to
acquire up to _________________shares of the Class A Common Stock (the "Common
Stock") of Clearwire Corporation (the "Company") from the Company pursuant to
the exercise or conversion of certain Warrants to purchase Common Stock held by
Purchaser. The Common Stock will be issued to Purchaser in a transaction not
involving a public offering and pursuant to an exemption from registration under
the Securities Act of 1933, as amended (the "1933 Act") and applicable state
securities laws. Purchaser has been advised that the Common Stock has not been
registered under the 1933 Act or state securities laws on the ground that this
transaction is exempt from registration, and that reliance by the Company on
such exemptions is predicated in part on Purchaser's representations set forth
in this letter. Accordingly, Purchaser represents, warrants and agrees as
follows:
1. Purchaser is acquiring the Common Stock for its own account and
beneficial interest to hold for investment and not for sale or with a view to
distribution of the Common Stock or any part thereof. Purchaser has no present
intention of selling (in connection with a distribution or otherwise), granting
any participation in, or otherwise distributing the same, and does not presently
have reason to anticipate a change in such intention.
2. Purchaser acknowledges that it has received all the information it has
requested from the Company and considers necessary or appropriate for deciding
whether to acquire the Common Stock. Purchaser represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Common Stock and to obtain any
additional information necessary to verify the accuracy of the information given
the Purchaser. Purchaser further represents that it has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risk of this investment.
3. Purchaser is an "accredited investor" as such term is defined in Rule
501 under the 1933 Act, or Purchaser has provided to the Company an opinion of
counsel to Purchaser in form and substance reasonably satisfactory to the
Company stating that the purchase and sale of
the Common Stock hereunder is exempt from the registration and prospectus
delivery requirements of the 1933 Act.
4. Purchaser acknowledges that investment in the Common Stock involves a
high degree of risk, and represents that it is able, without materially
impairing its financial condition, to hold the Common Stock for an indefinite
period of time and to suffer a complete loss of its investment.
5. Purchaser has been informed that under the 1933 Act, the Common Stock
must be held indefinitely unless it is subsequently registered under the 1933
Act or unless an exemption from such registration (such as Rule 144) is
available with respect to any proposed transfer or disposition by Purchaser of
the Common Stock. Purchaser further agrees that the Company may refuse to permit
Purchaser to sell, transfer or dispose of the Common Stock (except as permitted
under Rule 144) unless there is in effect a registration statement under the
1933 Act and any applicable state securities laws covering such transfer, or
unless Purchaser furnishes an opinion of counsel reasonably satisfactory to
counsel for the Company, to the effect that such registration is not required.
Purchaser shall not make any sale, transfer or other disposition of the Common
Stock in violation of the 1933 Act or the General Rules and Regulations
promulgated thereunder by the Securities and Exchange Commission or in violation
of any applicable state securities law.
6. Purchaser also understands and agrees that there will be placed on the
certificate(s) for the Common Stock, or any substitutions therefor, a legend
stating in substance:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the "1933 Act"), or any state
securities laws. These shares have been acquired for investment and may not
be sold or otherwise transferred in the absence of an effective
registration statement for these shares under the 1933 Act and applicable
state securities laws, or, if requested by the Company, an opinion of
counsel satisfactory to the Company that registration is not required and
that an applicable exemption is available."
Purchaser has carefully read this letter and has discussed its requirements
and other applicable limitations upon Purchaser's resale of the Common Stock
with Purchaser's counsel.
Very truly yours,
----------------------------------------
By:
------------------------------------
Title:
---------------------------------
EXHIBIT C
TRANSFERS BY INITIAL HOLDER
[***]
[*** Confidential Treatment Requested]
EXHIBIT D
INSTRUMENT OF ASSIGNMENT
INSTRUMENT OF ASSIGNMENT (the "Instrument of Assignment"), dated as of
____________________, 2006, by and between Speednet LLC, a Michigan limited
liability company ("Assignor"), and Clearwire Spectrum Holdings II LLC, a Nevada
limited liability company ("Assignee"). Capitalized terms used herein without
definition shall have the respective meanings assigned to them in the Purchase
Agreement (as defined below).
WHEREAS, Assignor and Assignee have entered into an Asset Purchase
Agreement (the "Purchase Agreement"), dated as of August 8,2006, pursuant to
which, Assignor agreed to convey to Assignee, and Assignee agreed to acquire,
the Licenses;
WHEREAS, Assignor and Assignee have filed an application with the FCC
requesting the assignment of the Licenses to Assignee; and
WHEREAS, the FCC has granted an application for the assignment of the
Licenses and such grant has become a Final Order;
NOW, THEREFORE, in consideration of the promises and the mutual
representations, warranties, covenants, conditions, and agreements hereinafter
set forth, the Parties agree as follows:
1. Assignment. Pursuant to Article 2 of the Purchase Agreement, for
valuable consideration, receipt of which is hereby acknowledged, Assignor,
intending to be legally bound, does hereby sell, assign, transfer, convey,
and deliver to Assignee, its successors and assigns forever, all right and
interest of Assignor in and to the Licenses, free and clear of all Liens,
except as provided in the Purchase Agreement
2. Terms of Purchase Agreement Control. Nothing contained in this
Instrument of Assignment shall in any way supersede, modify, replace,
amend, change, rescind, waive, exceed, expand, enlarge, or in any way
affect the provisions of the Purchase Agreement, including the warranties,
covenants, agreements, conditions and representations contained in the
Purchase Agreement and, in general, any of the rights and remedies, and any
of the obligations and indemnifications, of Assignor or Assignee set forth
in the Purchase Agreement.
3. Power of Attorney. Assignor hereby grants its power-of-attomey to
Assignee as Assignor's attorney-in-fact to take any appropriate action in
connection with the Licenses, in the name of Assignor or in its own or any
other name, it being understood that this authorization and
power-of-attorney are coupled with an interest and are irrevocable.
4. Further Assurances. Assignor covenants and agrees, in connection
with the Purchase Agreement and this Instrument of Assignment, promptly to
execute and deliver any additional documents and instruments and perform
any additional acts that may be reasonably necessary or desirable to
effectuate and perform more fully the provisions of this Instrument of
Assignment and the assignments provided for in Section 1 hereof.
Exhibit D
5. Miscellaneous. This Instrument of Assignment (a) is executed
pursuant to the Purchase Agreement and may be executed in counterparts,
each of which as so executed shall be deemed to be an original, but all of
which together shall constitute one instrument, (b) shall be governed by
and in accordance with the internal laws of the State of Delaware, without
regard to the principles of conflicts of law thereof and (c) shall be
binding upon and inure to the benefit of the Parties hereto and their
respective successors and permitted assigns.
IN WITNESS WHEREOF, Assignor and Assignee have each caused this Instrument
of Assignment to be duly executed and delivered as of the date first above
written.
SPEEDNET LLC
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
CLEARWIRE SPECTRUM HOLDINGS II LLC
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT E
ASSIGNMENT AND ASSUMPTION
THIS ASSIGNMENT AND ASSUMPTION (this "Assignment and Assumption") is
entered into effective as of the ________ day of ___________________, 2006, by
and between Speednet LLC, a Michigan limited liability company ("Assignor"), and
Clearwire Spectrum Holdings II LLC, a Nevada limited liability company
("Assignee"), pursuant to that certain Asset Purchase Agreement (the "Purchase
Agreement") dated as of August 8,2006 by and among Assignor, Assignee and
Clearwire Corporation, pursuant to which Assignor agreed to assign certain of
its liabilities and obligations to Clearwire Spectrum Holdings II LLC or its
assigns. Capitalized terms not otherwise defined herein shall have the
respective meanings set forth in the Purchase Agreement.
Assignor and Assignee hereby agree as follows:
1. Assignment. Subject to the terms and conditions of the Purchase
Agreement, Assignor does hereby assign, grant, transfer, convey, and
set over unto Assignee all of Assignor's rights, title and interest in
and to the intangible Assets, free and clear of all Liens (except as
provided in the Purchase Agreement), together with such other rights,
causes of action and remedies as may arise by operation of law, in law
or equity, in connection with any of the Leases and Assigned
Contracts.
2. Assumption. Subject to the terms of the Purchase Agreement, Assignee
hereby undertakes, assumes and agrees to perform, pay or discharge
when and as due all of the Assumed Liabilities, in accordance with the
terms of the Purchase Agreement.
3. No Amendment. This Assignment and Assumption shall not alter, modify
or amend the terms of the any of the Leases or Assigned Contracts in
any respect, nor shall it subject Assignee to any greater liabilities,
obligations or duties in connection therewith than would have been
enforceable against Assignor.
4. Binding Effect. This Assignment and Assumption shall be binding upon
and shall inure to the benefit of the parties thereto and their
respective successors and assigns.
5. Governing Law. This Assignment and Assumption shall be governed by and
interpreted in accordance with the laws of the State of Delaware.
6. Conflicts. To the extent there is a conflict between the terms and
provisions of this Assignment and Assumption and the Purchase
Agreement, the terms and provisions of the Purchase Agreement will
govern.
7. Headings. The headings herein are included for ease of reference only
and shall not control or affect the meaning or construction of the
provisions of this Assignment and Assumption.
8. Amendments. This Assignment and Assumption cannot be amended,
supplemented or modified except by an agreement in writing which makes
specific reference to this
Exhibit E
Assignment and Assumption, and which is signed by the party against
which enforcement of any such amendment, supplement or modification is
sought.
9. Further Assurances. Assignor agrees that upon request of Assignee, at
any time and from time to time, Assignor will do, execute, acknowledge
and deliver, or will cause to be done, executed, acknowledged and
delivered, all such further acts, deeds, assignments, transfers,
conveyances and assurances as may be reasonably required to evidence
further the assignment, transfer, conveyance and delivery of the
intangible Assets of Assignor to Assignee, or to aid or assist
Assignee in reducing to its possession, title to and possession of the
intangible Assets.
The parties hereto have executed this Assignment and Assumption as of the
date first written above.
ASSIGNOR: SPEEDNET LLC
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ASSIGNEE: CLEARWIRE SPECTRUM HOLDINGS II LLC
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Exhibit E
EXHIBIT F
BILL OF SALE
THIS BILL OF SALE (this "Bill of Sale") is entered into effective as of the
____________ day of ___________________, 2006, by Speednet LLC, a Michigan
limited liability company ("Seller") in favor of Clearwire Spectrum Holdings II
LLC, a Nevada limited liability company ("Assignee"), pursuant to that certain
Asset Purchase Agreement (the "Purchase Agreement") dated as of August 8, 2006,
by and among Seller, Clearwire Spectrum Holdings II LLC and Clearwire
Corporation, pursuant to which Seller agreed to transfer certain of its assets
to Clearwire Spectrum Holdings II LLC or its assigns. Capitalized terms not
otherwise defined herein shall have the respective meanings set forth in the
Purchase Agreement.
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and adequacy of which are
hereby acknowledged, Seller does hereby transfer, convey, set over and deliver
to Assignee, all Seller's right, title and interest in and to the tangible
Assets, free and clear of all Liens except as provided in the Purchase
Agreement.
TO HAVE AND TO HOLD said Assets unto Assignee, Assignee's representatives,
successors, and assigns, to and for its and their uses and benefit forever.
Seller further agrees that it will at any time and from time to time, at
the request of Assignee, do, execute, acknowledge and deliver or cause to be
done, executed, acknowledged and delivered to Assignee any all other and further
acts, deeds, assignments, transfers, conveyances, assurances and instruments
necessary to vest in Assignee full right, title and interest in or to any of the
property, assets or rights which this instrument purports to transfer to
Assignee.
To the extent there is a conflict between the terms and provisions of this
Bill of Sale and the Purchase Agreement, the terms and provisions of the
Purchase Agreement will govern.
This Bill of Sale and the rights of the parties under it will be governed
by and construed in all respects in accordance with the laws of the State of
Delaware, without regard to the conflicts of laws principles of such state.
IN WITNESS WHEREOF, Seller has caused this Bill of Sale to be executed
effective as of the date first written above.
SPEEDNET LLC
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Exhibit F
EXHIBIT G
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (this "Agreement") is dated as of
____________________, 2006, and is entered into by and between Clearwire
Spectrum Holdings II LLC ("Holdings"), Clearwire Corporation ("Clearwire" and
collectively with Holdings, "Purchaser"), Speednet LLC ("Seller") and Robert
Liggett ("Selling Member").
RECITALS:
Pursuant to an agreement dated August 8, 2006 (the "Purchase Agreement"),
Seller has agreed to sell to Holdings and Holdings has agreed to purchase from
Seller a substantial portion of the assets used in Seller's business. As a
condition to the closing of the sale, Seller and Selling Member are obligated to
enter into this Agreement. Capitalized terms not otherwise defined herein shall
have the meanings set forth in the Purchase Agreement.
AGREEMENT:
In consideration of the mutual covenants set forth in the Purchase
Agreement and the covenants of the parties set forth herein, it is agreed as
follows:
1. Covenant. Each of Seller and Selling Member agree that for a period of
two (2) years commencing on the Closing Date, but not beyond the longest time
permitted by applicable law, neither Seller nor Selling Member shall, directly
or indirectly: (a) anywhere in the world, engage or participate in, as an
employee, owner, partner, shareholder, officer, director, member, advisor,
consultant, agent or (without limitation by the specific enumeration of the
foregoing) otherwise, or permit his or its name to be used by or render services
of any type for, any Competing Business (as herein defined) or any person or
entity who, to Selling Member's knowledge, is developing a Competing Business;
provided, however, that nothing in this Agreement shall prevent Seller or
Selling Member from acquiring or owning, as a passive investment, securities
issued by Clearwire, or up to five percent (5%) of the outstanding voting
securities of an entity engaged in a Competing Business which are publicly
traded in any recognized national securities market; (b) take any action which
would be reasonably likely to (i) divert from Purchaser or its Affiliates any
opportunity which would be within the scope of Purchaser's or its Affiliates'
existing business or (ii) harm Purchaser, Purchaser's Affiliates or their
respective existing businesses; or (c) solicit or attempt to solicit any person
or entity who is or has been a customer, supplier, licensor, licensee or other
business relation of Purchaser or its Affiliates within three years prior to the
date hereof to curtail or cancel its business with Purchaser or any Affiliate of
Purchaser. As used herein, a "Competing Business" shall mean the business of
providing wireless internet access.
2. Remedies. Seller and Selling Member agree that a violation of this
Agreement at any time, including during litigation, may produce irreparable
damage and injury to Purchaser. In the event of a breach, or threatened breach,
of this Agreement by Seller or Selling Member,
Purchaser shall be entitled to seek injunctive relief, both preliminary and
permanent, enjoining and restraining such breach or threatened breach. Such
remedies shall be in addition to all other remedies available to Purchaser at
law or in equity, including but not limited to Purchaser's right to recover from
Seller and Selling Member any and all damages that may be sustained as a result
of Seller's or Selling Member's breach. The obligations of Seller and Selling
Member hereunder shall be joint and several.
3. Amendments and Waivers. The provisions of this Agreement may be amended
only by the written agreement of the parties hereto. Any waiver, permit, consent
or approval of any kind or character on the part of any party of any provisions
or conditions of this Agreement must be made in writing and shall be effective
only to the extent specifically set forth in such writing.
4. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties and their respective successors and assigns.
This Agreement may not be assigned by any party without the prior written
consent of the other parties; provided, however, that Clearwire's and Holding's
rights under this Agreement may be assigned in connection with a merger or sale
of substantially all of its assets without the consent of Seller or Selling
Member.
5. Severability. Seller and Selling Member recognize that the territorial,
time and scope limitations set forth in Paragraph 1 are reasonable and are
properly required for the protection of Purchaser. Whenever possible, each
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law. If a court or arbitrator should hold
any portion of this Agreement unenforceable for any reason, the maximum
restrictions of time, scope and geographic area reasonable under the
circumstances, as determined by the court or arbitrator, will be substituted for
the restrictions held unenforceable. Any provision of this Agreement that is
deemed invalid or unenforceable shall be ineffective to the extent of such
invalidity or unenforceability, without rendering invalid or unenforceable the
remaining provisions of this Agreement.
6. Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience of reference only and do not constitute a part of this
Agreement.
7. Governing Law. The validity, meaning and effect of this Agreement shall
be determined in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in that state. THE PARTIES HEREBY IRREVOCABLY
WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATED TO THIS AGREEMENT.
8. Execution in Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute one instrument. This
Agreement may be executed and delivered via facsimile signature.
2
9. Attorney's Fees. In any legal action or other proceeding (including any
arbitration proceeding) brought to enforce or interpret the terms of this
Agreement, the prevailing party or parties shall be entitled to reasonable
attorney's fees and other costs and expenses incurred in that proceeding and in
any subsequent appeals, in addition to any other relief to which he or it is
entitled.
10. Entire Agreement. This Agreement constitutes the entire agreement of
the parties concerning the matters referred to herein and therein and supersede
all prior agreements and understandings, oral or written.
11. No Waiver. No failure by any party to insist upon the strict
performance of any provision of this Agreement, or to exercise any right or
remedy consequent upon a breach thereof, shall constitute a waiver of any such
breach, of such provision or of any other provision. No waiver of any provision
of this Agreement shall be deemed a waiver of any other provision of this
Agreement or a waiver of such provision with respect to any subsequent breach,
unless expressly provided in writing.
IN WITNESS WHEREOF parties have caused this Agreement to be executed as of
the date first above written.
SELLER: PURCHASER:
SPEEDNET LLC CLEARWIRE SPECTRUM HOLDINGS II LLC
By By
---------------------------------- -------------------------------------
Title Title
------------------------------- ----------------------------------
SELLING MEMBER: CLEARWIRE CORPORATION
------------------------------------- By
Robert Liggett -------------------------------------
Title
----------------------------------
3
EXHIBIT H
_______________________, 2006
Clearwire Corporation
5808 Lake Washington Blvd. N.E.
Suite 300
Kirkland, WA 98033
Ladies and Gentlemen:
The undersigned, Speednet LLC ("Holder"), has the right to receive
2,033,000 shares of the Class A Common Stock (the "Shares") of Clearwire
Corporation (the "Company") and a warrant (the "Warrant") for the purchase of
1,130,000 shares of the Class A Common Stock of the Company (the "Warrant
Shares") from the Company. The Shares and the Warrant will be issued to Holder
in a transaction not involving a public offering and pursuant to an exemption
from registration under the Securities Act of 1933, as amended (the "1933 Act")
and applicable state securities laws. Holder has been advised that the Shares
and the Warrant have not been registered under the 1933 Act or state securities
laws on the ground that this transaction is exempt from registration, and that
reliance by the Company on such exemptions is predicated in part on Holder's
representations set forth in this letter. Accordingly, Holder represents,
warrants and agrees as follows:
1. Holder is acquiring the Warrant and the Shares for its own account and
beneficial interest to hold for investment and not for sale or with a view to
distribution of the Shares or the Warrant or any part thereof. Holder has no
present intention of selling (in connection with a distribution or otherwise),
granting any participation in, or otherwise distributing the same, and does not
presently have reason to anticipate a change in such intention.
2. Holder acknowledges that it has received all the information it has
requested from the Company and considers necessary or appropriate for deciding
whether to acquire the Shares and the Warrant. Holder represents that it has had
an opportunity to ask questions and receive answers from the Company regarding
the terms and conditions of the offering of the Shares and the Warrant and to
obtain any additional information necessary to verify the accuracy of the
information given the Holder. Holder further represents that it has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risk of this investment.
3. Holder is an "accredited investor" as such term is defined in Rule 501
under the 1933 Act.
4. Holder acknowledges that investment in the Shares and the Warrant
involves a high degree of risk, and represents that it is able, without
materially impairing its financial
Exhibit H
condition, to hold the Shares and the Warrant for an indefinite period of time
and to suffer a complete loss of its investment.
5. Holder has been informed that under the 1933 Act, the Shares, the
Warrant and the Warrant Shares must be held indefinitely unless it is
subsequently registered under the 1933 Act or unless an exemption from such
registration (such as Rule 144) is available with respect to any proposed
transfer or disposition by Holder of the Shares, the Warrant or the Warrant
Shares. Holder further agrees that the Company may refuse to permit Holder to
sell, transfer or dispose of the Shares, the Warrant or the Warrant Shares
(except as permitted under Rule 144) unless there is in effect a registration
statement under the 1933 Act and any applicable state securities laws covering
such transfer, or unless Holder furnishes an opinion of counsel reasonably
satisfactory to counsel for the Company, to the effect that such registration is
not required. Holder shall not make any sale, transfer or other disposition of
the Shares, the Warrant or the Warrant Shares in violation of the 1933 Act or
the General Rules and Regulations promulgated thereunder by the Securities and
Exchange Commission or in violation of any applicable state securities law.
6. Holder also understands and agrees that there will be placed on the
certificate(s) for the Shares and the Warrant Shares, or any substitutions
therefor, a legend stating in substance:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the "1933 Act"), or any state
securities laws. These shares have been acquired for investment and may not
be sold or otherwise transferred in the absence of an effective
registration statement for these shares under the 1933 Act and applicable
state securities laws, or, if requested by the Company, an opinion of
counsel satisfactory to the Company that registration is not required and
that an applicable exemption is available."
Holder has carefully read this letter and has discussed its requirements
and other applicable limitations upon Holder's resale of the Shares, the Warrant
and the Warrant Shares.
Very truly yours,
SPEEDNET LLC
----------------------------------------
Exhibit H
Exhibit 10.63
Educational Broadband Service
Long Term De Facto Transfer Lease Agreement
By and Between
[***]
And
CLEARWIRE SPECTRUM HOLDINGS II LLC
Effective Date: December 22, 2006
[*** Confidential Treatment Requested]
<TABLE>
<S> <C>
1. DEFINITIONS............................................................ 1
2. LEASE TERM AND RENEWAL................................................. 7
3. COMPENSATION........................................................... 8
4. EXCLUSIVITY, RIGHT OF FIRST REFUSAL, RIGHT TO PARTICIPATE.............. 9
5. FREQUENCY BAND TRANSITION.............................................. 11
6. CAPACITY REQUIREMENTS AND USES......................................... 12
7. EXISTING EBS EQUIPMENT AND BUILD-OUT OF CLEARWIRE NETWORK.............. 14
8. SERVICES TO BE MADE AVAILABLE TO LICENSEE.............................. 16
9. INTERFERENCE CONSENTS.................................................. 17
10. APPLICATIONS AND EXPENSE REIMBURSEMENT................................. 18
11. ASSIGNMENTS AND SUBLEASING............................................. 19
12. TERMINATION OF AGREEMENT............................................... 21
13. REVENUES AND EXPENSES.................................................. 23
14. NON-COMPETITION........................................................ 23
15. CONFIDENTIALITY AND NON-DISCLOSURE..................................... 23
16. ASSUMPTION OF LIABILITIES.............................................. 24
17. FCC-MANDATED LEASING OBLIGATIONS....................................... 24
18. REPRESENTATIONS AND WARRANTIES......................................... 25
19. COVENANTS.............................................................. 27
20. INDEMNIFICATION........................................................ 30
21. NOTICES................................................................ 32
22. MISCELLANEOUS.......................................................... 33
23. INCLUDED EXHIBITS...................................................... 35
</TABLE>
i
EDUCATIONAL BROADBAND SERVICE
LONG-TERM DE FACTO TRANSFER LEASE AGREEMENT
THIS Educational Broadband Service ("EBS") Long-Term De Facto Transfer
Lease Agreement (the "AGREEMENT") is entered into as of December 22, 2006 (the
"EFFECTIVE DATE"), by and between [***] ("LICENSEE"), and Clearwire Spectrum
Holdings II LLC, a Nevada limited liability company with its principal offices
at 5808 Lake Washington Blvd., Suite 300, Kirkland, WA 98033 ("CLEARWIRE").
Licensee and Clearwire are each sometimes referred to as "PARTY" and
collectively as "PARTIES."
WHEREAS, the Federal Communications Commission ("FCC") has authorized
Licensee to operate EBS channels [***] (each a "CHANNEL" and collectively the
"CHANNELS") within their respective geographic service areas as specified in
Section 27.1206(a)(1) of Title 47 of the Code of Federal Regulations as such
geographic service areas may be amended from time-to-time by FCC Rules (as
defined in Section 1) or FCC actions or events affecting geographically adjacent
licenses and channels (the "GSAS");
WHEREAS, reference copies of the FCC licenses for the Channels are attached
hereto as Exhibit A (each a "LICENSE" and collectively the "LICENSES");
WHEREAS, Licensee makes use of the Channels in furtherance of its
educational mission and intends, subject to the terms of this Agreement, in the
future to expand and enhance its use of the Channels for educational, [***], and
other purposes and needs of [***] (as defined in Section 1);
WHEREAS, the FCC permits a portion of the capacity on the Channels to be
leased for commercial purposes and to support the educational mission of EBS
licensees;
WHEREAS, Clearwire intends to deploy advanced wireless broadband services
in the GSAs and surrounding areas using EBS and Broadband Radio Service ("BRS")
channels;
WHEREAS, Licensee desires to maximize the use of the Channels for
educational and commercial purposes; and
WHEREAS, Licensee wishes to lease a portion of the capacity on the Channels
to Clearwire pursuant to the terms of this Agreement and Clearwire wishes to
utilize Clearwire's Capacity (as defined in Section 1) for commercial use in the
GSAs in accordance with the terms and conditions set forth below.
NOW THEREFORE, in consideration of the premises and covenants set forth in
this Agreement, and for good and valuable consideration, the sufficiency of
which is acknowledged by the Parties' signatures, the Parties agree as follows:
1. DEFINITIONS
[*** Confidential Treatment Requested]
The following terms shall have the meanings set forth below and, as
defined, may be used in the singular or plural form, as appropriate.
"AFFILIATE" shall mean with respect to a Party hereto, another Person that,
directly or indirectly (whether or not through one or more intermediaries)
controls, is controlled by or is under common control with such Party, where
"control" means the power to direct or cause the direction of over fifty percent
(50%) of the voting power of the applicable Person or otherwise to direct or
cause the direction of the management and policies of such Person, whether
through ownership of voting securities or by contract or otherwise; provided,
that any such Person shall be deemed to be an Affiliate only so long as such
control exists.
"AGENTS" has the meaning specified in Section 15(a).
"AGREEMENT" has the meaning specified in the preamble.
"APPLICATIONS" has the meaning specified in Section 10(a).
[***]
"ASSIGNEE" has the meaning specified in Section 11(a).
"ASSIGNMENT" has the meaning specified in Section 11(a).
"BONA FIDE OFFER" shall mean a third party offer to Licensee to purchase,
assign, transfer or lease (or acquire via assignment from Licensee) the Licenses
or the Channels (or any portion of the Channels) or to otherwise use any of the
capacity on the Channels (or any part thereof) in any manner, or to acquire an
option to acquire, lease or otherwise use any of the capacity on the Channels
(or any part thereof), which offer is in writing and signed by a proposed
purchaser, assignee, lessee, or transferee, and specifies the price and material
terms and conditions of such proposed sale, assignment or lease.
"BRS" has the meaning specified in the recitals.
"BREACHING PARTY" has the meaning specified in Section 12(d).
"CHANNEL" and "CHANNELS" have the meanings specified in the recitals.
"CLEARWIRE" has the meaning specified in the preamble.
"CLEARWIRE'S CAPACITY" means all of the capacity on the Channels, other
than the Licensee's Reserved Capacity.
"CLEARWIRE NETWORK" means the facilities that are to be constructed and
controlled by Clearwire and used to provide Licensee's Service using Licensee's
Reserved Capacity and Clearwire's Service.
[*** Confidential Treatment Requested]
2
"CLEARWIRE PARENT" shall mean Clearwire Corporation, a Delaware
corporation, or the successor Person or Persons which is or are the ultimate
corporate parent or parents of Clearwire or its successor, or of any Affiliate
of Clearwire that holds Clearwire Capacity.
"CLEARWIRE'S SERVICE" means the provision of wireless services over the
Clearwire Network including the provision of any content, service applications,
technical support, one-way or two-way digital communications, telephony, web
hosting, video, data, voice, Internet access, or other service using Clearwire's
Capacity, which service may or may not exist as of the Effective Date, but which
may be pursued and/or provided by Clearwire, its Affiliates or their successors
during the Term.
"COMMUNICATIONS ACT" has the meaning specified in Section 17(a).
"CONNECTION CALCULATION DATE" has the meaning specified in Section 8(b).
"CONNECTIONS" has the meaning specified in Section 8(a).
"COSTS AND EXPENSES" means any fees, costs, or expenses of any kind,
including legal fees, engineering fees, accounting fees, and consulting fees and
disbursements.
"DAMAGES" has the meaning specified in Section 20(a).
"DEDICATED EQUIPMENT" has the meaning specified in Section 7(e).
"DISCLOSING PARTY" has the meaning specified in Section 15(b).
"EBS" has the meaning specified in the preamble.
"EFFECTIVE DATE" has the meaning specified in the preamble.
"EXISTING EBS EQUIPMENT" has the meaning specified in Section 7(a).
"EXISTING SERVICE DISCONTINUANCE DATE" has the meaning specified in Section
7(a).
"FCC" has the meaning specified in the recitals.
"FCC LONG TERM LEASE APPLICATION" has the meaning specified in Section
10(d).
"FCC RULES" means Title 47 of the Code of Federal Regulations, as amended
from time to time, and FCC decisions, policies, reports and orders issued
pursuant to the adoption of such regulations.
"FINAL ORDER" means an order issued by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled or suspended; and with respect to which
(a) no timely-filed requests have been filed for administrative or judicial
review, reconsideration, appeal or stay and the time for filing any such
requests, and the time for the FCC to set aside the action on its own motion,
3
has expired, or (b) in the event of review, reconsideration or appeal, the
action or order has been affirmed and the time for further review,
reconsideration or appeal has expired.
"FINAL ORDER DATE" means the date that FCC approval of the FCC Long Term
Lease Application becomes a Final Order.
"GOVERNMENTAL AUTHORITY" means any local, state, municipal or federal
court, or other local, state, municipal, or federal governmental authority,
department, commission, board, agency, body or other instrumentality (domestic
or foreign), including the FCC.
"GOVERNMENTAL AUTHORIZATIONS" means any license, permission, approval,
authority or consent required to be obtained from any Governmental Authority in
order to maintain the Licenses.
"GSAS" has the meaning specified in the recitals.
"INCLUDING" means including, without limitation.
"INDEMNIFIED PARTY" has the meaning specified in Section 20(c).
"INDEMNIFYING PARTY" has the meaning specified in Section 20(c).
"INFORMATION" has the meaning specified in Section 15(b).
"INITIAL LEASE PAYMENT" has the meaning specified in Section 3(a).
"INITIAL TERM" has the meaning specified in Section 2(a).
"INTERFERENCE CONSENT" means any agreement or arrangement with a third
party affecting the technical parameters of the Channels (excluding prior
agreements to lease capacity on the Channels), including an agreement or
arrangement concerning (a) acceptance of interference or signal strength from a
third party's transmitter in excess of the interference or signal strength such
third party is entitled to cause or transmit under FCC Rules, or limiting
interference or signal strength from any transmitter operating on the Channels
below what is allowed under FCC Rules; (b) the alteration of operating
parameters authorized under the Licenses or the licenses of any third party in
order to facilitate operations that would otherwise not be permitted under FCC
Rules; or (c) the coordination of adjacent market channel use or technical
operating parameters.
"JAMS RESOLUTION" means final and binding arbitration initiated and
conducted by JAMS, or a successor thereto, pursuant to its Comprehensive
Arbitration Rules and Procedures, with the Optional Appeal Procedure. The
arbitration shall be conducted in [***] before a single neutral arbitrator
appointed in accordance with the JAMS Comprehensive Arbitration Rules and
Procedures. Any appeal shall be heard and decided by a panel of three neutral
arbitrators. The neutral arbitrator and the members of any appeal panel shall be
retired judges or justices of any [***] state or federal court, and shall in
their substantive rulings (as opposed to procedural or
[*** Confidential Treatment Requested]
4
discovery-related rulings that are otherwise governed by the JAMS Comprehensive
Arbitration Rules and Procedures), apply the laws of the State of [***] without
giving effect to any choice or conflict of law provision or rules that would
cause the application of the laws of any jurisdiction other than the State of
[***].
"LAW" and "LAWS" means applicable common law and any statute, ordinance,
code or other law, rule, permit, permit condition, regulation, order, decree,
technical or other standard, requirement or procedure enacted, adopted,
promulgated, applied or followed by any Governmental Authority including, but
not limited to, FCC Rules, as such may be amended at any time and from time to
time.
"LICENSE" and "LICENSES" have the meanings specified in the recitals.
"LICENSEE" has the meaning specified in the preamble.
"LICENSEE'S RESERVED CAPACITY" means the greater of five percent (5%) of
the digital capacity created on the Channels or the amount of capacity required
to meet the obligations of an EBS licensee under FCC Rules, as such capacity is
measured from time to time in accordance with Section 8.
"LICENSEE'S SERVICE" means the use by Licensee or Permitted End Users of
capacity and services provided over the Clearwire Network using Licensee's
Reserved Capacity and/or such other capacity or services as may be made
available to Licensee from time to time pursuant to this Agreement or the
Services Agreement, including the use of any content, service applications,
technical support, one-way or two-way digital communications, telephony, web
hosting, video, data, voice, Internet access or other service which may or may
not exist as of the Effective Date.
"LOWER BAND SEGMENT" has the meaning specified in Section 27.4 of FCC
Rules.
"MAXIMUM TERM" has the meaning specified in Section 2(b).
"MBPS" means megabits per second.
"MHZ/POPS" means the amount of megahertz of spectrum multiplied by the
population within a specified service area.
"MIDDLE BAND SEGMENT" has the meaning specified in Section 27.4 of FCC
Rules.
"MITIGATION PERIOD" has the meaning specified in Section 2(c).
"MONTHLY LEASE PAYMENT" has the meaning specified in Section 3(b).
"NEGOTIATION NOTICE" has the meaning specified in Section 4(b).
"NON-BREACHING PARTY" has the meaning specified in Section 12(d).
[*** Confidential Treatment Requested]
5
"PARENT GUARANTEE AND COVENANT AGREEMENT" has the meaning specified in
Section 19(d).
"PARTY" and "PARTIES" have the meanings specified in the preamble.
"PERMITTED END USERS" means the Licensee itself and any educational
institution or not-for-profit or religious organization with whom the Licensee,
[***] or their Affiliates is working in furtherance of the educational goals and
mission of Licensee, [***] or their Affiliates, and their respective students,
constituents, employees, consultants, agents and representatives.
"PERSON" means any natural person, corporation, general partnership,
limited partnership, limited liability company, proprietorship, other business
organization, trust, union, [***], association or Governmental Authority.
"RECEIVING PARTY" has the meaning specified in Section 15(b).
"REFUND" has the meaning specified in Section 3(a).
"RENEWAL TERM" has the meaning specified in Section 2(b).
"REPLACEMENT EBS EQUIPMENT" has the meaning specified in Section 7(b).
"ROFR" has the meaning specified in Section 4(c).
"ROFR PERIOD" has the meaning specified in Section 4(c).
"SERVICES AGREEMENT" has the meaning specified in Section 8.
"SUBSTANTIAL SERVICE REQUIREMENTS" has the meaning specified in Section
7(d).
"SUCCESSOR LICENSEE" has the meaning specified in Section 11(c).
"SUCCESSOR LICENSEE CONDITIONS" has the meaning specified in Section 11(c).
"TERM" has the meaning specified in Section 2(b).
"TERMINATION AMOUNT" means the [***] that would be paid or provided to
Licensee from the [***] discounted to a net present cash value at the
Termination Date using a [***] discount rate applied over the remaining portion
of the [***].
"TERMINATION DATE" is the effective date of termination of this Agreement
if a Termination Notice is sent to Licensee.
"TERMINATION NOTICE" has the meaning specified in Section 2(b).
"THIRD PARTY AGREEMENT" has the meaning specified in Section 2(d).
[*** Confidential Treatment Requested]
6
"TRANSITION" has the meaning specified in Section 5.
"UPPER BAND SEGMENT" has the meaning specified in Section 27.4 of FCC
Rules.
"WARRANTS" means the warrants to acquire equity in the Clearwire Parent as
described in Section 3(d).
"WARRANT AGREEMENTS" has the meaning specified in Section 3(d).
2. LEASE TERM AND RENEWAL
(A) INITIAL TERM. Subject to Section 2(e), the initial term of this
Agreement begins on the Final Order Date and ends on the date that is ten (10)
years from the Final Order Date (the "INITIAL TERM"), unless this Agreement is
terminated earlier pursuant to Section 12.
(B) RENEWAL. Subject to Section 2(e), on the date that is ten (10)
years from the Final Order Date and then again on the date that is twenty (20)
years from the Final Order Date, this Agreement will automatically renew for all
of the Channels that are subject to this Agreement at the time of the renewal,
in each case for an additional term of ten (10) years (each, a "RENEWAL TERM"
and together with the Initial Term, the "TERM"), for a maximum duration of
thirty (30) years (the "MAXIMUM TERM"). Each Renewal Term will occur
automatically unless Clearwire notifies Licensee at least twelve (12) months
prior to the end of the Initial Term or the end of any Renewal Term that it
declines to renew the Agreement ("TERMINATION NOTICE"). The terms and conditions
of this Agreement shall apply to each Renewal Term.
(C) EFFECT OF TERMINATION NOTICE. Upon Licensee's receipt of a
Termination Notice, Clearwire's exclusivity rights as described in Section 4(a),
ROFR as described in Section 4(c), and participation rights as described in
Section 4(e), will immediately cease to apply and be of no further force or
effect[***].
(D) [***].
(E) RENEWAL OF LICENSES AND EXTENSION OF AGREEMENT. If a License
expires during the Initial Term or any Renewal Term, this Agreement also will
expire at such time with respect to the Channel(s) associated with that License
unless the License is renewed and FCC authorization for this Agreement is
extended for such Channel(s). The Parties will cooperate to timely file License
renewal applications and requests for authorizations to extend this Agreement so
as to assure that the Licenses and this Agreement remain in full effect without
interruption during the Initial Term and any Renewal Term. This Agreement will
continue in effect unless the Agreement expires or is earlier terminated as
provided herein or, with respect to any Channel(s), the FCC denies by Final
Order any application for renewal of the License associated with such Channel(s)
or denies by Final Order any request to extend the term of the Agreement with
respect to such Channel(s). If the Agreement expires or is earlier terminated
with respect to less than all of the Channels pursuant to this Section 2(e), the
Agreement shall remain in effect with respect to the unaffected Channels,
subject to a pro rata reduction in compensation set forth in Section 12(a).
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3. COMPENSATION
(A) INITIAL LEASE PAYMENT. Within five (5) business days following the
Final Order Date, Clearwire will pay Licensee [***] by wire transfer in
immediately available funds (the "INITIAL LEASE PAYMENT"). If (i) this Agreement
is terminated by reason of uncured material default or material breach by
Licensee during the Initial Term, (ii) proper notice of such uncured material
default or material breach was provided to Licensee in accordance with Section
12, and (iii) such uncured material default or material breach precludes
Clearwire from using Clearwire's Capacity as contemplated in this Agreement,
then a portion of the Initial Lease Payment will be refunded to Clearwire
("REFUND"). The amount of the Refund will consist of the Initial Lease Payment
distributed equally over ten (10) years and adjusted on a pro rata basis to
account for the remaining time between the date of termination and the
expiration of ten (10) years following the Final Order Date (e.g., if Clearwire
terminates this Agreement due to Licensee's uncured material default on the date
that is four (4) years after the Final Order Date, then Licensee shall refund
Clearwire [***] of the Initial Lease Payment [***]. There will be no Refund if
the termination occurs for such reason after the expiration of the Initial Term.
(B) MONTHLY LEASE PAYMENT. Commencing with the Effective Date and
continuing for each consecutive calendar month thereafter during the Term,
Clearwire will pay Licensee monthly lease payments in the amounts set forth in
this Section 3(b) (each a "MONTHLY LEASE PAYMENT"). All Monthly Lease Payments
due to Licensee through and including the month during which the Final Order
Date occurs shall accrue and be paid to Licensee in one lump sum within five (5)
business days following the Final Order Date. Thereafter, each Monthly Lease
Payment shall be paid by the fifteenth (15th) day of the then-current month for
which the Monthly Lease Payment is due. The amount of the Monthly Lease Payment
shall be as follows: [***] for years one (1) through five (5); [***] for years
six (6) through ten (10); [***] for years eleven (11) through fifteen (15);
[***] for years sixteen (16) through twenty (20); and [***] for years twenty-one
(21) through thirty (30). For the purpose of the preceding sentence, the "years"
of this Agreement shall be calculated using the Effective Date as the starting
date of year one (1). Unless the Parties otherwise agree during the Term, all
Monthly Lease Payments shall be paid by wire transfer in immediately available
funds pursuant to wiring instructions provided by Licensee. The Monthly Lease
Payment due for any partial calendar month, at the commencement of the Initial
Term or expiration of the Term, shall be prorated accordingly, subject to
adjustment as provided in Section 3(c).
(C) ADJUSTMENTS TO MONTHLY LEASE PAYMENT. The Monthly Lease Payment
will be adjusted as follows:
(I) SECTION 12(A) ADJUSTMENTS. The Monthly Lease Payment will be
reduced in accordance with Section 12(a) if this Agreement is terminated
with respect to less than all of the Licenses and Channels.
(II) RECAPTURE OF LICENSEE'S RESERVED CAPACITY. The Monthly Lease
Payment will be increased on a pro rata basis during the Term if any part
of Licensee's Reserved Capacity becomes available to Clearwire pursuant to
Section 6(b) and in accordance with FCC Rules. The pro-ration of the
Monthly Lease Payment with respect to
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increases in Clearwire's Capacity shall be based on the amount of
Licensee's Reserved Capacity made available to Clearwire as a result of
such increase as compared to the amount of capacity made available to
Clearwire as of the Effective Date. For example, if on the tenth (10th)
anniversary of the Effective Date, Clearwire's Capacity increases by three
percent (3%), the Monthly Lease Payment to be paid for the remainder of the
Term shall be increased by three percent (3%).
(III) USE OF EXPANDED CAPACITY [***]. [***].
(D) WARRANTS. Two (2) business days prior to the Final Order Date,
Clearwire shall deliver to Licensee executed Warrant Agreements in the form of
Exhibits B1 and B2 ("WARRANT AGREEMENTS") entitling Licensee to the warrants to
acquire equity in the Clearwire Parent as set forth in the respective Warrant
Agreements ("WARRANTS"). The Warrants shall be exercisable from the Final Order
Date until the fifth (5th) anniversary of the Final Order Date. Subject to
Section 7(a), transfer of de facto control of Clearwire's Capacity shall be
effective upon receipt by Licensee of the Warrants and the Initial Lease
Payment. If the Final Order Date does not occur within nine (9) months of the
Effective Date then the Warrants, if delivered, shall automatically terminate
and be of no further force and effect so long as one of the Parties provides
notice to terminate this Agreement pursuant to Section 12(e).
(E) W-9. Within ten (10) days of the Effective Date, Licensee shall
deliver a completed IRS Form W-9 to Clearwire.
(F) REFUNDS. With the exception of the Refund specified in Section
3(a), none of the payments, services, service credits, reimbursements, or other
forms of compensation paid to Licensee under this Agreement, the Warrant
Agreement, or the Services Agreement shall be refundable.
4. EXCLUSIVITY, RIGHT OF FIRST REFUSAL, RIGHT TO PARTICIPATE
(A) EXCLUSIVITY. Except as specifically provided in this Section 4 and
Section 11(c), during the Term, Licensee will not negotiate or contract with any
third party to lease, sell, assign, transfer or use any of Clearwire's Capacity
or to have an option for such lease, sale, assignment, transfer or use, whether
such lease, sale, assignment, transfer or use is to take place during the Term
or thereafter.
(B) NEGOTIATION NOTICE. Licensee shall be under no obligation to renew
or extend this Agreement beyond the Term. However, if Licensee receives notice
from Clearwire during the period that is twelve (12) to eighteen (18) months
prior to expiration of the Maximum Term, which notice includes a bona fide
written offer from Clearwire to enter into a new agreement pertaining to sale,
lease or assignment of the Licenses or the Channels ("NEGOTIATION NOTICE"), then
Licensee shall negotiate with Clearwire, exclusively and in good faith for a
period of six (6) months from the date of Licensee's receipt of the Negotiation
Notice for the execution of a new agreement. If Clearwire provides a Negotiation
Notice, but the Parties do not enter into a new agreement pertaining to the
sale, lease or assignment to Clearwire of the Licenses or the Channels then
subject to this Agreement within six (6) months
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of Licensee's receipt of the Negotiation Notice, Licensee shall be free, for the
remainder of the Term and thereafter, to solicit or entertain offers from any
third party pertaining to the Licenses or the Channels (or any portion thereof);
provided, however, that if Licensee receives a Bona Fide Offer during the
remainder of the Term or the ROFR Period that Licensee intends to accept, such
Bona Fide Offer shall be subject to the ROFR. If Clearwire does not provide
Licensee with a Negotiation Notice in accordance with this Section 4(b), then
upon expiration of the period for providing such Negotiation Notice, Licensee's
exclusivity obligations pursuant to Section 4(a) shall terminate, and Licensee
shall be free, for the remainder of the Term and thereafter, to solicit or
entertain offers of any nature from any third party concerning the Channels or
the Licenses, subject to Clearwire's ROFR in Section 4(c).
(C) RIGHT OF FIRST REFUSAL. During the Term and for a period of [***]
following the expiration or termination of this Agreement ("ROFR PERIOD"), if
Licensee receives and desires to accept, a Bona Fide Offer (and if acceptance of
such Bona Fide Offer would be permissible under FCC Rules), Licensee shall,
within thirty (30) days following Licensee's determination to accept such Bona
Fide Offer, deliver to Clearwire notice setting forth the material terms and
conditions of the Bona Fide Offer (but shall not be required to identify the
offeror). Clearwire shall have a right of first refusal ("ROFR") with respect to
any such Bona Fide Offer and shall be required to provide notice to Licensee
within twenty (20) days following Clearwire's receipt of Licensee's notification
stating (i) whether Clearwire is exercising its ROFR, and (ii) the form of
consideration to be paid by Clearwire (as discussed in Section 4(d) below). If
Clearwire declines to exercise its ROFR or fails to provide timely notice of
exercise of its ROFR, Licensee will have one hundred twenty (120) days from the
expiration of Clearwire's twenty (20) day response period to enter into an
agreement with the offeror on the same terms and conditions as were offered to
Clearwire. If, within the aforementioned one hundred twenty (120) day period,
Licensee does not enter into a binding agreement with the offeror on the same
terms and conditions as were offered to Clearwire, then Clearwire's ROFR shall
remain in effect pursuant to the terms stated in this Section 4(c). If, within
the one hundred twenty (120) day period, Licensee enters into a binding
agreement with the offeror on the same terms and conditions as were offered to
Clearwire, then Clearwire's ROFR will terminate and be of no further force or
effect; provided, however, that should Licensee's agreement with the offeror be
terminated within [***] after the expiration or termination of this Agreement,
Clearwire's ROFR will be reinstated for an additional amount of time equal to
the remainder of the [***] plus the amount of days during which Licensee was
subject to such binding agreement. However, if, after Clearwire has declined to
exercise its ROFR (or has failed to provide timely notice of such exercise),
Licensee subsequently proposes to enter into a definitive agreement with the
offeror on different terms and conditions than those offered to Clearwire, then
such different terms and conditions shall be deemed to constitute a new offer
and Clearwire's ROFR will apply pursuant to the terms of this Section 4(c). All
materials exchanged under this ROFR are subject to the non-disclosure provisions
of Section 15. Notwithstanding anything in this Agreement to the contrary, if
Licensee receives a Termination Notice, or if this Agreement is terminated by
Licensee pursuant to Section 12(b) (Payment Default), or if this Agreement is
terminated by Licensee pursuant to Section 12(d) (Other Defaults), then
immediately upon the receipt of the Termination Notice or the effective date of
such termination, the provisions of this Section 4(c) shall no longer be
effective.
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(D) FORM OF CONSIDERATION AND DETERMINATION OF VALUE. Subject to, and
without limiting Clearwire's rights described in Section 4(c), if the whole or
any part of the consideration set forth in a Bona Fide Offer is in a form other
than cash, then Clearwire may meet such non-cash consideration using cash
comparable to the non-cash consideration in its acceptance notice. If Licensee
does not accept Clearwire's offer of a cash-substitute for the non-cash
consideration, then Licensee must notify Clearwire of Licensee's estimate of a
fair cash substitute consideration amount within fifteen (15) days after
Licensee's receipt of Clearwire's acceptance notice. Licensee's failure to
provide such notification to Clearwire within the prescribed fifteen (15) day
period shall be deemed an acceptance of Clearwire's cash-substitute offer. If
Licensee disputes Clearwire's cash-substitute amount, then Clearwire will have
ten (10) days from receipt of Licensee's dispute notice to notify Licensee of
its election to (i) adopt Licensee's stated cash value, or (ii) submit the
valuation issue for determination by JAMS Resolution. In any case where the
right to seek a determination by JAMS Resolution is invoked, Clearwire's ROFR
will remain open until twenty (20) days after Clearwire is notified of the
decision made by JAMS Resolution, during which time Clearwire may revise its
acceptance notice to adopt the findings made by the JAMS Resolution or waive its
ROFR with respect to the third party offer, provided that Licensee and the third
party execute a contract to implement the third party offer within one hundred
twenty (120) days of the end of Clearwire's twenty (20) day time period to
consider the decision made by the JAMS Resolution. Licensee's failure to accept
the third party offer restores the ROFR for the remainder of the ROFR Period, if
any. Licensee's failure to enter into a contract with the third party offeror
within the aforementioned one hundred twenty (120) day time period shall restore
Clearwire's ROFR for the remainder of the ROFR period, if any.
(E) RIGHT TO PARTICIPATE. During the Term and for a period of [***]
following the expiration or termination of this Agreement, if Licensee decides
to consider, issue or solicit bids, proposals or offers for sale (if permitted
by the FCC), assignment (excluding Licensee's rights to assign during the Term
under Section 11(c)), transfer, use or lease of any part or the whole of the
Channels, then Licensee will provide Clearwire with an opportunity no less
favorable in timing or substance than the opportunity provided to any other
Person: (i) to receive and/or submit bids, proposals and offers for the
Channels; (ii) to the extent permissible under applicable non-disclosure
agreements, to receive information with respect to such bids, proposals, offers
and counters thereto; and (iii) to discuss any of the same with Licensee. This
right to participate does not limit in any manner, and is in addition to, the
ROFR set forth in Section 4(c). Notwithstanding anything in this Agreement to
the contrary, if Licensee receives a Termination Notice, or if this Agreement is
terminated by Licensee pursuant to Section 12(b) (Payment Default), or if this
Agreement is terminated by Licensee pursuant to Section 12(d) (Other Defaults),
then immediately upon the receipt of the Termination Notice or the effective
date of such termination, the provisions of this Section 4(e) shall terminate
and cease to be of force and effect.
5. FREQUENCY BAND TRANSITION
(A) COOPERATION AND CONSULTATION. The Parties acknowledge that the
Channels are subject to relocation to different frequencies and/or to different
technical characteristics as a result of the band plan transition rules adopted
by the FCC in WT Docket No. 03-66 as such FCC Rules may be amended from time to
time (the "TRANSITION"). The
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Transition shall have no effect on the compensation to be paid to Licensee
pursuant to Section 3 or any obligations of Clearwire US LLC under the Services
Agreement or Clearwire Parent under the Warrant Agreement. Clearwire and
Licensee will cooperate in the Transition in accordance with FCC Rules to
facilitate Clearwire's and Licensee's use of the Channels as provided in this
Agreement. Except as FCC Rules may otherwise require, Licensee will consult with
Clearwire before adopting, consenting to, or otherwise agreeing to any change of
frequencies or characteristics of the Channels other than those changes
specified by FCC Rules, and will fully involve Clearwire in all of its
interactions with any third parties concerning transitions to channel plans
required or allowed as an outcome of the FCC's Transition proceedings. Within
thirty (30) days of the Effective Date, Licensee will provide Clearwire with
copies of Licensee's responses to Pre-Transition Data Requests made by Sprint
Nextel Corporation concerning the Licenses.
(B) POSSIBLE [***] EXCHANGE. The Parties acknowledge that pursuant to
[***] of FCC Rules, Licensee may be required to exchange [***], or portions
thereof, under call sign [***] for channels [***], or portions thereof,
authorized to the [***] under call sign [***].
(C) COSTS AND EXPENSES. Clearwire shall be solely responsible for
paying [***]. If neither Clearwire nor any third party initiates and/or
completes the Transition of the Channels within the time frames specified by FCC
Rules, Licensee may, at its sole option, avail itself of any "self-transition"
rights made available pursuant to FCC Rules. [***].
6. CAPACITY REQUIREMENTS AND USES
(A) CLEARWIRE'S CAPACITY. Subject to Licensee's rights pursuant to
Section 7(a), and subject to Clearwire's compliance with Section 3(d) and its
other obligations under this Agreement, upon the Final Order Date, Clearwire
will have the exclusive right to use all of Clearwire's Capacity.
(B) EXPANSION OF CLEARWIRE'S CAPACITY. If FCC Rules change such that
less (or no) capacity is required to be set aside for Licensee's use, Licensee
shall have the option, in Licensee's sole discretion, to make any or all of
Licensee's Reserved Capacity available to Clearwire as Clearwire's Capacity in
which case the Monthly Lease Payment will be increased as provided in Section
3(c)(ii). As of the Effective Date, Clearwire intends to use only 5.5 MHz of the
6 MHz assigned to [***]. During the Term, Clearwire may elect, in its sole
discretion, to use more than 5.5 MHz on [***].
(C) USE OF CAPACITY. Subject to Section 6(d), Clearwire may use
Clearwire's Capacity in any manner and for any purpose that is lawful, including
those that may be authorized in the future by the FCC. Subject to Section 14,
Licensee may use Licensee's Reserved Capacity for itself and Permitted End Users
in any manner and for any lawful purpose, including for the purpose of
satisfying Substantial Service Requirements.
(D) CONTENT RESTRICTIONS. The Parties acknowledge that once Clearwire
obtains de facto control of Clearwire's Capacity pursuant to the terms of this
Agreement, Clearwire will assume primary responsibility for ensuring that its
use of the Channels complies
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with applicable Laws. Notwithstanding the foregoing, Clearwire will use
commercially reasonable efforts to ensure that, to the best of its knowledge,
the Channels will not be used to transmit libelous, slanderous, defamatory,
obscene or otherwise illegal material; provided, however, that Clearwire bears
no responsibility for information or content posted on the world wide web or
Internet and bears no responsibility for individual emails, blogs or other
transmission of information over the Internet by third parties. If Clearwire or
Licensee become aware of illegal use of the Channels, the Parties will cooperate
with each other and with law enforcement personnel as appropriate to address any
illegal activity. If Clearwire or its Affiliates use Clearwire's Capacity to
transmit any programming over which they have content control, they will only
select for transmission over the Channels programming or services that do not,
to the best of their knowledge, include libelous, slanderous, defamatory,
obscene or otherwise illegal content. Notwithstanding the foregoing, Licensee
acknowledges and agrees that Clearwire does not make any representation,
warranty or covenant with respect to any content or material not provided by
Clearwire or its Affiliates or served through Clearwire technology that
constitutes libel, obscenity, slander or defamation or in any way violates moral
rights, rights of publicity or privacy or other rights. In the event of a breach
of this Section 6(d), in addition to Licensee's indemnification rights pursuant
to Section 20(b), Licensee's sole and exclusive remedy shall be injunctive
relief.
(E) ANNUAL MEETINGS. On an annual basis during the Term, beginning on
the first anniversary of the Effective Date, Licensee and Clearwire shall meet
to review and discuss the Services Agreement and Licensee's Reserved Capacity
and to coordinate the Parties' then-current and planned operations on, and use
of, the Channels. At such meetings, Clearwire will provide Licensee with
updates, if any, on advances in technology applicable to the Channels, the
Services Agreement, and Licensee's Reserved Capacity and new applications for
use of the Channels to further Licensee's educational goals and [***] goals for
the use of the Channels and the Licenses. Discussions with respect to Licensee's
Reserved Capacity shall not include the adjustments to the number of
Connections, which shall be completed in accordance with the terms of Section 8.
Any such discussions and all information provided to Licensee at such meetings
shall be subject to confidentiality and non-disclosure as set forth in Section
15.
(F) SECTION 27.1214(E) AMENDMENTS. Pursuant to Section 27.1214(e) of
FCC Rules, on the date that is fifteen (15) years after the Effective Date and
every five (5) years thereafter, Licensee shall have a period of sixty (60) days
to request a review of its use of Licensee's Reserved Capacity, at which time
the Parties shall negotiate in good faith an amendment to the Agreement that
accommodates any bona fide changes in educational needs, technology and other
relevant factors affecting Licensee's Reserved Capacity requirements.
Notwithstanding the foregoing, the following shall apply to any such amendment:
(i) to the extent such amendment materially increases Clearwire's monthly costs
either to operate Clearwire's Capacity or to meet Licensee's changed educational
use requirements, the amendment may provide that such costs will be offset by a
reduction in the Monthly Lease Payment or funding or service credits under the
Services Agreement for the remainder of the Term, a refund in an amount to be
agreed upon by both Parties, or both; (ii) Clearwire may accommodate changes in
Licensee's Reserved Capacity through any reasonable means available so as to
avoid disruption to the advanced wireless services provided by Clearwire; and
(iii) Clearwire shall not be required to accommodate changes in Licensee's
Reserved
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Capacity in a manner that has a negative economic impact on Clearwire or
Clearwire's commercial operations under the Agreement.
(G) NON-COMPENSATORY CHANNELS SWAPPING. With the consent of Licensee,
which consent will not be unreasonably withheld, conditioned, or delayed,
Clearwire may require Licensee to enter into agreements to swap the Channels for
other EBS or BRS channels in the GSAs as long as: (i) Clearwire demonstrates it
has a bona fide operational purpose to effectuate the proposed swap and any
direct or indirect compensation to Clearwire or its Affiliates resulting from
the swap is solely to account for any differences in the channel assignments or
geographic areas between the channels to be swapped; (ii) in Licensee's
reasonable determination, there is no material detriment in the operational
capability or commercial or economic value of the swapped channels as compared
to the Channels after taking into account relevant factors including applicable
Interference Consents relating to the Channels or swapped channels, the
operation of licenses in adjacent markets or frequency bands that could affect
the operation of the Channels, the size of the GSAs, and the population within
the GSAs; and (iii) there is no reduction or adverse effect on the services,
funding or service credits provided to Licensee under this Agreement or the
Services Agreement following the swap. Under no circumstances shall Licensee be
required to consent to any channel swap of an Upper Band Segment channel or
Lower Band Segment channel for a Middle Band Segment channel, or to any swap
under which the swapped channels provide less contiguous spectrum than the
Channels provide as configured after giving effect to the Transition. In
evaluating a proposed channel swap, the Parties shall consider [***] as full 6
MHz channels, regardless of whether Clearwire or any other Person is using the
full 6 MHz of each Channel. Clearwire shall bear all Costs and Expenses
associated with any channel swap. If Licensee withholds consent to a channel
swap proposed by Clearwire because Licensee determines that the proposed swap
fails to meet the conditions set forth above, the Parties will negotiate in good
faith in an effort to reach agreement on an alternative swap arrangement or to
adjust the compensation due hereunder; provided, however, that Licensee shall
not be required to consent to a channel swap that does not meet the conditions
set forth above unless the Parties have agreed to an alternative arrangement in
writing.
(H) USE OF MIDDLE BAND SEGMENT CHANNELS. Licensee agrees, at
Clearwire's option, that [***] may be used for low power advanced wireless
services, provided such use is permitted under FCC Rules and does not cause
harmful interference to Licensee's use of Licensee's Reserved Capacity.
7. EXISTING EBS EQUIPMENT AND BUILD-OUT OF CLEARWIRE NETWORK
(A) EXISTING OPERATIONS AND EBS EQUIPMENT. Licensee intends to rely on
[***] to continue to operate and maintain the existing transmission and
reception equipment currently in place for the Channels (the "EXISTING EBS
EQUIPMENT") until such time as Clearwire is prepared to activate the Clearwire
Network so as to enable the provision of Clearwire's Service and Licensee's
Service using Licensee's Reserved Capacity. Clearwire shall provide Licensee
with notice that it is prepared to activate the Clearwire Network in accordance
with the provisions of this Section 7 and, upon receiving such notice, Licensee
shall have sixty (60) days to cease all operations on the Channels (such date of
cessation hereinafter referred to as the "EXISTING SERVICE DISCONTINUANCE
DATE"). Notwithstanding the
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transfer of de facto control to Clearwire pursuant to Section 3(a) and
Clearwire's rights pursuant to Section 6(a), Licensee shall have the right to
use all of the capacity on the Channels to provide non-commercial services until
the Existing Service Discontinuance Date.
(B) RELOCATION OR REPLACEMENT OF EXISTING EBS EQUIPMENT. If Licensee
reasonably determines that it must relocate the Existing EBS Equipment to a new
transmission facility or obtain replacement EBS equipment ("REPLACEMENT EBS
EQUIPMENT") prior to the Existing Service Discontinuance Date, [***].
(C) [***]; provided, however, that Clearwire shall not be obligated to
pay for any such Costs and Expenses incurred by Licensee after the Existing
Service Discontinuance Date, other than any final Costs and Expenses incurred by
Licensee to discontinue its then-current EBS service.
(D) BUILD-OUT; SUBSTANTIAL SERVICE. Within [***] following the
Existing Service Discontinuance Date, Clearwire shall activate the Clearwire
Network and thereafter ensure, for the remainder of the Term, that the Clearwire
Network is maintained and operated so as to permit Licensee to meet whatever
spectrum reserve requirements, minimum educational use requirements, substantial
service requirements, and/or other use and performance benchmarks as are
established by the FCC for use of the Channels, as such requirements and
benchmarks may be modified from time to time (collectively the "SUBSTANTIAL
SERVICE REQUIREMENTS"). In accordance with this Section 7(d), Clearwire will
make available to Licensee the Connections as set forth in Section 8 and the
products, services, service credits, funding, and other compensation specified
in the Services Agreement to allow Licensee to meet the Substantial Service
Requirements. In addition, if required by FCC Rules, Clearwire will use
Clearwire's Capacity in such a way as to assure that Clearwire satisfies any
Substantial Service Requirements which may be applicable to commercial entities
for use of the Channels, as such requirements may change from time to time.
Notwithstanding the foregoing, Clearwire shall not be in breach of this Section
7(d) to the extent that Clearwire is prohibited from, or delayed in, completing
its obligations solely due to circumstances beyond its reasonable control that
could not have been reasonably anticipated, including its inability to obtain,
or the delay in obtaining, necessary governmental permits for completion of
construction of the Clearwire Network, provided that Clearwire has used its
commercially reasonable best efforts to perform under this Section 7(d); and,
provided, further, that Clearwire shall use its commercially reasonable best
efforts, at its expense, to design and implement any alternative and possibly
temporary measures that may be necessary for Licensee (and Clearwire, if
applicable) to meet the Substantial Service Requirements and/or preserve and
protect the Licenses and Channels if Clearwire encounters circumstances beyond
its reasonable control as described in this sentence.
(E) DEDICATED EQUIPMENT PURCHASE OPTION. Upon expiration or
termination of this Agreement, Licensee shall have the option, upon giving
notice to Clearwire within thirty (30) days of such expiration or termination,
to purchase or to lease at Clearwire's option that portion of the transmission
equipment (not including any tower rights) then in operation that is dedicated
solely to transmission of Licensee's Reserved Capacity on the Channels (the
"DEDICATED EQUIPMENT"), or comparable equipment. The price for such equipment
shall be
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equal to the fair market value of the Dedicated Equipment at the time of
Licensee's notice or, if comparable equipment is provided, Clearwire's cost in
obtaining such equipment.
(F) SHARED EQUIPMENT PURCHASE OR LEASE OPTION. Upon expiration or
termination of this Agreement, Licensee shall have the option upon giving notice
to Clearwire within thirty (30) days of such expiration or termination to
purchase or lease at Clearwire's option any equipment owned by Clearwire and
used in connection with the transmission of Licensee's Reserved Capacity on the
Channels that is not Dedicated Equipment, or comparable equipment at a price
equal to such equipment's fair market value for such purchase or lease as
applicable.
(G) REAL ESTATE, TOWER AND SITE LEASE RIGHTS. Nothing contained in
this Agreement shall be interpreted as providing Clearwire with rights to use
any real estate, towers, or other real or personal property owned or controlled
by Licensee or [***]. Licensee and [***] shall each be entitled to enter into
such arrangements as they elect, including arrangements that may be competitive
with Clearwire as long as they do not otherwise conflict with Licensee's
obligations to Clearwire under this Agreement.
8. SERVICES TO BE MADE AVAILABLE TO LICENSEE
(A) COST FREE CONNECTIONS USING LICENSEE'S RESERVED CAPACITY. During
the Term, Licensee shall have full access to and use of Licensee's Reserved
Capacity at no cost so as to enable the provision of Licensee's Service using
Licensee's Reserved Capacity. To facilitate and maximize Licensee's access and
use of Licensee's Reserved Capacity at no cost, the Parties will calculate the
amount of Licensee's Reserved Capacity in terms of total throughput measured in
Mbps based on all EBS and BRS channels used in the Clearwire Network at the time
the calculation is made. Licensee's Reserved Capacity shall be calculated as
follows: [***]. For example, and for purposes of illustration only, if Clearwire
uses [***]. The resulting Mbps will be translated into a maximum number of
commercially available end user devices (e.g., wireless modems, mobile
telephones, etc.) acquired by Licensee pursuant to the Services Agreement that
are technically compatible and may be connected to the Clearwire Network [***]
using Licensee's Reserved Capacity based upon the tiers and types of available
Clearwire's Service selected by Licensee ("CONNECTIONS"). Pursuant to the
foregoing example, [***] could be translated into (i) [***] Clearwire
residential modems with a downlink throughput of up to [***] and an uplink
throughput of up to [***]. It is the intent of the Parties that "Connections" be
interpreted generally to take into account changes and advances in technology,
the evolution of the Clearwire Network and changes in the use of the Channels
over time so as to ensure that Licensee benefits from future changes in
technology and new applications.
(B) CALCULATION AND AVAILABILITY OF CONNECTIONS. The maximum number of
Connections available to Licensee shall be calculated and made available to
Licensee within thirty (30) days following the date that Clearwire's Service
becomes available in either GSA ("CONNECTION CALCULATION DATE"). [***] taking
into consideration changes and advances in technology and changes, enhancements,
and advancements in Clearwire's Service and the Clearwire Network. At the time
of such [***], Clearwire will [***]. Notwithstanding the foregoing, in no event
shall the number of Connections available to Licensee be less than [***]
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Clearwire residential modems with a downlink throughput of up to [***] and an
uplink throughput of up to [***] (or the equivalent number of commercial modems
based on the formula described in Section 8(a)).
(C) TERMS OF USE. Licensee's ordering and Licensee's and its Permitted
End Users use of Connections shall be governed by the acceptable use policy and
terms of service, and such other policies of general applicability which apply
to such services, which are subject to amendment and may be found at
http://www.clearwire.com or such other URL as may be designated; provided,
however, that financial terms contained in the terms of service shall not apply
to Connections. In addition to the foregoing, Clearwire may specify from time to
time, in its sole discretion, reasonable procedures for activation, additions,
deletions or substitutions of Connections to Licensee and its Permitted End
Users.
(D) EQUIPMENT AND SOFTWARE. For all Connections made available to
Licensee and its Permitted End Users, Clearwire shall make available pursuant to
the terms of the Services Agreement any end user equipment, services or software
upgrades that Clearwire makes generally available to Clearwire's retail
customers subscribing to the same tier of service. If any equipment upgrade
involves replacement of equipment, the replaced equipment shall be returned to
Clearwire or its designee and title to the replacement equipment shall transfer
to Licensee or Permitted End Users.
(E) TITLE. All equipment provided by Clearwire to Licensee for the
Connections under this Agreement shall be the property of Licensee or Permitted
End Users free and clear of all liens and encumbrances, when paid in full (if
any payment is required). Licensee shall own, and be solely responsible for the
maintenance and operation of, all end user equipment, facilities and receive
sites installed at Licensee's locations, including the sites of its Permitted
End Users; provided however, that Licensee may use service credits for
maintenance and other services as specified in the Services Agreement.
(F) ADDITIONAL CONNECTIONS AND OTHER SERVICES. Licensee may obtain
additional connections and other products and services offered by Clearwire
Parent, its Affiliates, and their successors and assigns pursuant to the terms
of the Services Agreement attached hereto as Exhibit C ("SERVICES AGREEMENT").
9. INTERFERENCE CONSENTS
Except as disclosed in Exhibit D, Licensee has not, within eleven (11)
years of the Effective Date, executed any Interference Consent. Neither Party
shall execute any Interference Consent or request a waiver of FCC Rules
affecting the Channels or the Licenses without the other Party's advance written
consent, such consent not to be unreasonably withheld, refused or delayed;
provided, however, that Licensee may request a waiver of FCC Rules if it
reasonably determines such waiver is necessary to preserve the Licenses or to
prevent a material adverse effect to the Licenses. Licensee shall execute any
Interference Consent and consent to any waiver of FCC Rules, upon reasonable
request by Clearwire; provided, however, that Licensee shall have no obligation
to execute any Interference Consent or consent to any waiver of FCC Rules, if
Licensee reasonably determines that such consent would (i) result in
interference to the use of Licensee's Reserved Capacity, (ii) result in
interference to a third party in violation of
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FCC Rules; (iii) result in any other violation of FCC Rules; (iv) result in a
material difference in any of the Channels' GSAs upon expiration or termination
of this Agreement; or (v) have a material adverse affect on the value of the
Licenses or the Channels upon the expiration or termination of this Agreement.
10. APPLICATIONS AND EXPENSE REIMBURSEMENT
(A) APPLICATION PREPARATION. To the extent permissible under FCC Rules
and in cooperation with Licensee (including prior Licensee review of all
Applications to be submitted to the FCC or any Governmental Authority),
Clearwire will prepare and submit in its name all applications, amendments,
petitions, requests for waivers, and other documents (collectively,
"APPLICATIONS") necessary for the proper operation of Clearwire's Capacity;
provided, however, that Clearwire will not submit any Application without
Licensee's advance written consent, if such Application would, in Licensee's
reasonable determination, (i) result in interference to the use of Licensee's
Reserved Capacity, (ii) result in interference to a third party in violation of
FCC Rules; (iii) result in any other violation of FCC Rules; (iv) result in a
difference in any of the Channels' GSAs upon expiration or termination of this
Agreement; or (v) have an adverse affect on the value of the Licenses or the
Channels upon the expiration or termination of this Agreement. Licensee will
prepare and submit all Applications necessary for the modification, maintenance
and renewal of the Licenses that, under FCC Rules, may only be filed by
Licensee, including, but not limited to, requests for special temporary
authority or any other such filings reasonably requested by Clearwire that meet
the conditions applicable in this Section 10(a) to Applications that are
otherwise filed by Clearwire.
(B) APPLICATION COSTS AND EXPENSE REIMBURSEMENT. Clearwire shall
reimburse Licensee, not later than thirty (30) days after receipt of any invoice
from Licensee, (including such supporting documentation as Clearwire may
reasonably request), for all reasonable Costs and Expenses incurred in
connection with (i) Licensee's preparation, review, filing, and prosecution of
any Application (including any assignment or transfer applications and the FCC
Long Term Lease Application) or other documents submitted to the FCC relating to
the Licenses including applications to renew and continue in full force the
Licenses; (ii) Licensee's preparation, review, filing, and prosecution of any
Interference Consent or other documents requested by Clearwire; (iii) Licensee's
provision of assistance to Clearwire in licensing and other matters in
connection with the performance of this Agreement as may be reasonably requested
by Clearwire from time to time from the Effective Date; and (iv) any Transition
(or self-transition) of the Channels. During the Initial Term, any Costs and
Expenses for which Licensee intends to seek reimbursement under this Agreement
that is expected to exceed [***] shall be subject to prior approval by
Clearwire. During the first Renewal Term, if any, any Costs and Expenses for
which Licensee intends to seek reimbursement under this Agreement that is
expected to exceed [***] shall be subject to prior approval by Clearwire. During
the second Renewal Term, if any, any Costs and Expenses for which Licensee
intends to seek reimbursement under this Agreement that is expected to exceed
[***] shall be subject to prior approval by Clearwire.
(C) REGULATORY FEES. Clearwire will promptly pay all fees, taxes and
assessments of any kind associated with the Channels and the Licenses (including
any federal
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18
regulatory fees or fees imposed by the FCC) upon receipt of notice that such
fees, taxes or assessments are due.
(D) FCC LONG TERM LEASE APPLICATION. Within ten (10) days following
the Effective Date and prior to consummating the transfer of de facto control of
the Channels, the Parties agree to cooperate as required to prepare and file
with the FCC all forms and related exhibits, certifications and other documents
necessary to obtain the FCC's consent to this Agreement and satisfy the FCC's
requirements for long term de facto lease approval as set forth in 47 C.F.R.
Section 1.9030(e) ("FCC LONG TERM LEASE APPLICATION"). Each Party will fully
cooperate with the other, and do all things reasonably necessary to timely
submit, prosecute and defend the FCC Long Term Lease Application, including
responding to any petitions for reconsideration or Commission reconsiderations
of the grant of the FCC Long Term Lease Application, and will promptly file or
provide the other Party with all other information which is required to be
provided to the FCC in furtherance of the transactions contemplated hereby. The
Parties will disclose in the FCC Long Term Lease Application the automatic
extension of the Term upon the renewal of the Licenses. The Parties further
covenant and agree to include in any License renewal application, or separately
request, as necessary, a request to extend and renew this Agreement for the
renewal term of the License, if this Agreement contemplates renewal of this
Agreement for or during any part of such License renewal term. Any Costs and
Expenses associated with the filing of the FCC Long Term Lease Application and
renewals thereof shall be paid by Clearwire. Within thirty (30) days following
the Effective Date, the Parties will work in good faith to create a mutually
agreeable redacted form of this Agreement which will be submitted to the FCC if
this Agreement must be filed with the FCC, which redacted form of this Agreement
will be attached hereto as Exhibit E. If changes to Exhibit E are required by
Law, the Parties shall coordinate with each other and mutually agree on
appropriate revisions to Exhibit E.
(E) INFORMATION SHARING. The Parties shall promptly provide each other
with all correspondence, notices, and filings to or from the FCC or other
Governmental Authority that relate to the Licenses or the Channels, including
all Transition correspondence and any Application relating to the Licenses
received, sent or filed after the Effective Date. The Parties shall promptly
inform each other of any material FCC Rules violations with respect to the
Channels or the Licenses about which either Party becomes aware after the
Effective Date.
(F) REGULATORY SUPPORT. Upon either Party's request, the other Party
shall support any reasonable efforts by the requesting party to protect and
preserve the Licenses and Channels, including lobbying the FCC or any other
Governmental Authority to oppose any rulemakings or other proceedings that would
adversely affect the Licenses or Channels and the rights of Licensee and
Clearwire to hold and use the Licenses and Channels as contemplated by this
Agreement.
11. ASSIGNMENTS AND SUBLEASING
(A) ASSIGNMENT AND SUBLEASE BY CLEARWIRE TO THIRD PARTY. Clearwire may
not sell, assign, lease, sublease, cross-lease, license, exchange, delegate or
otherwise transfer (collectively, an "ASSIGNMENT") any of its rights and
obligations under this Agreement without the prior written consent of Licensee,
such consent not to be unreasonably withheld or delayed.
19
Notwithstanding the foregoing, Licensee shall consent to an Assignment to a
third party that, in Licensee's reasonable determination, is legally,
technically, and financially qualified to assume Clearwire's duties and
obligations under this Agreement (an "ASSIGNEE"); provided, however, that the
following additional conditions are met: [***]. When determining whether a
proposed assignee is legally, technically and financially qualified for an
Assignment, Licensee shall be entitled to take into account that Licensee would
no longer have the protections offered by the Parent Guarantee and Covenant
Agreement. In addition, notwithstanding the foregoing, an Assignment shall not
take place if, in Licensee's reasonable determination, the Assignment would have
a material adverse effect on Licensee's rights under the Services Agreement or
the ability of the proposed assignee to fulfill the terms of the Services
Agreement. This Agreement may not be Assigned unless there is a contemporaneous
Assignment of the Services Agreement to the same Person to whom this Agreement
is Assigned.
(B) PRO FORMA ASSIGNMENT AND SUBLEASE BY CLEARWIRE. Clearwire may
assign this Agreement (or its rights thereunder) or sublease Clearwire's
Capacity to an Affiliate of Clearwire or Clearwire Parent; provided, however,
that, the following conditions are met: (i) in Licensee's reasonable
determination, the assignee or sublessee must be legally, technically, and
financially qualified to assume, in writing in a form reasonably acceptable to
Licensee, all of Clearwire's duties and obligations under this Agreement; (ii)
the Parent Guarantee and Covenant Agreement will continue to apply in full force
and effect pursuant to its terms following the assignment or sublease; and (iii)
in Licensee's reasonable determination, the assignment or sublease would not
have an adverse effect on Licensee's rights under the Services Agreement or the
ability of Clearwire US LLC or its successor to fulfill the terms of the
Services Agreement. Clearwire shall provide notice to Licensee of any such
assignment or sublease, shall take all steps required by the FCC to effectuate
such assignment or sublease, and shall pay for all Costs and Expenses (including
reimbursing Licensee as necessary) associated with any such assignment or
sublease.
(C) ASSIGNMENT OR SURRENDER OF LICENSES. Licensee may elect to assign
the Licenses to a Person qualified to hold the Channels subject to the following
conditions: (i) to the extent FCC Rules do not preclude Clearwire from
exercising consent rights, Licensee shall obtain Clearwire's consent to the
assignment, such consent not to be unreasonably withheld, delayed or conditioned
(it being agreed by the Parties that it would be reasonable for Clearwire to
withhold its consent if Licensee proposes to assign the Channels to a Person
that is engaged in building, operating, managing, or distributing wireless
broadband services on a commercial basis); (ii) the assignee shall assume in
writing the rights and obligations of Licensee under this Agreement and the
Services Agreement; and (iii) to the extent FCC Rules do not preclude Clearwire
from exercising a ROFR with respect to the assignment of the Licenses, the
assignment of the Licenses shall be subject to Clearwire's ROFR described in
Section 4(c). If Clearwire exercises such ROFR, Licensee shall assign the
Licenses to an FCC-qualified Person designated by Clearwire who will assume the
Licenses and Licensee's obligations under this Agreement and the Services
Agreement (a "SUCCESSOR LICENSEE"); provided however, that such Successor
Licensee must be able to assume the Licenses and all of Licensee's obligations
with respect thereto, within one hundred twenty (120) days of being so
designated by Clearwire ("SUCCESSOR LICENSEE CONDITIONS"). If Licensee elects to
discontinue EBS operations and surrender one or more of its Licenses or Channels
to the FCC, such election shall be subject to the following: (i) Licensee shall
notify Clearwire upon making such
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decision; and (ii) if requested by Clearwire within thirty (30) days of
Licensee's notification to Clearwire, Licensee shall assign the License(s) for
the affected Channels to a Successor Licensee that meets the Successor Licensee
Conditions. Licensee, any Successor Licensee, and Clearwire shall cooperate in
filing with the FCC any and all documents necessary to assign the License(s) to
a Successor Licensee and obtain FCC consent to such assignment. [***].
(D) PRO FORMA ASSIGNMENT AND SUBLEASE BY LICENSEE. Licensee may,
without the consent of Clearwire, assign the Licenses for the Channels or
sublease its rights and obligations under this Agreement to [***] or an
Affiliate of Licensee; provided that Licensee notifies Clearwire of such pro
forma assignment or sublease and the assignee agrees in writing to assume all of
Licensee's rights and obligations under this Agreement. Licensee shall take all
steps required by the FCC to effectuate such assignment or sublease, and shall
pay for all Costs and Expenses associated with any such assignment or sublease.
12. TERMINATION OF AGREEMENT
(A) AUTOMATIC TERMINATION. This Agreement will terminate automatically
with respect to the Channel(s) subject to an affected License upon the earlier
of: (i) a Final Order denying any extensions of the term of the FCC Long Term
Lease Application with respect to that License; (ii) a Final Order denying the
renewal of the License; or (iii) a Final Order revoking, terminating or
canceling the License. If this Agreement is partially terminated with respect to
less than all of the Licenses and Channels, this Agreement shall automatically
continue in full force and effect for the remaining License(s) and Channel(s),
and the Monthly Lease Payment and funding and services credits under the
Services Agreement shall be reduced on a pro-rated basis to account for the
reduction in MHz/POPs covered by the License(s) and Channel(s) for which this
Agreement is terminated. No change or modification will be made with respect to
any other compensation previously paid to or earned by Licensee under this
Agreement, including the Initial Lease Payment.
(B) PAYMENT DEFAULT. This Agreement may be terminated by Licensee
immediately upon notice to Clearwire if Clearwire fails to make any payment
required pursuant to Section 3 of this Agreement and such breach continues
uncured for [***] after Clearwire receives notice of such breach from Licensee.
(C) INSOLVENCY. Either Party may terminate this Agreement upon
delivery of at least ten (10) days prior notice to the other Party if the other
Party ceases doing business as a going concern and makes an assignment for the
benefit of creditors, admits in writing an inability to pay its debts as they
become due, files a voluntary petition in bankruptcy, is adjudicated bankrupt or
insolvent, files a petition with a court of competent jurisdiction seeking for
itself any reorganization, composition, readjustment, liquidation, dissolution
or similar arrangement under any present or future statute or regulation, or
consents to or acquiesces in the appointment of a trustee, receiver, or
liquidator of it or of all or any substantial part of its assets or properties,
or within sixty (60) days after the commencement of any proceedings against it
seeking reorganization, readjustment, liquidation, dissolution or similar relief
under any present or future statute or regulation, it fails to have such
proceeding dismissed, or if within sixty (60) days after the appointment,
without the Party's consent or acquiescence, of any trustee, receiver or
liquidator of it or of all or any substantial part of its
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21
assets or properties such appointment shall not vacate. Any act or event
entitling one Party to terminate this Agreement under this Section 12(c) shall,
for all purposes of this Agreement, constitute a default in and failure by the
other Party to perform its obligations under the terms of this Agreement.
(D) OTHER DEFAULTS. In addition to the termination rights set forth
above, this Agreement may be terminated by either Party (in this context, the
"NON-BREACHING PARTY") upon material breach of, or default under, any
representation, warranty, covenant, agreement or obligation under this Agreement
by the other Party (in this context, the "BREACHING PARTY"); provided, however,
that the Breaching Party shall be provided with notice of such material breach
or default by the Non-Breaching Party of the alleged grounds for the breach or
default and allowed a [***] period for cure following such notice; provided,
further, however, that if the Breaching Party proceeds with reasonable diligence
during such [***] period and is unable, because of circumstances beyond its
control or because of the nature of the breach or default, to cure the breach or
default within such applicable time period, the time for cure shall be extended,
but in no event beyond [***] after receipt of notice from the Non-Breaching
Party. Clearwire's failure to satisfy the requirements set forth in Sections
3(d) and 7(d) shall be considered a material breach of this Agreement.
(E) FAILURE OF FINAL ORDER DATE. Either Party may terminate this
Agreement without liability by notice to the other Party if the Final Order Date
has not occurred on or prior to the date that is [***] from the Effective Date;
provided, however, that such failure is not the fault of the terminating party.
(F) SERVICES AGREEMENT DEFAULT. Any uncured material breach or default
of Clearwire US LLC or its successors under the Services Agreement or of
Clearwire Parent under the Parent Guarantee and Covenant Agreement shall be
considered a material default under this Agreement entitling Licensee to
terminate this Agreement effective immediately upon providing notice to
Clearwire without opportunity to cure such breach or default apart from any such
cure periods provided in the Services Agreement or Parent Guarantee and Covenant
Agreement, as applicable.
(G) NOTIFICATION TO FCC. The Parties will notify the FCC of the
termination of this Agreement with respect to a License or Channels within ten
(10) calendar days following the termination.
(H) EFFECT OF EXPIRATION OR TERMINATION. Except as expressly set forth
in this Agreement, upon the expiration or termination of this Agreement with
respect to one or both of the Licenses, each Party will pay its own Costs and
Expenses related to the expiration or termination of this Agreement and the
transactions contemplated herein; provided, however, that each Party shall pay
all unpaid amounts owed to the other Party under this Agreement as of the date
of termination or expiration of this Agreement. Any termination or expiration of
this Agreement, regardless of cause, will not release either Licensee or
Clearwire from any liability arising from any breach or violation by that Party
of the terms and provisions of this Agreement prior to the expiration or
termination. The general and procedural provisions of this Agreement, which may
be relevant to enforcing the obligations or duties of the Parties, as well as
any other provisions that by their terms obligate either party following
expiration or
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22
termination, will survive the expiration or termination of this Agreement until
the obligations or duties are performed or discharged in full. Upon expiration
or termination of this Agreement for any reason other than Licensee's material
breach, Clearwire, for a period of ninety (90) days, will cooperate in good
faith with Licensee and take such actions as are reasonable and necessary to
enable Licensee to transition the affected Licenses and the Channels for use
other than in connection with the Clearwire Network; provided, however,
Clearwire shall not be required to pay any Costs and Expenses associated with
such transition.
13. REVENUES AND EXPENSES
Except that Clearwire will pay Licensee's reasonable attorney's fees in the
negotiation of this initial Agreement, each Party will pay its own Costs and
Expenses incident to any amendments or modifications to the Agreement. Unless
otherwise provided in this Agreement, Clearwire is entitled to one hundred
percent (100%) of the revenue generated from the use of the Clearwire's
Capacity.
14. NON-COMPETITION
Licensee will not, during the Term, use Licensee's Reserved Capacity to
build, operate, manage or distribute, on a for-profit basis, a commercial
wireless broadband network. [***]. Nothing in this Section 14 shall be
interpreted as preventing Licensee from leasing, selling, or otherwise providing
rights to Clearwire, Clearwire's Affiliates, Permitted End Users and third
parties to use any real estate, towers, or other real or personal property owned
or controlled by Licensee or [***].
15. CONFIDENTIALITY AND NON-DISCLOSURE
(A) CONFIDENTIALITY OF THE TERMS OF THIS AGREEMENT. The terms of this
Agreement that are not otherwise required to be disclosed to the FCC will be
kept strictly confidential by the Parties and their Agents, which
confidentiality obligation will survive the termination or expiration of this
Agreement for a period of two (2) years. The Parties may make disclosures as
required by Law or judicial process, and to members of their boards of directors
and advisory boards, employees, shareholders, agents, attorneys and accountants
(collectively, "AGENTS") as required to perform their obligations under the
Agreement; provided, however, that the Parties will cause all Agents to honor
the provisions of this Section 15(a). At the request of one Party, the other
will support an application to a court of competent jurisdiction to enjoin any
disclosure and to maintain such confidentiality. Clearwire may disclose the
terms of this Agreement to its Affiliates, strategic partners, actual or
potential investors, lenders, acquirers, merger partners, and others whom
Clearwire deems in good faith to have a need to know such information for
purposes of pursuing a transaction or business relationship with Clearwire, so
long as Clearwire secures an enforceable obligation from all such third parties
to limit the use and disclosure of this Agreement as provided herein. Licensee
and [***] may disclose the terms of this Agreement to their respective
Affiliates, to possible successors to the interests of Licensee or [***], and
to lenders, solely for purposes of pursuing a transaction or formal relationship
with Licensee or [***] as the case may be, so long as Licensee or [***] secures
an enforceable obligation from such third parties to limit the use and
disclosure of this Agreement as provided herein. Licensee may also disclose the
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23
existence and duration of the exclusivity rights and ROFR in Section 4 of this
Agreement. The Parties will submit a confidentiality request to the FCC if the
FCC seeks from the Parties a copy of this Agreement or any other confidential
information regarding its terms.
(B) NON-DISCLOSURE OF SHARED INFORMATION. As used herein, the term
"INFORMATION" shall mean all non-public information disclosed by a Party
hereunder (in this context, the "DISCLOSING PARTY") to the other Party and its
Agents (collectively, in this context, the "RECEIVING PARTY"), whether written
or oral, that is designated as confidential or that, given the nature of the
information or the circumstances surrounding its disclosure, reasonably should
be considered as confidential. The term Information does not include information
which: (1) has been or becomes published or is now, or in the future, in the
public domain without breach of this Agreement by the Receiving Party or breach
of a similar agreement by a third party; (2) prior to disclosure hereunder, is
property within the legitimate possession of the Receiving Party which can be
verified by independent evidence; (3) subsequent to disclosure hereunder, is
lawfully received by the Receiving Party from a third party having rights
therein without restriction of third party's or the Receiving Party's rights to
disseminate the information and without notice of any restriction against its
further disclosure; or (4) is independently developed by the Receiving Party
through persons who have not had, either directly or indirectly, access to or
knowledge of such Information which can be verified by independent evidence.
During the Term, the Disclosing Party may be supplying and/or disclosing
Information relating to its business or operations. The Information will, during
the Term of this Agreement, and for a period of two (2) years after the
termination or expiration of the Agreement, be kept confidential by the
Receiving Party and not used for any purpose other than implementing the terms
of this Agreement. The Receiving Party will be responsible for any improper use
of the Information by it or any of its Agents. Without the prior written consent
of the Disclosing Party and except as allowed herein, the Receiving Party will
not disclose to any Person the Information, or the fact that the Information has
been made available to it, except (i) for disclosures required by Law (or
pursuant to judicial process), and (ii) for disclosures to the Receiving Party's
Agents. Each person to whom Information is disclosed must be advised of its
confidential nature and must agree to abide by the terms of this Section 15(b).
16. ASSUMPTION OF LIABILITIES
Neither Party is assuming or will be responsible for any of the other's
liabilities or obligations (including customer obligations) except as required
by the FCC or as specifically provided in this Agreement.
17. FCC-MANDATED LEASING OBLIGATIONS
(A) Licensee and Clearwire are familiar with FCC Rules affecting
spectrum leasing and the provision of EBS, the Communications Act of 1934, as
amended ("COMMUNICATIONS ACT"), the Code of Federal Regulations, and all other
applicable FCC Rules, and agree to comply with all applicable Laws.
(B) Clearwire assumes primary responsibility for complying with the
Communications Act, and FCC Rules that apply to the Channels and Licenses; this
Agreement
24
and the Services Agreement may be revoked, cancelled or terminated, in
accordance with Section 12, by Licensee or by the FCC if Clearwire fails to
comply with applicable Laws.
(C) Neither Licensee nor Clearwire will represent itself as the legal
representative of the other before the FCC or any Person, but will cooperate
with each other with respect to FCC matters concerning the Licenses and the
Channels.
(D) If a License is revoked, cancelled, terminated or otherwise ceases
to be in effect, Clearwire has no continuing authority or right to use the
leased spectrum under that License unless otherwise authorized by the FCC.
(E) The Agreement is not an assignment, sale or transfer of the
Licenses themselves.
(F) The Agreement will not be assigned to any Person that is
ineligible or unqualified to enter into a spectrum leasing arrangement under FCC
Rules.
(G) Licensee will not consent to an assignment of a spectrum leasing
arrangement unless such assignment complies with applicable FCC Rules.
(H) Licensee and Clearwire must each retain a copy of the Agreement
and make it available upon request by the FCC in accordance with the
confidentiality provisions contained in Section 15.
18. REPRESENTATIONS AND WARRANTIES
(A) LICENSEE REPRESENTATIONS AND WARRANTIES. Except as disclosed in
Exhibit F, Licensee hereby represents and warrants to Clearwire that:
(I) Except for proceedings or complaints affecting EBS licensees
generally, there are no proceedings or complaints existing, or to Licensee's
knowledge, threatened, before any local, state or federal regulatory body, as of
the Effective Date, that could reasonably be expected to have a material adverse
effect on (A) the Licenses; (B) Licensee's ability to perform its obligations
under this Agreement; or (C) on the solvency or financial condition of Licensee.
(II) (A) It has the full right and authority to enter into,
execute, deliver, and perform its obligations under this Agreement; (B) it has
taken all requisite corporate action to approve the execution, delivery and
performance of this Agreement; (C) this Agreement constitutes a legal, valid and
binding obligation enforceable against it in accordance with its terms (except
as may be limited by applicable bankruptcy, insolvency or other laws of general
application affecting creditors' rights generally and except as limited by laws
relating to availability of specific performance, injunctive relief or other
equitable remedies); and (D) its execution of and performance under this
Agreement will not violate any applicable Laws or any of its existing
contractual obligations.
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(III) It knows of no fact or circumstance that would disqualify
it from performing its undertakings hereunder (subject to obtaining FCC consent
to the FCC Long Term Lease Application and any other required consents and
approvals).
(IV) (A) The Licenses are in full force and effect, (B)
Licensee's operations and activities pursuant to the Licenses are being
conducted in material compliance with all FCC Rules, and (C) except as set forth
in this Agreement, no Person other than Licensee has any right, title or
interest in or claims to the Licenses.
(V) There are no proceedings, judgments, investigations, or
litigation existing or, to Licensee's knowledge, threatened against Licensee
that would reasonably be expected to have a material adverse effect on
Licensee's ability to perform its obligations under this Agreement or on
Licensee's solvency or financial condition.
(B) CLEARWIRE REPRESENTATIONS AND WARRANTIES. Clearwire hereby
represents and warrants to Licensee as follows:
(I) (A) It has the full right and authority to enter into,
execute, deliver, and perform its obligations under this Agreement; (B) it has
taken all requisite corporate action to approve the execution, delivery and
performance of this Agreement; (C) this Agreement constitutes a legal, valid and
binding obligation enforceable against it in accordance with its terms (except
as may be limited by applicable bankruptcy, insolvency or other laws of general
application affecting creditors' rights generally and except as limited by laws
relating to availability of specific performance, injunctive relief or other
equitable remedies); and (D) its execution of and performance under this
Agreement will not violate any applicable Laws or any of its existing
contractual obligations.
(II) It knows of no fact or circumstance that would disqualify it
from performing its undertakings hereunder, and neither it nor any of its
principals or its Affiliates will take any action, cause any action to be taken,
or fail to take any action that would disqualify them from performing and
undertaking the obligations under and as contemplated by this Agreement.
(III) It is qualified under FCC Rules to lease Clearwire's
Capacity.
(IV) It has the financial capacity to enter into and perform the
obligations of this Agreement.
(V) There are no proceedings, judgments, investigations, or
litigation existing or, to the best of Clearwire's knowledge, threatened against
Clearwire or any of its Affiliates that would reasonably be expected to have a
material adverse effect on Clearwire's ability to perform its obligations under
this Agreement or on the solvency or financial condition of Clearwire.
(C) SURVIVAL. The respective representations and warranties of the
Parties will be true and correct as of the Effective Date and as of the Final
Order Date as if made on each of the dates and will survive for [***] after the
Effective Date except that the representations
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26
and warranties of Licensee in Section 18(a)(iv) and of Clearwire in Section
18(b) (iii) shall survive during the Term.
19. COVENANTS
(A) COVENANTS AND OBLIGATIONS OF LICENSEE. In addition to the
covenants of Licensee contained elsewhere in this Agreement, Licensee shall use
commercially reasonable efforts to faithfully fulfill the following covenants
and obligations during the Term:
(I) It shall operate and maintain end user equipment associated
with Licensee's Service in accordance with applicable Laws.
(II) It shall avoid causing interference in contravention of FCC
Rules to Clearwire's Service or to the lawful transmissions of any third party,
and operate and maintain end user equipment associated with Licensee's Service
consistent with this obligation. If any interference in contravention of FCC
Rules is caused by end user equipment associated with Licensee's Service, it
shall resolve such interference in accordance with FCC Rules.
(III) Subject to obtaining the timely assistance of Clearwire, it
shall comply with FCC Rules and maintain in full force and effect the Licenses
and any associated authorizations for the Channels, including the timely filing
and diligent prosecution of applications for license renewals required to
maintain the Licenses in full force and effect throughout the Term.
(IV) It shall request from the FCC any modifications to the
Licenses or to any FCC authorization relating to the Licenses that is requested
in writing by Clearwire and is otherwise consistent with this Agreement,
including Section 10(a).
(V) It shall notify Clearwire as soon as reasonably practicable
about the nature and forum of any suit or proceeding brought or pending against
Licensee that is not disclosed in Exhibit F and which could reasonably be
expected to result in a judgment or obligation, after giving effect to available
insurance proceeds, of [***] or more against Licensee or that would otherwise
affect Licensee's ability to perform its obligations hereunder or its ability to
hold the Licenses.
(VI) With respect to any Internet access or other wireless
services it receives through the Clearwire Network, it shall take commercially
reasonable steps to ensure that it and Permitted End Users comply with any
applicable acceptable use policies and terms of service, as the same may be
provided to Licensee or made generally available from time to time.
(VII) It shall not take or fail to take (as applicable), and
shall cause its Affiliates and Agents to refrain from taking or from failing to
take (as applicable), any actions, that would disqualify Licensee from
performing its duties and obligations hereunder.
(VIII) It shall obtain and maintain all FCC licenses, permits and
authorizations necessary to allow Clearwire use of the Channels as provided
herein, and will remain eligible under FCC Rules to provide Clearwire's
Capacity, and, unless required by the FCC or other Governmental Authority, will
not commit any act, engage in any activity, or fail to
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27
take any action that could reasonably be expected to cause the FCC to impair,
revoke, cancel, suspend or refuse to renew the Licenses.
(IX) It shall not take or fail to take any actions that would
disqualify Licensee from performing its duties and obligations hereunder or
adversely impact the Licenses or the Channels.
(B) COVENANTS AND OBLIGATIONS OF CLEARWIRE. In addition to the
covenants of Clearwire contained elsewhere in this Agreement, Clearwire shall,
at its sole cost, use commercially reasonable efforts to faithfully fulfill the
following covenants and obligations during the Term:
(I) It shall obtain and maintain all Governmental Authorizations
necessary to perform its duties and obligations hereunder.
(II) After the Existing Service Discontinuance Date, in
accordance with Section 7(d), it shall construct, operate and maintain the
Clearwire Network so as to enable Licensee (and Clearwire, if applicable) to
satisfy the Substantial Service Requirements as contemplated by this Agreement.
Upon construction of the Clearwire Network, it shall operate, and maintain the
Clearwire Network at all times during the Term so as to avoid the forfeiture,
revocation, cancellation, non-renewal or other impairment of the Licenses or the
Channels.
(III) It shall cooperate at Licensee's reasonable request, to
assist Licensee in fulfilling Licensee's responsibilities as an FCC EBS
licensee.
(IV) It shall avoid causing interference to Licensee's use of
Licensee's Reserved Capacity or to the lawful transmissions of any third party,
and operate and maintain the Clearwire Network consistent with this obligation
at all times during the Term. If any interference in contravention of FCC Rules
is caused by the Clearwire Network, Clearwire's operations or equipment,
Clearwire shall be liable for, and shall be obliged to resolve, such
interference.
(V) It shall, at its own cost, prepare, file and prosecute all
applications necessary to secure and maintain in force all non-FCC Governmental
Authorizations required for it to operate the Clearwire Network and provide
Clearwire's Service, and to use commercially reasonable efforts to defend
against any proceeding that could result in the termination of such Governmental
Authorizations.
(VI) It shall obtain and maintain in force during the Term,
insurance reasonably satisfactory to Licensee that is customary and adequate in
form and amount to protect Licensee against Costs and Expenses, damages,
liabilities, claims, and other losses with respect to those matters specified in
Section 20. Any such policies of insurance shall name Licensee as additional
insured to the extent that its interests may appear. Clearwire shall provide
Licensee with a certificate of such insurance naming Licensee as additional
insured within thirty (30) days of the Effective Date. Clearwire shall ensure
that such insurance coverage does not lapse or terminate.
28
(VII) It shall notify Licensee as soon as reasonably practicable
about the nature and forum of any suit or proceeding brought against Clearwire
or its Affiliates that could result in a judgment or obligation, after giving
effect to available insurance proceeds, of [***] or more against Clearwire that
would affect Clearwire's ability to perform its obligations hereunder.
(VIII) It shall not take or fail to take any actions that would
disqualify Clearwire from performing its duties and obligations hereunder or
adversely impact the Licenses or the Channels.
(IX) It shall cooperate with Clearwire US LLC or its successor to
insure that Clearwire US LLC or its successor is able to fulfill its obligations
to Licensee under the terms of the Services Agreement.
(C) ADDITIONAL COVENANTS OF THE PARTIES.
(I) Subject to obtaining FCC Consent, the Parties expressly
acknowledge that this Agreement is designed to transfer de facto, but not de
jure, control of the Clearwire's Capacity to Clearwire in accordance with
Sections 1.9010 and 1.9030 of FCC Rules. The Parties acknowledge and agree that
this Agreement: (i) does not and will not vest in Clearwire, or constitute,
create or have the effect of constituting or creating, de jure control, direct
or indirect, over Licensee or the Licenses, which ownership or de jure control
remains exclusively and at all times in Licensee; and (ii) does not and will not
constitute the transfer, assignment, or disposition in any manner, voluntary or
involuntary, directly or indirectly, of the Licenses or the transfer of control
of Licensee within the meaning of Section 310(d) of the Communications Act other
than for spectrum leasing purposes. During the Term, Clearwire will not take any
action inconsistent with or contrary to Licensee's de jure control, as that term
is construed by the FCC, over the Licenses. During the Term, Clearwire will not
hold itself out to the public as the holder of the Licenses.
(II) Clearwire is primarily responsible for complying with (i)
the Communications Act and applicable FCC Rules with respect to Clearwire's
Capacity, and (ii) the activation, operation, and maintenance of the Clearwire
Network and provision of Clearwire's Service. Licensee is relieved of primary
and direct responsibility for ensuring that operations on Clearwire's Capacity
and the activation, operation and maintenance of the Clearwire Network and
provision of Clearwire's Service comply with the Communications Act and FCC
Rules. Licensee shall remain responsible for (i) complying with FCC Rules with
regard to Licensee's use of Licensee's Reserved Capacity, (ii) satisfying the
Substantial Service Requirements applicable to Licensee, and (iii) complying
with other FCC Rules that specifically apply to licensees in long term de facto
leasing arrangements. Licensee is responsible for its own FCC Rule violations
and any ongoing violations or other egregious behavior pertaining to use of the
Licenses about which it is aware.
(III) Clearwire shall comply with applicable secondary markets
leasing rules, currently set forth in Section 1.9000 et seq. of FCC Rules.
Clearwire acknowledges that this Agreement may be revoked, cancelled or
terminated by Licensee or by the FCC if Clearwire materially fails to comply
with FCC Rules. If a License is revoked, cancelled, terminated or
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29
otherwise ceases to be in effect, Clearwire understands that it will have no
continuing authority or right to use the Clearwire's Capacity on the License,
unless otherwise authorized by the FCC, or unless the FCC grants Clearwire
special temporary authority to operate.
(D) GUARANTEE AND COVENANT BY CLEARWIRE PARENT. Simultaneously with
the execution of this Agreement, the Clearwire Parent shall deliver the Parent
Guarantee and Covenant Agreement in the form of Exhibit G hereto ("PARENT
GUARANTEE AND COVENANT AGREEMENT"). Notwithstanding anything herein to the
contrary, this Agreement shall not be effective or binding on Licensee until
said Parent Guarantee and Covenant Agreement is delivered to Licensee.
20. INDEMNIFICATION
(A) INDEMNIFICATION BY LICENSEE. Neither Clearwire nor any Clearwire
Affiliate shall be liable to Licensee or to any Licensee Affiliate, for any
Costs and Expenses, damages, injuries, penalties, judgments, fines, liabilities,
claims or other losses of any nature whatsoever (collectively, "DAMAGES")
sustained by Licensee or a Licensee Affiliate on account of the matters
specified below in subsections (i) through (iv); nor shall Clearwire or any
Clearwire Affiliate be liable to Licensee or a Licensee Affiliate, for any claim
or demand made by a third party upon Licensee or a Licensee Affiliate for any
such Damages on account of the matters specified in subsections (i) through
(iv). In furtherance of these provisions, and except as stated herein, Licensee
shall indemnify, hold harmless, and defend Clearwire and Clearwire's Affiliates
from and against any Damages asserted by any third party, [***], with respect
to:
(I) The installation, maintenance, testing, repair, operation, or
removal of the Existing EBS Equipment by Licensee;
(II) Any breach by Licensee of any representation or warranty
made by Licensee in this Agreement;
(III) Any breach by Licensee of any covenant, agreement, or
obligation of Licensee contained in this Agreement; and
(IV) Any proceeding or claim which results from the misconduct or
negligence of Licensee, Licensee's Affiliates or any Permitted End Users under
this Agreement (including with respect to transmission of Licensee's Service
over Licensee's Reserved Capacity).
(B) INDEMNIFICATION BY CLEARWIRE. Neither Licensee nor any Licensee
Affiliate shall be liable to Clearwire, any Affiliate of Clearwire or any third
party for any Damages sustained by Clearwire or such third party on account of
the matters specified below in subsections (i) through (iv); nor shall Licensee
or any Licensee Affiliate be liable to Clearwire or any Clearwire Affiliate for
any Damages asserted by a third party against Clearwire or a Clearwire Affiliate
related to the matters specified in subsections (i) through (iv). In furtherance
of these provisions, and except as stated herein, Clearwire shall indemnify,
hold harmless, and defend Licensee and its Affiliates and Agents from and
against any and all
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30
Damages whether sustained by Licensee (or its Affiliates or Agents) or by any
third party, [***], arising out of, in connection with or with respect to:
(I) The installation, maintenance, testing, repair, operation, or
removal of any of Clearwire's equipment, Clearwire US LLC's equipment, or the
Clearwire Network;
(II) Any breach by Clearwire of any representation or warranty
made by Clearwire in this Agreement, or any breach by Clearwire US LLC of any
representation or warranty made in the Services Agreement;
(III) Any breach by Clearwire of any covenant, agreement, or
obligation of Clearwire contained in this Agreement, or any breach by Clearwire
US LLC of any covenant, agreement, or obligation of Clearwire US LLC contained
in the Services Agreement;
(IV) The provision of Clearwire's Service or of any of the
services provided under the Services Agreement including any claimed liability
arising as a result of an interruption, degradation, or failure in Clearwire's
Service; and
(V) Any proceeding which results from the conduct or activities
of Clearwire or it Affiliates, principals or customers, including any business
activities related to the Clearwire Network, Clearwire's Service, Services
Agreement, or Clearwire's Capacity.
(C) NOTIFICATION OF SUITS AND CLAIMS. Whenever any claim for
indemnification shall arise under Section 20(a) or 20(b), the Party to be
indemnified (the "INDEMNIFIED PARTY") shall promptly notify the Party to provide
indemnification (the "INDEMNIFYING PARTY") of the claim and, when known, the
facts constituting the basis for such claim and the amount or estimate of the
liability arising therefrom. The Indemnifying Party shall have the right to
defend against such claim. An Indemnified Party shall not settle or compromise
any claim by a third party for which the Indemnified Party is entitled to
indemnification hereunder without the prior written consent of the Indemnifying
Party, unless suit in respect of such third party claim shall have been
initiated against the Indemnified Party and the Indemnifying Party shall not
have undertaken the defense thereof. At the time any such defense may become
necessary, the Indemnifying Party shall furnish such bond or undertaking
reasonably adequate to the Indemnified Party to guarantee this obligation.
Except as otherwise provided herein, no action taken by an Indemnified Party
under advice of its legal counsel, in the exercise of its judgment, shall
relieve the Indemnifying Party of its obligations hereunder, including the
obligation to reimburse the Indemnified Party for Costs and Expenses incurred in
defending against any investigation or proceeding.
(D) LIMITATION OF LIABILITY. IN NO EVENT SHALL EITHER PARTY BE LIABLE
IN ANY WAY, REGARDLESS OF THE FORM IN WHICH ANY LEGAL OR EQUITABLE ACTION MAY BE
BROUGHT (WHETHER IN TORT, CONTRACT, STRICT LIABILITY OR OTHERWISE), FOR ANY LOSS
OF USE, INTERRUPTION OF BUSINESS, LOST PROFITS, SALES, DATA OR GOODWILL, COSTS
OF PROCURING SUBSTITUTE GOODS OR SERVICES, OR ANY SPECIAL, INCIDENTAL, INDIRECT,
PUNITIVE OR CONSEQUENTIAL DAMAGES WHATSOEVER, HOWEVER CAUSED, EVEN IF THE
PARTIES HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS OR DAMAGE,
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AND REGARDLESS OF WHETHER THESE LIMITATIONS CAUSE ANY REMEDY TO FAIL OF ITS
ESSENTIAL PURPOSE. The limitations of liability in this Section 20(d), are
material conditions to the Parties' entering into this Agreement, without which
the Parties would be unwilling to enter into this Agreement, and will survive
any termination or expiration of this Agreement.
21. NOTICES
Any notice required to be given by one Party to the other under this
Agreement will be delivered using a reliable national express overnight delivery
service and will be effective upon receipt. All notices will be delivered to the
Parties at the following addresses:
(A) CLEARWIRE:
Clearwire Spectrum Holdings II LLC
5808 Lake Washington Blvd. N.E.
Suite 300
Kirkland, WA 98033
Attn: [***]
Telephone: [***]
Fax: [***]
With a copy to:
Clearwire Spectrum Holdings II LLC
5808 Lake Washington Blvd. N.E.
Suite 300
Kirkland, WA 98033
Attn: [***]
Telephone: [***]
Fax: [***]
(B) LICENSEE:
[***]
Telephone: [***]
Facsimile: [***]
With a copy to:
[***]
Telephone: [***]
Facsimile: [***]
Either Party may change its addresses for receipt of notice or payment by giving
notice of such change to the other Party as provided in this Section 21.
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32
22. MISCELLANEOUS
(A) LAWS, RULES AND REGULATIONS. This Agreement is subject to all
Laws, relative to, among other things, the subject matter addressed in this
Agreement.
(B) FORCE MAJEURE. Neither Party will be liable for any nonperformance
under this Agreement due to causes beyond its reasonable control that could not
have been reasonably anticipated by the non-performing Party and that cannot be
reasonably avoided or overcome; provided that the non-performing party gives the
other Party prompt notice of such cause, and in any event, within fifteen (15)
calendar days of its discovery.
(C) INDEPENDENT PARTIES. None of the provisions of this Agreement will
be deemed to constitute a partnership, joint venture, or any other such
relationship between the Parties, and neither Party will have any authority to
bind the other in any manner. Neither Party will have or hold itself out as
having any right, authority or agency to act on behalf of the other Party in any
capacity or in any manner, except as may be specifically authorized in this
Agreement.
(D) SPECIFIC PERFORMANCE. The Parties recognize that the subject
matter of this Agreement is unique and that this Agreement may not provide an
adequate remedy at law. Accordingly, the Parties agree that each will be
entitled to seek injunctive relief and specific enforcement of this Agreement in
a court of equity without proof of specific monetary damages, but without
waiving any right thereto, in the event of breach of this Agreement by the other
Party, and each Party waives the defense in any action or proceeding brought to
enforce this Agreement that there exists an adequate remedy at law.
(E) APPLICABLE LAW. The validity, construction and performance of this
Agreement will be governed by and construed in accordance with FCC Rules and the
internal laws of the State of [***] without giving effect to any choice or
conflict of law provision or rule that would cause the application of the laws
of any jurisdiction other than the State of [***]. Except where JAMS Resolution
is provided for in this Agreement, the Parties hereto, their successors and
assigns consent to the jurisdiction of the courts of [***] with respect to any
legal proceedings that may result from a dispute concerning this Agreement.
(F) ATTORNEYS' FEES. If any action, including JAMS Resolution
proceedings, shall be brought on account of any breach of or to enforce or
interpret any of the terms, covenants or conditions of this Agreement, the
prevailing Party will be entitled to recover from the other its reasonable
attorneys' fees and costs, as determined by the arbitrator(s), court or
governing body hearing the action.
(G) SEVERABILITY. If any provision of this Agreement is found to be
illegal, invalid or unenforceable, such provision will be enforced to the
maximum extent permissible so as to effect the intent of the Parties, and the
validity, legality and enforceability of the remaining provisions will not in
any way be affected or impaired, unless continued enforcement of the provisions
frustrates the intent of the Parties.
(H) NO WAIVER. No delay or failure by either Party in exercising any
right under this Agreement, and no partial or single exercise of that right,
will constitute a waiver of
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33
that or any other right. Failure to enforce any right under this Agreement will
not be deemed a waiver of future enforcement of that or any other right.
(I) SELF HELP. Notwithstanding any other provision of this Agreement,
if at anytime during the Term, Licensee reasonably determines that Clearwire's
actions or omissions (including, by way of example, Clearwire's failure to
construct, maintain or operate the Clearwire Network in accordance with Section
7(d)) are reasonably likely to result in the forfeiture, revocation,
cancellation, non-renewal or other material impairment of the Licenses or the
Channels, then Licensee may, upon ten (10) days advance notice to Clearwire,
assume de facto control of Clearwire's Capacity and take whatever action
Licensee determines, in its reasonable discretion, to be necessary to prevent
the forfeiture, revocation, cancellation, non-renewal or any other impairment of
the Licenses or the Channels; provided however, if Licensee exercises its rights
under this Section 22(i), de facto control of Clearwire's Capacity shall be
transferred back to Clearwire promptly after Licensee has determined, in its
reasonable discretion, that the threat of forfeiture, revocation, cancellation,
non-renewal or other material impairment of the Licenses or the Channels no
longer exists. Clearwire shall promptly reimburse Licensee for all reasonable
Costs and Expenses incurred in connection with Licensee's exercise of its rights
pursuant to this Section 22(i).
(J) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but which collectively
will constitute one and the same instrument. Original signatures transmitted by
facsimile or email will be effective to create such counterparts.
(K) HEADINGS. The headings and captions used in this Agreement are for
convenience only and are not to be considered in construing or interpreting this
Agreement.
(L) CONSTRUCTION. The Parties and their respective counsel have
negotiated this Agreement. This Agreement will be interpreted in accordance with
its terms and without any strict construction in favor of or against either
Party based on draftsmanship of the Agreement or otherwise.
(M) COMPLETE AGREEMENT. This Agreement constitutes the entire
agreement between the Parties with respect to the subject matter addressed, and
supersedes and replaces all prior or contemporaneous understandings or
agreements, written or oral, between the Parties or any of their Affiliates
regarding this subject matter. No amendment to or modification of this Agreement
will be binding unless in writing and signed by a duly authorized representative
of each of the Parties and Clearwire Parent.
(N) COOPERATION. The Parties will take such further action and execute
such further assurances, documents and certificates as either Party may
reasonably request to effectuate the purposes of this Agreement.
(O) RECITALS. The recitals set forth at the beginning of this
Agreement are integral to this Agreement, are to be considered substantive
provisions hereof, and are incorporated herein by reference as if fully set
forth.
34
(P) PRESS ANNOUNCEMENTS. No announcement to the press or general
public of this Agreement or the terms or conditions thereof shall be made unless
such announcement or release shall have been approved in advance by both
Parties. Notwithstanding the foregoing, either Party may make any such
disclosures of this Agreement or the terms hereof to the extent necessary to
comply with accounting standards and applicable securities and other laws and
regulations of the Securities and Exchange Commission or with the regulations of
any applicable securities exchange and each of the Parties agree that that the
Parties and/or their Affiliates may be required to disclose the financial terms
of this Agreement in such Party's or its Affiliates' consolidated financial
statements or in the footnotes thereof; provided however, that Clearwire shall
provide notice to Licensee if it makes any such disclosures.
(Q) USE OF LICENSEE'S NAME. With the exception of the FCC Long Term
Lease Application, Clearwire will not use the name of Licensee, [***], or
their Affiliates in any materials that are available to the public without
Licensee's prior written permission, which written permission may be withheld or
granted in Licensee's sole discretion.
23. INCLUDED EXHIBITS
The following exhibits are part of this Agreement:
Exhibit A. FCC Reference Copies of Licenses
Exhibit B1. Warrant Agreement ($10.50)
Exhibit B2. Warrant Agreement ($16.00)
Exhibit C. Services Agreement
Exhibit D. Interference Consents
Exhibit E. Redacted Agreement
Exhibit F. Licensee's Disclosures
Exhibit G. Parent Guarantee and Covenant Agreement
[SIGNATURE PAGE FOLLOWS]
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AGREED TO:
CLEARWIRE SPECTRUM HOLDINGS II LLC
By: /s/ R. Gerard Salemme
---------------------------------
Name: R. Gerard Salemme
Title: Ex V.P.
[***]
By: /s/ [***]
---------------------------------
Name: [***]
Title: President
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EXHIBIT A
FCC REFERENCE COPIES OF LICENSES
[***]
[*** Confidential Treatment Requested]
A-1
EXHIBIT B1
WARRANT AGREEMENT ($10.50)
B-1
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
No. (NO)
Issued: (DATE), 2006
WARRANT TO PURCHASE
SHARES OF CLASS A COMMON STOCK OF
CLEARWIRE CORPORATION
(VOID AFTER __________, 20__ [[FIFTH ANNIVERSARY OF FINAL ORDER DATE]])
This certifies that [***] (the "Holder"), for value received, is entitled
to purchase from Clearwire Corporation, a Delaware corporation (the "Company"),
having a place of business at 5808 Lake Washington Blvd., Suite 300, Kirkland,
WA 98033, Two Million Five Hundred Thousand (2,500,000) fully paid and
nonassessable shares of the Company's Class A Common Stock (the "Common Stock").
The exercise price per share of this Warrant is Ten Dollars and Fifty Cents
($10.50) (the "Stock Purchase Price") payable in lawful money of the United
States or otherwise as hereinafter provided. If payment is by check and the
check is not a check issued by a regulated banking or financial institution the
shares to be so issued shall not be considered issued until such check has
cleared.
Unless this Warrant is terminated earlier as provided in Section 8, this
Warrant may be exercised in whole or in part at any time or from time to time up
to and including 5:00 p.m. (Pacific Time) on [[_______, 20__]][[INSERT DATE 5TH
ANNIVERSARY OF FINAL ORDER DATE]] (the "Expiration Date"), upon surrender to the
Company at its principal office (or at such other location as the Company may
advise the Holder in writing) of this Warrant properly endorsed with the
Subscription Form attached hereto as Warrant Exhibit A duly filled in and signed
(the "Subscription Form") and, if applicable, upon payment in cash or by check
of the aggregate Stock Purchase Price for the number of shares for which this
Warrant is being exercised determined in accordance with the provisions hereof.
The Stock Purchase Price and the number of shares purchasable hereunder are
subject to adjustment as provided in Section 3 of this Warrant.
1. EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
1.1 GENERAL. This Warrant is exercisable at the option of the Holder of
record hereof, at any time or from time to time, up to the Expiration Date for
all or any part of the shares of Common Stock (but not for a fraction of a
share) which may be purchased hereunder.
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1.2 ISSUANCE OF CERTIFICATES. The Company agrees that the shares of Common
Stock purchased under this Warrant shall be and are deemed to be issued to the
Holder, as directed by Holder from time to time, as the record owner of such
shares as of the close of business on the date on which the Holder surrenders
this Warrant, properly endorsed, and the completed, executed Subscription Form
(a copy of which is attached hereto as Warrant Exhibit A), at the offices of the
Company, upon payment made for such shares as set forth in this Warrant.
Certificates for the shares of Common Stock so purchased, together with any
other securities or property to which the Holder hereof is entitled upon such
exercise, shall be delivered to the Holder hereof by the Company at the
Company's expense within a reasonable time (not to exceed ten (10) business
days) after the rights represented by this Warrant have been so exercised. Each
stock certificate so delivered shall be in such denominations of Common Stock as
may be requested by the Holder hereof and shall be registered in the name of
such Holder or, subject to the provisions of Section 7, such Holder's designee.
In case of a purchase of less than all the shares which may be purchased under
this Warrant, the Company shall cancel this Warrant and execute and deliver a
new Warrant or Warrants of like tenor for the balance of the shares purchasable
under the Warrant surrendered upon such purchase to the Holder hereof within a
reasonable time (not to exceed ten (10) business days).
1.3 STOCKHOLDERS AGREEMENT. Upon exercising this Warrant, at the request of
the Company, the Holder agrees to become a party to the stockholders agreement
then in effect, if any, among the Company and the holders of shares constituting
a majority of the voting power of the Company's capital stock, prior to or upon
issuance of the Common Stock to the holder.
2. SHARES TO BE FULLY PAID; RESERVATION OF SHARES. The Company covenants and
agrees that all shares of Common Stock that may be issued upon the exercise of
the rights represented by this Warrant will, upon issuance, be duly authorized,
validly issued, fully paid and nonassessable and free from all preemptive rights
of any stockholder and free of all taxes, liens and charges with respect to the
issue thereof. The Company further covenants and agrees that, during the period
within which the rights represented by this Warrant may be exercised, the
Company will at all times have authorized and reserved or, shall upon request of
the Holder authorize and reserve, for the purpose of issue or transfer upon
exercise of the subscription rights evidenced by this Warrant, a sufficient
number of shares of authorized but unissued Common Stock, or other securities
and property, when and as required to provide for the exercise of the rights
represented by this Warrant. The Company will take all such action as may be
necessary to assure that such shares of Common Stock may be issued as provided
herein without violation of any applicable law or regulation, or of any
requirements of any domestic securities exchange upon which the Common Stock may
be listed, including, but not limited to, amending its Certificate of
Incorporation to provide sufficient reserves of shares of Common Stock;
provided, however, that the Company shall not be required to effect a
registration under Federal or State securities laws with respect to such
exercise. The Company will not take any action that would result in any
adjustment of the Stock Purchase Price (as set forth in Section 3 hereof) if the
total number of shares of Common Stock issuable after such action upon exercise
of all outstanding warrants and options, together with all shares of Common
Stock then outstanding, would exceed the total number of shares of Common Stock
then authorized by the Company's Certificate of Incorporation.
2
3. ADJUSTMENT OF STOCK PURCHASE PRICE AND NUMBER OF SHARES. The Stock Purchase
Price and the number of shares purchasable upon the exercise of this Warrant
shall be subject to adjustment from time to time upon the occurrence of certain
events described in this Section 3. Upon each adjustment of the Stock Purchase
Price, the Holder of this Warrant shall thereafter be entitled to purchase, at
the Stock Purchase Price resulting from such adjustment, the number of shares
obtained by multiplying the Stock Purchase Price in effect immediately prior to
such adjustment by the number of shares purchasable pursuant hereto immediately
prior to such adjustment, and dividing the product thereof by the Stock Purchase
Price resulting from such adjustment.
3.1 SUBDIVISION OR COMBINATION OF STOCK. In case the Company shall at any
time split or subdivide its outstanding shares of Common Stock into a greater
number of shares, the Stock Purchase Price in effect immediately prior to such
split or subdivision shall be proportionately reduced, and conversely, in case
the outstanding shares of Common Stock of the Company shall be combined into a
smaller number of shares, the Stock Purchase Price in effect immediately prior
to such combination shall be proportionately increased.
3.2 DIVIDENDS IN COMMON STOCK, OTHER STOCK, PROPERTY, RECLASSIFICATION. If
at any time or from time to time the holders of Common Stock (or any shares of
stock or other securities at the time receivable upon the exercise of this
Warrant) shall have received or become entitled to receive, without payment
therefor:
3.2.1 Common Stock or any shares of stock or other securities that are
at any time directly or indirectly convertible into or exchangeable for Common
Stock, or any rights or options to subscribe for, purchase or otherwise acquire
any of the foregoing by way of dividend or other distribution;
3.2.2 Any cash paid or payable otherwise than as a cash dividend out
of current earnings; or
3.2.3 Common Stock or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification, combination of
shares or similar corporate rearrangement (other than (i) shares of Common Stock
issued as a stock split, adjustments in respect of which shall be covered by the
terms of Section 3.1 above or (ii) an event for which adjustment is otherwise
made pursuant to Section 3.3 below);
then in each such case, the Holder hereof shall, upon the exercise of this
Warrant, be entitled to receive, in addition to the number of shares of Common
Stock receivable thereupon, and without payment of any additional consideration
therefor, the amount of stock and other securities and property (including cash
in the cases referred to in clauses 3.2.2 and 3.2.3 above) which such Holder
would hold on the date of such exercise had he or it been the holder of record
of such Common Stock as of the date on which holders of Common Stock received or
became entitled to receive such shares or all other additional stock and other
securities and property.
3.3 REORGANIZATION, RECLASSIFICATION OR RECAPITALIZATION. If any
recapitalization, reclassification or capital reorganization of the capital
stock of the Company shall be effected in such a way that holders of Common
Stock shall be entitled to receive stock, securities, or other
3
assets or property (a "Restructuring"), then, as a condition of such
Restructuring, lawful and adequate provisions shall be made whereby the Holder
hereof shall thereafter have the right to purchase and receive (in lieu of or in
addition to the shares of the Common Stock of the Company immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby) such shares of stock, securities or other assets or property
as may be issued or payable with respect to or in exchange for a number of
outstanding shares of such Common Stock equal to the number of shares of such
stock immediately theretofore purchasable and receivable upon the exercise of
the rights represented hereby and appropriate provision shall be made with
respect to the rights and interests of the Holder of this Warrant to the end
that the provisions hereof (including, without limitation, provisions for
adjustments of the Stock Purchase Price and of the number of shares purchasable
and receivable upon the exercise of this Warrant) shall thereafter be
applicable, as nearly as may be, in relation to any shares of stock, securities
or assets thereafter deliverable upon the exercise hereof.
3.4 NOTICE OF ADJUSTMENT. Upon any adjustment of the Stock Purchase Price,
any increase or decrease in the number of shares purchasable upon the exercise
of this Warrant or any change in the securities or other property deliverable
upon exercise of this Warrant, the Company shall give written notice thereof, by
first class mail, postage prepaid, addressed to the registered Holder of this
Warrant at the address of such Holder as shown on the books of the Company. The
notice shall be signed by the Company's President and shall state the Stock
Purchase Price resulting from such adjustment, the increase or decrease, if any,
in the number of shares purchasable at such price upon the exercise of this
Warrant or the amount of securities or other property deliverable upon such
exercise, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
3.5 OTHER NOTICES. If at any time:
3.5.1 the Company shall declare any cash dividend upon its Common
Stock;
3.5.2 the Company shall declare any dividend upon its Common Stock
payable in stock or make any special dividend or other distribution to the
holders of its Common Stock;
3.5.3 there shall be any Restructuring; or
3.5.4 there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then, in any one or more of said cases, the Company shall give, by first class
mail, postage prepaid, overnight courier or facsimile, addressed to the Holder
of this Warrant at the address of such Holder as shown on the books of the
Company, (a) at least fifteen (15) days' prior written notice of the date on
which the books of the Company shall close or a record shall be taken for such
dividend, distribution or subscription rights or for determining rights to vote
in respect of any such Restructuring, dissolution, liquidation or winding-up,
and (b) in the case of any such Restructuring, dissolution, liquidation,
winding-up or public offering, at least fifteen (15) days' prior written notice
of the date when the same shall take place; provided, however, that if any
response on the part of the Holder is otherwise required, the Holder shall make
its best efforts to respond to such notice as early as possible after the
receipt thereof. Any notice given in
4
accordance with the foregoing clause (a) shall also specify, in the case of any
such dividend, distribution or subscription rights, the date on which the
holders of Common Stock shall be entitled thereto. Any notice given in
accordance with the foregoing clause (b) shall also specify the date on which
the holders of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such Restructuring, dissolution,
liquidation, winding-up or public offering, as the case may be.
3.6 CERTAIN EVENTS. If any change in the outstanding Common Stock of the
Company or any other event occurs as to which the other provisions of this
Section 3 are not strictly applicable or if strictly applicable would not fairly
protect the purchase rights of the Holder of the Warrant in accordance with such
provisions, the Board of Directors of the Company shall make an adjustment in
the number and class of shares available under the Warrant, the Stock Purchase
Price or the application of such provisions, so as to protect such purchase
rights as aforesaid. The adjustment shall be such as will give the Holder of the
Warrant upon exercise for the same aggregate Stock Purchase Price the total
number, class and kind of shares as it would have owned had the Warrant been
exercised prior to the event and had it continued to hold such shares until
after the event requiring adjustment.
4. ISSUE TAX. The issuance of certificates for shares of Common Stock upon the
exercise of the Warrant shall be made without charge to the Holder of the
Warrant for any issue tax (other than any applicable income taxes) in respect
thereof; provided, however, that the Company shall not be required to pay any
tax that may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than that of the then Holder of the
Warrant being exercised.
5. CLOSING OF BOOKS. The Company will at no time close its transfer books
against the transfer of any warrant or of any shares of Common Stock issued or
issuable upon the exercise of any warrant in any manner that interferes with the
timely exercise of this Warrant.
6. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing contained in
this Warrant shall be construed as conferring upon the Holder hereof the right
to vote or to consent or to receive notice as a stockholder of the Company or
any other matters or any rights whatsoever as a stockholder of the Company. No
dividends or interest shall be payable or accrued in respect of this Warrant or
the interest represented hereby or the shares purchasable hereunder until, and
only to the extent that, this Warrant shall have been exercised. No provision
hereof in the absence of affirmative action by the Holder to purchase shares of
Common Stock, and no mere enumeration herein of the rights or privileges of the
Holder hereof, shall give rise to any liability of such Holder for the Stock
Purchase Price or as a stockholder of the Company, whether such liability is
asserted by the Company or by its creditors.
7. TRANSFER RESTRICTIONS. Subject to compliance with applicable federal and
state securities laws, this Warrant and all rights hereunder are transferable,
in whole but not in part, without charge to the Holder hereof (except for
transfer taxes), upon surrender of this Warrant properly endorsed and in
compliance with such provisions, to a Qualified Transferee. "Qualified
Transferee" means a proposed transferee that meets all of the following
requirements: (a) the proposed transferee is an "accredited investor" as such
term is defined under Regulation D of the Act; (b) the proposed transferee is
not a competitor of the Company, as reasonably determined
5
by the Company; and (c) the Company has not reasonably and in good faith
concluded that providing such proposed transferee any information to which a
stockholder of the Company is entitled is likely to threaten the proprietary
nature of such information or the Company's business objectives or competitive
positioning. The Company will maintain a register (the "Warrant Register")
containing the names and addresses of the Holder or Holders. Any Holder of this
Warrant or any portion thereof may change its address as shown on the Warrant
Register by written notice to the Company requesting such change. Any notice or
written communication required or permitted to be given to the Holder may be
delivered or given by mail to such Holder as shown on the Warrant Register and
at the address shown on the Warrant Register. Until this Warrant is transferred
on the Warrant Register of the Company, the Company may treat the Holder as
shown on the Warrant Register as the absolute owner of this Warrant for all
purposes, notwithstanding any notice to the contrary. This Warrant may not be
transferred or assigned without compliance with all applicable federal and state
securities laws by the transferor and the transferee. The Holder further agrees
not to make any disposition of all or any portion of this Warrant or any shares
of Common Stock or any security into or for which such Common Stock is exchanged
unless and until the transferee has agreed in writing for the benefit of the
Company to be bound by this Section 7 to the extent such section is then
applicable, and:
A. There is then in effect a registration statement under the 1933 Act
covering such proposed disposition and such disposition is made in accordance
with such registration statement; or
B. (i) the Holder shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition and (ii) if reasonably
requested by the Company, the Holder shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration of such securities under the 1933 Act.
8. CHANGE OF CONTROL.
8.1 The Company shall give the Holder at least fifteen (15) days' prior
written notice of a Change of Control in accordance with the provisions of
Section 3.5. A "Change of Control" means (i) a sale of all or substantially all
of the assets of the Company or (ii) the transfer by the Company's stockholders
by means of a merger, consolidation, reorganization, recapitalization or
otherwise, of more than 50% of the voting power of the Company in a single
transaction or a series of related transactions.
8.2 [***].
9. RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF WARRANT. The rights and
obligations of the Company, of the holder of this Warrant and of the holder of
shares of Common Stock issued upon exercise of this Warrant, referred to in
Section 7, shall survive the exercise of this Warrant.
10. MODIFICATION AND WAIVER. The terms of this Warrant may be amended, or the
observance of any term of this Warrant may be waived (either generally or in a
particular
[*** Confidential Treatment Requested]
6
instance and either retroactively or prospectively), only with the written
consent of the Company and the Holder of this Warrant.
11. NOTICES. Any notice, request or other document required or permitted to be
given or delivered to the Holder hereof or the Company shall be delivered or
shall be sent by first-class mail, postage prepaid, to the Holder at its address
as shown on the Warrant Register or to the Company at the address indicated
therefor in the first paragraph of this Warrant, or such other address as either
may from time to time provide to the other.
12. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description headings of the
several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of Delaware.
13. LOST WARRANTS. The Company represents and warrants to the Holder hereof that
upon receipt of evidence reasonably satisfactory to the Company of the loss,
theft, destruction, or mutilation of this Warrant and, in the case of any such
loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory
to the Company, or in the case of any such mutilation upon surrender and
cancellation of such Warrant, the Company, at its expense, will make and deliver
a new Warrant, of like tenor, in lieu of the lost, stolen, destroyed or
mutilated Warrant.
14. FRACTIONAL SHARES. No fractional shares shall be issued upon exercise of
this Warrant. The Company shall, in lieu of issuing any fractional share, pay
the Holder entitled to such fraction a sum in cash equal to such fraction
multiplied by the then effective Fair Market Value of the Common Stock.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
by its President, thereunto duly authorized as of the date first written above.
CLEARWIRE CORPORATION
a Delaware corporation
By:
------------------------------------
(OFFICER_NAME_TITLE)
7
WARRANT EXHIBIT A
SUBSCRIPTION FORM
Date: _____________, 20__
Clearwire Corporation
____________________________
____________________________
Ladies and Gentlemen:
The undersigned hereby elects to exercise the warrant issued to it by Clearwire
Corporation (the "Company") and dated ______________, 200_, Warrant No. ___ (the
"Warrant") to purchase thereunder __________ shares of the Class A Common Stock
of the Company (the "Shares") at a purchase price of $________ per Share, or an
aggregate purchase price of _______________________ ($__________) (the "Purchase
Price").
Pursuant to the terms of the Warrant the undersigned has delivered the Purchase
Price herewith in full in cash or by certified check or wire transfer. The
undersigned also makes the representations set forth on the attached Warrant
Exhibit B.
Very truly yours,
----------------------------------------
By:
------------------------------------
Title:
---------------------------------
WARRANT EXHIBIT B
INVESTMENT REPRESENTATIONS
THIS AGREEMENT MUST BE COMPLETED, SIGNED AND RETURNED TO CLEARWIRE CORPORATION
ALONG WITH THE SUBSCRIPTION FORM BEFORE THE COMMON STOCK ISSUABLE UPON EXERCISE
OF THE WARRANT DATED __________________, 200_, WILL BE ISSUED.
________________
Clearwire Corporation
____________________________
____________________________
Ladies and Gentlemen:
The undersigned, _________________________ ("Purchaser"), intends to
acquire up to ______________ shares of the Class A Common Stock (the "Common
Stock") of Clearwire Corporation (the "Company") from the Company pursuant to
the exercise or conversion of certain Warrants to purchase Common Stock held by
Purchaser. The Common Stock will be issued to Purchaser in a transaction not
involving a public offering and pursuant to an exemption from registration under
the Securities Act of 1933, as amended (the "1933 Act") and applicable state
securities laws. Purchaser has been advised that the Common Stock has not been
registered under the 1933 Act or state securities laws on the ground that this
transaction is exempt from registration, and that reliance by the Company on
such exemptions is predicated in part on Purchaser's representations set forth
in this letter. Accordingly, Purchaser represents, warrants and agrees as
follows:
1. Purchaser is acquiring the Common Stock for its own account and
beneficial interest to hold for investment and not for sale or with a view to
distribution of the Common Stock or any part thereof. Purchaser has no present
intention of selling (in connection with a distribution or otherwise), granting
any participation in, or otherwise distributing the same, and does not presently
have reason to anticipate a change in such intention.
2. Purchaser acknowledges that it has received all the information it has
requested from the Company and considers necessary or appropriate for deciding
whether to acquire the Common Stock. Purchaser represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Common Stock and to obtain any
additional information necessary to verify the accuracy of the information given
the Purchaser. Purchaser further represents that it has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risk of this investment.
3. Purchaser is an "accredited investor" as such term is defined in Rule
501 under the 1933 Act.
4. Purchaser acknowledges that investment in the Common Stock involves a
high degree of risk, and represents that it is able, without materially
impairing its financial condition, to hold the Common Stock for an indefinite
period of time and to suffer a complete loss of its investment.
5. Purchaser has been informed that under the 1933 Act, the Common Stock
must be held indefinitely unless it is subsequently registered under the 1933
Act or unless an exemption from such registration (such as Rule 144) is
available with respect to any proposed transfer or disposition by Purchaser of
the Common Stock. Purchaser further agrees that the Company may refuse to permit
Purchaser to sell, transfer or dispose of the Common Stock (except as permitted
under Rule 144) unless there is in effect a registration statement under the
1933 Act and any applicable state securities laws covering such transfer, or
unless Purchaser furnishes an opinion of counsel reasonably satisfactory to
counsel for the Company, to the effect that such registration is not required.
Purchaser shall not make any sale, transfer or other disposition of the Common
Stock in violation of the 1933 Act or the General Rules and Regulations
promulgated thereunder by the Securities and Exchange Commission or in violation
of any applicable state securities law.
6. Purchaser also understands and agrees that there will be placed on the
certificate(s) for the Common Stock, or any substitutions therefor, a legend
stating in substance:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the "1933 Act"), or any state
securities laws. These shares have been acquired for investment and may not
be sold or otherwise transferred in the absence of an effective
registration statement for these shares under the 1933 Act and applicable
state securities laws, or, if requested by the Company, an opinion of
counsel satisfactory to the Company that registration is not required and
that an applicable exemption is available."
Purchaser has carefully read this letter and has discussed its requirements
and other applicable limitations upon Purchaser's resale of the Common Stock
with Purchaser's counsel.
Very truly yours,
----------------------------------------
By:
------------------------------------
Title:
---------------------------------
EXHIBIT B2
WARRANT AGREEMENT ($16.00)
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
No. (NO)
Issued: (DATE), 2006
WARRANT TO PURCHASE
SHARES OF CLASS A COMMON STOCK OF
CLEARWIRE CORPORATION
(VOID AFTER __________, 20__ [[FIFTH ANNIVERSARY OF FINAL ORDER DATE]])
This certifies that [***] (the "Holder"), for value received, is entitled
to purchase from Clearwire Corporation, a Delaware corporation (the "Company"),
having a place of business at 5808 Lake Washington Blvd., Suite 300, Kirkland,
WA 98033, One Million Seven Hundred Thousand (1,700,000) fully paid and
nonassessable shares of the Company's Class A Common Stock (the "Common Stock").
The exercise price per share of this Warrant is Sixteen Dollars ($16.00)
(the "Stock Purchase Price") payable in lawful money of the United States or
otherwise as hereinafter provided. If payment is by check and the check is not a
check issued by a regulated banking or financial institution the shares to be so
issued shall not be considered issued until such check has cleared.
Unless this Warrant is terminated earlier as provided in Section 8, this
Warrant may be exercised in whole or in part at any time or from time to time up
to and including 5:00 p.m. (Pacific Time) on [[_______, 20__]][[INSERT DATE 5TH
ANNIVERSARY OF FINAL ORDER DATE]] (the "Expiration Date"), upon surrender to the
Company at its principal office (or at such other location as the Company may
advise the Holder in writing) of this Warrant properly endorsed with the
Subscription Form attached hereto as Warrant Exhibit A duly filled in and signed
(the "Subscription Form") and, if applicable, upon payment in cash or by check
of the aggregate Stock Purchase Price for the number of shares for which this
Warrant is being exercised determined in accordance with the provisions hereof.
The Stock Purchase Price and the number of shares purchasable hereunder are
subject to adjustment as provided in Section 3 of this Warrant.
1. EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
1.1 GENERAL. This Warrant is exercisable at the option of the Holder of
record hereof, at any time or from time to time, up to the Expiration Date for
all or any part of the shares of Common Stock (but not for a fraction of a
share) which may be purchased hereunder.
[*** Confidential Treatment Requested]
1.2 ISSUANCE OF CERTIFICATES. The Company agrees that the shares of Common
Stock purchased under this Warrant shall be and are deemed to be issued to the
Holder, as directed by Holder from time to time, as the record owner of such
shares as of the close of business on the date on which the Holder surrenders
this Warrant, properly endorsed, and the completed, executed Subscription Form
(a copy of which is attached hereto as Warrant Exhibit A), at the offices of the
Company, upon payment made for such shares as set forth in this Warrant.
Certificates for the shares of Common Stock so purchased, together with any
other securities or property to which the Holder hereof is entitled upon such
exercise, shall be delivered to the Holder hereof by the Company at the
Company's expense within a reasonable time (not to exceed ten (10) business
days) after the rights represented by this Warrant have been so exercised. Each
stock certificate so delivered shall be in such denominations of Common Stock as
may be requested by the Holder hereof and shall be registered in the name of
such Holder or, subject to the provisions of Section 7, such Holder's designee.
In case of a purchase of less than all the shares which may be purchased under
this Warrant, the Company shall cancel this Warrant and execute and deliver a
new Warrant or Warrants of like tenor for the balance of the shares purchasable
under the Warrant surrendered upon such purchase to the Holder hereof within a
reasonable time (not to exceed ten (10) business days).
1.3 STOCKHOLDERS AGREEMENT. Upon exercising this Warrant, at the request of
the Company, the Holder agrees to become a party to the stockholders agreement
then in effect, if any, among the Company and the holders of shares constituting
a majority of the voting power of the Company's capital stock, prior to or upon
issuance of the Common Stock to the holder.
2. SHARES TO BE FULLY PAID; RESERVATION OF SHARES. The Company covenants and
agrees that all shares of Common Stock that may be issued upon the exercise of
the rights represented by this Warrant will, upon issuance, be duly authorized,
validly issued, fully paid and nonassessable and free from all preemptive rights
of any stockholder and free of all taxes, liens and charges with respect to the
issue thereof. The Company further covenants and agrees that, during the period
within which the rights represented by this Warrant may be exercised, the
Company will at all times have authorized and reserved or, shall upon request of
the Holder authorize and reserve, for the purpose of issue or transfer upon
exercise of the subscription rights evidenced by this Warrant, a sufficient
number of shares of authorized but unissued Common Stock, or other securities
and property, when and as required to provide for the exercise of the rights
represented by this Warrant. The Company will take all such action as may be
necessary to assure that such shares of Common Stock may be issued as provided
herein without violation of any applicable law or regulation, or of any
requirements of any domestic securities exchange upon which the Common Stock may
be listed, including, but not limited to, amending its Certificate of
Incorporation to provide sufficient reserves of shares of Common Stock;
provided, however, that the Company shall not be required to effect a
registration under Federal or State securities laws with respect to such
exercise. The Company will not take any action that would result in any
adjustment of the Stock Purchase Price (as set forth in Section 3 hereof) if the
total number of shares of Common Stock issuable after such action upon exercise
of all outstanding warrants and options, together with all shares of Common
Stock then outstanding, would exceed the total number of shares of Common Stock
then authorized by the Company's Certificate of Incorporation.
2
3. ADJUSTMENT OF STOCK PURCHASE PRICE AND NUMBER OF SHARES. The Stock Purchase
Price and the number of shares purchasable upon the exercise of this Warrant
shall be subject to adjustment from time to time upon the occurrence of certain
events described in this Section 3. Upon each adjustment of the Stock Purchase
Price, the Holder of this Warrant shall thereafter be entitled to purchase, at
the Stock Purchase Price resulting from such adjustment, the number of shares
obtained by multiplying the Stock Purchase Price in effect immediately prior to
such adjustment by the number of shares purchasable pursuant hereto immediately
prior to such adjustment, and dividing the product thereof by the Stock Purchase
Price resulting from such adjustment.
3.1 SUBDIVISION OR COMBINATION OF STOCK. In case the Company shall at any
time split or subdivide its outstanding shares of Common Stock into a greater
number of shares, the Stock Purchase Price in effect immediately prior to such
split or subdivision shall be proportionately reduced, and conversely, in case
the outstanding shares of Common Stock of the Company shall be combined into a
smaller number of shares, the Stock Purchase Price in effect immediately prior
to such combination shall be proportionately increased.
3.2 DIVIDENDS IN COMMON STOCK, OTHER STOCK, PROPERTY, RECLASSIFICATION. If
at any time or from time to time the holders of Common Stock (or any shares of
stock or other securities at the time receivable upon the exercise of this
Warrant) shall have received or become entitled to receive, without payment
therefor:
3.2.1 Common Stock or any shares of stock or other securities that are
at any time directly or indirectly convertible into or exchangeable for Common
Stock, or any rights or options to subscribe for, purchase or otherwise acquire
any of the foregoing by way of dividend or other distribution;
3.2.2 Any cash paid or payable otherwise than as a cash dividend out
of current earnings; or
3.2.3 Common Stock or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification, combination of
shares or similar corporate rearrangement (other than (i) shares of Common Stock
issued as a stock split, adjustments in respect of which shall be covered by the
terms of Section 3.1 above or (ii) an event for which adjustment is otherwise
made pursuant to Section 3.3 below);
then in each such case, the Holder hereof shall, upon the exercise of this
Warrant, be entitled to receive, in addition to the number of shares of Common
Stock receivable thereupon, and without payment of any additional consideration
therefor, the amount of stock and other securities and property (including cash
in the cases referred to in clauses 3.2.2 and 3.2.3 above) which such Holder
would hold on the date of such exercise had he or it been the holder of record
of such Common Stock as of the date on which holders of Common Stock received or
became entitled to receive such shares or all other additional stock and other
securities and property.
3.3 REORGANIZATION, RECLASSIFICATION OR RECAPITALIZATION. If any
recapitalization, reclassification or capital reorganization of the capital
stock of the Company shall be effected in such a way that holders of Common
Stock shall be entitled to receive stock, securities, or other
3
assets or property (a "Restructuring"), then, as a condition of such
Restructuring, lawful and adequate provisions shall be made whereby the Holder
hereof shall thereafter have the right to purchase and receive (in lieu of or in
addition to the shares of the Common Stock of the Company immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby) such shares of stock, securities or other assets or property
as may be issued or payable with respect to or in exchange for a number of
outstanding shares of such Common Stock equal to the number of shares of such
stock immediately theretofore purchasable and receivable upon the exercise of
the rights represented hereby and appropriate provision shall be made with
respect to the rights and interests of the Holder of this Warrant to the end
that the provisions hereof (including, without limitation, provisions for
adjustments of the Stock Purchase Price and of the number of shares purchasable
and receivable upon the exercise of this Warrant) shall thereafter be
applicable, as nearly as may be, in relation to any shares of stock, securities
or assets thereafter deliverable upon the exercise hereof.
3.4 NOTICE OF ADJUSTMENT. Upon any adjustment of the Stock Purchase Price,
any increase or decrease in the number of shares purchasable upon the exercise
of this Warrant or any change in the securities or other property deliverable
upon exercise of this Warrant, the Company shall give written notice thereof, by
first class mail, postage prepaid, addressed to the registered Holder of this
Warrant at the address of such Holder as shown on the books of the Company. The
notice shall be signed by the Company's President and shall state the Stock
Purchase Price resulting from such adjustment, the increase or decrease, if any,
in the number of shares purchasable at such price upon the exercise of this
Warrant or the amount of securities or other property deliverable upon such
exercise, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
3.5 OTHER NOTICES. If at any time:
3.5.1 the Company shall declare any cash dividend upon its Common
Stock;
3.5.2 the Company shall declare any dividend upon its Common Stock
payable in stock or make any special dividend or other distribution to the
holders of its Common Stock;
3.5.3 there shall be any Restructuring; or
3.5.4 there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then, in any one or more of said cases, the Company shall give, by first class
mail, postage prepaid, overnight courier or facsimile, addressed to the Holder
of this Warrant at the address of such Holder as shown on the books of the
Company, (a) at least fifteen (15) days' prior written notice of the date on
which the books of the Company shall close or a record shall be taken for such
dividend, distribution or subscription rights or for determining rights to vote
in respect of any such Restructuring, dissolution, liquidation or winding-up,
and (b) in the case of any such Restructuring, dissolution, liquidation,
winding-up or public offering, at least fifteen (15) days' prior written notice
of the date when the same shall take place; provided, however, that if any
response on the part of the Holder is otherwise required, the Holder shall make
its best efforts to respond to such notice as early as possible after the
receipt thereof. Any notice given in accordance with the foregoing clause (a)
shall also specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Common Stock shall be
entitled thereto. Any notice given in
4
accordance with the foregoing clause (b) shall also specify the date on which
the holders of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such Restructuring, dissolution,
liquidation, winding-up or public offering, as the case may be.
3.6 CERTAIN EVENTS. If any change in the outstanding Common Stock of the
Company or any other event occurs as to which the other provisions of this
Section 3 are not strictly applicable or if strictly applicable would not fairly
protect the purchase rights of the Holder of the Warrant in accordance with such
provisions, the Board of Directors of the Company shall make an adjustment in
the number and class of shares available under the Warrant, the Stock Purchase
Price or the application of such provisions, so as to protect such purchase
rights as aforesaid. The adjustment shall be such as will give the Holder of the
Warrant upon exercise for the same aggregate Stock Purchase Price the total
number, class and kind of shares as it would have owned had the Warrant been
exercised prior to the event and had it continued to hold such shares until
after the event requiring adjustment.
4. ISSUE TAX. The issuance of certificates for shares of Common Stock upon the
exercise of the Warrant shall be made without charge to the Holder of the
Warrant for any issue tax (other than any applicable income taxes) in respect
thereof; provided, however, that the Company shall not be required to pay any
tax that may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than that of the then Holder of the
Warrant being exercised.
5. CLOSING OF BOOKS. The Company will at no time close its transfer books
against the transfer of any warrant or of any shares of Common Stock issued or
issuable upon the exercise of any warrant in any manner that interferes with the
timely exercise of this Warrant.
6. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing contained in
this Warrant shall be construed as conferring upon the Holder hereof the right
to vote or to consent or to receive notice as a stockholder of the Company or
any other matters or any rights whatsoever as a stockholder of the Company. No
dividends or interest shall be payable or accrued in respect of this Warrant or
the interest represented hereby or the shares purchasable hereunder until, and
only to the extent that, this Warrant shall have been exercised. No provision
hereof in the absence of affirmative action by the Holder to purchase shares of
Common Stock, and no mere enumeration herein of the rights or privileges of the
Holder hereof, shall give rise to any liability of such Holder for the Stock
Purchase Price or as a stockholder of the Company, whether such liability is
asserted by the Company or by its creditors.
7. TRANSFER RESTRICTIONS. Subject to compliance with applicable federal and
state securities laws, this Warrant and all rights hereunder are transferable,
in whole but not in part, without charge to the Holder hereof (except for
transfer taxes), upon surrender of this Warrant properly endorsed and in
compliance with such provisions, to a Qualified Transferee. "Qualified
Transferee" means a proposed transferee that meets all of the following
requirements: (a) the proposed transferee is an "accredited investor" as such
term is defined under Regulation D of the Act; (b) the proposed transferee is
not a competitor of the Company, as reasonably determined
5
by the Company; and (c) the Company has not reasonably and in good faith
concluded that providing such proposed transferee any information to which a
stockholder of the Company is entitled is likely to threaten the proprietary
nature of such information or the Company's business objectives or competitive
positioning. The Company will maintain a register (the "Warrant Register")
containing the names and addresses of the Holder or Holders. Any Holder of this
Warrant or any portion thereof may change its address as shown on the Warrant
Register by written notice to the Company requesting such change. Any notice or
written communication required or permitted to be given to the Holder may be
delivered or given by mail to such Holder as shown on the Warrant Register and
at the address shown on the Warrant Register. Until this Warrant is transferred
on the Warrant Register of the Company, the Company may treat the Holder as
shown on the Warrant Register as the absolute owner of this Warrant for all
purposes, notwithstanding any notice to the contrary. This Warrant may not be
transferred or assigned without compliance with all applicable federal and state
securities laws by the transferor and the transferee. The Holder further agrees
not to make any disposition of all or any portion of this Warrant or any shares
of Common Stock or any security into or for which such Common Stock is exchanged
unless and until the transferee has agreed in writing for the benefit of the
Company to be bound by this Section 7 to the extent such section is then
applicable, and:
A. There is then in effect a registration statement under the 1933 Act
covering such proposed disposition and such disposition is made in accordance
with such registration statement; or
B. (i) the Holder shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition and (ii) if reasonably
requested by the Company, the Holder shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration of such securities under the 1933 Act.
8. CHANGE OF CONTROL.
8.1 The Company shall give the Holder at least fifteen (15) days' prior
written notice of a Change of Control in accordance with the provisions of
Section 3.5. A "Change of Control" means (i) a sale of all or substantially all
of the assets of the Company or (ii) the transfer by the Company's stockholders
by means of a merger, consolidation, reorganization, recapitalization or
otherwise, of more than 50% of the voting power of the Company in a single
transaction or a series of related transactions.
8.2 [***].
9. RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF WARRANT. The rights and
obligations of the Company, of the holder of this Warrant and of the holder of
shares of Common Stock issued upon exercise of this Warrant, referred to in
Section 7, shall survive the exercise of this Warrant.
10. MODIFICATION AND WAIVER. The terms of this Warrant may be amended, or the
observance of any term of this Warrant may be waived (either generally or in a
particular
[*** Confidential Treatment Requested]
6
instance and either retroactively or prospectively), only with the written
consent of the Company and the Holder of this Warrant.
11. NOTICES. Any notice, request or other document required or permitted to be
given or delivered to the Holder hereof or the Company shall be delivered or
shall be sent by first-class mail, postage prepaid, to the Holder at its address
as shown on the Warrant Register or to the Company at the address indicated
therefor in the first paragraph of this Warrant, or such other address as either
may from time to time provide to the other.
12. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description headings of the
several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of Delaware.
13. LOST WARRANTS. The Company represents and warrants to the Holder hereof that
upon receipt of evidence reasonably satisfactory to the Company of the loss,
theft, destruction, or mutilation of this Warrant and, in the case of any such
loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory
to the Company, or in the case of any such mutilation upon surrender and
cancellation of such Warrant, the Company, at its expense, will make and deliver
a new Warrant, of like tenor, in lieu of the lost, stolen, destroyed or
mutilated Warrant.
14. FRACTIONAL SHARES. No fractional shares shall be issued upon exercise of
this Warrant. The Company shall, in lieu of issuing any fractional share, pay
the Holder entitled to such fraction a sum in cash equal to such fraction
multiplied by the then effective Fair Market Value of the Common Stock.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
by its President, thereunto duly authorized as of the date first written above.
CLEARWIRE CORPORATION
a Delaware corporation
By:
------------------------------------
(OFFICER_NAME_TITLE)
7
WARRANT EXHIBIT A
SUBSCRIPTION FORM
Date: _____________, 20__
Clearwire Corporation
_______________________
_______________________
Ladies and Gentlemen:
The undersigned hereby elects to exercise the warrant issued to it by Clearwire
Corporation (the "Company") and dated ______________, 200_, Warrant No. ___ (the
"Warrant") to purchase thereunder __________ shares of the Class A Common Stock
of the Company (the "Shares") at a purchase price of $________ per Share, or an
aggregate purchase price of _______________________ ($__________) (the "Purchase
Price").
Pursuant to the terms of the Warrant the undersigned has delivered the Purchase
Price herewith in full in cash or by certified check or wire transfer. The
undersigned also makes the representations set forth on the attached Warrant
Exhibit B.
Very truly yours,
----------------------------------------
By:
------------------------------------
Title:
---------------------------------
WARRANT EXHIBIT B
INVESTMENT REPRESENTATIONS
THIS AGREEMENT MUST BE COMPLETED, SIGNED AND RETURNED TO CLEARWIRE CORPORATION
ALONG WITH THE SUBSCRIPTION FORM BEFORE THE COMMON STOCK ISSUABLE UPON EXERCISE
OF THE WARRANT DATED __________________, 200_, WILL BE ISSUED.
_____________________
Clearwire Corporation
_______________________
_______________________
Ladies and Gentlemen:
The undersigned, _________________________ ("Purchaser"), intends to
acquire up to ______________ shares of the Class A Common Stock (the "Common
Stock") of Clearwire Corporation (the "Company") from the Company pursuant to
the exercise or conversion of certain Warrants to purchase Common Stock held by
Purchaser. The Common Stock will be issued to Purchaser in a transaction not
involving a public offering and pursuant to an exemption from registration under
the Securities Act of 1933, as amended (the "1933 Act") and applicable state
securities laws. Purchaser has been advised that the Common Stock has not been
registered under the 1933 Act or state securities laws on the ground that this
transaction is exempt from registration, and that reliance by the Company on
such exemptions is predicated in part on Purchaser's representations set forth
in this letter. Accordingly, Purchaser represents, warrants and agrees as
follows:
1. Purchaser is acquiring the Common Stock for its own account and
beneficial interest to hold for investment and not for sale or with a view to
distribution of the Common Stock or any part thereof. Purchaser has no present
intention of selling (in connection with a distribution or otherwise), granting
any participation in, or otherwise distributing the same, and does not presently
have reason to anticipate a change in such intention.
2. Purchaser acknowledges that it has received all the information it has
requested from the Company and considers necessary or appropriate for deciding
whether to acquire the Common Stock. Purchaser represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Common Stock and to obtain any
additional information necessary to verify the accuracy of the information given
the Purchaser. Purchaser further represents that it has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risk of this investment.
3. Purchaser is an "accredited investor" as such term is defined in Rule
501 under the 1933 Act.
4. Purchaser acknowledges that investment in the Common Stock involves a
high degree of risk, and represents that it is able, without materially
impairing its financial condition, to hold the Common Stock for an indefinite
period of time and to suffer a complete loss of its investment.
5. Purchaser has been informed that under the 1933 Act, the Common Stock
must be held indefinitely unless it is subsequently registered under the 1933
Act or unless an exemption from such registration (such as Rule 144) is
available with respect to any proposed transfer or disposition by Purchaser of
the Common Stock. Purchaser further agrees that the Company may refuse to permit
Purchaser to sell, transfer or dispose of the Common Stock (except as permitted
under Rule 144) unless there is in effect a registration statement under the
1933 Act and any applicable state securities laws covering such transfer, or
unless Purchaser furnishes an opinion of counsel reasonably satisfactory to
counsel for the Company, to the effect that such registration is not required.
Purchaser shall not make any sale, transfer or other disposition of the Common
Stock in violation of the 1933 Act or the General Rules and Regulations
promulgated thereunder by the Securities and Exchange Commission or in violation
of any applicable state securities law.
6. Purchaser also understands and agrees that there will be placed on the
certificate(s) for the Common Stock, or any substitutions therefor, a legend
stating in substance:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the "1933 Act"), or any state
securities laws. These shares have been acquired for investment and may not
be sold or otherwise transferred in the absence of an effective
registration statement for these shares under the 1933 Act and applicable
state securities laws, or, if requested by the Company, an opinion of
counsel satisfactory to the Company that registration is not required and
that an applicable exemption is available."
Purchaser has carefully read this letter and has discussed its requirements
and other applicable limitations upon Purchaser's resale of the Common Stock
with Purchaser's counsel.
Very truly yours,
----------------------------------------
By:
------------------------------------
Title:
---------------------------------
EXHIBIT C
SERVICES AGREEMENT
C-1
SERVICES AGREEMENT
THIS Services Agreement ("SERVICES AGREEMENT") is made and entered into
effective December __, 2006 (the "EFFECTIVE DATE"), by and between [***]
("LICENSEE"), and Clearwire US LLC, a Nevada limited liability company with its
principal offices at 5808 Lake Washington Blvd., Suite 300, Kirkland, WA 98033,
and its successors ("CLEARWIRE US"). Clearwire US and Licensee may be referred
to herein individually as a "PARTY" and collectively as "PARTIES."
WHEREAS, Clearwire US, directly and through its Affiliates (as defined in
Section 1), operates wireless broadband systems and facilities capable of
delivering certain wireless broadband data services to customers, including
high-speed Internet access and such other services and technologies as may be
available in the future;
WHEREAS, Licensee and Clearwire Spectrum Holdings II LLC, a Nevada limited
liability company ("CSH II"), have entered into an Educational Broadband Service
Long Term De Facto Transfer Lease Agreement dated December __, 2006 (the
"LEASE"), pursuant to which Licensee has leased to CSH II a portion of the
capacity on certain Educational Broadband Service channels licensed to Licensee;
WHEREAS, Clearwire US and CSH II are both wholly-owned, first tier
subsidiaries of Clearwire Parent (as defined in Section 1);
WHEREAS, Clearwire Parent (as defined in Section 1) has executed a Parent
Guarantee and Covenant Agreement on December __, 2006, pursuant to which upon
the occurrence of certain described events, Clearwire Parent will guarantee the
performance of Clearwire US under this Services Agreement and provide a letter
of credit to Licensee; and
WHEREAS, the Parties are entering into this Services Agreement to provide
Licensee with the ability to access and use products and services offered by
Clearwire US and its Affiliates and funding for certain other services during
the term of the Lease.
NOW, THEREFORE, in consideration of the foregoing and the promises set
forth below, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Licensee and Clearwire US agree as
follows:
1. DEFINITIONS
(A) The following terms, when used in this Services Agreement, shall
have the same meanings ascribed to them in the Lease: Affiliate, [***],
Clearwire Network, Clearwire Parent, Clearwire's Service, Costs and Expenses,
Final Order Date, GSAs, Including, Laws, Parent Guarantee and Covenant
Agreement, Permitted End Users, and Person.
(B) The following terms shall have the meanings set forth below and,
as defined, may be used in the singular or plural form, as appropriate.
"ADDITIONAL CAPITAL PAYMENT" has the meaning specified in Section 5(b).
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"[***] COUNTIES" means [***] counties in [***].
"ASSIGNMENT" has the meaning specified in Section 9(a).
"CAPITAL GOODS" has the meaning specified in Section 5(a).
"CAPITAL PAYMENT" has the meaning specified in Section 5(a).
"CLEARWIRE" has the meaning specified in Section 4(a).
"CLEARWIRE GOODS" has the meaning specified in Section 4(a).
"CLEARWIRE US" has the meaning specified in the preamble.
"CSH II" has the meaning specified in the recitals.
"EFFECTIVE DATE" has the meaning specified in the preamble.
"LEASE" has the meaning specified in the recitals.
"LICENSEE" has the meaning specified in the preamble.
"PARTY" and "PARTIES" have the meanings specified in the preamble.
"PRICE LIST" has the meaning specified in section 4(b).
"RESALE CUSTOMERS" has the meaning specified in section 7.
"ROLL OVER CREDITS" has the meaning specified in Section 3(b).
"SERVICE CREDITS" has the meaning specified in Section 3(a).
"SERVICES" means any telecommunications or information service (including
any product, end user equipment, hardware, software and maintenance necessary to
access and use such services) that may exist now or in the future.
"SERVICES AGREEMENT" has the meaning specified in the preamble.
"TERM" has the meaning specified in Section 8(a).
"THIRD PARTY SERVICES" has the meaning specified in Section 4(c).
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2. SCOPE OF SERVICES AGREEMENT
This Services Agreement is intended to provide Licensee with (a) Services
for a term coinciding with the term of the Lease; and (b) partial compensation
for Licensee's lease of spectrum capacity to CSH II under the Lease. Clearwire
acknowledges that Licensee intends to provide Services to itself, [***] and
Permitted End Users within the [***] Counties pursuant to the terms of this
Services Agreement. The Parties acknowledge that the products and services
offered by Clearwire US and its Affiliates, as well as by third party providers,
will change over time as technology advances and new applications emerge. The
intent of the Parties is that the term "Services" be interpreted broadly and in
a flexible manner (changing over time) so as to ensure that Licensee benefits
from future changes in technology and new applications.
3. SERVICE CREDITS
(A) SERVICE CREDITS. On the Final Order Date, and each anniversary of
the Final Order Date thereafter during the Term, Licensee shall be credited with
an annual amount of service credits ("SERVICE CREDITS") to be used in accordance
with this Services Agreement. The amount of the Service Credits shall be as
follows: [***] per year for years one (1) through five (5); [***] per year for
years six (6) through ten (10); [***] per year for years eleven (11) through
fifteen (15); [***] per year for years sixteen (16) through twenty (20); [***]
per year for years twenty-one (21) through twenty-five (25); and [***] per year
for years twenty-six (26) through thirty (30). For the purpose of the preceding
sentence and Sections 3(b), 4(c) and 4(d), the "years" of this Services
Agreement shall be calculated using the Final Order Date as the starting date of
year one (1).
(B) ROLL OVER OF SERVICE CREDITS. On each anniversary of the Final
Order Date, any amount of the unused Service Credits for the previous year may
be rolled over (i.e., carried forward) to the current year (the "ROLL OVER
CREDITS") subject to the following limitations: (i) Licensee may not use more
than [***] in Service Credits (including Roll Over Credits) in any one (1) year
period, (ii) the total Service Credits (including Roll Over Credits) shall not
exceed [***] at any one time after the third (3rd) year following commercial
launch of Clearwire's Service within either GSA, and (iii) no Roll Over Credits
shall be allowed or provided following the [***] anniversary of the Final Order
Date. After the [***] anniversary of the Final Order Date, Licensee shall have
available to it in each given year, the Service Credits provided under Section
3(a), but no Roll Over Credits.
(C) REPORTING. Within sixty (60) days following each anniversary of
the Final Order Date during the Term, Clearwire US shall provide to Licensee a
report of the Service Credits and Roll Over Credits used by Licensee for the
preceding calendar quarter.
4. USE OF SERVICE CREDITS
(A) CLEARWIRE PRODUCTS AND SERVICES. Beginning on the Final Order
Date, Service Credits can be used by Licensee to buy any product or service,
including maintenance, planning and consulting services, offered by Clearwire US
and/or its Affiliates, successors or assigns and their Affiliates (collectively,
"CLEARWIRE") in the [***] Counties ("CLEARWIRE GOODS"), for use by Licensee,
[***] and Permitted End Users. All Clearwire Goods must be
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offered to Licensee, [***], and Permitted End Users [***] offered by Clearwire
at each location to which Licensee provides Clearwire Goods pursuant to the
terms of this Services Agreement.
(B) LISTS OF PRODUCTS AND SERVICES. The list of available Clearwire
Goods and their prices applicable to Licensee shall be as provided on
Clearwire's website, www.clearwire.com, or such other URL or successor method of
publishing the availability of Clearwire Goods as may be designated by Clearwire
from time to time ("PRICE LIST"). From time to time, Clearwire will notify
Licensee of any Clearwire Goods that are not described in the Price List that
may be made available to Licensee pursuant to this Agreement. Subject to
compliance with Section 4(a), the Clearwire Goods and prices may change from
time to time, as Clearwire changes such Clearwire Goods and prices for all
customers, and such changes will be reflected on the Price List. Each time the
Price List is updated, the updated information updates will supercede the prior
information.
(C) [***].
(D) HUMAN RESOURCES. Service Credits may also be used to fund
internal, third party, or Clearwire human resources (e.g., internal and outside
consulting and staffing to assist Licensee in deploying and managing
telecommunications and information services), provided that Licensee may use
only [***] in Service Credits for non-Clearwire human resources for the first
(1st) year following the Final Order Date, and [***] in Service Credits for
non-Clearwire human resources for each subsequent year thereafter.
(E) [***].
(F) EXCESS SERVICES. If Licensee orders Clearwire Goods or Third Party
Services, including distribution of content pursuant to Section 4(e), in excess
of the Service Credits and any available Roll Over Credits, then Licensee will
pay for such excess in accordance with the pricing described in Section 4(a).
(G) TITLE. Licensee shall receive full and unencumbered title to any
equipment, hardware, software or the like that Licensee purchases using the
Service Credits (including Roll Over Credits) hereunder.
5. CAPITAL PAYMENTS
(A) On each of the Final Order Date and on the tenth (10th)
anniversary of the Final Order Date, Licensee shall be credited with [***] to be
used for capital purchases as described in this Section 5(a) (each a "CAPITAL
PAYMENT"). Licensee may use each Capital Payment to order from Clearwire any
hardware, software or consulting services for Licensee, [***] and Permitted End
Users to design, implement, access and use any Clearwire Goods or Third Party
Services ("CAPITAL GOODS"). For example, and for illustrative purposes only,
Licensee may purchase networking equipment, end user equipment, wiring, routers,
local distribution networks, hardware or software upgrades and consulting time
for current or future technologies and services. Notwithstanding the foregoing,
the Parties agree that up to [***] of each Capital Payment must be used, if at
all, to purchase Capital Goods from Clearwire and
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up to [***] may be used to purchase Capital Goods available from third parties
to the extent Clearwire does not have such Capital Goods available; [***].
(B) In addition, Licensee shall be credited with [***] on the
twentieth (20th) anniversary of the Final Order Date ("ADDITIONAL CAPITAL
PAYMENT"). Licensee may use the Additional Capital Payment to purchase any
Capital Goods from Clearwire or third parties, or, upon Licensee's request,
Clearwire shall send to Licensee the Additional Capital Payment in cash in a
lump sum amount within fifteen (15) days of Licensee's request (provided the
subject payment has become due hereunder).
(C) The Capital Payments and Additional Capital Payment must each be
used or, in the case of the Additional Capital Payment, be taken in cash by
Licensee within ten (10) years of being credited to Licensee pursuant to this
Section 5.
6. OPERATIONAL TERMS
(A) ORDERING. Licensee may purchase Clearwire Goods and Third Party
Services via submission of an order form in a format reasonably acceptable to
Clearwire. Although Licensee may provide Clearwire Goods and Third Party
Services to itself, [***] and Permitted End Users, only Licensee may submit
order forms or otherwise request action by Clearwire US under this Services
Agreement. The ordering and use of Clearwire Goods shall be governed by the
acceptable use policy and terms of service, and such other policies of general
applicability which apply to such services, which are subject to amendment by
Clearwire at any time and may be found at http://www.clearwire.com or such other
URL as may be designated by Clearwire from time to time; provided, however, that
financial terms contained in the terms of service shall not apply to such
Clearwire Goods, which financial terms will be as set forth in this Services
Agreement. In addition to the foregoing policies, Clearwire may specify from
time to time reasonable procedures for the activation, addition, deletion or
substitution of Clearwire Goods and Third Party Services to Licensee.
(B) MAINTENANCE. Licensee, [***] and Permitted End Users will be
solely responsible for the maintenance and operation of all end user equipment,
facilities and receive sites installed at Licensee, [***] or Permitted End User
sites; provided, however, that Licensee may order maintenance services using its
Service Credits as provided in this Services Agreement.
(C) SERVICE OUTAGES, REPAIRS AND UPGRADES. In addressing any service
outages, necessary repairs or upgrades to Clearwire Goods or Capital Goods,
Clearwire shall treat Licensee, [***] and Permitted End Users the same as
similarly situated customers, including assigning Licensee, [***], and Permitted
End Users the same level of priority in resolving service outages or making
necessary repairs or upgrades as it assigns to its other customers subscribing
to similar levels of Clearwire services.
(D) DESIGNATED POINT OF CONTACT. Within thirty (30) days of the Final
Order Date, Clearwire shall provide to Licensee the name and contact information
(i.e., office phone and fax numbers, mobile phone number, address and e-mail) of
a qualified Clearwire engineer or manager who will serve as a dedicated point of
contact to Licensee and whose
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responsibilities will include administering and implementing the terms of this
Services Agreement, providing information to Licensee, answering Licensee's
questions and such other activities as may be necessary or desirable to
implement the intent of this Services Agreement.
7. [***]
[***].
8. TERM AND TERMINATION
(A) TERM. This Services Agreement shall commence on the Effective Date
and shall continue in effect until the earlier of thirty (30) years or the date
of expiration or termination of the Lease for any reason (the "TERM"), unless
earlier terminated as provided herein.
(B) TERMINATION FOR BREACH. Either Party may terminate this Services
Agreement upon notice to the other Party at any time in the event of a material
breach or default by the other Party under this Services Agreement, which
material breach or default remains uncured after thirty (30) days notice of such
breach or default is provided by the other Party; provided, however, that if the
breaching Party proceeds with reasonable diligence during such thirty (30) day
period and is unable, because of circumstances beyond its control or because of
the nature of the breach or default, to cure the breach or default within such
applicable time period, the time for cure shall be extended, but in no event
beyond one hundred eighty (180) days after receipt of notice from the
non-breaching Party.
(C) TERMINATION FOR BANKRUPTCY. Either Party may terminate this
Services Agreement upon notice to the other Party if the other Party (a) ceases
to do business in the normal course, (b) becomes or is declared insolvent or
bankrupt, (c) is the subject of any proceeding related to its liquidation or
insolvency, whether voluntary or involuntary, which is not dismissed within
ninety (90) calendar days or (iv) makes an assignment for the benefit of
creditors.
(D) EFFECT OF TERMINATION. Upon the expiration of this Services
Agreement, any outstanding Service Credits, Roll Over Credits, Capital Payments
or Additional Capital Payment will be terminated and be of no further force or
effect. Upon the termination of this Services Agreement, any outstanding Service
Credits, Roll Over Credits, Capital Payments or Additional Capital Payment will
be terminated and of no further force or effect; provided however, that any
termination of this Services Agreement pursuant to Sections 8(b) or 8(c) will
not release either Licensee or Clearwire from any liability arising from any
breach or violation by that Party of the terms and provisions of this Services
Agreement prior to such termination. Each Party will be responsible for its own
Costs and Expenses related to the expiration or termination of this Services
Agreement, other than a termination pursuant to Section 8(b) and 8(c). The
general and procedural provisions of this Services Agreement, which may be
relevant to enforcing the obligations or duties of the Parties, as well as any
other provisions that by their terms obligate either Party following expiration
or termination, will survive the expiration or termination of this Services
Agreement until the obligations or duties are performed or discharged in full.
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9. ASSIGNMENTS AND SUBLEASING
(A) ASSIGNMENT AND SUBLEASE BY CLEARWIRE US TO THIRD PARTY. Clearwire
US may not sell, assign, lease, sublease, cross-lease, license, exchange,
delegate or otherwise transfer (collectively, an "ASSIGNMENT") any of its rights
or obligations under this Services Agreement without the prior written consent
of Licensee, such consent not to be unreasonably withheld or delayed.
Notwithstanding the foregoing, Licensee's consent shall not be required for an
Assignment to the same Person or Affiliate of the Person to which the Lease is
assigned; provided that the assignment of the Lease is completed in accordance
with the terms and conditions of the Lease, and provided further that both
assignments occur simultaneously.
(B) PRO FORMA ASSIGNMENT AND SUBLEASE BY CLEARWIRE US. Notwithstanding
the foregoing, Clearwire US may assign or sublease this Services Agreement (or
its rights or obligations thereunder) to an Affiliate of Clearwire US or
Clearwire Parent; provided, however, that, the Parent Guarantee and Covenant
Agreement will continue to apply in full force and effect pursuant to its terms
following the assignment or sublease. Clearwire shall provide notice to Licensee
of any such assignment or sublease and shall pay for all Costs and Expenses
(including reimbursing Licensee as necessary) associated with any such
assignment or sublease.
(C) ASSIGNMENT BY LICENSEE. Licensee may assign this Services
Agreement to a Person to which Licensee simultaneously assigns all of the
Channels in accordance with the terms and conditions of the Lease. [***].
10. REPRESENTATIONS AND WARRANTIES
(A) LICENSEE REPRESENTATIONS AND WARRANTIES. Licensee hereby
represents and warrants to Clearwire US that:
(I) (A) It has the full right and authority to enter into,
execute, deliver, and perform its obligations under this Services Agreement; (B)
it has taken all requisite corporate action to approve the execution, delivery
and performance of this Services Agreement; (C) this Services Agreement
constitutes a legal, valid and binding obligation enforceable against it in
accordance with its terms (except as may be limited by applicable bankruptcy,
insolvency or other laws of general application affecting creditors' rights
generally and except as limited by laws relating to availability of specific
performance, injunctive relief or other equitable remedies); (D) its execution
of and performance under this Services Agreement will not violate any applicable
Laws or any of its existing contractual obligations and (E) it knows of no fact
or circumstance that would disqualify it from performing its undertakings
hereunder.
(B) CLEARWIRE US REPRESENTATIONS AND WARRANTIES. Clearwire US hereby
represents and warrants to Licensee as follows:
(I) (A) It has the full right and authority to enter into,
execute, deliver, and perform its obligations under this Services Agreement; (B)
it has taken all requisite corporate action to approve the execution, delivery
and performance of this Services Agreement; (C) this Services Agreement
constitutes a legal, valid and binding obligation enforceable against it in
accordance with its terms (except as may be limited by applicable bankruptcy,
insolvency or
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other laws of general application affecting creditors' rights generally and
except as limited by laws relating to availability of specific performance,
injunctive relief or other equitable remedies); and (D) its execution of and
performance under this Services Agreement will not violate any applicable Laws
or any of its existing contractual obligations.
(II) It knows of no fact or circumstance that would disqualify it
from performing its undertakings hereunder, and neither it nor any of its
principals or its Affiliates will take any action, cause any action to be taken,
or fail to take any action that would disqualify them from performing and
undertaking the obligations under and as contemplated by this Services
Agreement.
(III) It has the financial capacity to enter into and perform the
obligations of this Services Agreement.
(IV) There are no proceedings, judgments, investigations, or
litigation existing or, to the best of Clearwire US's knowledge, threatened
against Clearwire US or any of its Affiliates that would reasonably be expected
to have a material adverse effect on Clearwire US's ability to perform its
obligations under this Services Agreement or on the solvency or financial
condition of Clearwire US.
(C) SURVIVAL. The respective representations and warranties of the
Parties will be true and correct as of the Effective Date and as of the Final
Order Date and will survive for [***] after the Effective Date.
11. MISCELLANEOUS
(A) NOTICES. Any notice required to be given by one Party to the other
under this Services Agreement will be delivered using a reliable national
express overnight delivery service and will be effective upon receipt. All
notices will be delivered to the Parties at the following addresses:
If to Clearwire US:
Clearwire US LLC
5808 Lake Washington Blvd. N.E.
Suite 300
Kirkland, WA 98033
Attn [***]
Telephone: [***]
Fax: [***]
With a copy to:
Clearwire US LLC
5808 Lake Washington Blvd. N.E.
Suite 300
Kirkland, WA 98033
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Attn: [***]
Telephone: [***]
Fax: [***]
If to Licensee:
[***]
Telephone: [***]
Facsimile: [***]
With a copy to:
[***]
Telephone: [***]
Facsimile: [***]
Either Party may change its addresses for receipt of notice or payment by giving
notice of such change to the other Party as provided in this Section 11(a).
(B) FORCE MAJEURE. Neither Party will be liable for any nonperformance
under this Services Agreement due to causes beyond its reasonable control that
could not have been reasonably anticipated by the non-performing Party and that
cannot be reasonably avoided or overcome; provided that the non-performing party
gives the other Party prompt notice of such cause, and in any event, within
fifteen (15) calendar days of its discovery.
(C) INDEPENDENT PARTIES. None of the provisions of this Services
Agreement will be deemed to constitute a partnership, joint venture, or any
other such relationship between the Parties, and neither Party will have any
authority to bind the other in any manner. Neither Party will have or hold
itself out as having any right, authority or agency to act on behalf of the
other Party in any capacity or in any manner, except as may be specifically
authorized in this Services Agreement.
(D) APPLICABLE LAW. The validity, construction and performance of this
Services Agreement will be governed by and construed in accordance with the
internal laws of the State of Washington without giving effect to any choice or
conflict of law provision or rule that would cause the application of the laws
of any jurisdiction other than the State of Washington. The Parties hereto,
their successors and assigns consent to the jurisdiction of the courts of [***]
with respect to any legal proceedings that may result from a dispute concerning
this Services Agreement.
(E) ATTORNEYS' FEES. If any action shall be brought on account of any
breach of or to enforce or interpret any of the terms, covenants or conditions
of this Services Agreement, the prevailing Party will be entitled to recover
from the other its reasonable attorneys' fees and costs, as determined by the
court or governing body hearing the action.
(F) SEVERABILITY. If any provision of this Services Agreement is found
to be illegal, invalid or unenforceable, such provision will be enforced to the
maximum extent permissible so as to effect the intent of the Parties, and the
validity, legality and enforceability
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of the remaining provisions will not in any way be affected or impaired, unless
continued enforcement of the provisions frustrates the intent of the Parties.
(G) NO WAIVER. No delay or failure by either Party in exercising any
right under this Services Agreement, and no partial or single exercise of that
right, will constitute a waiver of that or any other right. Failure to enforce
any right under this Services Agreement will not be deemed a waiver of future
enforcement of that or any other right.
(H) COUNTERPARTS. This Services Agreement may be executed in one or
more counterparts, each of which will be deemed an original, but which
collectively will constitute one and the same instrument. Original signatures
transmitted by facsimile or email will be effective to create such counterparts.
(I) HEADINGS. The headings and captions used in this Services
Agreement are for convenience only and are not to be considered in construing or
interpreting this Services Agreement.
(J) CONSTRUCTION. The Parties and their respective counsel have
negotiated this Services Agreement. This Services Agreement will be interpreted
in accordance with its terms and without any strict construction in favor of or
against either Party based on draftsmanship of the Services Agreement or
otherwise.
(K) COMPLETE AGREEMENT. This Services Agreement, together with the
Lease and Parent Guarantee and Covenant Agreement, constitutes the entire
agreement between the Parties with respect to the subject matter addressed, and
supersedes and replaces all prior or contemporaneous understandings or
agreements, written or oral, between the Parties or any of their Affiliates
regarding this subject matter. No amendment to or modification of this Services
Agreement will be binding unless in writing and signed by a duly authorized
representative of each of the Parties and Clearwire Parent.
(L) PRESS ANNOUNCEMENTS. No announcement to the press or general
public of this Services Agreement or the terms or conditions thereof shall be
made unless such announcement or release shall have been approved in advance by
both Parties. Notwithstanding the foregoing, either Party may make any such
disclosures of this Services Agreement or the terms hereof to the extent
necessary to comply with accounting standards and applicable securities and
other laws and regulations of the Securities and Exchange Commission or with the
regulations of any applicable securities exchange and each of the Parties agree
that that the Parties and/or their Affiliates may be required to disclose the
financial terms of this Services Agreement in such Party's or its Affiliates'
consolidated financial statements or in the footnotes thereof; provided,
however, that Clearwire US shall provide notice to Licensee if it makes any such
disclosures.
(M) USE OF LICENSEE'S NAME. Except as provided in Section 11(l) above
Clearwire US will not use the name of Licensee, [***], or their Affiliates in
any materials that are available to the public without Licensee's prior written
permission, which written permission may be withheld or granted in Licensee's
sole discretion.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Parties hereto have executed this Services
Agreement effective as of the Effective Date, pursuant to due authority. Each
Party acknowledges that it has read this Services Agreement, understands it, and
agrees to be bound by its terms.
[***] CLEARWIRE US LLC
By: /s/ [***] By: /s/ R. Gerard Salemme
--------------------------------- ------------------------------------
Name: [***] Name: R. Gerard Salemme
Title: President Title: Ex. V. P.
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EXHIBIT D
INTERFERENCE CONSENTS
Set forth in this Exhibit D are the following documents and information related
to Section 9 of the Agreement:
1. [***].
2. [***].
3. [***].
4. [***].
5. [***].
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[***]
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EXHIBIT E
[TO BE PROVIDED WITHIN 30 DAYS OF EFFECTIVE DATE.]
E-1
EXHIBIT F
LICENSEE'S DISCLOSURES
[***]:
1. [***].
2. [***].
3. [***].
[***].
[***].
[***].
[***].
[***].
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F-3
[***]
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EXHIBIT G
PARENT GUARANTEE AND COVENANT AGREEMENT
G-1
PARENT GUARANTEE AND COVENANT AGREEMENT
THIS Parent Guarantee and Covenant Agreement (the "AGREEMENT") is entered
into as of December __, 2006 (the "EFFECTIVE DATE"), by and between [***]
("LICENSEE"), Clearwire Spectrum Holdings II LLC, a Nevada limited liability
company with its principal offices at 5808 Lake Washington Blvd., Suite 300,
Kirkland, WA 98033, and its successors ("CLEARWIRE"), Clearwire US LLC, a Nevada
limited liability company with its principal offices at 5808 Lake Washington
Blvd., Suite 300, Kirkland, WA 98033, and its successors ("CLEARWIRE US") and
Clearwire Corporation, a Delaware corporation with its principal offices at 5808
Lake Washington Blvd., Suite 300, Kirkland, WA 98033, and its successors
("CLEARWIRE PARENT"). Licensee, Clearwire, Clearwire US and Clearwire Parent are
sometimes referred to, individually, as a "PARTY" and, collectively, as the
"PARTIES."
WHEREAS, contemporaneously with the Effective Date hereof, Licensee and
Clearwire have entered into a Long-Term De Facto Transfer Lease Agreement (the
"LEASE") by which Licensee will lease to Clearwire excess capacity on Licensee's
Educational Broadband Service channels [***] under call sign [***] and [***]
under call sign [***] pursuant to the terms and conditions set forth in the
Lease;
WHEREAS, contemporaneously with the Effective Date hereof, Licensee and
Clearwire US have entered into a Services Agreement, under which Clearwire US
will provide Licensee with services and service credits to be applied toward
telecommunications and information services (the "SERVICES AGREEMENT");
WHEREAS, Clearwire Parent is the ultimate corporate parent of Clearwire and
Clearwire US and desires to provide additional assurances to Licensee that
Clearwire and Clearwire US will meet the terms and conditions of the Lease and
the Services Agreement, respectively; and
WHEREAS, the assurances provided by Clearwire Parent in this Agreement are
essential to the Lease and Services Agreement, and Licensee would not enter into
the Lease or Services Agreement without this Agreement.
NOW, THEREFORE, in consideration of the premises and covenants set forth in
this Agreement, and for good and valuable consideration, the sufficiency of
which is acknowledged by the Parties' signatures, the Parties agree as follows:
1. TRIGGERING EVENTS. Within thirty (30) days following the occurrence of a
Triggering Event (defined below), Clearwire Parent shall provide Licensee with
written notice of the Triggering Event and will provide the Guaranty (as defined
in Section 2) and the Letter of Credit (as defined in Section 3). A "TRIGGERING
EVENT" shall occur if any one or more of the following events occurs during the
Initial Term of the Lease:
(A) Clearwire defaults under or breaches the Lease and fails to cure
said default or breach upon notice from Licensee pursuant to the terms of
Sections 12(b) or 12(d) of the Lease;
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(B) Clearwire US defaults under or breaches the Services Agreement and
fails to cure said default or breach upon notice from Licensee pursuant to the
terms of Section 8(b) of the Services Agreement;
(C) If the debt of Clearwire Parent has been rated by Standard &
Poor's, Moody's Investors Service and/or Fitch Ratings (each a "RATINGS
AGENCY"), and any Ratings Agency issues a rating for Clearwire Parent that is
below the first rating ever issued by that Rating Agency for Clearwire Parent;
or
(D) If (i) the debt of Clearwire Parent has not been rated by a
Ratings Agency, ceases to be so rated, or if Clearwire no longer has debt to be
rated, and (ii) Clearwire Parent's net cash is less than the net present value,
using a [***] annual discount rate, of the Monthly Lease Payments due to
Licensee under the Lease for the next [***] of the term of the Lease plus the
cash value of the funding and service credits due to Licensee under the Services
Agreement for the next [***] of the term of the Services Agreement (assuming
maximum rollover of those service credits pursuant to the terms of the Services
Agreement). "NET CASH" shall mean the value of Clearwire Parent's cash and
marketable securities less its current liabilities (including the current
portion of long-term debt).
2. GUARANTY. Upon the occurrence of a Triggering Event, Clearwire Parent
agrees to irrevocably and unconditionally guarantee the full performance and
observance of its wholly-owned subsidiaries, Clearwire and Clearwire US, of all
present and future obligations, duties, responsibilities, covenants and the like
under the Lease and Services Agreement, respectively, for so long as the
Triggering Event is continuing (the "GUARANTY"). If, after the Guaranty becomes
effective, Clearwire and/or Clearwire US default or breach their respective
obligations under the terms of the Lease or Services Agreement, Licensee, at its
election, may seek to enforce its rights under the Lease and/or Services
Agreement against Clearwire Parent as guarantor either simultaneously with or
after seeking to enforce such rights against Clearwire and/or Clearwire US.
Clearwire Parent expressly waives any notice or demand from Licensee that is
separate from any notice or demand that Licensee is required to provide
Clearwire and Clearwire US in the event of a breach or default under the terms
of the Lease or Services Agreement, respectively.
3. TERMS OF THE LETTER OF CREDIT.
(A) Following the occurrence of one or more Triggering Events,
Clearwire Parent will, as soon as reasonably practicable, deliver to Licensee a
letter of credit issued by a commercial bank reasonably acceptable to Licensee
and in a form reasonably acceptable to Licensee that may be drawn upon by
Licensee to satisfy any monetary obligations of Clearwire and/or Clearwire US
under the Lease or the Services Agreement that have not been satisfied ("LETTER
OF CREDIT").
(B) If the Triggering Event is based on Section 1(a), the Letter of
Credit shall be, subject to increases as provided in Section 3(e) below, for the
amount of the Monthly Lease Payments (as that term is defined in the Lease) that
would be due through the earlier of (i) expiration of the current term of the
Lease or (ii) [***] ("MONTHLY LEASE PAYMENTS OUTSTANDING").
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(C) If the Triggering Event is based on Section 1(b), the Letter of
Credit shall be for an amount equal to the cash payments required to be made
under the Services Agreement until the earlier of (i) expiration of the current
term of the Lease Agreement and (ii) [***], (in each case assuming maximum
rollover of those service credits pursuant to the terms of the Services
Agreement) ("SERVICE CREDITS OUTSTANDING").
(D) If the Triggering Event is based on Sections 1(c) or 1(d) or a
combination of any Triggering Events, then the Letter of Credit shall be for an
amount equal to [***].
(E) The Parties acknowledge and agree that Clearwire Parent is
currently subject to limitations on its ability to incur indebtedness under that
certain Loan Agreement, dated as of August 21, 2006 ("LOAN AGREEMENT"). The
Parties further acknowledge and agree that Section 7.1(k) of the Loan Agreement
specifically permits Clearwire Parent to incur indebtedness represented by
letters of credit in an aggregate face amount not to exceed [***] at any one
time outstanding (the "LOC BASKET"). [***].
(F) The term of the Letter of Credit shall be for a period of time
from the delivery of the Letter of Credit through the earlier to occur of the
[***]; provided, however that upon the first anniversary of the Letter of
Credit, and each anniversary thereafter, in each event if the Triggering Event
is still continuing, then Clearwire Parent will either renew or substitute a new
Letter of Credit with the LOC Term determined in accordance with this section.
[***]. If the Triggering Event is not continuing, then Clearwire Parent may
terminate the Letter of Credit upon written notice to Licensee.
4. MISCELLANEOUS.
(A) This Agreement shall be binding upon and inure to the benefit of
the Parties, their assigns, and successors. In the event of an assignment
pursuant to Section 11(a) of the Lease or Section 9(a) of the Services
Agreement, this Agreement shall terminate and be of no further force or effect.
(B) Without limiting any other circumstance in which this Agreement
shall survive, the Parties specifically acknowledge that this Agreement shall
survive (i) any channel swap under Section 6(g) of the Lease and (ii) any
transaction described in Section 11(b) of the Lease or Section 9(b) of the
Services Agreement. In the event of an assignment pursuant to Section 11(b) of
the Lease or Section 9(b) of the Services Agreement, this Agreement shall be
automatically amended so as to substitute the assignee's name wherever
"Clearwire" or "Clearwire US," as the case may be, appears in this Agreement
following the assignment.
(C) The validity, construction and performance of this Agreement will
be governed by and construed in accordance with the internal laws of the State
of [***] without giving effect to any choice or conflict of law provision or
rule that would cause the application of the laws of any jurisdiction other than
the State of [***]. The Parties hereto, their successors and assigns consent to
the jurisdiction of the courts of [***] with respect to any legal proceedings
that may result from a dispute concerning this Agreement.
(D) If any action shall be brought on account of any breach of or to
enforce or interpret any of the terms, covenants or conditions of this
Agreement, the prevailing Party will be
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entitled to recover from the other Parties, on a joint and several basis, its
reasonable attorneys' fees and costs, as determined by the court or governing
body hearing the action.
(E) If any provision of this Agreement is found to be illegal, invalid
or unenforceable, such provision will be enforced to the maximum extent
permissible so as to effect the intent of the Parties, and the validity,
legality and enforceability of the remaining provisions will not in any way be
affected or impaired, unless continued enforcement of the provisions frustrates
the intent of the Parties.
(F) No delay or failure by a Party in exercising any right under this
Agreement, and no partial or single exercise of that right, will constitute a
waiver of that or any other right. Failure to enforce any right under this
Agreement will not be deemed a waiver of future enforcement of that or any other
right.
(G) This Agreement may be executed in one or more counterparts, each
of which will be deemed an original, but which collectively will constitute one
and the same instrument. Original signatures transmitted by facsimile will be
effective to create such counterparts.
(H) The Parties and their respective counsel have negotiated this
Agreement. This Agreement will be interpreted in accordance with its terms and
without any strict construction in favor of or against a Party based on
draftsmanship of the Agreement or otherwise.
(I) This Agreement constitutes the entire agreement between the
Parties with respect to the subject matter addressed, and, apart from the Lease
and Services Agreement, supersedes and replaces all prior or contemporaneous
understandings or agreements, written or oral, between the Parties or any of
their affiliates regarding this subject matter. No amendment to or modification
of this Agreement will be binding unless in writing and signed by a duly
authorized representative of each of the Parties.
(J) The Parties will take such further action and execute such further
assurances, documents and certificates as another Party may reasonably request
to effectuate the purposes of this Agreement.
[SIGNATURE PAGE FOLLOWS]
D-3
ACKNOWLEDGED AND AGREED:
CLEARWIRE CORPORATION
By: /s/ R. Gerard Salemme
---------------------------------
Name: R. Gerard Salemme
Title: Ex. V. P.
ACKNOWLEDGED:
[***]
By: /s/ [***]
---------------------------------
Name: [***]
Title: President
CLEARWIRE SPECTRUM HOLDINGS II LLC
By: /s/ R. Gerard Salemme
---------------------------------
Name: R. Gerard Salemme
Title: Ex. V. P.
CLEARWIRE US LLC
By: /s/ R. Gerard Salemme
---------------------------------
Name: R. Gerard Salemme
Title: Ex. V. P.
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Exhibit 21.1
The following is a list of the significant subsidiaries of Clearwire
Corporation, and the state or other jurisdiction of incorporation or
organization.
LIST OF CONSOLIDATED SUBSIDIARIES OF CLEARWIRE CORPORATION
<Table>
<Caption>
State or Other Jurisdiction of
Name of Subsidiary Incorporation or Organization
------------------ -----------------------------
<S> <C>
Clearwire US LLC Nevada
Clearwire Communications, Inc. Delaware
Clearwire Hawaii Partners LLC Delaware
Clearwire Hawaii Partners Spectrum, LLC Nevada
Clearwire Latin America, LLC Nevada
Clearwire Spectrum Corp. Delaware
Clearwire Spectrum Holdings LLC Nevada
Clearwire Spectrum Holdings II LLC Nevada
Clearwire Technologies, Inc. Delaware
Clearwire Telecommunications Services, LLC Nevada
Craig Wireless Honolulu, Inc. Hawaii
DCT Los Angeles, L.L.C. Delaware
Fixed Wireless Holdings, LLC Delaware
Jonsson Communications Corporation California
LH Communications, LLC Ohio
Lois Hubbard Communications, LLC Ohio
Unison Wireless, Inc. Delaware
Winbeam, Incorporated Pennsylvania
Winbeam Westmoreland, LLC Pennsylvania
Clearwire International, LLC Washington
Budget Wireless Limited Ireland
Clearwire d.o.o. za telekomunikacije Croatia
Clearwire Belgium Sprl Belgium
CLEARWIRE d.o.o. Beograd Serbia
Clearwire Brasil Participacoes Ltda. Brasil
Clearwire Europe B.V. Netherlands
Clearwire Europe Management Services GmBH Austria
Clearwire Europe S.a.r.l. Luxembourg
Clearwire France S.A.S. France
Clearwire Ireland Limited Ireland
Clearwire Poland Holdings S.a.r.l. Poland
Clearwire Poland Sp. Z.o.o. Poland
Clearwire Poland Spectrum Sp. Z.o.o. Poland
Clearwire Slovakia s.r.o. Slovakia
CW Telecomunicacoes Ltda. Brazil
Mac Telecom SA Belgium
accessNET International, S.A. Romania
Banda Ancha, S.A. Spain
Idilis, S.A. Romania
</Table>
LIST OF UNCONSOLIDATED SUBSIDIARIES OF CLEARWIRE CORPORATION
<Table>
<Caption>
State or Other Jurisdiction of
Name of Subsidiary Incorporation or Organization
------------------ -----------------------------
<S> <C>
ATCO Clearwire Telecom Limited Cayman Islands
ATCO Clearwire Telecom Limited -- Jordan PSC Jordan
Craig Wireless Manitoba Inc. Canada
Danske Telecom A/S Denmark
GALT Wireless, LLC Washington
MVS Net, S.A. de C.V. Mexico
</Table>