MMDS Channel Lease Agreement - Lawrence N. Brandt and New England Wireless Inc.
MMDS CHANNEL LEASE AGREEMENT
This MMDS Channel Lease Agreement (this "Agreement") entered into this
10th day of October, 1991, between Lawrence N. Brandt, having his principal
place of business at 3201 New Mexico Avenue, N.W., Washington, D.C. 20016
(hereinafter referred to as "Lessor" or "Brandt"), and New England Wireless,
Inc., (and any other entities owned or controlled by NEW), a Vermont
corporation, having its principal place of business at 56 Green Street,
Bellows Falls, Vermont 05101 (hereinafter referred to as "New England
Wireless" or "Lessee").
W I T N E S S E T H
WHEREAS, Lessor is the Federal Communications Commission (hereinafter
referred to as the "FCC"), applicant and tentative selectee for a four
channel Multichannel Multipoint Distribution Service Station (hereinafter
referred to as the "MMDS Station"), to operate on Channels E-1, E-2, E-3,
and E-4 (hereinafter referred to as the "Channels"), as designated by
Subpart K of Part 21 of the FCC's Rules, serving Burlington, Vermont area
(hereinafter referred to as the "Market Area" or the "Burlington Market
Area"), by line-of-sight transmissions from the MMDS Station.
WHEREAS, Lessee is undertaking to build and operate a wireless cable
system to serve the Burlington Market Area; and
WHEREAS, Lessor is desirous of leasing service on all of the Channels
to Lessee and Lessee is desirous of leasing such service from Lessor.
NOW, THEREFORE, in consideration of the premises and of mutual
promises, undertakings, covenants and conditions set forth herein, the
parties hereto do hereby agree as follows:
1. Use of the Channels.
(a) Leased Time. Lessor hereby leases to Lessee the complete
transmission capacity on all of the Channels 24 hours a day, seven days a
week, every week, as necessary for Lessee's use of the Channels for
transmission of Lessee provided video and audio programming, data and other
information in connection with Lessee's wireless cable business at reception
points selected by Lessee in the Market Area (the "Wireless Cable System")
commencing on the day the MMDS Station is constructed and extending for the
term of this Agreement and any renewal(s) thereof.
(b) Scope of Use. The transmission capacity may be used by Lessee
for any legal purpose as part of its Wireless Cable System, without any
restriction on the substance, format or type of information or signal to be
transmitted thereover except that Lessee shall not transmit video and audio
programming, data and other information that does not comply with FCC rules
and policies or any other applicable federal, state or local requirements,
including, but not limited to, FCC policies concerning indecent or obscene
programming.
(c) Obligation to Transmit. Nothing in this Agreement shall be
construed to obligate or create a duty on the part of Lessee to actually
provide to Lessor for transmission any minimum amount of video and audio
programming, data or other information during that air time covered hereby,
but the absence of programming shall not relieve Lessee of its obligation to
pay Lessor the fees due hereunder.
(d) Preemption. The use of the Channels leased hereunder are
subject to preemption by Lessor in accordance with any requirement or order
of the FCC or any other local, state or federal regulatory authority with
jurisdiction over the operation of the Channels. However, in the event such
preemption exceeds 168 consecutive hours on any one of the Channels or a
total of 336 hours in any thirty (30) day period on any or all of the
Channels, Lessee may terminate this Agreement without further liability to
Lessor.
2. Term.
(a) Initial Term. Subject to the provisions for earlier
termination contained in Section 11 hereof, the term of this Agreement shall
commence upon the date first written above and shall continue in full force
and effect for a period of five (5) years from the Start Date as defined in
Section 6 hereof. Said period is hereinafter referred to as the "Initial
Term."
(b) Renewal Term. Subject to the provisions for earlier
termination contained in Section 11 hereof, the term of this Agreement shall
automatically be extended for up to five (5) successive additional terms of
five years each (such additional term(s) are hereinafter referred to as the
"Renewal Term(s)") unless Lessee shall have served written notice on Lessor
at least six (6) months prior to the expiration date of the then-current
Initial Term or Renewal Term that it elects not to renew this Agreement for
the subsequent Renewal Term. Commencing no later than six (6) months prior
to the expiration of the fifth Renewal Term, if this Agreement has been so
extended by Lessee, Lessor and Lessee shall attempt in good faith to
negotiate the terms of a further extension of this Agreement. At no time
prior to the conclusion of those negotiations may Lessor enter into any
agreement contemplating any use whatsoever of any or all of the Channels
with any individual or entity other than Lessee.
3. Facilities.
(a) Transmission Point. Lessor's FCC application specifies a
transmitter site located at the WJOY/WQCR Radio Tower on Joy Drive in
Burlington, Vermont (the "Present Transmission Point") . Lessee has advised
Lessor that it has obtained reasonable assurance of the availability of a
new Transmission Point (the "New Transmission Point") located on Mount
Mansfield, the coordinates of which are 44 [DEGREES] 31' 32", 72 [DEGREES]
48' 54". Lessee will co-locate all of the microwave transmission facilities
to be utilized in Lessee's Wireless Cable Business serving the Burlington
Market Area at the New Transmission Point. Lessee shall, within thirty (30)
days of the date of the Agreement, provide Lessor with an amendment to his
pending application to specify the New Transmission Point for the MMDS
Station and to conform the design and equipment of the MMDS Station to that
of other facilities Lessee intends to utilize in connection with its
wireless cable business in the Burlington Market Area. Lessor shall submit
such amendment to the FCC within five (5) working days of receipt thereof.
In the event that the Commission, prior to or after submission of the
modification amendment to specify the New Transmission Point, should issue a
Conditional License specifying that construction shall be completed at the
Present Transmission Point, Lessor and Lessee shall cooperate in the
preparation and filing of an application for modification of conditional
license in the same manner as provided for in this Section for filing of an
amendment to the presently pending application. It is the intent of the
parties that Lessee's design of the MMDS Station and Lessee's specification
of equipment shall be approved by Lessor unless Lessor reasonably believes
that the design of the MMDS Station or specification of equipment proposed
by Lessee will result in non-compliance with the rules or policies of the
FCC or Lessor's inability to provide service as contemplated by this
Agreement. In the event of such reasonable disapproval by Lessor, the
parties shall utilize their best efforts to redesign the MMDS Station to
meet both the needs of Lessee's Wireless Cable Business and Lessor's
concerns.
(b) Satisfaction Notice. Upon a grant of (a) Conditional License
which specifies that construction shall be completed at the New Transmission
Point (the "Modified Conditional License") or (b) a Conditional License
which specifies that construction shall be completed at the Present
Transmission Point (the "Conditional License"), Lessor shall utilize his
best efforts to satisfy any and all conditions that the FCC may impose in
the Conditional License or the Modified Conditional License or the FCC's
Rules as conditions precedent to the construction and operation of the MMDS
Station in a manner consistent with this Agreement and further Lessor shall
take all steps necessary to obtain a Modified Conditional License as
provided for in Section 3(a) hereof. Lessor shall provide Lessee notice
within three (3) workdays of satisfying all conditions that the FCC may
impose in the Modified Conditional License or the FCC's Rules as conditions
precedent to the construction and operation of the MMDS Station (the
"Satisfaction Notice") . Notwithstanding anything in this Agreement to the
contrary, Lessee shall not be required to commence construction of the MMDS
Station until after Lessor's receipt of the Modified Conditional License and
Lessee's receipt of the Satisfaction Notice with respect thereto.
(c) Construction Schedule. Within sixty (60) days after the date
of the grant of the Modified Conditional License, Lessee shall order the
Transmission Equipment (as defined in Section 3 (c) hereof), utilizing its
best efforts to specify a delivery schedule as necessary to ensure delivery
of equipment and construction of the MMDS Station by the earlier of nine (9)
months after such grant date or such date that may be specified by the FCC
in the Modified Conditional License for completion of construction of the
MMDS Station, provided, however, that it has received the Satisfaction
Notice provided for in Section 3(b) hereof. In the event that Lessee is
unable to complete construction of the Station within the time provided by
the FCC for construction of the MMDS Station in the Modified Conditional
License for causes reasonably beyond its control, Lessee's time to complete
construction shall, subject to FCC approval thereof, be extended for such
period as is reasonable under the circumstances. Lessor agrees that upon
request of Lessee, it will file reasonable requests for an extension of its
time to complete construction of the MMDS Station. Without limiting the
generality of the foregoing, Lessor shall, upon Lessee's request, request
an extension of the time to construct the MMDS Station in the event the
Transmission Equipment is not delivered before ninety (90) days of the date
on which Lessor's authority to construct the MMDS Station is to expire under
the Modified Conditional License (as such may be extended from time to
time). Lessee shall have no obligation to order Transmission Equipment or
to construct the Station unless a Modified Conditional License specifying
the New Transmission Point shall have been granted by the FCC provided,
however, that Lessor and Lessee will use their respective best efforts to
obtain grant of a Modified Conditional License.
(d) Certification of Completion of Construction. Within three (3)
workdays after completing construction of the Station, Lessee shall notify
Lessor in writing of such completion. Within five (5) workdays of receiving
such notice, Lessor shall file a Certification of Completion of Construction
of the MMDS Station on FCC Form 494 or any successor form designated by the
FCC (the "Construction Certificate") , along with any other documentation as
may be necessary at the time to permit the commercial operation of the MMDS
Station.
(e) Transmission Equipment. Lessee shall purchase and install such
transmitters and other equipment, including, without limitation,
transmitters, combiners and waveguide (hereinafter referred to as the
"Transmission Equipment"), which equipment may be shared with other
stations, as is required to operate the Channels in accordance with the
provisions of FCC rules and regulations and the Station's FCC license.
Lessor's consent, which shall not be unreasonably withheld, shall be
required as to all Transmission Equipment. Within sixty (60) days after the
date of this Agreement, Lessee shall provide Lessor with a list of all
proposed Transmission Equipment, except for such Transmission Equipment
previously specified in the amendment) to the present application or
modification application) to specify the New Transmission Point or within
ten (10) days thereafter. Lessor shall be considered to have consented
thereto unless he states his reasons for declining consent in writing within
ten (10) days after receipt of any list of Transmission Equipment has been
provided to the Lessor by the Lessee. It is the intent of the parties that
Lessee's specification of Transmission Equipment shall be approved unless
Lessor reasonably believes that use of the Transmission Equipment specified
by Lessor will result in non-compliance with Lessor's FCC license, the rules
or policies of the FCC or Lessor's ability to provide service as required by
this Agreement.
(f) Lease of Transmission Equipment. Lessor shall have no
ownership or security interest in the Transmission Equipment. All
Transmission Equipment shall be owned by Lessee and shall be leased to
Lessor for the sum of one dollar ($1.00) per year for the entire Initial
Term and any renewal(s) thereof. In the event of termination (except as a
result of Lessor's breach) or non-renewal of this Agreement Lessor shall
have the right to purchase the Transmission Equipment at fair market value
except for such of the Transmission Equipment as is shared with other FCC-
licensed stations. In the event that Lessee shall desire to replace any of
the Transmission Equipment, Lessor shall reasonably agree to such
replacement and Lessor and Lessee will cooperate to satisfy any FCC
requirements with respect thereto.
(g) Lease of Transmission Point. Lessee agrees to utilize its best
efforts to enter a binding lease or option for sufficient space at the New
Transmission Point for installation and operation of the transmission
facilities (the "New Transmission Point Space") within ninety (90) days
after execution of this Agreement and shall, in any event, secure such a
lease or option no later than the date on which the FCC grants the Modified
Conditional License. Such option and/or lease shall provide for (1) lease
of such space for the entire Initial Term and any renewals thereof, and (2)
the right of Lessee to sublet such space to Lessor for the entire term
thereof. Copies of such option and lease shall be provided to Lessor within
ten (10) days of the execution thereof. Such lease shall provide for full
and equal rights to access by Lessor and by Lessee or by the authorized
representatives of either.
(h) Sublease of Transmission Point Space. Lessee agrees to
sublease the New Transmission Point Space to Lessor during the term of this
Agreement for $1.00 per month, provided that Lessor shall have no liability
under Lessee's lease with the owner of the New Transmission Point Space, and
no liability to Lessee under the sublease except for the payment as
specified in this paragraph. In the event of termination (except as a
result of Lessor's breach) or non-renewal of this Agreement, Lessee shall if
feasible and, if so requested by Lessor and at Lessor's cost and expense,
cooperate in seeking assignment of the lease for that part of the
Transmission Point used for operation of the Transmission Equipment or in
any efforts by Lessor to secure from the owner of the New Transmission Point
a lease for the space utilized for the Transmission Equipment at the New
Transmission Point.
(i) Modification of License. Lessor and Lessee acknowledge the
possibility that the location and technical configuration of the MMDS
Station may from time to time prevent Lessee from optimizing its wireless
cable business throughout the term of this Agreement. Lessor therefore
agrees that if at any time and from time to time Lessee so requests in
writing, Lessor shall use its best efforts to modify its FCC application(s)
or license(s) to meet the reasonable requirements of Lessee. Lessee shall
pay all costs associated with such modifications (including engineering and
legal fees, equipment costs and construction expenses), as provided in
Paragraph 5(f) hereof.
4. Operation of the Channels.
(a) Operation of the Transmission Equipment. Lessee shall supply,
at its sole cost and expense, personnel to operate and maintain the
Transmission Equipment on a day-to-day basis. Said personnel shall insure
that the Transmission Equipment shall at all times meet the technical
operating requirements set forth in the FCC License and the rules and
regulations of the FCC. All operations, maintenance and repair activities
shall be undertaken at such times as are consistent with the operating
requirements of Lessee's business. Lessor and Lessee shall cooperate to
insure that each of them at all times is fully aware of any and all
operational, maintenance and repair activities on the Channels. All
maintenance personnel shall be under the technical direction, supervision
and control of Lessor but shall be contracted for and shall be supervised on
a day-to-day basis by Lessee at Lessee's sole expense. All repairs shall be
completed as soon as reasonably possible following notification by Lessor to
Lessee of the need thereof. Lessee shall have access to the station
facilities at all times for any of the foregoing activities. Lessor shall
not be liable for any costs, and/or liability whatsoever arising as a result
of Lessee's work on the Transmission Equipment pursuant to this Agreement,
except liability caused by Lessor's own negligence.
(b) Operation of Additional Equipment. Lessee, at its own expense,
and with the prior written approval of Lessor, which shall not be
unreasonably withheld, may make alterations and/or additions to the
Transmission Equipment (including, without limitation, encoding and/or
addressing equipment selected by it) as may be required by the exigencies of
its business from time to time, provided that such alterations and additions
do not violate any FCC rules or regulations. Any alterations/additions
shall be provided by Lessee and title thereto shall remain in Lessee.
Lessee shall be responsible for the operation, maintenance and repair of all
equipment provided by it and shall indemnify Lessor against and shall pay
all costs, including legal, engineering, equipment, construction,
installation and other expenses associated with any alterations or
attachments to the Transmission Equipment, provided, however, that Lessee
has approved such costs in advance.
(c) Interference With Existing Operations. Lessor and Lessee will
cooperate in the operation and maintenance of the Transmission Equipment as
well as any alterations or attachments added thereto, in such a fashion as
to insure that the Channels do not create impermissible interference to any
FCC applicants, permittees or licensees which are entitled to protection
from such interference under the rules and regulations of the FCC, provided
that Lessee shall be responsible at its sole expense for eliminating such
interference.
(d) Reception Equipment. The parties contemplate that the MMDS
Station will be licensed and operated on a non-common carrier basis.
Therefore, the parties agree that Lessor has no responsibility hereunder to
acquire or provide any reception antennas, down converters', decoders,
descramblers., related power supplies or any associated equipment
("Reception Equipment") required to display signals transmitted over the
Channels on a television set. Lessee may, in its sole discretion and on
terms and conditions of its choosing, may, from time to time, install or
cause to be installed such Reception Equipment as may be required in order
for the general public, or any member thereof, to view the programs to be
transmitted over the Channels. Title to all Reception Equipment provided by
Lessee hereunder shall vest in Lessee or its designee. Lessee shall be
required to install Reception Equipment only at particular locations
selected by it. Reception equipment shall be installed, maintained,
operated and controlled by Lessee consistent with FCC rules and regulations.
(e) Program Origination and Delivery. Lessee shall be solely
responsible for the origination of all programming to be transmitted over
the Channels and the delivery of such programming to the New Transmission
Point, including but not limited to the costs of point-to-point microwave
channels and earth stations, if any, which it may require for such purpose.
Lessee shall bear all costs and expenses of purchasing, installing,
operating and maintaining those facilities. Any personnel required to
install, operate and maintain any program origination and delivery
facilities shall be provided by Lessee, at its sole cost and expense, and
such personnel shall be under Lessee's exclusive control.
(f) Operating Expenses. Lessee shall be solely responsible for and
shall indemnify and hold Lessor harmless from all operating expenses
resulting from provision of service over the Channels. Said operating
expenses shall include all expenses incurred by Lessor in providing service
on Lessee's behalf, provided such expenses are approved in advance by
Lessee. Any operating costs incurred by Lessor shall be passed through each
month on a dollar-for-dollar basis to Lessee and shall be due and payable as
provided in Section 5(d) hereof.
(g) Cooperation of Lessor and Lessee. Lessor shall use, operate
and maintain the Transmission Equipment in such a way as not to interfere
with Lessee or cause damage to Lessee's facilities equipment or Wireless
Cable business. Lessee shall use, operate and maintain the equipment
(including any attachments installed to the Transmission Equipment) in such
a way as not to interfere with Lessor or cause damage to the Transmission
Equipment.
(h) Maintenance of Authorization. Throughout the Initial Term and
any Renewal Term, Lessor shall maintain in force all licenses and other
authorizations required in connection with Lessee's use of the Channels
hereunder, and shall file and prosecute all necessary applications for
license renewal and all periodic reports required by the FCC. Lessor shall
not assign, transfer, sell, trade, dispose or otherwise encumber such
licenses and other authorizations or modify them in such a way as to impair
Lessee's rights hereunder without the prior written consent of Lessee, which
shall not be unreasonably withheld.
(i) Additional Authorizations. Where requested to do so by Lessee
in writing, Lessor shall utilize its best efforts to obtain and maintain in
force such additional or other authorization) as would help Lessee in its
business (including authorizations for relays, repeaters and boosters),
obtain all governmental authorizations and fulfill all other usual and
customary requirements associated with obtaining and maintaining such
authorizations. Lessee shall pay all reasonable costs, including legal,
engineering, equipment, construction, installation and other expenses
associated with obtaining and maintaining such authorization and
constructing, operating, and maintaining the authorized facilities as
provided in Paragraph 5(f) hereof.
(j) Further Efforts. Lessor shall, at Lessee's expense, file and
diligently prosecute such reasonable petitions to deny or other protests
against applications of third parties for licenses as may be requested by
Lessee.
(k) Prosecution of Applications and Amendments. In the event any
person petitions the FCC to deny or otherwise challenges any application
filed pursuant to this Agreement, or in the event the FCC grants any
application filed pursuant to this Agreement and any person petitions for
review or reconsideration of such grant before the FCC or seeks judicial
review of such grant, then Lessor and Lessee shall at Lessee's expense
oppose such petition or challenge before the FCC or defend such grant by the
FCC diligently and in absolute good faith. Should the FCC deny any
application filed by Lessor hereunder, Lessee and Lessor shall utilize their
best efforts at Lessee's expense, to secure reconsideration or review of
such denial and, should such denial become a Final Order, shall utilize
their best efforts to redesign the MMDS Station in order to meet Lessee's
legitimate business needs and to satisfy the objections of the FCC.
(l) Covenant Not to Amend or Modify. Because the location and
configuration of the MMDS Station and other facilities constructed by Lessee
hereunder are critical to Lessee's business, Lessee shall not attempt to
further amend the pending Application other than as provided for in Section
3(h) hereof or to modify the Modified Conditional License, or any other
application filed hereunder or modify any license or other authorization
secured hereunder without the prior written consent of Lessee, which consent
shall not be unreasonably withheld.
5. Charges.
(a) Security Deposit. To assure fulfillment of Lessee's
obligations hereunder, Lessee shall, on the earlier of (i) six (6) months
after the date of execution of this Agreement or (ii) no later than ten (10)
days after grant by the FCC of the Modified Conditional License for the
Station to specify the New Transmission Point, pay to Lessor a security
deposit (the "Security Deposit") in the amount of Eighteen Thousand Dollars
($18,000.00) provided, however, that such Modified Conditional License
provides that the Licensee shall have at least a six (6) month period in
which the MMDS Station may be constructed. In the event that the FCC shall
not have granted a Modified Conditional License within six (6) months of the
date of execution of this Agreement, or the FCC shall have granted a
Modified Conditional License providing less than six (6) months for
construction of the MMDS Station, the Security Deposit shall be placed in an
interest bearing escrow account by the law firm of McFadden, Evans & Sill
(the "Escrow Agent"). The Escrow Agent shall pay the principal of the
Security Deposit to Lessor upon grant of a Modified Conditional License
providing a continuous period of six (6) months or more for construction of
the MMDS Station. In the event that the FCC should grant the Modified
Conditional License containing a condition requiring construction in less
than six (6) months from the date of such grant and Lessee determines that
the time provided for construction of the MMDS Station is not reasonably
sufficient for actual construction of the MMDS Station, the Security Deposit
shall be held in escrow by the Escrow Agent and shall be paid over to Lessor
within ten (10) days of grant of such extensions of time by the FCC as may
be reasonably necessary for construction of the MMDS station as contemplated
by Section 3(c) hereof. Lessee may, at its option, terminate this Agreement
and the Security Deposit shall be returned to Lessee if Lessor is unable to
obtain FCC approval of a Modified Conditional License specifying the new
Transmission Point for a period within which Lessee determines it can
reasonably comply with the construction schedule contained in Section 3(c)
hereof. In any case, a grant of a Modified Conditional License or of any
extension thereof authorizing a continuous construction period of six (6)
months or more shall be considered reasonably sufficient for construction.
In the event of termination pursuant to this provision Lessee's only
remaining obligation shall be to pay Lessor's expenses under Section 5(f) of
this Agreement through the date of termination. In the event the Security
Deposit is then held in escrow, the Escrow Agent is directed to deduct such
expenses from the escrowed funds and to pay over the balance of the
principal and interest accrued thereon to Lessee. Subsequent to the payment
of the Security Deposit to the Lessor, in the event of any default in
Lessee's obligations, Lessor shall have the right, at its option and
consistent with Section 5(e) hereof, to apply the Security Deposit to the
curing of such default. Any such application shall not be a defense to any
action by Lessor arising out of said default, and, upon demand, Lessee shall
restore the Security Deposit to the then full amount. Failure by Lessee to
pay the Security Deposit provided for in this section shall terminate this
Agreement, subject, however, to Lessee's obligation to pay Lessor's expenses
under Section 5(f) of this Agreement through the date of termination.
(b) Transmission Fee. Commencing on the Start Date and continuing
each month thereafter for the Initial Term of this Agreement, Lessee shall
pay to Lessor in consideration of lease of the Channels provided to Lessee
hereunder and the performance by Lessor of its additional obligations
hereunder, a minimum monthly fee (the "Transmission Fee"), of One Thousand
Dollars ($1,000.00) in each of the first twelve months following the Start
Date, One Thousand Two Hundred and Fifty Dollars ($1,250.00) in the
thirteenth through twenty-fourth months following the Start Date and One
Thousand Five Hundred Dollars ($1,500.00) for each of remaining months in
the Initial and Renewal Term(s). The Transmission Fee shall only be paid in
those months in which the amount payable to Lessor as a Transmission Fee
pursuant to this provision is greater than the net amount due and payable to
Lessor as a Connection Fee pursuant to 5(c) hereof.
(c) Connection Fee. Commencing on the Start Date and continuing
each month thereafter, Lessee shall pay to Lessor a monthly connection fee
(the "Connection Fee") which shall be the product of the average number of
wireless cable subscribers receiving Lessee's wireless cable operation over
the MMDS Station in the Burlington Market Area during the previous calendar
month and a per subscriber fee of Thirty-Five Cents ($.35) per month. For
the purposes of computing the Connection Fee due for any month, the term
"Subscribers" shall be deemed to mean the number of paid subscribers who
have received Lessee's wireless cable programming over Lessor's Station
during the prior month. For purposes of the definition of Subscriber, (1)
each single family residential dwelling and each single business office or
place shall be considered one subscriber and (2) in those situations where
programming is sold in bulk for viewing at isolated locations in the same
facility (e.g., where a number of viewing units are grouped for billing
purposes, such as may be the case with condominiums and hotels) and the
Lessee's rates therefore are less than its prevailing monthly rate for the
sale of the Lessee's programming over Lessee's wireless cable system to
individual subscribers in the Market Area, the number of subscribers from
such bulk billing points shall be determined by dividing the total monthly
revenues derived from the sale of programming over Lessee's wireless cable
system to the bulk billing point by the Lessee's then prevailing basic
monthly rate for the sale of programming to individual subscribers receiving
wireless cable programming over Lessor's Channels in the Market Area. The
determination of the number of Subscribers in any given month may be subject
to redetermination by the Lessee, with notice to the Lessor, to take into
account those Subscribers who have not paid for at least one full month's
subscription fee and those who the Lessee may have disconnected or
terminated for lack of payment. In such event, the Connection Fees for the
applicable month shall be recalculated at any time within three (3) months
of the end of the month in question and deficiencies in the Connection Fee
for such month shall be paid promptly by the Lessee to the Lessor and any
excess in the Connection Fee for such month shall be applied to offset
against any then current payments due from the Lessee to the Lessor.
(d) Required Certificate, Invoice and Payment Procedure. Lessee
shall, within fifteen (15) days after the end of each month after the Start
Date, provide Lessor with a Certificate signed by a partner of Lessee
showing the number of Subscribers for the preceding month, computed in
accordance with Section 5(c). The Connection Fee or Transmission Fee
payable by Lessee to Lessor, as determined in accordance with Sections 5(b)
and 5(c) hereof, shall be computed on the Certificate, and Lessee shall
forward said Connection Fee or Transmission Fee to Lessor at the time of
tendering the Certificate. Lessee shall include on the Certificate any
other information reasonably requested by Lessor so that Lessor may
accurately determine that the Connection Fee tendered by Lessee has been
calculated correctly pursuant to Section 5(c) hereof. Any other charges to
be paid by Lessee hereunder shall be invoiced to Lessee on a monthly basis
by Lessor. Said invoices shall contain an itemization of the charges
contained therein, and shall be paid by Lessee within twenty (20) days after
the date of receipt thereof.
(e) Set-Off. The Security Deposit provided for in Section 5(a)
hereof shall be set-off on a pro rata basis against the Connection or
Transmission Fee due during each month of the fifth year of the Initial
Term. The amount of the set-off shall be Fifteen Hundred Dollars
($1,500.00) per month, i.e., Eighteen Thousand Dollars ($18,000.00) divided
by Twelve (12) months equals Fifteen Hundred Dollars ($1,500.00) per month.
(f) Lessor's Expenses. Lessee shall pay all reasonable costs
incurred by Lessor subsequent to the execution of this Agreement ("Lessor's
Expenses"), including filing fees, legal, engineering and consulting fees,
equipment, construction, installation and other expenses associated with
obtaining, protecting and maintaining Lessor's FCC authorization (including
the satisfaction of any conditions thereon), with performing under this
Agreement, and with constructing, operating and maintaining the authorized
facilities, so long as such expenses relate to activities required of Lessor
under this Agreement or are otherwise approved by Lessee.
(g) Right to Audit. Lessor and Lessee shall, while this agreement
is in force, keep, maintain and preserve complete and accurate records and
accounts, including invoices, correspondence, ledgers, financial and other
records reasonably required to determine Lessor's and Lessee's charges
hereunder, and such records and accounts shall be available for inspection
and audit at the respective offices of Lessor and Lessee at any time or
times during the time service is being provided to Lessee hereunder or
within ninety (90) days thereafter, during reasonable business hours, by
Lessor or Lessee or their nominee(s). Lessor and Lessee shall provide each
other with five (5) business days' advance written notice of their intent to
inspect said records and accounts prior to being allowed to do so. In the
event of any dispute to the amount of Connection Fees due to Lessor, such
dispute and no other dispute arising under this Agreement, shall be resolved
by arbitration before the American Arbitration Association (the "AAA") on a
fast track single arbitrator basis. Such dispute shall not in any way
result in a default hereunder unless the award of the AAA is not complied
with. All non-public information obtained by Lessee or Lessor during any
audit shall be maintained on a confidential basis.
(h) Proration of Fees. In the event that (i) the Start Date shall
be a date other than the first day of a calendar month, (ii) this Agreement
shall be terminated on a date other than the last day of a calendar month
and it is determined that such termination shall have occurred in a manner
not affecting Lessor's right to payments hereunder, the Transmission Fee or
Connection Fee due Lessor in such month shall be pro rated.
(i) Subscriber Contracts. Lessor shall not interfere with the
right of Lessee or its designee to lawfully modify, waive, rescind,
terminate, in whole or in part, or cancel any and all services or contracts
with Subscribers. In case any such services or contracts are rescinded,
terminated or canceled, Lessor shall not be entitled to any participation in
revenues or claims whatsoever with respect to the unperformed portion of any
such contract.
6. Start Date. The Start Date shall be the earlier of the date upon
which Lessee first provides service to a Subscriber or the first day of the
sixth calendar month following the date upon which Lessor certifies
completion of construction pursuant to Section 3(d) hereof. For purposes of
this Paragraph, a "Subscriber" is any residential unit or commercial
establishment which receives wireless cable service under paid contract with
the Lessee or under rights granted by the Lessee.
7. Unauthorized Reception Over Channels. Lessor if requested by
Lessee and to the extent requested, shall use its best efforts to prevent
any unauthorized individual or entity from receiving the signals transmitted
over the Channels. Lessee shall be responsible for and shall reimburse
Lessor for all costs, including legal, engineering, equipment, construction,
installation and other expenses associated with any prevention efforts
regarding unauthorized reception over the Channels initiated by Lessor on
Lessee's behalf provided that Lessee has approved such costs in advance.
8. Indemnification. Each party shall forever protect, save, defend
and keep the other party harmless and indemnify said other party against and
from any and all claims, demands, losses, costs (including reasonable
attorneys' fees), damages, suits, judgments, penalties, expenses and
liabilities of any kind or nature whatsoever arising directly or indirectly
out of the acts, omissions, negligence or willful misconduct of the said
party, its employees or agents in connection with the performance of this
Agreement. Moreover, Lessee shall forever protect, save, defend and keep
Lessor and its owners, employees and agents harmless and indemnify them
against (i) any and all claims, demands, losses, costs (including reasonable
attorneys' fees), damages, suits, judgments, penalties, expenses and
liabilities resulting from Lessee's wireless cable operation and from claims
of indecency, obscenity, libel, slander or the infringement of copyright or
the unauthorized use of any trademark, trade name, service mark or any other
claimed harm or unlawfulness arising from the transmission of any
programming; and (ii) against claims for infringement of patents arising
from Lessor's or Lessee's use of the Transmission Equipment in connection
with apparatus or systems of Lessee. Where such indemnification is sought
by a party (the "Claiming Party"), (a) it shall notify 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 acknowledgement of its obligation to indemnify in such
instance, in form and substance satisfactory to the Claiming party, the
Claiming Party shall afford the Indemnifying Party the 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 shall not effect any such compromise or settlement
without prior written consent of the Indemnifying Party) and (c) the
Claiming Party shall cooperate with the reasonable requests of the
Indemnifying Party in its above-described participation in any compromise,
settlement, defense or resolution of such claim or litigation.
9. Insurance. The Lessee shall during the entire term of this
Agreement (and all renewal(s) thereof) carry insurance covering (i) general
liability, (ii) loss or damage to the transmission equipment, (iii) loss and
liability for accidents and other losses in such amounts as is reasonably
prudent in view of the potential losses covered. The Lessor shall be named
as coinsured on each of such policies and the Lessee shall provide the
Lessor with certificates of insurance demonstrating such coverage and co-
insured status prior to commencement of construction as provided for in
Section 3(b) hereof.
10. Representations and Warranties. Each of the parties hereto
represents and warrants to the other the following, with respect to facts
and issues relating to it;
(a) Organization. Lessor will, on the Start Date, control the FCC
license for the Channels and have full power and authority to carry out all
of the transactions contemplated hereby. Lessee has full power and
authority to own property and to carry out all of the transactions
contemplated hereby.
(b) Compliance with Law. Lessor and Lessee shall comply with all
material laws, rules and regulations governing the business, ownership and
operation of the Channels.
(c) Requisite Authority. All requisite resolutions and other
authorizations necessary for the execution, delivery, performance and
satisfaction of this Agreement by Lessor and Lessee have been duly adopted
and complied with.
(d) Litigation and Claims. No litigation, proceeding, complaint,
investigation or controversy is pending by or before any court or regulatory
agency or to the knowledge of Lessor or Lessee is threatened that is
material to this transaction, and there is no basis known to it for any such
litigation, proceeding, controversy or claim.
11. Termination.
(a) Termination of FCC Authorization. Either party may terminate
this Agreement upon prior written notice to the other that Lessor's
authority to provide the Channels in accordance with the terms of this
Agreement shall have terminated by the FCC. If such FCC termination shall
have occurred without breach by either party of its obligations hereunder,
such termination shall extinguish and cancel this Agreement and its effect
absolutely without further liability on the part of either party to the
other except that Lessor shall be entitled to retain the Security Deposit
and Lessee shall remain obligated to pay all Transmission Fees, Connection
Fees, Monthly Operating Charges and Lessor's expenses through the date of
such termination. If, however, such FCC termination is caused in whole or
in part by a material breach of this Agreement, then such termination shall
not affect or diminish the rights, claims or remedies available in equity or
at law to the non-breaching party. If such termination is occasioned by a
breach of this Agreement by Lessor, Lessor shall, within ten (10) days after
such termination, return the Security Deposit to Lessee, provided, however,
that such return shall be without prejudice to any other rights or remedies
that Lessee may enjoy under this Agreement.
(b) Termination by Reason of Default and Nonperformance. At the
option of a non-defaulting party, this Agreement may be terminated upon the
material breach or default by the other party of its duties and obligations
hereunder if such breach or default shall continue for a period of thirty
(30) consecutive days after such party's receipt of written notice thereof
from the nondefaulting party. If such termination is occasioned by a breach
of this Agreement by Lessor, Lessor shall, within ten (10) days after such
termination, return the Security Deposit to Lessee, provided, however, that
such return shall be without prejudice to any other rights or remedies that
Lessee may enjoy under this Agreement. Failure to make any payment of
Transmission Fees, Connection Fees or operating charges shall, if such
failure continues for a period of thirty (30) days after written notice
thereof to Lessee, constitute a material breach of this Agreement by Lessee.
In such event, Lessor may elect to cancel and terminate this Agreement, and
retain the Security Deposit, and Lessee shall remain obligated to pay all
Transmission Fees, Connection Fees, Operating Charges and Lessor's expenses
through the date of such termination.
(c) Termination for Interference. If, following the Start Date,
harmful electrical interference as defined by FCC Rules which precludes
service to 25% or more of the homes within the Station's predicted service
area should arise which is beyond the control of Lessee and Lessor, Lessee
may terminate this Agreement without further liability to Lessor, provided,
however, that Lessee shall first give written notice to Lessor of its intent
to so terminate, provide therein complete information concerning the origin,
nature and duration of such interference and utilize its best efforts for a
reasonable period in cooperation with Lessor to eliminate such electrical
interference. In the event of termination under this Paragraph, Lessor
shall be entitled to retain the Security Deposit and Lessee shall remain
obligated to pay all Transmission Fees, Connection Fees, Operating Charges
and Lessor's Expenses through the date of such termination.
12. Miscellaneous.
(a) Force Majeure. Notwithstanding anything contained herein to
the contrary, no party shall be liable to any other for failure to perform
any obligation hereunder (nor shall any charges or payments be obligated to
be made in respect thereof) 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 miliary authorities, acts of God or other
contingencies beyond the reasonable control of the parties, and all
requirements as to notice and other performance required hereunder within a
specified period of pendency of any such contingency which shall interfere
with such performance.
(b) Assignment of Interests. Except as provided in Section 12(d)
hereof, neither Lessor nor Lessee may assign their rights or interests under
this Agreement except with the prior written consent of the other party,
which consent shall not be unreasonably withheld.
(c) Sublease. Lessee may not sublease any rights or interests
under this Agreement without the prior consent of Lessor nor may Lessor
enter any agreement to provide wireless cable programming or any other
transmission service to any other entity in the Market Area without the
prior consent of Lessee, it being understood that any sublease or agreement
to provide such programming to any other entity shall require that all
revenues received by such sublease or third party shall be subject to the
Connection Fee provided for in Section 3(c) hereof.
(d) Right of First Refusal. If at any time Lessor receives and
intends to accept a bona fide offer to purchase the MMDS Station, it shall
deliver to Lessee notice of the offer. The notice shall specify the
proposed purchase price for the station and the terms for payment thereof.
For a period of sixty (60) days from receipt of such notice, Lessee shall
have a right to notify Lessor that it intends to purchase the MMDS Station
at the price and on the terms specified in the notice. If Lessee declines
to exercise this right, Lessor will be permitted to consummate the proposed
sale or transfer, subject to Lessee's prior and superseding interest as
created and existing under the terms and provisions of this Agreement,
including the following Section. In the event that any material term of the
original offer is changed in any respect or a material new offer is
presented, before accepting such offer Lessor must first follow the
procedures specified in the foregoing, providing Lessee notice with regard
to the revised offer and giving it the opportunity to exercise its right of
first refusal thereto. At the commencement of any negotiations with any
party for the acquisition by that party of the authorizations, Lessor will
provide such party, in writing, with full disclosure of Lessee's rights
provided for in this Paragraph and of Lessor's intention to honor those
rights. No such sale or transfer of the MMDS Station by Lessor will have
the effect of limiting, abbreviating or terminating the rights and interests
created in favor of Lessee under this Agreement, including under the
following Section.
13. There is no paragraph 13 to this Agreement.
14. Option to Purchase. Lessee shall have an option to purchase
Lessor's MMDS Station, subject to FCC approval, upon the following terms:
(a) Date of Exercise. Lessee may exercise this option by written
notice for a period of six (6) months following the first anniversary of the
Start Date.
(b) Option Price. The Option Price is Fifty Thousand Dollars
($50,000.00).
(c) Exercise of Option. Upon exercise of this Option, the parties
will promptly seek FCC approval of assignment of the license from Lessor to
Lessee. The Option Price will be payable in cash at closing which shall be
held within thirty (30) days after FCC grant of assignment or transfer to
Lessee shall become final and not subject to FCC or judicial review. In the
event the FCC shall not consent to such assignment or transfer, this
Agreement shall remain in full force and effect.
(d) Closing. At closing following exercise of the Option and FCC
approval thereof, Lessor shall deliver to Lessee the Station license and all
other instruments necessary to perfect Lessee's rights with respect thereto.
At such closing this Agreement shall terminate and neither Lessor nor Lessee
shall have any further rights or obligations with respect thereto.
15. Notice. Any notice required to be given by any party to any
other party shall be deemed to have been sufficiently given it in writing,
deposited in the United States mail in a sealed envelope with postage
thereon prepaid and certified or registered, return receipt requested,
addressed to Lessor or to Lessee as the case may be, at their respective
addresses set forth in the preamble hereto, or, if different, at the last
known principal business address of each such party. A copy of any notice
to Lessee shall be made in the same manner to:
William M. Barnard, Esquire
1220 19th Street, N.W., #501
Washington, D.C. 20036
A copy of any notice to Lessor shall be made in the same manner to:
Todd Gray, Esquire
Dow, Lohnes & Albertson
1255 23rd Street, N.W., #500
Washington, D.C. 20037
(f) Severability of Provisions. If any provision hereof is held
invalid, the remainder of this Agreement shall not be affected thereby.
(g) Entire Agreement. This Agreement states the entire agreement
as of this date between the parties with respect to the subject matter
hereof and supersedes all pre-existing oral, letter or other agreements or
commitments with respect thereto. This Agreement may be modified only by an
agreement in writing executed by all of the parties hereto.
(h) Survival of Representations. All representations, warranties,
covenants and agreements made by the parties hereto shall survive the
execution and delivery hereof.
(i) Payment of Expenses. Except as otherwise provided herein, the
parties shall pay their own expenses incident to the preparation and
carrying out of this Agreement, including all fees and expenses of their
respective counsel.
(j) Further Action. From time to time after the date of execution
hereof, the parties shall 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 purposes hereof. In
addition, each party agrees that it will not take any action which would
adversely affect the rights granted by it to the other party hereunder.
(k) Counterparts. This Agreement may be executed 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, and shall become
effective when each of the parties hereto shall have had delivered to it
this Agreement duly executed by the other party hereto.
(l) Headings. The headings herein are inserted for convenience
only and shall not constitute a part hereof.
(m) Dealings with Third Parties. No party is, nor shall any party
hold itself out to be, vested with any power or right to contractually bind,
or act on behalf of any other as its contracting broker, agent or otherwise
for committing, selling, conveying or transferring any of the other party's
assets or property, contracting for or in the same of the other party, or
making any contractually binding representations as to the other party which
shall be deemed representations contractually binding such party. In
particular, Lessee shall not be identified as the FCC licensee or permittee
of the Channels and Lessor shall not be held out as the programmer of the
Channels.
(n) Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Vermont.
(o) FCC Rules. Anything contained herein to the contrary
notwithstanding, nothing herein shall in any way limit the rights and
remedies of Lessor or Lessee under FCC rules and regulations.
(p) FCC Licenses. Nothing contained herein shall be construed as
granting to Lessee any rights in or to any FCC authorizations or license(s)
which may be held by Lessor.
(q) Time of Essence. Whenever this Agreement shall set forth any
time for the performance of an act, such time shall be deemed of the
essence.
(r) Benefit. This Agreement shall inure to the benefit of and
shall be binding upon the parties hereto and their respective heirs, legal
representatives, successors and, to the extent permissible hereunder,
assigns. Nothing in this Agreement expressed or implied, is intended to or
shall (a) confer on any person other than the parties hereto or their
respective heirs, legal representatives, successors or assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
or (b) constitute the parties hereto partners or participants in a joint
venture.
(s) Confidentiality. All non-public information exchanged by the
parties or acquired by them in connection with their performance under this
Agreement shall be kept confidential.
(t) Reformation. If the FCC or any other governmental authority
should (i) change its Rules or policies in a manner that would affect the
enforceability of this Agreement, (ii) directly or indirectly reject or take
action to challenge the enforceability of this Agreement, or (iii) take any
steps whatsoever, on its own initiative or by petition from another person,
to challenge or deny the authority heretofore granted by the FCC with regard
to the Channels, then the parties hereto shall promptly negotiate in good
faith to reform and amend this Agreement so as to eliminate or amend to make
unobjectionable any portion that is the subject of any FCC action. No party
shall take any action that contributes to such FCC action.
(u) Specific Performance. The parties acknowledge and agree that
the rights reserved to each of them hereunder are of a special, unique,
unusual and extraordinary character, which gives them a particular value,
the loss of which cannot be adequately or reasonably compensated for in
damages in an action at law, and the breach by either of the parties of any
of the provisions hereof will cause the other parties irreparable injury and
damage. In such event, the non-defaulting party shall be entitled, as a
matter of right, to require of the defaulting party specific performance of
all of the acts, services and undertakings required hereunder including the
reasonable obtaining of all requisite authorizations to execute or perform
this Agreement and to obtain injunctive and other equitable relief in any
competent court to prevent the violation of any of the provisions hereof.
Neither this provision nor any exercise by any party or rights to equitable
relief or specific performance herein granted shall constitute a waiver of
any other rights which it may have to damages or otherwise.
(v) Waiver. The express or implied waiver by either party of any
breach of any representation or warranty or any failure to fulfill any
condition, covenant or other obligation or liability under this Agreement
shall not constitute a waiver of any other representation or warranty or of
any other failure in the future or in the past by the other party to fulfill
such representation, warranty, condition, covenant, obligation or liability
hereunder.
(w) Word Meanings. As used in this Agreement, the term "including"
shall be deemed to mean "including, without limitation". All pronouns and
any variations therefore shall be deemed to refer to the masculine,
feminine, neuter, singular or plural as the context may require. A "Final
Order" means a written action or order issued by the FCC: (a) which has not
been reversed, stayed, enjoined, set aside, annulled or suspended; and (b)
with respect to which (i) no 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, has expired, or (ii) 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.
LAWRENCE N. BRANDT
By: /S/_____________________________
Date: October 10, 1991
NEW ENGLAND WIRELESS CABLE, INC.
By: /S/_____________________________
President
Date: October 18, 1991