EBS Excess Capacity Leasing

1
EBS Excess Capacity Leasing

• Presented by
• Edwin N. Lavergne
• 202-626-6359
• lavergne_at_fr.com
• February 22, 2006

2
Term of Lease

• A long term lease can be a one-way street.
• This Agreement shall automatically renew after 5
  years unless Operator provides Lessor with notice
  of termination at least 90 days prior to the
  fifth anniversary of Agreement.
• Consider early termination fee (upfront or upon
  termination)
• A long term lease can last longer than you think.
• In the event the Commissions rules are revised
  to permit lease terms in excess of 15 years, this
  Agreement shall, at the option of Operator,
  automatically be extended to the maximum term
  permitted by the Commission.
• Think long and hard before agreeing to such a
  provision.

3
Value of Terms Negotiated Now Can Be Diminished
Significantly

• The true value of what is negotiated now can be
  diminished significantly over time through
  inflation and other factors.

4
To offset long term effects consider

• Annual increases of X or CPI, whichever is
  greater
• Significant increases in compensation at periodic
  intervals
• Revenue sharing
• Equity participation
• Right to terminate if certain goals are not met
  (e.g., if commercial service is not deployed
  within X years)
• Right to recapture spectrum if the need arises
• Right to make adjustments to compensation based
  on third party appraisals at periodic intervals
• Right to make adjustments to compensation based
  on changes in population within GSA

5
Exclusivity Rights of First Refusal

• Exclusive Negotiations at end of term
• Will you know where you stand before the
  agreement ends?
• Consider Six month exclusive negotiating period
  commencing one year before end of lease
• Rights of First Refusal
• Reasonable time limits and clearly spelled out
  obligations.
• No exclusive negotiating rights or ROFR if
  commercial operator elects to terminate early.

6
Amount of Capacity Leased

• Ensure that LBS/UBS reserved spectrum is
  preserved for your future use.
• Where is reserved spectrum located (guard band)?
• Is reserved spectrum contiguous?
• Is reserved spectrum protected for your future
  use (interference consents)?
• Will your spectrum lessee build-out its network
  in such a way that you can take advantage of your
  reserved spectrum?
• What end user equipment rights are desired?

7
Build Out and Substantial Performance

• How much will you rely on your commercial lessee
  for deployment of services to comply with FCC
  rules?
• Consider requiring commercial lessee to build
  whatever needs to be built, by whatever date it
  needs to be built, to ensure that you meet
  whatever EBS substantial service or other
  benchmarks are established by the FCC.
• If deployment does not occur as planned, consider
  self-help option or other alternatives.

8
Non Compete Clauses

• Commercial lessees generally want some assurance
  that an EBS licensee will not compete in the
  commercial arena. Evaluate how such a provision
  may need to be limited to meet your needs.
• Nothing is this agreement shall prevent Licensee
  from collecting any fees from any school
  (elementary, secondary, or post-secondary) or
  institution affiliated with Licensee, students or
  teachers thereof, or any employees of Licensee
  who use Licensees services on an accredited
  basis, or as part of any bona fide religious,
  educational, instructional or informational
  service offered by Licensee.