Exhibit 10.3
CONFIDENTIAL
TREATMENT
Portions
of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934. Such portions are marked
“[*]” in this document; they have been filed separately
with the Commission.
SPECTRUM
MANAGER
LEASE
AGREEMENT
This Spectrum Manager
Lease Agreement (“Lease Agreement”) is entered into as
of this 31 st day of October, 2007, between Globalstar
Licensee LLC, a Delaware limited liability company and a
wholly-owned subsidiary of Globalstar, Inc. with its principal
place of business located at 461 South Milpitas Blvd., Building 5,
Milpitas, CA 95035 (“Lessor”), and Open Range
Communications, Inc., a Delaware corporation with its
principal place of business located at 6465 South Greenwood Plaza
Blvd., Suite 820 Centennial, CO 80111 (“Lessee”)
(collectively the “Parties” or, individually, a
“Party”).
W I T N E S S E T
H
WHEREAS ,
Lessor holds the licenses issued by the Federal Communications
Commission (“FCC”) identified on Part 1 of
Exhibit A hereto (each an “FCC License” and
collectively the “FCC Licenses”); and
WHEREAS ,
Lessor and Lessee desire to enter into this Lease Agreement in
order: (i) to grant Lessee the right to use up to 20 MHz of
spectrum covered by the FCC Licenses that is authorized today or in
the future for Ancillary Terrestrial Component (“ATC”)
service, as more specifically set forth on Part 2 of
Exhibit A hereto (collectively, the “GSAT
Spectrum”) to provide the ORC Services (as defined below) in
certain named geographic markets within the United States, as set
forth herein (collectively, the “Leased Territories”);
(ii) to establish the terms under which Lessee may construct
and operate terrestrial wireless facilities in the Leased
Territories utilizing the GSAT Spectrum (the “System”);
and (iii) to memorialize the respective rights and
responsibilities of Lessor and Lessee with respect to the
operations of the System consistent with the Communications Act of
1934, as amended, and the rules, regulations and policies of the
FCC (collectively, the “Communications Laws”) and the
terms and conditions set forth herein;
NOW THEREFORE ,
in consideration of the mutual promises contained herein, the
Parties hereby agree as follows:
1.
Agreement to Lease.
(a)
Spectrum Usage Rights . Subject to the terms and
conditions set forth herein (including, without limitation, the
condition precedent of FCC approval as
set
forth in Section 9 below), Lessor hereby grants to Lessee the
right to use the GSAT Spectrum (the “Leased Spectrum”),
beginning on the Lease Commencement Date (as defined below) and
until the expiration or termination of this Lease Agreement (the
“Spectrum Usage Rights”) to provide the ORC Services
within the geographic boundaries set forth on Exhibit B hereto
(the “Initial Markets”), and within the Deferred Pop
Markets (as defined below) and all other geographic boundaries that
are granted to Lessee pursuant to the Options (as defined below)
when such grants are effective hereunder. The Parties
acknowledge that the Initial Markets include 6,000,000 Pops, with
“Pops” being defined as the population of a
“Place,” as used for the reporting of decennial census
data, including census designated places, consolidated cities and
incorporated places, based on 2000 Census Data and extrapolated to
2006 using county growth rate demographic information as provided
by Claritas and included in Exhibit C hereto. At any
time prior to the beginning of its build-out in a particular
Initial Market, Lessee may with prior notice to Lessor substitute,
in place of such Initial Market, one or more alternative geographic
markets within the United States and outside the [*] containing an
equivalent number of Pops to the Initial Market so replaced
(“Substituted Markets”), and upon such notice
Exhibit B shall be deemed amended to replace such Initial
Market with the Substituted Markets; provided, however, that in no
case will the Initial Markets include in excess of [*]
Pops.
(b)
Permitted Use . Lessee may use the Leased Spectrum to
offer wireless broadband internet access services utilizing data
rates of [*] Mbps downlink and [*] Kbps uplink over the System (the
“ORC Services”), but only if and to the extent that
such use and ORC Services (i) comply with all terms and
conditions of the FCC Licenses and the Communications Laws, as
currently in effect or as they may be modified in the future,
including without limitation those Communications Laws related to
ATC service, and (ii) do not interfere with the full operation
of the mobile satellite service (“MSS”) system operated
by Lessor and its affiliates (including all gateway earth stations,
mobile earth stations, and other facilities and equipment related
thereto), their full use of the FCC Licenses outside the Leased
Spectrum (subject to Section 10(g) hereof), and their
provision of communications services outside the Leased
Territories, and so long as the System and Lessee’s customer
premises equipment is capable of communicating with such MSS system
in accordance with Lessor’s technical specifications.
(c)
Scope of Spectrum Usage Rights . Subject at all times to
the review, supervision and ultimate control of Lessor, the
Spectrum Usage Rights granted hereunder convey to Lessee the right
and obligation to use the Leased Spectrum to purchase, construct
and operate the System to provide the ORC Services within the
Leased Territories. The Spectrum Usage Rights granted to Lessee
include, among other things, the right and obligation to the extent
consistent with the Communications Laws:
(i)
design and construct the System, including determining the number
and location of radio facilities to be constructed;
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(ii)
identify, obtain and maintain, in its own name, full legal right to
all real property necessary to deploy the System;
(iii)
obtain and maintain, in its own name, appropriate zoning approval
for the System;
(iv)
purchase, in its own name, all equipment as may be necessary or
appropriate for the construction and testing of the System;
(v)
provide administrative, legal, accounting, billing, credit,
collection, insurance, purchasing, clerical and such other general
services as may be necessary or appropriate for the construction,
testing, maintenance and operation of the System;
(vi)
provide operational, engineering, maintenance, repair and such
other technical services as may be necessary for the construction,
testing, maintenance and operation of the System;
(vii)
control access to and from the System facilities; provided,
however, that in no event shall Lessor be restricted from
unfettered access to the System facilities in accordance with
Section 5(b) below;
(viii)
conduct and manage the affairs of the System, including the making
of all ordinary business decisions in furtherance of the day-to-day
operation of the System;
(ix)
determine and carry out all policy decisions relating to the
facilities of the System, subject to such oversight by Lessor as is
reasonably necessary to ensure compliance with the Communications
Laws;
(x)
hire, supervise, and dismiss all personnel employed in the
operation of the System (other than employees hired by Lessor for
the purpose of carrying out Lessor’s duties with respect to
the FCC Licenses and the Leased Spectrum);
(xi)
undertake all financial obligations, including payment of expenses
arising out of the operation of the System, and securing all
financing for the construction and operation of the System;
(xii)
receive all monies and profits from the operation of the System,
subject to Lessee’s payment obligations under this Lease
Agreement;
(xiii)
make determinations as to the scope, marketing, and other terms and
conditions of the ORC Services to be provided to Lessee’s
customers on the System; and
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(xiv)
take all other actions that Lessee deems necessary or desirable to
construct, test, maintain, and operate the System or otherwise
carry out any of the foregoing items.
(d)
Non-Interference . Except as permitted by Sections
1(c)(vii) and 3(a), and so long as Lessee performs its
obligations hereunder, Lessor will not interfere with or disturb
Lessee’s rights under this Lease Agreement, including,
without limitation, its rights to exclusive possession, use and
quiet enjoyment of the Spectrum Usage Rights, to the extent
permitted under the Communications Laws.
2.
Obligations of Lessee.
(a)
General
Obligations . Subject to the review,
supervision and ultimate control of Lessor, Lessee shall:
(i)
cooperate with and aid Lessor with whatever actions Lessor is
required to take, if any, in order to make any required
notifications, or to obtain the approvals or consents of any
governmental body necessary for the Lessee to construct and operate
the System;
(ii)
operate the System consistent with the Communications Laws or any
other applicable Federal, State or local law, including but not
limited to, all Federal Aviation Administration (“FAA”)
and FCC Tower Registration filing requirements for all structures
under FCC Rule Part 17; NEPA regulations (FCC
Rule Part 1.1307-11); this Lease Agreement; and the terms
and conditions of the FCC Licenses (including, but not limited to,
eligibility, basic and character qualifications requirements,
foreign ownership and use restrictions, and technical
requirements);
(iii)
satisfy all of the requirements that may be imposed on Lessee under
the Communications Laws, including, but not limited to,
Section 1.9020 and any similar sections of the FCC’s
Rules governing spectrum manager leasing arrangements;
(iv)
expressly satisfy the FCC’s E-911 requirements set forth in
47 C.F.R. Part 9 to the extent that they are applicable to the
Lessee’s provision of ORC Services on the Leased Spectrum, as
though Lessee were solely responsible for such compliance; and
(v)
take whatever actions are reasonably necessary to resolve any
interference-related matters arising from operation of any system
it may construct and operate on the Leased Spectrum, including any
conflicts between Lessee and any other licensed spectrum user.
(b)
Equipment . Lessee shall install and maintain all
equipment, including but not limited to, towers, transmission
lines, antennas, microwave facilities, transmitters and related
equipment that is necessary for the operation of the System
consistent with the FCC Licenses and the Spectrum Usage Rights
(“System Equipment”). Lessee may pledge the System
Equipment as security or otherwise create
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encumbrances on the System Equipment as Lessee
deems appropriate. Upon the termination of this Lease Agreement,
Lessee shall promptly cease operating the System Equipment on the
Leased Spectrum.
(c)
FCC Compliance . At all times during the term of
this Lease Agreement, Lessor shall retain the primary
responsibility for ensuring that the FCC Licenses and the Leased
Spectrum are utilized in full compliance with the Communications
Laws, including, but not limited to, the responsibility for all
interactions with the FCC related to the FCC Licenses and the
Leased Spectrum. Lessee acknowledges that Lessee will remain
independently responsible to Lessor and, to the extent required
under the Communications Laws, to the FCC for complying with the
foregoing, and agrees that Lessee will not construct or operate any
facility utilizing the Leased Spectrum in a manner inconsistent
with, contrary to, or in violation of, the Communications Laws.
Lessee will use commercially reasonable efforts to cooperate with
Lessor in meeting Lessor’s FCC compliance obligations with
respect to the Leased Spectrum.
(d)
Notification of Violations or Material Changes;
Cooperation . Lessee shall promptly notify Lessor of any
occurrence of any contractual dispute, violation, litigation,
investigation, proceeding or inquiry that may arise generally or
between Lessee and any person, entity, or governmental body which,
if adversely determined, could reasonably be expected to have a
materially adverse impact on the FCC Licenses or Lessee’s
Spectrum Usage Rights. If the FCC or any other governmental body
initiates an investigation or inquiry concerning Lessor or Lessee
in connection with this Lease Agreement or Lessee’s
performance of any of its obligations hereunder, Lessee shall
cooperate with Lessor, the FCC, or other governmental body in an
effort to resolve such investigation or inquiry; provided, however,
that this sentence shall not require Lessee to waive any legal
rights or privileges with respect to such investigation or
inquiry.
3.
Obligations of Lessor.
(a)
Oversight of Lessee’s Operations on the Leased
Spectrum . Throughout the term of this Lease Agreement,
Lessor will have the unconditional right to take all actions
necessary or desirable to ensure that Lessee’s exercise of
its Spectrum Usage Rights in the Leased Spectrum and its operation
of the System comply with the Communications Laws, this Lease
Agreement, and the terms and conditions of the FCC Licenses
(including, but not limited to, conformity with applicable license
eligibility, basic qualifications, character qualifications and
technical requirements, and use and foreign ownership
restrictions). As such, and without limitation, throughout the term
of this Lease Agreement, Lessor retains the unconditional right to
do any of the following:
(i)
monitor and oversee Lessee’s use of the Spectrum Usage
Rights, as necessary, to ensure that Lessee operates the System in
conformance with technical and use rules applicable to the FCC
Licenses;
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(ii)
take all actions that are reasonably necessary to ensure that
Lessee’s operation of the System complies with the
Communications Laws intended to prevent harmful interference to any
other licensed spectrum user;
(iii)
take whatever actions are reasonably necessary to resolve any
interference-related matters arising from operation of the System,
including any conflicts between Lessee and any other licensed
spectrum user;
(iv)
make determinations as to whether particular circumstances give
rise to the requirement of filing an application or notification
with the FCC or any other governmental authority, and if such, with
Lessee’s cooperation, make such filing or notification;
and
(v)
communicate with the FCC on matters related to the FCC
Licenses.
(b)
Maintenance of the FCC Licenses. Lessor will take all actions
within its control to maintain the FCC Licenses and Leasee’s
rights hereunder to use the Leased Spectrum in full force and
effect. Lessor shall secure and maintain all required FCC
authorizations, including but not limited to a blanket license or
other appropriate authorization, for all MSS ATC customer premises
equipment, terminals, and other communications devices used by Open
Range customers (the “Blanket License”). The
Blanket License shall be considered to be one of the FCC Licenses
for the purposes of this Lease Agreement.
(c)
FCC Interactions . Lessor will be the sole interface
with the FCC on all matters directly relating to the FCC Licenses
or the Spectrum Usage Rights granted under this Lease Agreement;
provided, however, that nothing contained herein shall restrict
Lessee from communicating with the FCC (i) on policy matters
not solely relating to Lessee’s use of the Leased Spectrum or
on matters imposed under the Communications Laws on Lessee as a
result of its provision of services to its customers on the System,
or (ii) subject to the requirements of
Section 2(d) above, on inquiries specifically directed to
Lessee (rather than Lessor or the System) by the FCC, so long as
Lessee provides prompt prior notice of such communicating to
Lessor. Upon reasonable advance request, Lessor may request Lessee
to attend any meetings with the FCC which involve or relate to
Lessee’s use of the Leased Spectrum.
(d)
Notifications of Violations or Material Changes;
Cooperation . Lessor will notify Lessee promptly of the
occurrence of any event or the initiation of any litigation,
investigation, proceeding or inquiry by the FCC or any governmental
body that could reasonably be expected to have a material impact or
result in a material change to the ownership or operation of the
FCC Licenses or Lessee’s Spectrum Usage Rights under this
Lease Agreement. If the FCC or any other governmental body
initiates an investigation or inquiry concerning Lessor or Lessee
in connection with this Lease Agreement or Lessor’s
performance of any of its obligations hereunder, Lessor shall
cooperate with Lessee, the FCC, or other governmental body in an
effort to resolve such investigation or inquiry; provided, however,
that this sentence shall not require
6
Lessor to waive any legal rights or privileges
with respect to such investigation or inquiry.
4.
Control of FCC License and Leased Spectrum.
Notwithstanding any other provision, and
at all times during the term of this Lease Agreement, Lessor shall
retain de jure and de facto control of the Leased Spectrum as
required under the Communications Laws. This Lease Agreement
(i) does not and will not vest in Lessee, or constitute,
create or have the effect of constituting or creating, direct or
indirect de facto or de jure control over Lessor or the Leased
Spectrum, which ownership or control will remain exclusively and at
all times in Lessor and its affiliates, and (ii) does not and
will not constitute the transfer, assignment, or disposition in any
manner, voluntary or involuntary, directly or indirectly, of the
Leased Spectrum or the transfer of control of Lessor within the
meaning of Section 310(d) of the Communications Act.
Lessee will not take any action inconsistent with or contrary to
the Lessor’s de jure and de facto control, as those terms are
construed by the FCC, over the Leased Spectrum. Lessee will not
hold itself out to the public as the owner of the FCC Licenses or
the Leased Spectrum.
5.
Coordination; Oversight; Reports.
(a)
Coordination . Lessee and Lessor will meet periodically,
at such times as Lessor reasonably requests by notice to Lessee, to
enable Lessor to ensure that Lessee’s activities using the
Leased Spectrum and the operation of the System comply with the
Communications Laws. At these meetings, the Parties will discuss
matters reasonably related to Lessee’s construction and
operation of the System to the extent required to ensure compliance
with the Communications Laws. Lessee will keep or cause to be kept
complete books and records with respect to construction and
operation of the System, showing (i) technical and operational
information related to the System, and (ii) other records
reasonably necessary, convenient or incidental to construction,
maintenance or operation of the System. Upon Lessor’s
request, Lessee will provide Lessor with reasonable access to such
books and records.
(b)
Right of Access . Lessor may, upon at least twenty-four
(24) hours advance notice, inspect any facility comprising the
System during normal business hours and take any action it deems
reasonably necessary to fulfill its obligations under this Lease
Agreement or the Communications Laws. Lessee may require that an
escort selected by Lessee accompany Lessor on any on-site visit to
Lessee’s facilities. Notwithstanding the foregoing, Lessor
may access any facility that is part of the System upon such
shorter advance notice as is possible under the circumstances in
the event of an emergency at such facility involving Lessee’s
use of the Leased Spectrum, including but not limited to any
instance of objectionable interference to any other user of the
Leased Spectrum which is authorized to use the Leased Spectrum to
provide services outside the Leased Territories. Lessor will notify
Lessee as soon as practicable of Lessor’s access during such
emergency.
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(c)
Reporting . Upon Lessor’s request, Lessee shall
provide information updating Lessor about Lessee’s activities
with respect to the Leased Spectrum, including information
regarding (i) technical and operational details about
Lessee’s transmission facilities; and (ii) any safety,
interference or compliance related problems which have arisen as a
result of Lessee’s operation of the System or use of the
Leased Spectrum. Upon Lessor’s request, Lessee shall confirm
in writing that, to the best of Lessee’s knowledge,
(i) Lessee is not aware of any interference related problems
on the System; (ii) Lessee is not aware of any RF safety
related problems with respect to its operations on the System;
(iii) Lessee remains qualified to be a lessee of the Leased
Spectrum; and (iv) Lessee’s operations on the System
comply with the provisions of this Lease Agreement and the
Communications Laws.
6.
Applications/Notifications.
(a)
Initial Lease Agreement Application . Within ten
(10) business days following the date of execution of this
Lease Agreement, to the extent required by the Communications Laws,
Lessor will prepare and file with the FCC such documents as are
required by the Communications Laws (which may include a summary of
this Lease Agreement) (the “Lease Filing”) requesting
the FCC’s approval of this Lease Agreement and the lease of
the Leased Spectrum provided for herein. As soon as
practicable following the publishing of a Notice of Proposed
Rulemaking which, if formally adopted as an FCC rule, would allow
Lessor’s use of GSAT Spectrum for ATC service and that,
together with applicable rules and policies, would not be
reasonably expected to impair the ability of Lessee to use
Lessor’s ATC spectrum as contemplated herein, Lessor will
prepare and file with the FCC the documents necessary to request
any waivers of the Communications Laws necessary to permit the
lease of Leased Spectrum and any other waivers or filings necessary
to effectuate fully the intent of this Lease Agreement (the
“Waiver Filings” and, collectively with the Lease
Filing, the “FCC Filing”). Lessor will develop a
list of the Waiver Filings that it currently believes are
necessary and will deliver such list to Lessee within ten
(10) business days following the date of execution of this
Lease Agreement. Lessor will work to identify as promptly as
practicable any additional Waiver Filings that may be necessary or
appropriate. Each Party (i) will fully cooperate with
the other, and do all things reasonably necessary to timely submit
the FCC Filing to the FCC, (ii) 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; and (iii) will use reasonable commercial efforts to
obtain the approvals and/or waivers from the FCC necessary to give
effect to this Lease Agreement. In addition, the
Parties will fully cooperate with each other and use commercially
reasonable efforts to seek waivers and/or approvals from the FCC as
necessary to permit Lessee to use “TDD” transmission in
connection with its provision of ORC Services.
(b)
Facility Filings . If Lessee desires to construct any
new System facility, or to modify any existing System facility, and
such construction or modification would require an application,
notification, or other filing with the FCC, another governmental
body or a non-governmental third party (a “Facility
Filing”), then Lessee will notify Lessor of such requirement,
and Lessor will have the final authority to
8
determine whether a Facility Filing is
necessary. Lessor may independently determine that a Facility
Filing is required as to any facility of which Lessor, in
exercising its oversight hereunder, becomes aware. Such
determination by either Party shall include whether the proposed
new facility or proposed modification to an existing facility will
require (i) frequency coordination; (ii) submission of an
environmental assessment; (iii) international or
Interdepartment Radio Advisory Committee (IRAC) coordination;
(iv) radio quiet zone reporting; (v) notification to the
FAA, or (vi) any waivers of the Communications Laws. If a
Facility Filing is necessary, Lessee shall promptly prepare and
provide to Lessor all necessary application forms, exhibits, filing
fees and other materials necessary for Lessor to make such
submission in its own name. Lessor shall make such filings. If
Lessor believes that such filing is incomplete, then Lessor may
instead return such filing to Lessee with a reasonable explanation
of those matters that require further preparation and Lessee shall
promptly revise such filing to the reasonable satisfaction of
Lessor.
(c)
Compliance Applications . Lessor will make all ongoing
compliance filings and reports required by the FCC or any other
governmental body as a result of its ownership of the FCC Licenses,
subject to Lessee’s compliance with its obligations under
this Lease Agreement (including without limitation the following
sentence). Lessee shall timely notify Lessor if Lessee believes
that a compliance filing is required or if it has taken or proposes
to take any action which could result in Lessor having to make a
compliance filing. Upon such notification, Lessor shall have the
exclusive right to decide whether any such compliance filing is
required and, if required, the substance of such filing.
7.
Term.
(a)
Initial Term . The grant of Spectrum Usage Rights
pursuant to Section 1 of this Lease Agreement with respect to
the Initial Markets will become effective on the first day (the
“Lease Commencement Date”) after all of the conditions
set forth in Section 9 have been satisfied or waived, and the
grant of Spectrum Usage Rights for the Deferred Pop Markets and
Option Markets shall become effective as set forth in
Section 10 hereof. The term of this Lease Agreement will
continue in full force and effect, unless earlier terminated in
accordance with the provisions set forth herein, for the duration
of Lessor’s FCC Licenses, including any renewals thereof, or
for 30 years from the Lease Commencement Date, whichever is
shorter, subject at all times to compliance with the Communications
Laws, provided that, should the duration of Lessor’s FCC
Licenses be less than thirty (30) years then Lessor agrees to renew
this Lease Agreement under the same terms and conditions for such
additional period or periods which taken together will equal thirty
(30) years from the Commencement date (the “Initial
Term”).
(b)
Renewal . If Lessee is in compliance with the
terms of this Lease Agreement at such time, Lessee may elect to
extend the term of this Lease Agreement for an additional ten years
following the end of the Initial Term (the “Renewal
Term”) by delivering written notice of its intent to exercise
its option to renew to Lessor not less than 36 months prior to the
expiration of the Initial Term. Payment terms for the
9
Renewal Term shall be as set forth in
Section 8 and Exhibit D hereof (except with respect to
the Option Markets, the payment terms for which are covered by
Section 10(b)(ii)).
(c)
Additional Lease Extension . Beginning 37 months
prior to the end of the Renewal Term, if the Lease is renewed
pursuant to Section 7(b) above, the Parties will
negotiate in good faith in an attempt to agree on a further
extension of the term of this Lease Agreement. If the Parties
have not agreed on such an extension on or before the 15th month
prior to the end of the Renewal Term, then either Party shall be
entitled to require that the unresolved terms in the lease
extension be submitted to a panel of three independent industry
experts for determination of commercially reasonable terms based on
market comparables (“Determination”) in accordance with
the following process. The Party desiring such Determination
shall give written notice to that effect to the other Party,
specifying in such notice the name, address and professional
qualifications of its appointed expert. Within 15 days after
receipt of such notice, the other Party shall give written notice
to the Party desiring such Determination, specifying the name,
address and professional qualifications of its appointed
expert. The two appointed experts shall within 15 days
thereafter appoint a third expert by mutual consent. All
experts appointed hereunder shall have professional qualifications
and experience appropriate to address that matters at issue, and
shall be in all respects impartial and disinterested. The
panel of experts shall prepare and deliver a written decision
fixing the unresolved terms for the lease extension within 30 days
following the appointment of the final expert. Such written
decision shall be final and binding on the Parties. Any lease
extension determined pursuant to a Determination under this
Section 7(c) shall be for a [*]-year term and shall be on
the same general terms and conditions (other than pricing) as are
set forth in this Lease Agreement.
8.
Payments.
(a)
Ongoing Lease Agreement Payments for Initial Markets and
Deferred Pop Markets . Beginning on the Lease Commencement
Date and continuing on the same day of each month thereafter until
the expiration or termination of the term of this Lease Agreement,
Lessee will pay to Lessor monthly lease payments as follows:
(i)
Fixed monthly payments (“Fixed Lease Payments”) and
down payments (“Down Payments”) as set forth on
Exhibit D hereto. The Fixed Lease Payments for the
Initial Markets shall begin, and the Down Payment for the Initial
Markets shall be payable, on the Lease Commencement Date. The
Fixed Lease Payments for the Deferred Pop Markets shall begin, and
the Down Payment for the Deferred Pop Markets shall be payable, on
the earlier of (A) the date on which Lessee begins offering
any ORC Services in such market pursuant to
Section 10(a) hereof and (b) the first day of the
[*] month following the Lease Commencement Date. If Lessee is
not able to use a portion of the GSAT Spectrum due to a regulatory
restriction imposed by the FCC, the Down Payment and all Fixed
Lease Payments shall be adjusted so that they apply proportionately
based on the portion (determined by number of MHz) of GSAT Spectrum
actually available for use by Lessee, as more specifically set
forth on Exhibit D hereto.
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(ii)
Variable monthly payments (“Variable Lease Payments”)
equal to $[*] per subscriber per month on the System. A
“subscriber” is defined as a unit of customer premises
equipment, or a group of units of customer premises equipment
employed by the same user that share a single wireless access card
or specific customer identifier and no two of which may be used
simultaneously. Within five days following each month-end
during the term of this Lease Agreement, Lessee shall deliver to
Lessor a written certification of the number of subscribers on the
System during such month. The Variable Lease Payments shall
increase [*]% on the first day of the 25 th month
following the Lease Commencement Date (the “Escalation
Date”), and the Variable Lease Payments then in effect shall
increase [*]% on each anniversary of the Escalation Date
thereafter, all as set forth on Exhibit D.
(iii)
For avoidance of doubt, this subsection (a) shall not be
applicable to any Leased Spectrum leased pursuant to the Options as
described in Section 10(b) hereof.
(b)
Regulatory Fees . Lessee shall pay its own FCC
regulatory fees, if any, accruing by reason of Lessee’s
operation of the system on the Leased Spectrum.
(c)
Sales and Use Taxes . Lessee shall bill, collect,
report, and remit any and all sales or use taxes directly related
to Lessee’s use of the Leased Spectrum and the services
provided thereon in all jurisdictions where such taxes apply.
(d)
Inspection Rights . Lessor and its affiliates,
agents, accountants and other advisors may inspect Lessee’s
books and records from time to time, upon reasonable notice and in
a manner not to unreasonably interfere with Lessee’s business
operations, in order for Lessor to confirm Lessee’s
compliance with its obligations under this Lease Agreement.
Such inspection shall be at Lessor’s expense, unless such
inspection reveals a material underpayment by Lessee, in which case
Lessee shall reimburse Lessor for its costs and expenses associated
with such inspection. In addition, upon Lessor’s
request Lessee will provide evidence of payment of regulatory fees
and sales and use taxes as required by subsections (b) and
(c) above.
9.
Conditions to Lease Commencement Date. The grant of Spectrum Usage Rights
pursuant to Section 1 of this Lease Agreement and the
obligations under Section 8 hereof shall be subject to the
satisfaction of the following conditions:
(a)
Lessor shall have obtained
approval from the
FCC to provide Ancillary
Terrestrial Services using
at least [*] MHz in S-band
spectrum of the GSAT
Spectrum.
(b)
The FCC shall have approved this
Lease Agreement and granted any other approvals and waivers
necessary, in each Party’s reasonable determination, to give
effect to this Lease Agreement and the transactions contemplated
hereby.
(c)
No order of any governmental
authority preventing or adversely affecting the consummation of the
transactions contemplated by this Lease Agreement shall be in
effect, and no applicable law, rule or regulation (including,
without limitation,
11
the Communications Laws)
prohibiting or adversely affecting the consummation of the
transactions contemplated by this Lease Agreement shall be in
effect, and there shall not have been instituted (or if
instituted, shall not have been withdrawn or terminated) by or
before any governmental authority any action, claim, hearing,
investigation or other proceeding seeking to enjoin, prohibit or
adversely affect the consummation of the transactions contemplated
by this Lease Agreement.
(d)
Lessee shall have obtained debt
and equity financing in excess of $ [*] , which financing shall be available to be
drawn upon by Lessee to construct the System and carry out
Lessee’s obligations under this Lease Agreement, and Lessee
shall have provided to Lessor evidence of such financing to
Lessor’s reasonable satisfaction.
(e)
Each of Lessee’s
representations and warranties set forth in this Lease Agreement
shall be true and complete in all material respects at and as of
the Lease Commencement Date with the same effect as though such
representations and warranties had been made or given at and as of
the Lease Commencement Date, and Lessee shall have
performed and complied in all
material respects with all of its covenants and obligations under
this Lease Agreement to be performed or complied with by such party
on or prior to the Lease Commencement Date, and Lessee shall have
delivered to Lessor a certificate executed by a senior officer of
Lessee certifying as to Lessee’s compliance with the
foregoing.
(f)
Each of Lessor’s
representations and warranties set forth in this Lease Agreement
shall be true and complete in all material respects at and as of
the Lease Commencement Date with the same effect as though such
representations and warranties had been made or given at and as of
the Lease Commencement Date, and Lessor shall have
performed and complied in all
material respects with all of its covenants and obligations under
this Lease Agreement to be performed or complied with by such party
on or prior to the Lease Commencement Date, and Lessor shall have
delivered to Lessee a certificate executed by a senior officer of
Lessor certifying as to Lessor’s compliance with the
foregoing.
(g)
[*]
The condition set forth in
subsections (d) and (e) above may be waived by Lessor,
and subsection (f) above may be waived by
Lessee.
10.
Other Agreements.
(a)
Deferred Pop Markets .
(i)
Subject to the limitations below, Lessee shall select additional
geographic markets within the United States that include a total of
[*]
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Pops (the “Deferred Pop Markets”)
within which the Spectrum Usage Rights will be granted hereunder at
a time or times of Lessee’s choosing (as evidenced by written
notice to Lessor) on or after the Lease Commencement Date and prior
to or during the [*] month following the Lease Commencement
Date. The term of the grant of Spectrum Usage Rights
hereunder for the Deferred Pop Markets shall run from the date of
such grant until the end of the Initial Term, and the renewal
provisions of Section 7(b) and the Additional Lease
Extension provision of Section 7(c) shall apply to the
Deferred Pop Markets as well as the Initial Markets.
(ii)
Lessee will use its reasonable best efforts to identify in writing
the Deferred Pop Markets to Lessor within one year of the Lease
Commencement Date. Once the Deferred Pop Markets have been so
identified in writing by Lessee to Lessor, Lessor may not lease, or
enter into any discussions regarding the lease of, the use of any
GSAT Spectrum within such Deferred Pop Markets to any person or
entity other than Lessee during the term of this Lease Agreement,
provided that Lessee complies in a timely fashion with its
obligations set forth in Section 10(a)(i) above.
(iii)
Notwithstanding anything to the contrary herein, except with
respect to the nine markets designated with an asterisk on
Exhibit E hereto, no Deferred Pop Market may fall within the
Cellular Market Areas set forth on Exhibit E hereto [*], and
no market within the [*] shall be included as a Deferred Pop
Market, unless Lessor consents in writing to the inclusion of such
market (which consent Lessor may withhold in its sole discretion),
and the Parties reach agreement on pricing therefor. Lessor will
respond within ten business days of receipt to any Lessee request
to include a [*] market in the Deferred Pop Markets.
“Cellular Market Area” as used herein has the meaning
commonly used by the FCC and in the mobile wireless industry.
(iv)
Lessor and Lessee will work together to prepare and file any
necessary applications or notifications to the FCC that may be
required in connection with the extension of the Spectrum Usage
Rights to any Deferred Pop Markets. The Initial Markets
together with the Deferred Pop Markets are collectively referred to
as the “Lessee Markets.”
(v)
For avoidance of doubt, the fact that a market has been identified
by Lessee as a Deferred Pop Market will not, by itself, cause
Lessee to be liable for payment for the Pops within such market
under this Lease Agreement. The payment obligations for such
Deferred Pop Market under Section 8 and Exhibit D hereof
will begin on the earlier of i) the beginning of the [*] month
following the Lease Commencement Date and ii) the date on which
Lessee begins offering any ORC Services in such market. If
Lessee has not identified in writing to Lessor the Deferred Pop
Markets in accordance with this Section by the end of the [*]
month following the Lease Commencement Date, Lessee shall be liable
for payment for all [*] Deferred Pops under this Lease Agreement,
whether or not it is providing service in any Deferred Pop Markets
at such time. Once payment obligations begin for the
Deferred
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Pop
Markets, all other terms of this Lease Agreement (except as
specifically otherwise noted herein) shall apply to the Deferred
Pop Markets.
(b)
Options and Rights of First Refusal on Additional Pops
.
(i)
Lessee will have three successive options (the
“Options”) to lease GSAT Spectrum to provide ORC
Services outside the Lessee Markets, subject to the limitations
herein, in geographic markets within the United States including up
to a maximum of [*] Pops (the “Option Markets”).
The first Option will be for markets including [*] Pops. The
second option will be for markets including [*] Pops. The
third Option will be for markets including [*] Pops. Each
Option shall be exercisable beginning on the Lease Commencement
Date. Lessee may exercise the first Option prior to the third
anniversary of the Lease Commencement Date, may exercise the second
Option prior to the fourth anniversary of the Lease Commencement
Date, and may exercise the third Option prior to the fifth
anniversary of the Lease Commencement Date. Each Option must be
exercised by Lessee delivering to Lessor written notice of its
exercise of such Option (including the specific geographic markets
Lessee intends such Option to apply to) within the applicable
exercise period. Options may be exercised partially over
time, subject to the limitations set forth herein. If any
Option exercise period expires without Lessee fully exercising the
applicable Option, then all remaining unexercised Options shall
terminate, unless Lessor elects otherwise by written notice to
Lessee. The term of the grant of Spectrum Usage Rights
hereunder for any Option Market shall run from the date of
Lessee’s exercise of the applicable Option until the end of
the Initial Term, and the renewal provisions of
Section 7(b) and the Additional Lease Extension provision
of Section 7(c) shall apply to the Option Markets as well
as the Initial Markets and the Deferred Pop Markets.
(ii)
Unless otherwise agreed by Lessee and Lessor with respect to any
Option Market, Lessee will pay to Lessor for such Option Market,
beginning on the date the Option is exercised and on the first day
of each month thereafter until the expiration or termination of
this Lease Agreement, a monthly lease payment (“Option Lease
Payments”) based upon a net present value, determined
assuming a [*]% per annum discount rate and a zero future value
(“NPV”), assuming a 30-year lease term, of the product
of (A) $[*] multiplied by (B) the number of MHz of Leased
Spectrum (which, for avoidance of doubt, shall be all of the GSAT
Spectrum in such Option Market) multiplied by (C) the Pops
included in such Option Market. Lessee shall also be
responsible for all payments and obligations under Sections 8(b),
8(c) and 8(d) with respect to the Option Markets.
The Parties acknowledge that they will remain flexible on the
payment timing and structure that effectuates the pricing described
in the previous sentence, in order to accommodate the needs of
third parties to which Lessee may choose to sublease Option Markets
under an affiliate program. Notwithstanding anything to the
contrary herein, except with respect to the nine markets designated
with an asterisk on Exhibit E hereto, the Options shall not
apply to markets within the [*], and no market within the [*] may
be included as an Option Market unless Lessor consents thereto in
writing (which consent Lessor may withhold in its sole discretion)
and the Parties reach agreement on pricing therefor. Other
than with
14
respect to pricing, which is addressed by this
subsection (ii), once any Option is exercised for any Option
Market, all terms of this Lease Agreement (except as specifically
otherwise noted herein) shall apply to such Option
Market.
(iii)
For the period beginning on the Lease Commencement Date and ending
on the earlier of (A) the date on which the final Option is
exercised and (B) the expiration of any Option pursuant to
subsection (i) above prior to it being exercised in full by
Lessee (the “Pops ROFR Period”), Lessee shall have the
following right of first refusal to lease GSAT Spectrum in
geographic markets outside the [*] that include up to [*] Pops in
the aggregate (the “Pops ROFR”). The Pops ROFR
shall operate as follows and shall be subject to the following
limitations. If Lessor receives a bona fide offer to lease
GSAT Spectrum (an “Offer”) in any geographic market or
markets outside the [*], it shall notify Lessee of the markets
covered by the Offer that are outside the [*] (the “ROFR
Markets”) within 10 business days of receipt of such
offer. If Lessee wishes to exercise the Pops ROFR with
respect to the ROFR Markets, it must so notify Lessor in writing
within 30 days of the date of Lessor’s delivery of notice of
the Offer. If Lessee does not notify Lessor within the 30-day
period, Lessor may lease the GSAT Spectr
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