10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Form 10-Q

(Mark One)

[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2002

Or

[   ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ________________ to ________________

Commission File Number 000-28160

WESTERN WIRELESS CORPORATION

(Exact name of registrant as specified in its charter)

Washington	91-1638901
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

3650 131st Avenue S.E. Bellevue, Washington	98006
(Address of principal executive offices)	(Zip Code)

(425) 586-8700

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  [X]    No [   ]

     Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Title	Shares Outstanding as of August 9, 2002
Class A Common Stock, no par value		72,229,605
Class B Common Stock, no par value		6,774,724

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
	Item 1. Financial Statements
		Condensed Consolidated Balance Sheets
		Condensed Consolidated Statements of Operations and Comprehensive Loss
		Condensed Consolidated Statements of Cash Flows
		Notes to Condensed Consolidated Financial Statements
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures About Market Risk
PART II — OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 2. Changes in Securities
	Item 3. Defaults Upon Senior Securities
	Item 4. Submission of Matters to a Vote of Security Holders
	Item 5. Other Information
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
EXHIBIT INDEX
EXHIBIT 10.1
EXHIBIT 10.2
EXHIBIT 10.3

Western Wireless Corporation
Form 10-Q
For the Quarter Ended June 30, 2002

Table of Contents

			Page
PART I - FINANCIAL INFORMATION
	Item 1. Financial Statements
		Condensed Consolidated Balance Sheets as of June 30, 2002, and December 31, 2001		3
		Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2002, and June 30, 2001		4
		Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2002, and June 30, 2001		5
		Notes to Condensed Consolidated Financial Statements		6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		15
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		22
PART II - OTHER INFORMATION
	Item 1.	Legal Proceedings		23
	Item 2.	Changes in Securities		23
	Item 3.	Defaults Upon Senior Securities		23
	Item 4.	Submission of Matters to a Vote of Security Holders		23
	Item 5.	Other Information		23
	Item 6.	Exhibits and Reports on Form 8-K		23

2

PART I — FINANCIAL INFORMATION

WESTERN WIRELESS CORPORATION
Condensed Consolidated Balance Sheets
(Dollars in thousands)

			June 30,			December 31,
			2002			2001
			(Unaudited)
ASSETS
Current assets:
	Cash and cash equivalents		$	41,897		$	45,240
	Accounts receivable, net of allowance for doubtful accounts of $21,256 and $21,095, respectively			152,903			151,787
	Inventory			25,036			34,331
	Marketable securities			18,263			21,016
	Prepaid expenses and other current assets			34,339			49,402
		Total current assets		272,438			301,776
Property and equipment, net of accumulated depreciation of $640,568 and $530,805, respectively				861,857			838,078
Licensing costs and other intangible assets, net of accumulated amortization of $20,515 and $15,170, respectively				1,181,522			1,184,516
Investments in and advances to unconsolidated affiliates				35,451			32,752
Other assets				33,240			13,298
			$	2,384,508		$	2,370,420
LIABILITIES AND NET CAPITAL DEFICIENCY
Current liabilities:
	Accounts payable		$	61,002		$	83,005
	Accrued liabilities and other			193,516			175,016
	Construction accounts payable			48,140			93,764
	Current portion of long-term debt			94,407			55,471
		Total current liabilities		397,065			407,256
Long-term debt, net of current portion				2,300,196			2,237,374
Deferred income taxes				85,510
		Total liabilities		2,782,771			2,644,630
Minority interests in consolidated subsidiaries				23,641			25,089
Commitments and contingencies (Note 7)
Net capital deficiency:
	Preferred stock, no par value, 50,000,000 shares authorized; no shares issued and outstanding
	Common stock, no par value, 300,000,000 shares authorized;
		Class A, 72,229,605 and 71,881,603 shares issued and outstanding, respectively
		Class B, 6,774,724 and 6,981,072 shares issued and outstanding, respectively		669,067			668,158
	Deferred compensation			(98	)
	Accumulated other comprehensive loss			(21,840	)		(24,181	)
	Deficit			(1,069,033	)		(943,276	)
		Total net capital deficiency		(421,904	)		(299,299	)
			$	2,384,508		$	2,370,420

See accompanying notes to condensed consolidated financial statements.

3

WESTERN WIRELESS CORPORATION
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Dollars in thousands, except per share data)
(Unaudited)

				Three months ended June 30,						Six months ended June 30,
				2002			2001			2002			2001
Revenues:
	Subscriber revenues			$	204,826		$	170,530		$	403,397		$	331,640
	Roamer revenues				64,394			68,839			125,375			131,036
	Fixed line revenues				13,383			302			26,999			381
	Equipment sales and other revenues				16,184			12,891			33,680			25,979
		Total revenues			298,787			252,562			589,451			489,036
Operating expenses:
	Cost of service				93,107			59,562			182,972			114,529
	Cost of equipment sales				28,549			20,718			55,317			37,131
	General and administrative				50,293			52,320			110,532			103,513
	Sales and marketing				46,422			39,229			86,134			81,571
	Depreciation and amortization				58,588			52,685			120,103			95,304
	Asset disposition				7,556						7,556
	Stock based compensation, net							6,251						12,247
		Total operating expenses			284,515			230,765			562,614			444,295
Other income (expense):
	Interest and financing expense, net				(39,311	)		(40,806	)		(78,670	)		(82,918	)
	Equity in net income (loss) of unconsolidated affiliates				841			543			2,488			(2,412	)
	Other, net				(714	)		(619	)		4,483			(290	)
		Total other expense			(39,184	)		(40,882	)		(71,699	)		(85,620	)
Minority interests in consolidated subsidiaries					2,590			5,058			5,825			9,548
Loss before provision for income taxes					(22,322	)		(14,027	)		(39,037	)		(31,331	)
Provision for income taxes					(7,433	)					(86,720	)
Loss before cumulative change in accounting principle					(29,755	)		(14,027	)		(125,757	)		(31,331	)
Cumulative change in accounting principle														(5,580	)
		Net loss		$	(29,755	)	$	(14,027	)	$	(125,757	)	$	(36,911	)
Basic and diluted loss per share:
	Before cumulative change in accounting principle			$	(0.38	)	$	(0.18	)	$	(1.59	)	$	(0.40	)
	Cumulative change in accounting principle													(0.07	)
Basic and diluted loss per share				$	(0.38	)	$	(0.18	)	$	(1.59	)	$	(0.47	)
Weighted average shares outstanding:
	Basic and diluted				78,969,000			78,635,000			78,940,000			78,487,000
Comprehensive loss:
	Net loss			$	(29,755	)	$	(14,027	)	$	(125,757	)	$	(36,911	)
	Unrealized gain (loss) on marketable securities:
		Reclassification adjustment												(1,984	)
		Unrealized holding gain (loss)			(1,657	)		1,667			(2,753	)		(3,795	)
			Net unrealized gain (loss)		(1,657	)		1,667			(2,753	)		(5,779	)
	Foreign currency translation				11,275			(4,811	)		6,766			(5,185	)
	Unrealized gain (loss) on hedges				(3,765	)		80			(1,672	)		(1,092	)
Total comprehensive loss				$	(23,902	)	$	(17,091	)	$	(123,416	)	$	(48,967	)

See accompanying notes to condensed consolidated financial statements.

4

WESTERN WIRELESS CORPORATION
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)

			Six months ended June 30,
			2002			2001
Operating activities:
	Net loss		$	(125,757	)	$	(36,911	)
	Adjustments to reconcile net loss to net cash provided by operating activities:
		Cumulative change in accounting principle					5,580
		Gain on sale of marketable securities					(8,006	)
		Depreciation and amortization		122,129			96,696
		Deferred income taxes		85,510
		Asset disposition		7,556
		Stock based compensation					12,247
		Equity in net (income) loss of unconsolidated affiliates		(2,488	)		2,412
		Minority interests in consolidated subsidiaries		(5,825	)		(9,548	)
		Adjustment of interest rate hedges to fair market value		(811	)		7,380
		Other, net		2,025			2,478
		Changes in operating assets and liabilities		13,280			(21,227	)
		Net cash provided by operating activities		95,619			51,101
Investing activities:
	Purchase of property and equipment			(160,460	)		(155,284	)
	Additions to licensing costs and other intangible assets			(5,602	)		(25,138	)
	Proceeds from sale of marketable securities						26,636
	Purchase of marketable securities						(3,896	)
	Receipts from and (investments in) unconsolidated subsidiaries			(722	)		2,962
	Long-term deposits			(18,655	)
	Payments to VoiceStream Wireless						(24,500	)
	Purchase of minority interests in Western Wireless International						(14,140	)
		Net cash used in investing activities		(185,439	)		(193,360	)
Financing activities:
	Additions to long-term debt			141,841			608,461
	Repayment of long-term debt			(58,503	)		(440,000	)
	Minority interest contributions			520			19,978
	Other			565			1,500
		Net cash provided by financing activities		84,423			189,939
Effect of exchange rate changes				2,054
Change in cash and cash equivalents				(3,343	)		47,680
Cash and cash equivalents, beginning of period				45,240			23,278
Cash and cash equivalents, end of period			$	41,897		$	70,958

See accompanying notes to condensed consolidated financial statements.

5

Western Wireless Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)

1. Organization:

     Western Wireless Corporation provides wireless communications services in the United States principally through the ownership and operation of cellular systems. The Company provides cellular operations primarily in rural areas in 19 western states under the CELLULARONE^® brand name. In April 2002, the Company launched service in Amarillo, Texas under the Western Wireless brand name.

     The Company owns approximately 98% of Western Wireless International Holding Corporation (“WWI”) which, through consolidated subsidiaries and equity investments, is a provider of wireless and other communications services worldwide.

     Throughout this document, Western Wireless Corporation and its subsidiaries are referred to as “the Company,” “we,” “our” or “us.” The condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) that permit reduced disclosures for interim periods. The condensed consolidated balance sheet as of December 31, 2001, has been derived from audited financial statements. The unaudited interim condensed consolidated financial statements dated June 30, 2002 and 2001, are presented herein, and reflect all adjustments, which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented. Results of operations for interim periods presented herein are not necessarily indicative of results of operations for the entire year. For further information, refer to our annual audited financial statements and footnotes thereto for the year ended December 31, 2001, contained in our Form 10-K dated March 29, 2002.

2. Summary of Significant Accounting Policies:

     Supplemental cash flow disclosure:

     Cash paid for interest was $78.4 million and $75.4 million for the six months ended June 30, 2002 and 2001, respectively.

     Reclassifications:

     Certain amounts in prior years’ financial statements have been reclassified to conform to the 2002 presentation.

     Principles of Consolidation:

     U.S. headquarter functions and majority owned European, South American and Caribbean consolidated subsidiaries are recorded as of the date of the financial statements. During the first quarter of 2002, we brought the results of Bolivia and Haiti current with the date of the financial statements. Entities accounted for using the equity method and our consolidated Ghanaian subsidiary are presented on a one quarter lag. For the six months ended June 30, 2001, consolidated subsidiaries in Iceland, Ghana, Bolivia and Haiti, along with entities accounted for using the equity method, were recorded on a one quarter lag. The inclusion of an additional quarter of operations for Bolivia and Haiti in the first quarter for 2002 had an insignificant impact on our consolidated operating results.

     Recently issued accounting standards:

     In July 2002, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (“SFAS No. 146”). SFAS No. 146 requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. SFAS No. 146 supersedes Emergency Issues Task Force Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” SFAS No. 146 is to be applied prospectively to exit or disposal activities initiated after December 31, 2002.

     In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections” (“SFAS No. 145”). SFAS No. 145 requires that gains and losses from the extinguishments of debt be classified as extraordinary items only if they meet the criteria in Accounting Principles Board Opinion No. 30 (“Opinion No. 30”). Applying the provisions of Opinion No. 30 will distinguish transactions that are part of an entity’s recurring operations from those that are unusual and infrequent that meet criteria for classification as an extraordinary item. We have adopted the provisions of SFAS No. 145 during the second quarter of 2002 and have recognized a gain of $1.3 million in other income on the repurchase of approximately $17 million of our 10½% Senior Subordinated Notes due 2006 and 2007.

6

Western Wireless Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)

     In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations” (“SFAS No. 143”). This statement deals with the costs of closing facilities and removing assets. SFAS No. 143 requires entities to record the fair value of a legal liability for an asset retirement obligation in the period it is incurred if a reasonable estimate of fair value can be made. This cost is initially capitalized and amortized over the remaining life of the underlying asset. Once the obligation is ultimately settled, any difference between the final cost and the recorded liability is recognized as a gain or loss on disposition. SFAS No. 143 is effective for us beginning January 1, 2003. We are currently evaluating the impact this statement will have on our future consolidated financial results.

     On January 1, 2002, we adopted SFAS No. 142 “Goodwill and Other Intangible Assets” (“SFAS No. 142”). SFAS No. 142 addresses how acquired goodwill and other intangible assets are recorded upon their acquisition as well as how they are to be accounted for after they have been initially recognized in the financial statements. Under this statement, goodwill, including excess net book value associated with equity method investments, and other intangible assets with indefinite useful lives, on a prospective basis, will no longer be amortized. Upon adoption of SFAS 142, we ceased amortization of our domestic licenses as we determined that these assets meet the definition of indefinite life intangible assets. The fair value of our domestic licenses was estimated using the discounted present value of expected future cash flows. The determination of fair value is a complex consideration that involves significant assumptions and estimates. Assumptions and estimates made by us were based on our best judgments and included among other things: (i) an assessment of market and economic conditions including discount rates; (ii) future operating performance; (iii) competition and market share; and (iv) the nature and cost of technology utilized. We completed the assessment for impairment of our indefinite life intangible assets required upon the implementation of SFAS No. 142 and determined that in the aggregate they were not impaired. In the future, impairment must be assessed at least annually for these assets, or when indications of impairment exist. It is possible that future assessments could cause us to conclude that impairment indications exist. Accordingly, there are no assurances that future valuations will result in the conclusion that our domestic licenses are not impaired.

     In connection with the adoption of SFAS No. 142, we have incurred a non-cash charge of approximately $85.5 million for the six months ended June 30, 2002 as a provision for income taxes mainly to increase the valuation allowance related to our net operating loss carryforwards. This non-cash charge includes $71.4 million in one-time charges required because we have significant deferred tax liabilities related to our domestic licenses. Historically, we did not need a valuation allowance for the portion of our net operating loss carryforward equal to the amount of license amortization expected to occur during the net operating loss carryforward period. Since we ceased amortizing domestic licenses on January 1, 2002 for book purposes and we can no longer estimate the amount, if any, of deferred tax liabilities related to our domestic licenses which will reverse during the net operating loss carryforward period, we have increased the valuation allowance accordingly. Further, since January 1, 2002, we continue to amortize our licenses for federal income tax purposes. As previously discussed, license costs are no longer amortized for book purposes. The ongoing difference between book and tax amortization resulted in an additional non-cash charge as a provision for income taxes of approximately $14.1 million for the six months ended June 30, 2002. The additional non-cash charge to the income tax provision results from growth in our deferred tax liability that cannot be estimated to reverse during our net operating loss carryforward period.

     On January 1, 2002, we adopted SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”). SFAS No. 144 supersedes SFAS 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of” (“SFAS No. 121”). SFAS No. 144 primarily addresses significant issues relating to the implementation of SFAS No. 121 and develops a single accounting model for long-lived assets to be disposed of, whether previously held and used or newly acquired. We periodically evaluate whether there has been any indication of impairment of our long-lived assets.

     3. Marketable Securities:

     Marketable securities are classified as available-for-sale and are stated at fair market value. Information regarding our marketable securities is summarized as follows:

(Dollars in thousands)

		June 30, 2002			December 31, 2001
Available-for-sale equity securities:
	Aggregate fair value	$	18,263		$	21,016
	Historical cost		18,959			18,959
Unrealized holding gain (loss)		$	(696	)	$	2,057

     Our net unrealized holding gains and losses are included as an increase to accumulated other comprehensive loss. Realized gains and losses are determined on the basis of specific identification.

7

Western Wireless Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)

4. Prepaid Expenses and Other Current Assets:

(Dollars in thousands)
	June 30, 2002		December 31, 2001
Rent	$	10,681	$	5,786
Cellular One Group promotional fund		7,273		5,522
VAT receivable		3,706		17,725
Insurance		2,976		884
Taxes and fees		990		2,487
Acquisition related receivable				2,401
Deposits		2,278		6,423
Other		6,435		8,174
	$	34,339	$	49,402

5. Licensing Costs and Other Intangible Assets:

     Upon adoption of SFAS No. 142, as described in Note 2, we ceased amortization related to domestic licensing costs beginning on January 1, 2002.

(Dollars in thousands)
		June 30, 2002				December 31, 2001
Intangible assets subject to amortization:
	International licensing costs		$	99,549		$	95,278
	Deferred financing costs			31,991			27,155
	Trademark and other			16,956			16,543
				148,496			138,976
Accumulated amortization				(20,515	)		(15,170	)
				127,981			123,806
Intangible assets not subject to amortization:
	Domestic licensing costs			1,053,541			1,060,710
			$	1,181,522		$	1,184,516

     We include the amortization of deferred financing costs in interest and financing expense. The following table represents current and expected amortization expense, net of deferred financing costs, for each of the following periods:

(Dollars in thousands)
Aggregate amortization expense:
	For the six months ended June 30, 2002	$	4,022
Expected amortization expense:
	For the six months ending December 31, 2002		3,683
	For the year ending December 31, 2003		7,366
	For the year ending December 31, 2004		7,366
	For the year ending December 31, 2005		7,366
	For the year ending December 31, 2006		7,366

8

Western Wireless Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)

     The following table reconciles our net loss adjusted to exclude amortization expense related to intangible assets, assuming the adoption of SFAS No, 142 had occurred on January 1, 2001:

(Dollars in thousands, except per share amounts)
		Six months ended June 30,
		2002			2001
Net loss		$	(125,757	)	$	(36,911	)
Add back: License amortization						14,588
Adjusted net loss		$	(125,757	)	$	(22,323	)
Basic and diluted loss per share:
	Net loss	$	(1.59	)	$	(0.47	)
	License amortization					0.19
	Adjusted net loss	$	(1.59	)	$	(0.28	)

6. Debt:

     Long-Term Debt:

(Dollars in thousands)
		June 30, 2002			December 31, 2001
Credit Facility:
	Revolvers	$	700,000		$	640,000
	Term Loans		1,100,000			1,100,000
10½% Senior Subordinated Notes Due 2006			187,050			200,000
10½% Senior Subordinated Notes Due 2007			196,000			200,000
tele.ring Revolver			93,622			63,374
Slovenian Credit Facility			41,470
Icelandic Credit Facility			23,273			22,687
Bolivian Bridge Loan			34,700			21,145
Irish Bridge Loan						17,716
Other			18,488			27,923
			2,394,603			2,292,845
Less current portion			(94,407	)		(55,471	)
		$	2,300,196		$	2,237,374

The aggregate amounts of principal maturities as of June 30, 2002, are as follows:

(Dollars in thousands)
Six months ending December 31, 2002		$	39,019
Year ending December 31,
	2003		112,877
	2004		196,841
	2005		301,829
	2006		559,067
	2007		514,039
	Thereafter		670,931
		$	2,394,603

9

Western Wireless Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)

     Irish Bridge Loan:

     In April 2001, Meteor Mobile Communications Limited (“MMC”), a subsidiary of WWI, entered into a bridge loan facility agreement (the “Irish Bridge Loan”) with two banks to provide funding for the development and operation of MMC’s network in Ireland. In April 2002, a subsidiary of WWI repaid the remainder of the outstanding principal plus interest.

     Slovenian Credit Facility:

     In April 2002, Western Wireless International d.o.o. (“Vega”), a subsidiary of WWI, entered into a credit facility agreement (the “Slovenian Credit Facility”) with a consortium of banks to provide funding for the implementation and expansion of Vega’s network in Slovenia. The total amount of the Slovenian Credit Facility is 116 million euro. Under the terms of the Slovenian Credit Facility, all outstanding principal is required to be repaid in predetermined semi-annual installments beginning on May 30, 2004 and ending on November 30, 2009. Interest is accrued mainly at EURIBOR plus an applicable margin, initially ranging from 1.25% to 3.25% based on Vega’s financial and technical performance. Further, the Slovenian Credit Facility requires Vega to enter into interest rate hedge agreements on a minimum of 50% of the outstanding balance under the Slovenian Credit Facility to manage the interest rate exposure pertaining to borrowings under the Slovenian Credit Facility.

     The Slovenian Credit Facility contains certain borrowing conditions and restrictive covenants, including: minimum subscribers; population coverage; certain cash flow requirements; minimum contributed capital and debt service coverage. Western Wireless International Corporation (“WWIC”), a subsidiary of WWI, has guaranteed the Slovenian Credit Facility under the following circumstances: failure to meet specified network construction milestones, the subsidiary’s insolvency, or abandonment of the project. Further, WWIC has made a commitment that is collateralized by cash to contribute up to a maximum of 16 million euro in additional capital to provide for cumulative operating cash flow shortfalls and cash balance deficiencies, if any. In the second quarter of 2002, Vega’s revenues were 1.3 million euro below the minimum revenues required under the covenants contained in the Slovenian Credit Facility. In August 2002, pursuant to the Slovenian Credit Facility, WWIC exercised the right to contribute an additional 1.3 million euro to Vega as a result of the revenue shortfall. As of June 30, 2002, Vega had approximately $54 million available to borrow under the Slovenian Credit Facility, $27 million of which is restricted for payment on future purchases by Vega from its equipment supplier. We expect that there will be additional revenue or other financial covenant shortfalls in the future which may limit the availability of borrowings under the Slovenian Credit Facility, subject to WWIC’s right to contribute additional amounts in order to cure such shortfalls.

10

Western Wireless Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)

7. Commitments and contingencies:

     Purchase Commitments:

     In order to ensure adequate supply and availability of certain wireless system equipment requirements and service needs, we have committed to purchase from various suppliers, wireless communications equipment and services. Information regarding these commitments as of June 30, 2002, is as follows:

(Dollars in thousands)
Aggregate commitments	$	187,000
Ordered and received	$	149,000
Awaiting delivery	$	9,000
Expiration dates	September 2002
	to March 2004

     International Contingencies:

     Ivory Coast:

     WWI owns a 40% interest in Cora de Comstar (“Cora”), which has operated under a provisional operating license since the company was formed in 1995. This interest is accounted for by WWI on the equity method. When the provisional license was issued to Cora, the government established certain conditions by which the provisional license would become a long-term license. On July 6, 2001, the government announced its intention to require Cora and the two other wireless operators in Côte d’Ivoire to each pay a license fee of 40 billion CFA francs, or approximately $53 million, in order to obtain their long-term licenses. WWI believes that this requirement violates the terms of the provisional license and is a breach of Cora’s contract with the government. However, in February 2002, Cora agreed to an interim payment plan of approximately $0.1 million per month, funded by Cora’s operating cash flows, until Cora is able to obtain additional funding or renegotiates the license fee and terms. Despite the ongoing negotiations, the government issued Cora the long-term license in the second quarter of 2002. WWI’s net investment in Cora at June 30, 2002 is $5 million.

     Ghana:

     Under the terms of the Ghana license, a subsidiary of WWI, Western Telesystems Ghana Limited (“Westel”) was required to meet certain customer levels and build-out requirements by February 2002. Due to the inability of the regulator to provide spectrum and enforce interconnection with the incumbent telephone company, all development has been stifled. Westel was unable to meet the required customer levels. The National Communication Authority of Ghana (“NCA”) has assessed a penalty claim of $71 million for not meeting these build-out requirements. Westel is currently in discussions with the NCA and other government officials to settle these matters and does not believe the enforcement of these penalties is probable. WWI’s net investment in Westel at June 30, 2002 is approximately $5 million.

11

Western Wireless Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)

8. Income (Loss) per Common Share:

     Statement of Financial Accounting Standards No. 128, “Earnings Per Share,” requires two presentations of income per share — “basic” and “diluted.” Basic income per share is calculated using the weighted average number of shares outstanding during the period. Diluted income per share is computed on the basis of the weighted average number of common shares outstanding plus the dilutive effect of outstanding stock options using the “treasury stock” method.

     Income (loss) per share is calculated using the weighted average number of shares of outstanding stock during the period. For those periods presented with net losses, any stock options outstanding are antidilutive, thus basic and diluted loss per share are equal. Weighted average shares issuable upon the exercise of stock options, which were not included in the calculation were 2,264,300 and 2,043,400 for the six months ended June 30, 2002 and 2001, respectively, because they were antidilutive.

     The components of basic and diluted loss per share are as follows:

(Dollars in thousands, except per share data)
			Three months ended June 30,						Six months ended June 30,
			2002			2001			2002			2001
Numerator:
	Loss before cumulative change in accounting principle		$	(29,755	)	$	(14,027	)	$	(125,757	)	$	(31,331	)
	Cumulative change in accounting principle												(5,580	)
		Net loss	$	(29,755	)	$	(14,027	)	$	(125,757	)	$	(36,911	)
Denominator:
	Weighted-average shares:
		Basic		78,969,000			78,635,000			78,940,000			78,487,000
	Effect of dilutive securities:
		Dilutive options
	Weighted-average shares:
		Diluted		78,969,000			78,635,000			78,940,000			78,487,000
Basic and diluted loss per share:
	Before cumulative change in accounting principle		$	(0.38	)	$	(0.18	)	$	(1.59	)	$	(0.40	)
	Cumulative change in accounting principle												(0.07	)
Basic and diluted loss per share			$	(0.38	)	$	(0.18	)	$	(1.59	)	$	(0.47	)

9. Acquisitions and Dispositions:

     Asset Dispositions:

     We have implemented our strategy to dispose of certain minor domestic non-core assets. In conjunction with these efforts, we have recognized a charge in the second quarter of 2002 of approximately $7.6 million related to the disposition of certain of our paging assets. We also have certain Specialized Mobile Radio (“SMR”) and Competitive Local Exchange Carrier (“CLEC”) assets that we have sold. The results of the dispositions of the SMR and CLEC assets will be reflected in the third quarter of 2002 and are expected to result in a small gain.

     North Dakota 3:

     In June 2002, we were notified that we were the high bidder for the North Dakota 3 Rural Service Area (“RSA”) license by the FCC for approximately $9.4 million. The purchase of the license is anticipated to close late in the third quarter of 2002. Currently we operate this RSA under an interim operating authority.

12

Western Wireless Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)

     tele.ring:

     In April 2002, an indirect wholly-owned subsidiary of WWI, exercised its option to acquire 100% of the stock of Mannesmann 3G Mobilfunk GmbH (an indirect wholly-owned subsidiary of Vodafone), holder of an Austrian UMTS license for assumption of $0.5 million of liabilities. The acquired entity currently has no ongoing operations.

13

Western Wireless Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)

10. Segment Information:

     Our operations are overseen by domestic and international management teams each reporting to our Chief Executive Officer. We mainly provide cellular services in rural markets in the western United States. Our international operations consist mainly of consolidated subsidiaries and operating entities throughout the world. Certain centralized back office costs and assets benefit all of our operations. These costs are allocated to both segments in a manner which reflects the relative time devoted to each of the segments.

     The domestic cellular operations comprise the majority of our total revenues, expenses and total assets as presented in the table below:

(Dollars in thousands)
		Domestic Operations			International Operations				Consolidated
Three months ended June 30, 2002
	Total revenues	$	222,591		$	76,196		$	298,787
	Depreciation and amortization expense		47,130			11,458			58,588
	Interest and financing expense, net		28,031			11,280			39,311
	Net loss		(1,374	)		(28,381	)		(29,755	)
	Total capital expenditures		30,468			51,301			81,769
Six months ended June 30, 2002
	Total revenues	$	433,868		$	155,583		$	589,451
	Depreciation and amortization expense		96,692			23,411			120,103
	Interest and financing expense, net		57,035			21,635			78,670
	Net loss		(68,151	)		(57,606	)		(125,757	)
	Total capital expenditures		65,743			94,717			160,460
At June 30, 2002
	Total assets	$	1,817,741		$	566,767		$	2,384,508

(Dollars in thousands)
		Domestic Operations			International Operations				Consolidated
Three months ended June 30, 2001
	Total revenues	$	235,681		$	16,881		$	252,562
	Depreciation and amortization expense		47,107			5,578			52,685
	Interest and financing expense, net		34,980			5,826			40,806
	Net income (loss)		14,524			(28,551	)		(14,027	)
	Total capital expenditures		63,336			26,903			90,239
Six months ended June 30, 2001
	Total revenues	$	459,338		$	29,698		$	489,036
	Depreciation and amortization expense		84,592			10,712			95,304
	Interest and financing expense, net		72,904			10,014			82,918
	Cumulative change in accounting principle		(6,600	)		1,020			(5,580	)
	Net income (loss)		20,883			(57,794	)		(36,911	)
	Total capital expenditures		88,438			66,846			155,284
At June 30, 2001
	Total assets	$	1,836,412		$	336,907		$	2,173,319

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     Cautionary statement for purposes of the “Safe Harbor” provisions of the Private Litigation Reform Act of 1995. Statements contained herein that are not based on historical fact, including without limitation statements containing the words “believes,” “may,” “will,” “estimate,” “continue,” “anticipates,” “intends,” “expects” and words of similar import, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions, both nationally and in the regions in which Western Wireless operates; technology changes; competition; changes in business strategy or development plans; the high leverage of Western Wireless; the ability to attract and retain qualified personnel; existing governmental regulations and changes in, or the failure to comply with, governmental regulations; liability and other claims asserted against Western Wireless; and other factors referenced in Western Wireless’ public offering prospectuses and its periodic reports filed with the Securities and Exchange Commission.

     Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Western Wireless disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future results, events or developments.

     Unless the context requires otherwise, “Western Wireless,” “the Company,” “we,” “our” and “us” include us and our subsidiaries.

     The following discussion and analysis is based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The discussion and analysis should be read in conjunction with our consolidated financial statements and notes thereto and other financial information included herein and in our Form 10-K for the year ended December 31, 2001. The preparation of our financial statements requires management to make estimates and judgments that affect the reported amount of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities during the periods reported. Estimates are used when accounting for certain items such as subscriber and roamer revenues, interconnect costs, incollect expense, allowance for doubtful accounts, long-lived assets, investments in unconsolidated affiliates, income taxes and contingencies. We base our estimates on historical experience, where applicable, and other assumptions that we believe are reasonable under the circumstances. Actual results may differ from our estimates due to changing conditions or the validity of our assumptions.

     Overview

     We provide wireless communications services in 19 western states under the CELLULARONE^® brand name principally through the ownership and operation of cellular wireless systems. The operations are primarily in rural areas due to our belief that there are certain strategic advantages to operating in these areas. We own FCC licenses to provide such services in 18 Metropolitan Service Areas (“MSA”) and 88 Rural Service Areas (“RSA”). Additionally, we own 10 MHZ personal communication services (“PCS”) licenses for three Basic Trading Areas (“BTA”). In June 2002, we were notified we were the high bidder for the North Dakota 3 RSA license by the FCC. This RSA is included in the 88 RSAs discussed above as we currently provide service in this area through an interim operating authority.

     During the second quarter, we continued to deploy CDMA services throughout our territory and now cover approximately 50% of our population with CDMA.

     At June 30, 2002, we owned approximately 98% of Western Wireless International Holding Corporation (“WWI”) and the balance was owned by Bradley Horwitz, our Executive Vice President and President of WWI. WWI, through consolidated interests in subsidiaries and operating joint ventures, is a provider of wireless and other communications services in ten countries. WWI owns interests in wireless licenses in ten foreign countries with a controlling interest in seven of these countries. Slovenia, Austria, Ireland, Bolivia, Iceland, Haiti and Ghana are consolidated into our financial results. Cote D’Ivoire, Croatia and Georgia are accounted for using the equity method.

     U.S. headquarter functions of WWI and majority owned European, South American and Caribbean consolidated subsidiaries are recorded as of the date of the financial statements. During the first quarter of 2002, we brought the results of Bolivia and Haiti current with the date of the financial statements. Our consolidated Ghanaian entity and entities accounted for using the equity method continue to be presented on a one quarter lag. For the first six months of 2001, consolidated subsidiaries in Iceland, Ghana, Bolivia and Haiti, along with entities accounted for using the equity method were recorded on a one quarter lag. The inclusion of an additional quarter of operations for Bolivia and Haiti in the first quarter for 2002 had an insignificant impact on our consolidated operating results.

     Results of Domestic Operations for the Three and Six Months Ended June 30, 2002 and 2001

     We had 1,165,300 domestic subscribers at June 30, 2002. This represents an increase of 5,800 and a decrease of 11,200 compared to March 31, 2002 and December 31, 2001, respectively. We had 1,116,500 domestic subscribers at June 30, 2001. This represented an increase of 30,000 and 67,000 compared to March 31, 2001 and December 31, 2000, respectively.

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     The following table sets forth certain financial data as it relates to our domestic operations:

(Dollars in thousands)
				Three months ended June 30,				Six months ended June 30,
				2002		2001		2002		2001
Revenues:
	Subscriber revenues			$	151,999	$	158,157	$	297,677	$	310,089
	Roamer revenues				58,841		68,101		111,851		129,713
	Equipment sales and other revenues				11,751		9,423		24,340		19,536
			Total revenues	$	222,591	$	235,681	$	433,868	$	459,338
Operating expenses:
	Cost of service			$	46,157	$	49,554	$	90,491	$	97,184
	Cost of equipment sales				19,302		16,823		37,732		29,144
	General and administrative				34,947		43,590		72,835		84,730
	Sales and marketing				30,216		30,704		55,954		62,308
	Depreciation and amortization				47,130		47,107		96,692		84,592
	Asset disposition				7,556				7,556
	Stock based compensation						1,053				2,376
		Total operating expenses		$	185,308	$	188,831	$	361,260	$	360,334
EBITDA				$	91,969	$	95,010	$	176,856	$	185,972

     Domestic Revenues

     The decrease in subscriber revenues for the three and six month periods ended June 30, 2002, compared to the same periods one year ago is due mainly to a decrease in the monthly average revenue per subscriber (“ARPU”). ARPU was $43.59 for the three months ended June 30, 2002, a $4.27, or 8.9%, decline from $47.86 for the three months ended June 30, 2001. ARPU was $42.37 for the six months ended June 30, 2002, a $5.35, or 11.2%, decline from $47.72 for the six months ended June 30, 2001. The decline in ARPU is the result of several factors including: (i) larger home calling areas; (ii) more rate plans that included long distance at no additional charge; and (iii) an increase in the number of rate plans that share minutes with an existing plan at a lower access rate. We continue to focus on attracting and retaining customers with rate plans that provide more features and included minutes at a higher average recurring access charge. New rate plans offered in 2002 have slowed the decline in ARPU and management expects that trend to continue.

     The decrease in roamer revenue for the three and six months ended June 30, 2002, compared to the same periods a year ago is due mainly to a year-over-year decrease in the roamer rate with AT&T Wireless Services, Inc. (“AT&T Wireless”), our largest roaming partner, under the contract extension period June 16, 2001 through June 15, 2002 partially offset by growth in roamer minutes. In March 2002, we entered into an additional extension of our roaming agreement with AT&T Wireless. The contract extension became effective June 16, 2002 and remains in effect until June 15, 2006. In the first year, the extended agreement provides for lower per minute rates compared to the contractual rates through June 15, 2002, charged to AT&T Wireless for AT&T Wireless’ customers roaming on our network. The extended agreement also provides for slight rate decreases charged to AT&T Wireless in both the second and third year of the agreement. Additionally, in April 2002, we signed new roaming agreements with Cingular Wireless (“Cingular”) and Verizon Wireless Corporation (“Verizon”) effective through April 2005. Management expects that the new agreements with Cingular and Verizon along with increases in volume from AT&T Wireless will generate sufficient new roaming traffic to offset most, if not all, of the AT&T Wireless rate reduction that took effect June 16, 2002.

     Equipment sales and other revenues for the three and six months ended June 30, 2002, which consist primarily of wireless handset and accessory sales to customers, increased compared to the three and six months ended June 30, 2001, due mainly to an increase in the average revenue per phone sold as a result of an increase in the number of digital handsets sold. As the cost of digital handsets continues to decline, we expect to pass these savings on to our customers. However, we expect to continue to sell these handsets at higher prices than we historically sold analog handsets.

     Domestic Operating Expenses

     The decrease in cost of service for the three and six month periods ended June 30, 2002, compared to the same periods one year ago is mainly attributable to decreased off network roaming costs for our customers as a result of reciprocal pricing contained in our new

16

roaming agreements with AT&T Wireless, Cingular and Verizon. These decreases were partially offset by increased costs associated with supporting an increase in the number of subscriber and roamer minutes of use. Domestic cost of service per minute of use (“MOU”) decreased to $0.03 per MOU for both the three and six month period ended June 30, 2002, compared to $0.04 for the three months ended June 30, 2001, and $0.05 for the six months ended June 30, 2001. The decrease in domestic cost of service per MOU is due mainly to the decrease in off network roaming costs previously discussed. In addition, we continue to see the fixed cost components of cost of service increasing at a slower rate than variable costs on a per minute basis. We expect domestic cost of service to continue to be down on a year-over-year basis through the end of 2002 due to continued savings in off network roaming costs. Further, we expect domestic cost of service per MOU to continue to gradually decline as greater economies of scale continue to be realized.

     General and administrative costs decreased for the three and six month periods ended June 30, 2002, compared to the same periods one year ago primarily as the result of lower bad debt expense and lower billing costs. Our domestic general and administrative monthly cost per average subscriber for the three months ended June 30, 2002, decreased to $10.02 from $13.19 for the quarter ended June 30, 2001. Our domestic general and administrative monthly cost per average subscriber for the six months ended June 30, 2002, decreased to $10.37 from $13.04 for the six months ended June 30, 2001. Management anticipates cost efficiencies to continue on a per domestic subscriber basis in 2002 as compared to 2001.

     Sales and marketing costs, including the loss on equipment sales, decreased for the three and six month periods ended June 30, 2002, compared to the same periods one year ago due primarily to a decrease in domestic gross subscriber additions, partially offset by higher average cost per gross subscriber addition. The increase in the average cost per gross subscriber addition results mainly from fixed sales and marketing costs being spread over fewer gross subscriber adds.

     Cost of equipment sales increased for the three and six months ended June 30, 2002, compared to the same periods in 2001 as a result of an increase in the average per unit cost of handsets sold due to a greater proportion of digital handsets in the overall handsets sold mix. This increase was partially offset by a decrease in the number of handsets sold. We expect that as the mix of digital and analog handsets continues to migrate more toward digital, our per unit cost of handsets will increase, partially offset by declining prices of digital handsets in the market place. Although subscribers generally are responsible for purchasing or otherwise obtaining their own handsets, we have historically sold handsets below cost to respond to competition and general industry practice and expect to continue to do so in the future.

     The increase in depreciation and amortization expense for the six months ended June 30, 2002, compared to the same periods in 2001, is mainly attributable to the growth of domestic wireless communication system assets partially offset by a decrease in amortization expense associated with the discontinuance of license amortization with the adoption on January 1, 2002, of Statement of Financial Accounting Standards (“SFAS”) No. 142 “Goodwill and Other Intangible Assets” (“SFAS No. 142”). With the adoption of SFAS No. 142 and with a reduction of year-over-year capital spending, we expect depreciation and amortization to be relatively flat in future periods.

     The asset disposition loss results from the implementation of our strategy to dispose of certain minor domestic non-core assets. In conjunction with these efforts, we have recognized a charge in the second quarter of 2002 of approximately $7.6 million related to the disposition of certain of our paging assets. We also have certain Specialized Mobile Radio (“SMR”) and Competitive Local Exchange Carrier (“CLEC”) assets that we have sold. The results of the dispositions of the SMR and CLEC assets will be reflected in the third quarter of 2002 and are expected to result in a small gain.

Domestic EBITDA

     EBITDA represents total revenues less total operating expenses exclusive of depreciation, amortization, asset disposition and stock based compensation for our operations. Management believes EBITDA provides meaningful additional information on our performance and on our ability to service our long-term debt and other fixed obligations, and to fund our continued growth. EBITDA is considered by many financial analysts to be a meaningful indicator of an entity’s ability to meet its future financial obligations, and growth in EBITDA is considered to be an indicator of future profitability, especially in a capital-intensive industry such as wireless telecommunications. EBITDA should not be construed as an alternative to net income (loss) as determined in accordance with United States generally accepted accounting principles, as an alternate to cash flows from operating activities (as determined in accordance with generally accepted accounting principles), or as a measure of liquidity. Since all companies do not calculate EBITDA in the same manner, our presentation may not be comparable to other similarly titled measures of other companies.

     Domestic EBITDA decreased for the three and six months ended June 30, 2002, compared to the three and six months ended June 30, 2001. The year-over-year decreases are the result of decreases in subscriber and roaming revenues partially offset by decreases in cost of service, sales and marketing, and general and administrative expenses. Operating margin (domestic EBITDA as a percentage of service revenues) increased to 43.4% and 42.8% from 41.6% and 41.9% for the three and six month periods ended June 30, 2002, compared to the three and six month periods ended June 30, 2001, respectively. Management expects domestic EBITDA to increase in 2002, as compared to 2001.

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     Results of International Operations for the Three and Six Months Ended June 30, 2002 and 2001

     Our international consolidated operations offer postpaid and prepaid mobile services in Slovenia, Austria, Ireland, Iceland, Bolivia and Haiti, and fixed line service primarily in Austria. We had 637,400 consolidated international mobile customers at June 30, 2002. This represents an increase of 55,600, or 9.6%, compared to March 31, 2002 and an increase of 89,500 or 16.3% compared to December 31, 2001. We had 162,800 consolidated international customers at June 30, 2001, representing an increase of 46,000 or 39.4% compared to March 31, 2001 and an increase of 79,900 or 96.4% compared to December 31, 2000. As of June 30, 2002 and 2001, approximately 67% and 75%, respectively, of our consolidated international customers were prepaid customers. As of June 30, 2002, we had 177,400 fixed lines.

     The following table sets forth certain financial data as it relates to our international operations:

(Dollars in thousands)
			Three months ended June 30,						Six months ended June 30,
			2002			2001			2002			2001
Revenues:
	Subscriber revenues		$	52,827		$	12,373		$	105,720		$	21,551
	Roamer revenues			5,553			738			13,524			1,323
	Fixed line revenues			13,383			302			26,999			381
	Equipment sales and other revenues			4,433			3,468			9,340			6,443
		Total revenues	$	76,196		$	16,881		$	155,583		$	29,698
Operating expenses:
	Cost of service		$	46,950		$	10,008		$	92,481		$	17,345
	Cost of equipment sales			9,247			3,895			17,585			7,987
	General and administrative			15,346			8,730			37,697			18,783
	Sales and marketing			16,206			8,525			30,180			19,263
	Depreciation and amortization			11,458			5,578			23,411			10,712
	Stock based compensation						5,198						9,871
		Total operating expenses	$	99,207		$	41,934		$	201,354		$	83,961
EBITDA			$	(11,553	)	$	(14,277	)	$	(22,360	)	$	(33,680	)

     International Revenues

     The increase in subscriber revenues for the three and six months ended June 30, 2002, compared to the same periods in 2001 is primarily due to the inclusion of subscriber revenue generated by tele.ring, which was acquired by us at the end of June 2001. Additionally, we eliminated the one quarter lag and brought the results of Bolivia and Haiti current in the first quarter of 2002, resulting in the inclusion of an additional quarter of operations for these entities for the six month period ended June 30, 2002. We anticipate continued growth in international subscriber revenues as we continue to add prepaid and postpaid subscribers in our international markets.

     The increase in roamer revenues for the three and six months ended June 30, 2002, compared to the same periods in 2001 is primarily due to the inclusion of roamer revenue generated by tele.ring, as previously discussed.

     Fixed line revenues increased for the three and six months ended June 30, 2002 as compared to the same periods in 2001, primarily as a result of inclusion of fixed line revenue generated by tele.ring, as previously discussed.

     Equipment sales and other revenues, which consist mostly of wireless handset and accessory sales to customers, increased for the three months ended June 30, 2002, compared to the same period in 2001 primarily due to the launch of Slovenia in December 2001. The increase for the six month period ended June 30, 2002, compared to the same period one year ago, is due to the launch of Slovenia and the inclusion of an additional quarter of operations for Bolivia and Haiti.

     International Operating Expenses

     Operating expenses represent the expenses incurred by our consolidated international markets and headquarters’ administrative functions in the United States. Seven of our international consolidated markets were operational during the entire six months ended June

18

30, 2002, while only four were operational during the same period in 2001. Our international operations in Ireland and Slovenia became operational in February 2001 and December 2001, respectively, and we acquired tele.ring at the end of June 2001. Additionally, we eliminated the one quarter lag and brought the results of Bolivia and Haiti current in the first quarter of 2002, resulting in the inclusion of an additional quarter of operations for these entities for the six months ended June 30, 2002. Accordingly, operating expenses increased for the three and six months ended June 30, 2002, over the same periods in 2001. The period-over-period trend is not necessarily indicative of future trends as our number of consolidated international markets that were operational increased. As we continue to add subscribers and expand our wireless footprint in our consolidated international markets, international operating expenses are expected to continue to increase.

     We have no stock based compensation in 2002 based on current market conditions.

     International EBITDA

     EBITDA represents total revenues less total operating expenses exclusive of depreciation, amortization and stock based compensation for our operations. Since all companies do not calculate EBITDA in the same manner, our presentation may not be comparable to similarly titled measures of other companies.

     International EBITDA losses for our consolidated subsidiaries improved for the three and six months ended June 30, 2002, compared to the same periods in 2001, due to an increased subscriber base and operating efficiencies in the first half of 2002 and eliminating the lag of certain markets during the quarter ended March 31, 2001. Management expects international EBITDA losses to improve throughout 2002, compared to 2001, as a result of continued subscriber growth and related economies of scale in our existing markets.

     Consolidated Other Income (Expense)

     Consolidated interest and financing expense decreased to $39.3 million and $78.7 million for the three and six months ended June 30, 2002, from $40.8 million and $82.9 million one year ago. The decreases year-over-year are primarily due to a reduction of our weighted average interest rate partially offset by an increase in our average long-term debt. For the three months ended June 30, 2002 and 2001, the domestic weighted average interest rate paid to third parties was 6.7% and 8.1%, respectively. For the six months ended June 30, 2002 and 2001, the domestic weighted average interest rate paid to third parties was 6.7% and 8.4%, respectively. For the three months ended June 30, 2002 and 2001, the consolidated international weighted average interest rates paid to third parties by WWI was 6.4% and 8.3%, respectively. For the six months ended June 30, 2002 and 2001, the consolidated international weighted average interest rates paid to third parties by WWI was 6.3% and 8.2%, respectively.

     Provision for Income Taxes

     In connection with the adoption of SFAS No. 142, we have incurred a non-cash charge of approximately $85.5 million for the six months ended June 30, 2002 as a provision for income taxes mainly to increase the valuation allowance related to our net operating loss carryforwards. This non-cash charge includes $71.4 million in one-time charges required because we have significant deferred tax liabilities related to our domestic licenses. Historically, we did not need a valuation allowance for the portion of our net operating loss carryforward equal to the amount of license amortization expected to occur during the net operating loss carryforward period. Since we ceased amortizing licenses on January 1, 2002 for book purposes and we can no longer estimate the amount, if any, of deferred tax liabilities related to our domestic licenses which will reverse during the net operating loss carryforward period, we have increased the valuation allowance accordingly. Further, since January 1, 2002, we continue to amortize our licenses for federal income tax purposes. As previously discussed, license costs are no longer amortized for book purposes. The ongoing difference between book and tax amortization resulted in an additional non-cash charge as a provision for income tax of approximately $14.1 million for the six months ended June 30, 2002. The additional non-cash charge to the income tax provision results from growth in our deferred tax liability that cannot be estimated to reverse during our net operating loss carryforward period.

     This adjustment reflects tax accounting requirements and is not based on any changes to our business model, future prospects, the value of our licenses or any current or future cash tax payments. The increase in the valuation allowance does not reflect any change in our assessment of the likelihood of utilizing the tax NOL carryforwards on a cash tax basis in the future. We will continue to evaluate the need for this valuation allowance for accounting purposes to determine if we should reverse all or part of the allowance in the future.

     Consolidated Liquidity and Capital Resources

     We have a $2.1 billion credit facility with a consortium of lenders (the “Credit Facility”). The Credit Facility provides for $1 billion in revolving loans and $1.1 billion in term loans. As of August 12, 2002, $1.8 billion is outstanding under the Credit Facility and we have approximately $185 million available to borrow.

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     During the second quarter, we repurchased approximately $17 million of our 10½% Senior Subordinated Notes due in 2006 and 2007 in open market transactions.

     In June 2001, under the terms of the transaction to acquire tele.ring from a subsidiary of Vodafone Group Plc (“Vodafone”), an affiliate of Vodafone agreed to make available to tele.ring financing of 250 million euro for purposes of funding working capital and network expansion (the “tele.ring Revolver”). At June 30, 2002, the outstanding balance under the tele.ring Revolver was approximately $94 million, including accrued interest. At June 30, 2002, there was approximately 160 million euro available but undrawn under the tele.ring Revolver which is expected to sustain tele.ring until it becomes free cash flow positive.

     NuevaTel, S.A. (“NuevaTel”), a subsidiary of WWI, has a bridge loan facility (“the Bridge Loan”). The aggregate amount available under the Bridge Loan is $37.5 million. The amount available to draw is contingent upon the issuance of purchase orders to an equipment provider. WWI, along with its partners, has severally guaranteed the Bridge Loan. At June 30, 2002, NuevaTel had drawn approximately $35 million against this bridge loan facility. There is no availability under the facility. The loan matures in its entirety in October 2002. We believe we can extend or refinance the Bolivian bridge loan facility prior to its maturity, but neither can be assured.

     A subsidiary of WWI, TAL h.f. (“TAL”), has a credit facility with three foreign banks denominated in a basket of five currencies. At June 30, 2002, TAL had approximately $23 million outstanding under this facility. This facility is fully drawn. We will repay approximately $2 million of principal during the remainder of 2002 and expect to do so using positive cash flow from TAL.

     In April 2002, a subsidiary of WWI repaid the remainder of the outstanding principal and interest on the Meteor Mobile Communications Limited bridge loan facility.

Slovenian Credit Facility:

     In April 2002, Western Wireless International d.o.o. (“Vega”), a subsidiary of WWI, entered into a credit facility agreement (the “Slovenian Credit Facility”) with a consortium of banks to provide funding for the implementation and expansion of Vega’s network in Slovenia. The total amount of the Slovenian Credit Facility is 116 million euro. Under the terms of the Slovenian Credit Facility, all outstanding principal is required to be repaid in predetermined semi-annual installments beginning on May 30, 2004 and ending on November 30, 2009. Interest is accrued mainly at EURIBOR plus an applicable margin, initially ranging from 1.25% to 3.25% based on Vega’s financial and technical performance. Further, the Slovenian Credit Facility requires Vega to enter into interest rate hedge agreements on a minimum of 50% of the outstanding balance under the Slovenian Credit Facility to manage the interest rate exposure pertaining to borrowings under the Slovenian Credit Facility.

     The Slovenian Credit Facility contains certain borrowing conditions and restrictive covenants, including: minimum subscribers; population coverage; certain cash flow requirements; minimum contributed capital and debt service coverage. Western Wireless International Corporation (“WWIC”), a subsidiary of WWI, has guaranteed the Slovenian Credit Facility under the following circumstances: failure to meet specified network construction milestones, the subsidiary’s insolvency, or abandonment of the project. Further, WWIC has made a commitment that is collateralized by cash to contribute up to a maximum of 16 million euro in additional capital to provide for cumulative operating cash flow shortfalls and cash balance deficiencies, if any. In the second quarter of 2002, Vega’s revenues were 1.3 million euro below the minimum revenues required under the covenants contained in the Slovenian Credit Facility. In August 2002, pursuant to the Slovenian Credit Facility, WWIC exercised the right to contribute an additional 1.3 million euro to Vega as a result of the revenue shortfall. As of June 30, 2002, Vega had approximately $54 million available to borrow under the Slovenian Credit Facility, $27 million of which is restricted for payment on future purchases by Vega from its equipment supplier. We expect that there will be additional revenue or other financial covenant shortfalls in the future which may limit the availability of borrowings under the Slovenian Credit Facility, subject to WWIC’s right to contribute additional amounts in order to cure such shortfalls.

     The maturities of our aggregate long-term debt, including that due within one year and classified as current are:

(Dollars in millions)
	6 mos.
	ending
	December 31,										There-
	2002		2003		2004		2005		2006		after		Total
Domestic	$	0.0	$	106.1	$	156.1	$	256.1	$	518.1	$	1,152.0	$	2,188.4
International		39.0		6.8		40.7		45.7		41.0		33.0		206.2
Total	$	39.0	$	112.9	$	196.8	$	301.8	$	559.1	$	1,185.0	$	2,394.6

     For the remainder of 2002, we anticipate spending approximately $90 million for continued improvement to our domestic network and back office infrastructure.

     During the remainder of 2002, WWI’s business plans also include funding for capital expenditures and operating losses. WWI plans to fund these needs through local foreign borrowings, the tele.ring Revolver, the Slovenian Credit Facility and contributions and advances from Western Wireless and minority partners in our consolidated subsidiaries. For the remainder of 2002, WWI anticipates expending approximately $70 million for expansion of its wireless networks and requiring approximately $28 million in working capital. It is anticipated that the net contributions and advances by Western Wireless for the remainder of 2002 will be approximately $27 million.

     We believe that our current borrowing capacity under the Credit Facility and available international loan facilities, along with domestic operating cash flow, will be adequate to fund our projected domestic network capital expenditures, international operations and debt service requirements for the remainder of 2002. However, if operating cash flows are less than planned, covenants and borrowing

20

limitations contained in the Credit Facility and the 10½% Senior Subordinated Notes due in 2006 and 2007 may be triggered that limit the availability of borrowings under the Credit Facility. Our operating cash flow is dependent upon, among other things: (i) the amount of revenue we are able to generate from our customers; (ii) the amount of operating expenses required to provide our services; (iii) the cost of acquiring and retaining customers; and (iv) our ability to grow our customer base. In the event we are required to seek additional funding and/or restructure our existing financial arrangements, such funding may not be available to us on satisfactory terms, if at all. Our ability to raise additional capital, if necessary, is subject to a variety of factors, including: (i) the commercial success of our operations; (ii) the volatility and demand of the capital markets, conditions in the economy generally and the telecommunications industry specifically; and (iii) other factors we cannot presently predict with certainty.

     Net cash provided by operating activities was $95.6 million for the six months ended June 30, 2002. Adjustments to the $125.8 million net loss to reconcile to net cash used in operating activities included: (i) $122.1 million of depreciation and amortization; (ii) $85.5 million in deferred income taxes; (iii) $5.8 million minority interests income of consolidated subsidiaries; and (iv) $7.6 million for loss on asset disposition. Net cash used in operating activities was $51.1 million for the six months ended June 30, 2001.

     Net cash used in investing activities was $185.4 million for the six months ended June 30, 2002. Investing activities for the period consisted primarily of $160.5 million in purchases of property and equipment of which $94.7 million was related to WWI and $18.7 million in long-term deposits. Net cash used in investing activities was $193.4 million for the six months ended June 30, 2001.

     Net cash provided by financing activities was $84.4 million for the six months ended June 30, 2002. Financing activities for such period consisted primarily of additions to long-term debt of $141.8 million for the continued expansion of our cellular infrastructure and to fund international joint ventures through WWI and repayments of long-term debt amounting to $58.5 million. Net cash provided by financing activities was $189.9 million for the six months ended June 30, 2001.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

     Our earnings are affected by changes in short-term interest rates as a result of our borrowings. As part of our risk management program, we utilize interest rate caps, swaps and collars to hedge variable rate interest risk. Additionally, we have entered into foreign exchange contracts to hedge certain foreign currency commitments. The following table provides information as of June 30, 2002, about our long-term debt and derivative financial instruments that are sensitive to changes in interest rates and foreign currency fluctuations:

(Dollars in millions)
		Expected maturity date
												There-				Fair
		2002		2003		2004		2005		2006		after		Total		Value
Liabilities:
Maturities of long-term debt:
	Variable Rate	$	39.0	$	112.9	$	196.8	$	301.8	$	372.0	$	989.0	$	2,011.5	$	2,011.5
	Fixed Rate									$	187.1	$	196.0	$	383.1	$	160.9
Interest Rate Derivatives:
Financial instruments related to debt
Interest rate caps:
	Notional amounts outstanding by year of maturity			$	1.7	$	3.3	$	30.9					$	35.9	$	0.2
The interest rate caps effectively lock $35.9 million of our borrowings between 5.0% and 7.0%
Interest rate collars:
	Notional amounts outstanding by year of maturity			$	245.0	$	55.0							$	300.0	$	(13.3	)
The interest rate collars effectively lock $300 million of our borrowings between 6.5% and 7.8%
Interest rate swaps:
	Notional amounts outstanding by year of maturity	$	21.8	$	70.0	$	300.0	$	25.0					$	416.8	$	(21.0	)
The interest rate swaps effectively lock $416.8 million of our borrowings between 4.9% and 6.8%
Foreign Currency Exchange Derivatives:
	Forward exchange agreement
	Pay USD/receive EUR (USD equivalent)	$	0.8											$	0.8	$	0.7
We have a foreign currency forward to sell $0.8 million and buy 0.9 million euro in November 2002

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

     There are no material, pending legal proceedings to which we or any of our subsidiaries or affiliates is a party or of which any of their property is subject which, if adversely decided, would have a material adverse effect on us.

Item 2. Changes in Securities

     None.

Item 3. Defaults Upon Senior Securities

     None.

Item 4. Submission of Matters to a Vote of Security Holders

     The Annual Meeting of Shareholders was held on May 16, 2002. The following matters were voted upon at the meeting and received the number of votes indicated:

1. To elect nine directors to serve until the Annual Meeting of Shareholders for 2003 and until their respective successors are elected and qualified.

	For		Withheld
John W. Stanton		129,818,356		3,713,547
John L. Bunce		132,285,903		1,246,000
Mitchell R. Cohen		132,468,337		1,063,566
Daniel J. Evans		133,015,312		516,591
Theresa E. Gillespie		129,667,993		3,863,910
Jonathan M. Nelson		132,116,342		1,415,561
Terence M. O’Toole		132,156,485		1,375,418
Mikal J. Thomsen		130,014,697		3,517,206
Peter H. van Oppen		132,469,962		1,061,941

2. To ratify the selection of PricewaterhouseCoopers LLP as our independent auditors for 2001 and 2002.

For:	132,650,177
Against:	786,667
Abstain:	95,088

3. To amend the Western Wireless Corporation 1994 Management Incentive Stock Option Plan to increase the number of shares available for issuance there under by 2,500,000 shares.

For:	110,139,997
Against:	23,270,079
Abstain:	121,856

Item 5. Other Information

     None.

Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibit	Description
10.1	Letter Agreement dated April 5, 2002 by and among tele.ring Telekom Service GmbH, EHG Einkaufs- und Handels GmbH, Vodafone AG (as universal successor of Mannesmann Eurokom GmbH) and EKOM Telecommunications Holding AG

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10.2	Western Wireless Corporation 1994 Management Incentive Stock Option Plan, as adopted and amended November 16, 1995, May 20, 1999, February 3, 2000 and May 16, 2002
10.3	Employment Agreement by and between Eric Hertz and Western Wireless Corporation dated May 7, 2002

(b) Reports on Form 8-K

None

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Western Wireless Corporation

By:	/s/ THERESA E. GILLESPIE	By:	/s/ SCOTT SOLEY
	Theresa E. Gillespie Executive Vice President		Scott Soley Vice President and Controller (Chief Accounting Officer)

Dated: August 13, 2002

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EXHIBIT INDEX

Exhibit	Description
10.1	Letter Agreement dated April 5, 2002 by and among tele.ring Telekom Service GmbH, EHG Einkaufs- und Handels GmbH, Vodafone AG (as universal successor of Mannesmann Eurokom GmbH) and EKOM Telecommunications Holding AG
10.2	Western Wireless Corporation 1994 Management Incentive Stock Option Plan, as adopted and amended November 16, 1995, May 20, 1999, February 3, 2000 and May 16, 2002
10.3	Employment Agreement by and between Eric Hertz and Western Wireless Corporation dated May 7, 2002

26 EX-10.1 3 v83292exv10w1.txt EXHIBIT 10.1 TELE.RING TELEKOM SERVICE GMBH Hainburger Strasse 33 A--1030 Vienna Austria EHG EINKAUFS- UND HANDELS GMBH Seilergasse 16 A-1010 Vienna Austria April 5, 2002 Vodafone AG (as universal successor of Mannesmann Eurokom GmbH) Mannesmannufer 3 D-40213 Dusseldorf Attention: Christian Sommer EKOM Telecommunications Holding AG Fichtenstrasse 7 A-4020 Linz Attention: Christian Sommer Re: Resolution of Certain Disputes Ladies and Gentlemen: Reference is made to the Agreement dated May 4, 2001, for the sale and purchase of 100% of the shares in tele.ring Telekom Service GmbH, 100% of the partnership interest in tele.ring Telekom Service GmbH & Co KEG and for the call-option regarding the sale and purchase of 100% of the shares in Mannesmann 3G Mobilfunk GmbH, together with the Annexes and Schedules thereto (the "Agreement"); the Closing Memorandum dated June 29, 2001, together with the Annexes thereto (the "Closing Memorandum"); and the Term Loan Agreement dated June 29, 2001 (the "Loan Agreement"). All terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Agreement, the Closing Memorandum or the Loan Agreement, as the case may be. Upon execution of this settlement agreement (the "Letter Agreement") in the space provided, each of you and we, now and for all time, agree as set forth herein in respect of the final settlement and resolution of the matters described below. A. RESOLUTION OF CERTAIN DISPUTES AND RELATED AGREEMENTS With respect to: 1. our claim that you owe us EUR 483,274 in order to reimburse us for certain bonus payments we paid to former managers of tele.ring GmbH referred to in Annex 20 to the Closing Memorandum (the "Bonus Dispute"): concurrently with your execution hereof you shall pay to a bank account designated by us, by wire transfer of immediately available funds, EUR 483,274 in full and final settlement of the Bonus Dispute; we, acting for and on behalf of ourselves, our subsidiaries, affiliates, successors and assigns hereby waive and do remise, release, acquit and discharge you, each and every one of your shareholders, subsidiaries, affiliates and directors, officers, employees, agents and attorneys, heirs, predecessors, successors and assigns of and from any and all claims in connection with Annex 20 in full and final settlement of the Bonus Dispute. 2. our claim that you owe us EUR 2,791,000 in connection with KPMG's determination made on December 21, 2001 regarding the Consolidated Closing Net Working Capital (the "Closing Balance Sheet Dispute"): we shall, upon your execution hereof be deemed to have waived and released such claim in full and final settlement thereof; we, acting for and on behalf of ourselves, our subsidiaries, affiliates, successors and assigns hereby waive and do remise, release, acquit and discharge you, each and every one of your shareholders, subsidiaries, affiliates and directors, officers, employees, agents and attorneys, heirs, predecessors, successors and assigns of and from any and all claims in connection with Schedule 13 to the Agreement, the engagement letter dated November 30, 2001 and signed by Vodafone AG, EHG Einkaufs-und Handels GmbH and KPMG Alpen-Treuhand Wirtschaftsprufungs-und Steuerberatungsgesellschaft m.b.H. and the determination issued by KPMG Alpen-Treuhand Wirtschaftsprufungs-und Steuerberatungsgesellschaft m.b.H. on December 21, 2001 in full and final settlement of the Closing Balance Sheet Dispute. 3. your claim that we owe you the Non Roll-Out Equipment referred to in Annex 23 to the Agreement (the "Alcatel Equipment Dispute"): you shall, automatically upon your execution hereof, be deemed (i) to have waived and released such claim and (ii) to have acknowledged and agreed that we shall retain, and are entitled to retain, all of the aforesaid Alcatel Equipment free and clear of all liens, claims and encumbrances, in each case in full and final settlement of such claim; you, acting for and on behalf of yourselves, your subsidiaries, affiliates, successors and assigns hereby waive and do remise, release, acquit and discharge us, each and every one of our shareholders, subsidiaries, affiliates and directors, officers, employees, agents and attorneys, heirs, predecessors, successors and assigns of and from any and all claims in connection with Annex 23 in full and final settlement of the Alcatel Equipment Dispute. 4. your claim that we owe you or any of your affiliates EUR 585,919.68 as reimbursement for interest due to you in respect of the guaranty (the "Guaranty") issued by you in favor of the Regulator relating to the GSM license (the "GSM Guaranty Dispute"): you shall, automatically upon your execution hereof, be deemed to have waived and released such claim in full and final settlement thereof; you, acting for and on behalf of yourselves, your subsidiaries, affiliates, successors and assigns hereby waive and do remise, release, acquit and discharge us, each and every one of our shareholders, subsidiaries, affiliates and directors, officers, employees, agents and attorneys, heirs, predecessors, successors and assigns of and from any and all claims in connection with interest due on the guaranty issued by you in favor of the Regulator relating to the GSM license in full and final settlement of the GSM Guaranty Dispute. 2 5. advances under the Loan Agreement: Subject to the results of your review of the information that will be provided to and/or reviewed by you under this Subsection A.5, you further acknowledge and agree that we are not in breach of any provision of the Loan Agreement and that the Loan Agreement remains in full force and effect, with all obligations on our part to the date hereof having been fulfilled. We acknowledge and agree that you or your third party advisors who are subject to a contractual or professional duty of confidentiality shall be granted access to the relevant books and records of tele.ring GmbH in order to evidence that the Advances made by you prior to the date hereof have been spent in accordance with the Business Plan and generally in accordance with the Schedule of Proposed Expenditures that accompanied such prior Advances. We acknowledge and agree that the Facility and the Commitment (as defined in the Loan Agreement) shall immediately be reduced to an aggregate amount of EUR 250 million (Euro two hundred fifty million). We, acting for and on behalf of ourselves, our subsidiaries, affiliates, successors and assigns hereby waive and do remise, release, acquit and discharge you, each and every one of your shareholders, subsidiaries, affiliates and directors, officers, employees, agents and attorneys, heirs, predecessors, successors and assigns of and from any and all claims in connection with the immediate reduction of the Facility and the Commitment to EUR 250 million. Upon execution of this Letter Agreement you agree to release the remaining EUR 10 million requested in the last Drawdown Request issued by tele.ring GmbH. B. PROJECTIONS, COMPARISON, NOTIFICATION AND REVIEW 1. We agree to provide you, or we shall cause tele.ring GmbH to provide you, with the following for your information: (a) Upon execution of this Letter Agreement, we shall provide you with a copy of projections in the form of Exhibit A hereto (the "Projections") prepared by tele.ring GmbH in good faith, on the basis of which tele.ring GmbH may reasonably believe that it will be able to repay all obligations outstanding under the Loan Agreement on the due dates thereof by means of (i) internally generated funds of tele.ring GmbH, (ii) a refinancing of the Loan Agreement, (iii) a sale of an equity interest in tele.ring GmbH, or (iv) otherwise. (b) Commencing with the year 2003, on or before March 1 of each year until all obligations outstanding under the Loan Agreement have been repaid in full, we shall provide you with a copy of then current Projections on the basis of which tele.ring GmbH may reasonably believe it will be able to repay all obligations outstanding under the Loan Agreement on the due dates thereof in the manner provided in Subsection B.1.(a). (c) Commencing with the year 2002, on or before March 31 of each year until all outstanding obligations under the Loan Agreement have been repaid in full, we shall provide you with a comparison (the "Comparison") of (i) the actual performance of tele.ring GmbH for the prior calendar year and (ii) the Projections for such prior calendar 3 year, which Comparison shall be in the form of Exhibit A hereto; except that the Comparison with respect to the year 2001 shall only be required for the period from July 1, 2001 through December 31, 2001, and that the Comparison for such period in 2001 shall be provided to you by no later than ten (10) Business Days after the date hereof. (d) Commencing with the year 2002, on or before March 31 of each year we shall provide you with the financial statements that tele.ring GmbH is required to file pursuant to Section 277 and Section 221 HGB (Austrian Commercial Code). (e) Commencing on the date of this Letter Agreement and continuing until all obligations outstanding under the Loan Agreement have been repaid in full, we shall give you prompt notice of any event that severely and adversely impacts the business of tele.ring GmbH. 2. We agree that all Projections shall be prepared by us in good faith based upon reasonable assumptions at the time such Projections were prepared and each time said Projections are provided to you, we shall provide you, or we shall cause tele.ring GmbH to provide you, with a certificate of tele.ring GmbH, to the effect that such Projections were prepared in good faith and based upon reasonable assumptions at the time such Projections were prepared. 3. We agree to grant to you or your designated representatives, during the period of thirty (30) days following execution of this Letter Agreement, upon your request and at reasonable times that do not unreasonably interfere with tele.ring GmbH's ability to conduct its business, access to the relevant books and records of tele.ring GmbH for a minimum of 10 full Business Days in order to evidence that the Advances made by you prior to the date hereof have been spent in accordance with the Business Plan and generally in accordance with the Schedule of Proposed Expenditures that accompanied such prior Advances. Provided we grant you access to such books and records for a minimum of 10 full Business Days, you agree to complete your review of such books and records during such thirty (30) day period. 4. During ten (10) Banking Days after the date of each Drawdown Request issued by us after the date of this Letter Agreement, we agree to grant to you or your designated representatives, upon your request and at reasonable times that do not unreasonably interfere with tele.ring GmbH's ability to conduct its business, access to the relevant books and records of tele.ring GmbH for a minimum of 5 full Business Days in order to demonstrate that the Advance received by tele.ring GmbH immediately prior to the date of each such Drawdown Request was spent in accordance with the Business Plan and generally in accordance with the Schedule of Proposed Expenditures that accompanied such immediately prior Advances. Provided we grant you access to such books and records for a minimum of 5 full Business Days, you agree to complete your review of such books and records during such ten (10) Banking Day period. 5. Within thirty (30) days following your receipt of a copy of the Projections (Subsections B.1.(a), (b) and (c)), we shall make available, at a mutually agreeable date and time, appropriate members of tele.ring GmbH's management who will answer any 4 reasonable questions that you or your third party advisors who are subject to a professional or contractual duty of confidentiality may have in connection with the Projections, Comparisons and the underlying assumptions and numbers for a minimum of 1 full Business Day. You agree that the Projections, Comparisons and all documents and other information obtained by you as a result of your review of the Projections, Comparisons and our books and records as described herein, shall be used by you and/or your representatives solely for information purposes and shall not be used by you, your affiliates or any of your representatives, for any other purpose, nor shall any such documents or information be disclosed to any other person, firm or entity without our prior written consent. With the exception of your right to receive certain information from us under this Letter Agreement, nothing contained in this Letter Agreement shall be deemed to increase or decrease any rights of the Lender or be deemed a waiver of any rights of the Lender under the Loan Agreement. C. MM3G We hereby exercise the MM3G Call Option and designate May 21, 2002 as the Closing Date for the purchase of the MM3G Shares. You acknowledge and agree that we have exercised the MM3G Call Option in a timely manner and that subject to the fulfillment of the conditions set forth in Section 7.1 of the Agreement and the payment by us of the MM3G Exercise Price, you shall deliver the MM3G Shares to us at the Closing. In the event that during the period commencing on the Closing of the exercise of the MM3G Call Option and ending on the date that we, acting in good faith, file with Telekom-Control-Kommission a notice that we have satisfied the requirements of Article 8, Section 2, item 1 (relating to coverage of 25%) in accordance with Article 9 of the UMTS License, with respect to the UMTS License, we, or we cause any of our affiliates to, (a) return or waive the UMTS License to the Regulator and as a result thereof the Regulator or the Republic of Austria refunds to us or you or any of our or your affiliates all or any portion of the license fee paid by you or any of your affiliates for the UMTS License, you and we agree to share, or cause our affiliate(s) to share, on a 60 (you) : 40 (we) basis any such refund (after deducting from the gross amount of the refund all expenses directly and reasonably incurred by us or MM3G (or any of our affiliates, as the case may be) in connection with the UMTS License, including but not limited to the cost of equipment or other property relating to the system constructed or to be constructed pursuant to the UMTS License, any fines paid to the Regulator or otherwise related to failure to construct all or any portion of the system relating to the UMTS License, or relating to the negotiation of any such refund); or (b) otherwise dispose of or sell the shares and/or assets of MM3G, which sale includes the UMTS License (provided that (i) corporate restructuring measures within the Western Wireless group and (ii) corporate measures of MM3G for the purpose of raising capital to build or operate the tele.ring GmbH and/or MM3G system (including, for the avoidance of doubt, the pledging of the shares or assets of MM3G), shall not entitle you to any sharing of such proceeds contemplated herein, provided that the proceeds thereof are used for the purpose of constructing or operating the tele.ring GmbH and/or MM3G system, i.e. are not distributed to MM3G's shareholders or the shareholders of any of our affiliates, as the case may be), which disposal or sale is not combined with the actual sale or disposal of 5 any other significant non-Austrian-based business, businesses or assets owned or controlled by Western Wireless International Corporation ("WWIC") or any of its affiliates directly or indirectly and used in the telecommunications business, we agree to share, or cause our affiliate(s) to share, on a 60 (you):40 (we) basis the proceeds of any such sale or disposal that are attributable to the UMTS License, without duplication of any amount payable to you pursuant to the terms of that letter dated June 29, 2001 by and between you and WWIC (which terms shall remain unaffected by the provisions of this Letter Agreement) (after deducting from the gross proceeds all expenses directly and reasonably incurred by us or MM3G (or any of our affiliates, as the case may be) in connection with the UMTS License or the UMTS business, including but not limited to the cost of equipment or other property relating to the system constructed or to be constructed pursuant to the UMTS License, any fines paid to the Regulator or otherwise related to failure to construct all or any portion of the system relating to the UMTS License, or relating to the negotiation of such sale). As used in this Subsection C, the term (a) "dispose" or "disposal" shall not include, among other things, the pledge of or granting a security interest, lien or other encumbrance, in or with respect to the shares or assets of MM3G, if the purpose thereof is the raising of capital or purchasing of equipment for use in the tele.ring GmbH and/or MM3G telecommunications business; and (b) "significant" means any existing non-Austrian-based business, businesses, shares, assets or system(s) owned or controlled by WWIC with a value in excess of EUR fifty (50) million. We agree to pay to you your share of any such refund or any such proceeds, if any, within ten (10) days after receipt by us of any such refund or any such proceeds. You and, at your request, your third party advisors who are subject to a contractual or professional duty of confidentiality shall have the right within the thirty (30) day period after receipt of any such sale proceeds or any such refund by us, to be granted access to any documents or other information relating to the amount to be paid to you, in order to review such documents or other information in accordance with the next paragraph for a minimum of 10 full Business Days. Provided you and/or your advisors are granted access to such documents and other information for a minimum of 10 full Business Days, such review shall be completed within such thirty (30) day period. In the event that we and you (i) disagree about whether you are entitled to a share of any refund or proceeds hereunder, and/or (ii) disagree about the actual amount of any refund or proceeds to be allocated to the disposal or sale of the shares and/or assets of MM3G that are attributable to the UMTS License, and/or (iii) disagree about the amount to be paid to you under this Section C, the Parties shall meet in order to attempt to resolve any differences. If such resolution cannot be achieved within 10 days, either Party may, by notice to the other, designate an accounting firm (the "First Firm") to determine (a) whether you are entitled to a share of any refund or proceeds under this Section C, (b) the actual amount of the proceeds to be allocated to any sale or disposal of the shares and/or assets of MM3G that are attributable to the UMTS License and/or (c) the amount to be paid to you under this Section C (the "Determination"). The First Firm shall promptly make its Determination unless the other Party elects, within 5 days after receipt of the notice, to designate another accounting firm (the "Second Firm") by giving notice to the 6 Party which designated the First Firm. The First and Second Firms shall within 3 days of the appointment of the Second Firm select a Third accounting firm (the "Third Firm") to make such Determination. If the First Firm and the Second Firm fail to mutually agree on the Third Firm within 3 days, the Third Firm shall be appointed by the President of the Vienna Chamber of Accountants upon request from either Party. The Third Firm shall make the Determination as promptly as practicable but in any event within 30 days of its appointment. The Third Firm shall be requested to give both Parties the opportunity to present their views. The Determination of the Third Firm shall be final and binding on the Parties and not subject to further review or appeal. We shall pay you the amount to be paid to you, as determined in accordance with this Section C, without delay and in any event within 5 days following receipt of the Determination. Each Party shall pay the costs of the firm that it designated and the costs of the Third Firm shall be shared equally. We, acting for and behalf of ourselves and our subsidiaries, affiliates, successors and assigns, acknowledge, agree and shall procure that you or any of your third party advisors who are subject to a contractual or professional duty of confidentiality, will be granted prompt access to any and all records, books, documents and other information which are relevant to determine the details of the disposal of the UMTS License and/or the actual amount of proceeds or other benefits within the meaning of the immediately preceding paragraphs of this Letter Agreement. You shall treat any information obtained through accessing such books, records, documents or other information in accordance with Clause 14 of the Agreement and shall not use such information for any purpose other than protecting or enforcing your rights under this Letter Agreement. D. RELEASE Following your and our execution hereof, other than in respect of the covenants and agreements specifically set forth herein, each of you and we generally releases and forever discharges the other and their respective affiliates from any and all claims, demands, liabilities, suits, damages, losses, expenses, attorneys' fees and costs, obligations or causes of action, known or unknown, of any kind and every nature whatsoever, fixed or contingent, and whether or not accrued or matured, which you or we or our respective affiliates, ever had or may have arising out of or relating to: - the Bonus Dispute; - the Closing Balance Sheet Dispute; - the Alcatel Equipment Dispute; and - the GSM Guaranty Dispute. in each case including but not limited to any claim against the other or our respective affiliates based on or relating to breach of contract (whether oral or written), tort, fraud, defamation, negligence, promissory estoppel or otherwise. Further, following your and our execution hereof, each of you and we covenant on our own behalf and on behalf of our respective affiliates, to cease, terminate and forego, and forever not to assert, file, 7 prosecute, maintain, commence, institute or sponsor (or purposely facilitate any person in connection with the foregoing), any complaint, arbitration or lawsuit or any legal, equitable or administrative proceeding of any nature, against the other in connection with any matter released hereby. E. REPRESENTATIONS AND WARRANTIES 1. Each of you represents and warrants to us as follows: (a) Authorization. The execution and delivery by you of this Letter Agreement, and the performance by you of your obligations hereunder, have been duly authorized by all necessary action and no other proceedings on your part which have not been taken are necessary to authorize this Letter Agreement or the agreements contained herein. (b) Enforceability. This Letter Agreement has been duly and voluntarily executed and delivered by you and constitutes your legal, valid and binding obligation, enforceable against you in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights or remedies generally. (c) No Conflict. The execution, delivery and performance by you of this Letter Agreement will not result in the violation of, or be in conflict with, or constitute a default under, any term of your organizational documents or any law, mortgage, indenture, contract, agreement or instrument to which your are a Party or by which you are bound, which violation, conflict or default would have a material adverse effect on you or on the agreements contained herein. (d) No Assignment. You have not assigned or transferred to any other person or entity, including without limitation, any parent, subsidiary or affiliate of yours, any portion of any claim, right, demand, action or cause of action under the Agreement, the Loan Agreement, the Closing Memorandum and the transactions contemplated thereby. 2. We represent and warrant to you as follows: (a) Authorization. The execution and delivery by us of this Letter Agreement, and the performance by us of our obligations hereunder, have been duly authorized by all necessary action and no other proceedings on our part which have not been taken are necessary to authorize this Letter Agreement or the agreements contained herein. (b) Enforceability. This Letter Agreement has been duly and voluntarily executed and delivered by us and constitutes our legal, valid and binding obligation, enforceable against us in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights or remedies generally. 8 (c) No Conflict. The execution, delivery and performance by us of this Letter Agreement will not result in the violation of, or be in conflict with, or constitute a default under, any term of our organizational documents or any law, mortgage, indenture, contract, agreement or instrument to which we are a Party or by which we are bound, which violation, conflict or default would have a material adverse effect on us or on the agreements contained herein. (d) No Assignment. We have not assigned or transferred to any other person or entity, including without limitation, any parent, subsidiary or affiliate of ours, any portion of any claim, right, demand, action or cause of action under the Agreement, the Loan Agreement, the Closing Memorandum and the transactions contemplated thereby. F. GOVERNING LAW This Letter Agreement shall be governed by and construed in accordance with the laws of Austria without regard to the principles of conflict of laws thereof. G. DISPUTE RESOLUTION In the event of any dispute, controversy or claim arising out of or in connection with this Letter Agreement (including any exhibit, schedule or attachment hereto) or the breach, termination or validity of this Letter Agreement, each of you and we shall use all reasonable endeavours to resolve the matter on an amicable basis. If one Party serves formal written notice on the other Party or parties that a material dispute, controversy or claim of such a description has arisen and the parties are unable to resolve the dispute within a period of thirty (30) days from the service of such notice, then the dispute, controversy or claim shall be referred to our respective senior executives. No recourse to arbitration by one Party against the other Party or parties under this Letter Agreement shall take place unless and until such procedure has been followed. If our respective senior executives shall have been unable to resolve any dispute, controversy or claim referred to them under the foregoing paragraph within a period of ten (10) days from referral to such senior executives, that dispute, controversy or claim shall be referred to and finally settled by arbitration under and in accordance with the Rules of Arbitration of the International Chamber of Commerce by three arbitrators appointed in accordance with those rules. The place of arbitration shall be Zurich, Switzerland. The arbitration proceedings shall be conducted, and the award shall be rendered, in the English language. Each of you and we hereby waive any rights of application and appeal to any court or tribunal of competent jurisdiction (including without limitation the courts of Germany, Austria, Switzerland, the United States and England) to the fullest extent permitted by law in connection with any question of law arising in the course of the arbitration or with respect to any award made except for actions relating to enforcement of the arbitration agreement or an arbitral award and except for actions seeking interim or other provisional relief in aid of arbitration in any court of competent jurisdiction. H. MISCELLANEOUS 9 No original copy of this document shall be brought into Austria unless a legal requirement to do so exists. Any Party hereto who either brings its original copy of this document into Austria, or permits its original copy to be so brought into Austria in violation of the foregoing shall be solely responsible for any and all consequences with respect to Austrian stamp duty legislation and shall indemnify the other Party for and against any and all such consequences. I. NOTICES 1. Any notice or other communication given or made under or in connection with the matters contemplated by this Letter Agreement shall be in writing. 2. Any such notice or other communication shall be addressed as provided in Subsection I.3 and, if so addressed, shall be deemed to have been duly given or made as follows: (a) if sent by personal delivery, upon delivery at the address of the relevant Party; (b) if sent by international commercial courier, upon delivery; and (c) if sent by facsimile, when dispatched, but only so long as the facsimile communication is followed immediately by dispatch by international commercial courier; provided that if, in accordance with the above provisions, any such notice or other communication would otherwise be deemed to be given or made outside Working Hours, such notice or other communication shall be deemed to be given or made at the start of Working Hours on the next Business Day. 3. The relevant addressee, address and facsimile number of each Party for the purposes of this Letter Agreement, subject to Subsection I.4, are:

Name of Party Address Facsimile No. - ------------- ------- ------------- Vodafone AG (as universal successor of Mannesmann Eurokom Mannesmannufer 3 +49-211-820-2493 GmbH) D-40213 Dusseldorf Attn: Christian Sommer Germany EKOM Telekommunications Mannesmannufer 3 +49-211-820-2493 Holding AG D-40213 Dusseldorf Attn: Christian Sommer Germany EHG Einkaufs- und Handels GmbH 3650 131st Avenue S.E. 001-425-586-8222 c/o Western Wireless International Corporation Suite 400 Attn: Bradley Horwitz Bellevue, WA 98006

10

tele.ring Telekom Service GmbH Hainburger Strasse 33 +43-1-931-012-8035 Attn: Gina Haggerty A-1030 Vienna Austria

4. A Party may notify the other Party or Parties to this Letter Agreement of a change to its name, relevant addressee, address or facsimile number for the purposes of Subsection I.3 provided that such notification shall only be effective on: (a) the date specified in the notification as the date on which the change is to take place; or (b) if no date is specified or the date specified is less than 5 (five) clear Business Days after the date on which notice is given, the date falling 5 (five) clear Business Days after notice of any such change has been given. J. ANNOUNCEMENTS 1. Subject to Subsection J.2, no announcement concerning this Letter Agreement shall be made by any Party without the prior written approval of the other Party or Parties, such approval not to be unreasonably withheld or delayed. 2. Any Party may make an announcement or filing with a securities exchange or regulatory or governmental body concerning this Letter Agreement or any ancillary matter if required by: (a) the law of any relevant jurisdiction; (b) any securities exchange or regulatory or governmental body to which either Party is subject or submits, wherever situated, whether or not the requirement has the force of law, in which case the Party concerned shall take all such steps as may be reasonable and practicable in the circumstances to agree the contents of such announcement or filing with the other Party or Parties before making such announcement or filing. 3. The restrictions contained in this Subsection I shall continue to apply after signing this Letter Agreement without limit in time. K. CONFIDENTIALITY 1. Subject to Subsection K.2, each Party shall treat as strictly confidential all information received or obtained as a result of entering into or performing this Letter Agreement which relates to: (a) the provisions of this Letter Agreement; (b) the negotiations relating to this Letter Agreement; (c) the subject matter of this Letter Agreement; or 11 (d) the other Party or Parties. 2. Any Party may disclose information which would otherwise be confidential if and to the extent: (a) required by the law of any relevant jurisdiction; (b) required by any rule or regulation issued by any securities exchange or regulatory or governmental body to which either Party is subject or submits, wherever situated, whether or not any such rule or regulation for information has the force of law; (c) disclosed to the professional advisers, auditors and bankers of each Party, provided that the disclosing Party shall ensure that such advisers, auditors and bankers are bound by materially identical confidentiality obligations; (d) the information has come into the public domain through no fault of that Party; or (e) the other Party has or the other Parties have given prior written approval to the disclosure, such approval not to be unreasonably withheld or delayed, provided that any such information disclosed pursuant to paragraph (a) or (b) of this Subsection K.2 shall be disclosed only after three (3) Business Days prior written notice to the other Party. 3. The restrictions contained in this Subsection K shall continue to apply after signing this Letter Agreement without limit in time. L. COUNTERPARTS 1. This Letter Agreement may be executed in any number of counterparts, and by the Parties on separate counterparts, but shall not be effective until each Party has executed at least one counterpart. 2. Each counterpart shall constitute an original of this Letter Agreement, but all the counterparts shall together constitute but one and the same instrument. M. LANGUAGE 1. With the exception of the notarial deeds and regulatory filings required to give effect to the transaction contemplated hereunder, each notice, demand, request, statement, instrument, certificate, or other communication given, delivered or made by one Party to another under this Letter Agreement shall be: (a) in English; or (b) accompanied by an English translation. 12 2. The receiving Party shall be entitled to assume the accuracy of, and to rely upon, any English translation of any document provided pursuant to Subsection M.1(b). N. EXPENSES Each of the Parties shall pay their own expenses, including all legal fees and expenses, incurred by them in connection with the negotiation and execution of this Letter Agreement. This Letter Agreement (a) constitutes and contains the entire agreement and understanding between each of you and us in respect of the matters described herein and supersedes and replaces all prior negotiations and all agreements proposed or otherwise, whether written or oral, concerning the subject matter hereof and (b) shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Should any provision of this Letter Agreement be or become wholly or in part invalid or unenforceable, the validity or enforceability of all remaining provisions of this Letter Agreement shall not be affected thereby. The invalid or unenforceable provision shall be deemed replaced by such valid and enforceable provision which serves best the economic interest of the parties originally pursued with the invalid or unenforceable provision. The same shall apply in the case of an omission in this Letter Agreement. Intending to be legally bound, tele.ring Telekom Service GmbH By: /s/ Richard M. Hoffman -------------------------------- Name: Richard M. Hoffman Title: Attorney-in-Fact EHG Einkaufs- und Handels GmbH By: /s/ Brad Horwitz -------------------------------- Name: Brad Horwitz Title: Geschaftsfurher 13 Vodafone AG (as universal successor of Mannesmann Eurokom GmbH) By: /s/ J. Peters /s/ C. Sommer ------------------------------- ----------------------------- Name: J. Peters Name: C. Sommer Title: Officer Title: Officer EKOM Telecommunications Holding AG By: /s/ Peter Walz ------------------------------- Name: Peter Walz Title: Vorstand 14 EX-10.2 4 v83292exv10w2.txt EXHIBIT 10.2 WESTERN WIRELESS CORPORATION AMENDED AND RESTATED 1994 MANAGEMENT INCENTIVE STOCK OPTION PLAN 1. Establishment and Purpose. This 1994 Management Incentive Stock Option Plan was established to provide an important inducement for management to generate shareholder value by giving certain key personnel of Western Wireless Corporation and its subsidiaries a stake in the equity of the Company. The Company believes that the key managers participating in the Plan will seek to build personal financial security through creating and maintaining value in the Company for all shareholders. This Plan allows the Company to grant two types of options, namely (1) Nonstatutory Stock Options; and (2) Incentive Stock Options as the latter are defined and governed by Section 422 of the Internal Revenue Code of 1986, as amended. 2. Definitions. As used herein, the following definitions shall apply. "Administrator" means the Board or any Committee designated by the Board to administer the Plan in accordance with Section 4 hereof. "Applicable Laws" means the legal requirements relating to the administration and operation of stock option plans under federal and state corporate and securities laws and the Code. "Board" means the Board of Directors of the Company, as constituted from time to time. "Code" means the Internal Revenue Code of 1986, as amended. "Committee" means a committee appointed by the Board, in accordance with Section 4 hereof. If no such committee has been appointed, "Committee" means the full Board. "Common Stock" means the Common Stock of the Company, par value $.001 per share. "Company" means Western Wireless Corporation, a Washington corporation. "Consultant" shall mean any person engaged by the Company who is not an Employee. "Director" means a member of the Board. "Disability" means total and permanent disability as defined in Section 22(e)(3) of the Code. "Employee" means any person, including Officers and Directors, who is an employee (within the meaning of Section 3401(c) of the Code and the regulations thereunder) of the Company, a Parent or a Subsidiary. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exercise Price" means the price at which one Share of the Common Stock may be purchased upon exercise of an Option, as specified by the Administrator in the applicable Option Agreement. "Fair Market Value" means, as of any date, the value of Common Stock determined as follows: (i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the National Market System of the National Association of Securities Dealers, Inc. Automated Quotation ("NASDAQ") System, the Fair Market Value of a Share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such system or exchange (or the exchange with the greatest volume of trading in Common Stock) on the last market trading day prior to the day of determination, as reported in the Wall Street Journal or such other source as the Administrator deems reliable; (ii) If the Common Stock is quoted on the NASDAQ System (but not on the National Market System thereof) or is regularly quoted by a recognized securities dealer but selling prices are not reported, 1 the Fair Market Value of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination, as reported in the Wall Street Journal or such other source as the Administrator deems reliable; (iii) In the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Administrator as required. "Incentive Stock Option" means an Option intended to qualify as an incentive stock option within the meaning of Section 422(b) of the Code and the regulations promulgated thereunder. "Nonstatutory Stock Option" means an Option not intended to qualify as an incentive stock option within the meaning of Section 422(b) of the Code and the regulations promulgated thereunder "Officer" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. "Option" means a stock option granted pursuant to the Plan. "Option Agreement" means a written agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan, but may be modified in the discretion of the Administrator. "Option Exchange Program" means a program whereby outstanding Options are surrendered in exchange for Options with a lower exercise price. "Optioned Stock" means the Common Stock subject to an Option. "Optionee" means an Employee who holds an outstanding Option. "Parent" means a "parent corporation" (other than the Company), whether now or hereafter existing, as defined in Section 424(e) of the Code. "Plan" means this 1994 Management Incentive Stock Option Plan of Western Wireless Corporation, as it may be amended. "Publicly Traded" means that the Common Stock is listed on an established stock exchange or traded on the Nasdaq Stock Market. "Rule 16b-3" means Rule 16b-3 under the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan. "Service" means service as an Employee. "Share" means one share of the Common Stock, as adjusted in accordance with Section 8 hereof. "Subsidiary" means a "subsidiary corporation" (other than the Company), whether now or hereafter existing, as defined in Section 424(f) of the Code. 3. Stock Subject to the Plan. Shares offered under the Plan shall be authorized but unissued or reacquired Common Stock. The maximum aggregate number of Shares issuable under the Plan shall not exceed ten million one hundred thousand (10,100,000) Shares of the Company, subject to (i) adjustment pursuant to Section 8 hereof, or (ii) amendment hereof approved by the shareholders of the Company. If an outstanding Option for any reason expires or is terminated or canceled or otherwise becomes unexercisable before being exercised in full, or is surrendered pursuant to an Option Exchange Program, the Shares allocable to the unexercised portion of such Option will not be charged against the limitations of this Section and will become available for future grant or sale under the Plan. Shares issued pursuant to the exercise of an Option that are repurchased by the Company will not be available for subsequent Option grants under the Plan. 4. Administration of the Plan. The Plan shall be administered by a Committee appointed by the Board consisting of two or more members of the Board, which Committee shall be constituted to comply with Applicable Laws, including Rule 16b-3, if applicable. If no such Committee is appointed, the Plan shall be administered by the Board. The members of a Committee will serve for such term as the Board may 2 determine. From time to time, the Board may increase the size of the Committee and appoint additional members, remove members, fill vacancies (however caused), and remove all members of the Committee and thereafter directly administer the Plan. Decisions of a Committee made within the discretion delegated to it by the Board will be final and binding on all persons who have an interest in the Plan. (a) Administration With Respect to Directors and Officers Subject to Section 16(b). The composition of any Committee responsible for administration of the Plan with respect to Optionees who are subject to the trading restrictions of Section 16(b) of the Exchange Act with respect to securities of the Company will comply with the applicable requirements of Rule 16b-3. (b) Authority of the Administrator. The Administrator of the Plan will have full authority to administer the Plan within the scope of its delegated responsibilities, including authority to interpret and construe any relevant provision of the Plan, to adopt such rules and regulations as it may deem necessary, and to determine the terms and conditions of Option grants made under the Plan (which need not be identical). Without limiting the foregoing, the Administrator will have the authority, in its discretion: (i) to determine whether and to what extent Options are granted hereunder; (ii) to select the Employees to whom Options may be granted hereunder; (iii) to determine the number of Shares to be covered by each Option granted hereunder; (iv) to determine the Fair Market Value of the Common Stock; (v) to approve forms of the Option Agreement for use under the Plan; (vi) to determine the time period during which an Option may be exercised, provided that the time period for an Incentive Stock Option may not be more than ten (10) years; (vii) to determine the terms and conditions not inconsistent with those of the Plan, of any award of an Option granted hereunder, including, but not limited to, the Exercise Price; the time or times when Options may be exercised; all vesting provisions; any waiver of forfeiture restrictions; and any restriction or limitation regarding any Option or the Shares relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine; (viii) to determine whether and to what extent the Company should grant or permit loans or guarantee loans in connection with the grant or the exercise of an Option by an Optionee pursuant to Section 12 hereof; (ix) with the consent of the affected Optionee, to effect, at any time and from time to time, the cancellation of any or all outstanding Options under the Plan and to grant new Options in substitution therefor, in accordance with Section 14 hereof; (x) to prescribe, amend and rescind rules and regulations relating to the Plan; (xi) to modify, amend or waive the terms, conditions and restrictions of any outstanding Option; provided, however, no such modification, amendment or waiver shall, without the written consent of the Optionee, impair the Optionee's rights or increase the Optionee's obligations with respect to such Option; (xii) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Option previously granted by the Administrator; (xiii) to institute an Option Exchange Program; and (xiv) to make all other determinations deemed necessary or advisable for administering the Plan. (c) Effect of Administrator's Decision. The Administrator's decisions, determinations and interpretations shall be final and binding on all Optionees and any other holders of Options. 5. Eligibility. From time to time, the Administrator may, in its discretion, select individuals from among the Employees, Directors and Consultants of the Company or any of its Subsidiaries to receive Options under the Plan. 3 6. Terms and Conditions of Options. (a) Option Agreement. Each Option granted under the Plan will be evidenced by an Option Agreement between the Optionee and the Company. Such Options will be subject to all applicable terms and conditions of the Plan and such instruments may contain other terms and conditions which are not inconsistent with the purpose of the Plan and which the Administrator deems appropriate for inclusion in an Option Agreement. Notwithstanding the foregoing, an Option Agreement or any other written agreement between the Company and an Optionee may contain other terms and conditions concerning the Option (including, without limitation, terms and conditions relating to vesting) as are mutually agreed to by the Optionee and the Company. The provisions of the various Option Agreements or other agreements entered into under the Plan need not be identical. (b) Number of Shares. Each Option Agreement shall specify the number of Shares that are subject to the Option and shall provide for the adjustment of such number in accordance with Section 8 hereof. (c) Character of Options. Each Option granted under the Plan shall be designated in the Option Agreement as either a Nonstatutory Stock Option or an Incentive Stock Option, as the case may be. (d) Exercise Price. Each Option Agreement shall specify the Exercise Price. Subject to the discretion of the Administrator, the Exercise Price of an Option shall be the Fair Market Value per Share on the date of grant. (e) Payment. The Exercise Price of each Option will be payable immediately and in full upon exercise; provided, however, that the Administrator may, either at the time the Option is granted or at the time it is exercised and subject to such limitations as it may determine, authorize payment of all or a portion of the Exercise Price in one or a combination of the following forms: (i) cash; (ii) check; (iii) a promissory note (but only if authorized or allowed pursuant to Sections 12 and 22(e) hereof); (iv) other Shares of Common Stock which have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the Shares as to which the Option will be exercised; (v) delivery of a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company the amount of sale or loan proceeds to pay the Exercise Price; (vi) utilization of the cashless exercise method described in Section 6(h) hereof; (vii) any combination of the foregoing methods of payment; or (viii) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws. In the event that the Company's Common Stock is Publicly Traded, unless otherwise provided in the Option Agreement, the methods of payment set forth in subparagraphs (iii) and (vi) above shall not be permitted hereunder. (f) Exercisability. Each Option Agreement shall specify the date when all or any portion of the Option will become exercisable, any conditions which must be satisfied before the Option may be exercised and the term of the Option. (g) Nontransferability of Options. An Option may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent and distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee. (h) Termination of Employment. In the event that an Optionee's employment by the Company or a Parent or Subsidiary terminates (other than upon the Optionee's death or Disability), or a Subsidiary ceases to be a Subsidiary (in which event the employment of such company's employees will be deemed to be 4 terminated under this Plan), the Optionee may exercise his or her Option, but only within such applicable period of time as is set forth below, and, except as otherwise provided by written agreement between the Optionee and the Company, only to the extent that the Optionee was entitled to exercise it at the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). If, after termination, the Optionee does not exercise his or her Option within the applicable time period specified below, the Option shall terminate. For purposes of this Subsection 6(h), the Optionee's employment shall not be considered to have been terminated in the case of any leave of absence approved by the Board, including sick leave, military leave, or any other personal leave. For Incentive Stock Options, Optionee shall have a period of three (3) months from the date of termination of employment. For Nonstatutory Stock Options, in the event that the Common Stock of the Company is then Publicly Traded, Optionee shall have a period of six (6) months and one day from the date of termination of employment, and in the event that the Common Stock of the Company is not then Publicly Traded, Optionee shall have a period of twelve (12) months and one day from the date of termination of employment. During the applicable period the Optionee may either (i) exercise his or her Option by delivery of the Exercise Price pursuant to Section 7 hereof or, if the Common Stock of the Company is not then Publicly Traded and if provided for in Optionee's Option Agreement, (ii) deliver the requisite Exercise Price by utilizing a cashless election procedure at a price per share equal to the Fair Market Value of a Share of Common Stock as of the date of termination of employment (provided that the Administrator is not otherwise prohibited by Company loan agreements or related contractual obligations from permitting such cashless election procedure.) The cashless election procedure is also available to Optionee, at anytime prior to termination of employment, if provided for as a designated method in the Option Agreement and subject to the other terms and conditions of the Plan and the Option Agreement. If the Company is publicly traded, the Company, working with the brokerage firm, if any, designated by the Company to facilitate exercises of options and sales of shares under this Plan, may from time to time amend the procedures set forth herein and may specify additional or different procedures for a cashless exercise for any or all Optionees. Optionee shall be responsible for satisfying all applicable federal, state, local and employment tax withholding requirements associated with such exercise and must evidence the ability to satisfy such withholding requirements prior to such exercise. (i) Disability of Optionee. In the event that an Optionee's employment terminates as a result of the Optionee's Disability, the Optionee may exercise his or her Option at any time within twelve (12) months from the date of such termination, but, except as otherwise provided by written agreement between the Optionee and the Company, only to the extent that the Optionee was entitled to exercise it at the date of such termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). If, after termination of employment, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate. (j) Death of Optionee. In the event of the death of an Optionee, the Option may be exercised at any time within twenty-four (24) months following the date of death (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement), by the Optionee's estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but, except as otherwise provided by written agreement between the Optionee and the Company, only to the extent that the Optionee was entitled to exercise the Option at the date of death. If, after death, the Optionee's estate or a person who acquired the right to exercise the Option by bequest or inheritance does not exercise the Option within the time specified herein, the Option shall terminate. 7. Procedure for Exercise. Any Option granted hereunder shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. An Option may not be exercised for a fraction of a Share. An Option shall be deemed exercised when the Company receives: (i) written notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted in the Option Agreement and the Plan. If the Company is publicly traded, the Company, working with the brokerage firm, if any, designated by 5 the Company to facilitate exercises of options and sales of shares under this Plan, may from time to time amend the procedures set forth herein and may specify additional or different procedures. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the stock certificate evidencing such Shares is issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company will issue or cause to be issued such stock certificate promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 8 hereof. 8. Adjustments. (a) Changes in Capitalization. In the event of a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company, the number of shares of Common Stock covered by each outstanding Option, and the number of shares of Common Stock which have been authorized for issuance under the Plan but as to which no Options have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option, as well as the price per share of Common Stock covered by each such outstanding Option, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock. Any conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration." Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Option. (b) Corporate Structure. In the event of a merger, consolidation, acquisition of property or stock, separation, reorganization or other change to the capital or business structure of the Company (including, without limitation, by means of an exchange offer or other transaction) (collectively, a "Reorganization" ) the effect of which is to organize a parent company of the Company which will own not less than 50% of the capital stock of the Company (such parent company is hereinafter referred to as "Company Holdings" ), the Administrator shall have the authority to effect, without the consent of the Optionees, (x) the cancellation of all outstanding Options granted under the Plan and substitute therefor options to purchase shares of Company Holdings ("New Options"), or (y) the assumption by Company Holdings of Options granted under the Plan; provided, however, that (i) immediately after the Reorganization the excess of the aggregate fair market value of all shares subject to New Options over the aggregate option prices of all shares subject to New Options shall equal but not be more than the excess of the aggregate fair market value immediately preceding the Reorganization of all shares subject to Options granted under the Plan over the aggregate option prices of all shares subject to Options granted under the Plan, and (ii) New Options, or the assumption or substitution of Options granted under the Plan, do not give an Optionee additional benefits which such Optionee did not have under Options granted under the Plan. Such a Reorganization shall not be treated as a Triggering Event or a Change of Control (as defined in the Option Agreement, as applicable) for purposes of the Plan and related Option Agreement. The grant of Options under this Plan will in no way affect the right of the Company to adjust, reclassify, reorganize, or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets or effect any other Reorganization. (c) Substitutions and Assumptions. The Board shall have the right to substitute or assume options in connection with mergers, reorganizations, separations, or other "corporate transactions" as that term is defined in and said substitutions and assumptions are permitted by Section 424 of the Code (as however amended or superseded) and the regulations promulgated thereunder. Any shares or Options issued upon the assumption of or in substitution for outstanding awards made by a corporation or other business entity acquired by the Company shall not reduce the number of Shares or Options issuable under the Plan (unless such shares or 6 Options are made available to individuals who become, upon the acquisition, an Officer or otherwise an individual subject to Section 16 of the Exchange Act). 9. Date of Grant. Subject to applicable statutory approval, the date of the grant of an Option shall be, for all purposes, the date on which the Administrator makes the determination to grant such Option, or such other date as is determined by the Administrator. Notice of the determination to grant an Option shall be provided to the Optionee within a reasonable time after the date of such grant. 10. No Employment Rights. Neither the Plan nor any Option shall confer upon any Employee any right to continue in the employ of the Company of any affiliate or constitute a contract or agreement of employment or interfere in any way with any right that the Company or an affiliate may have to reduce such Employee's compensation or to terminate such Employee's employment at any time with or without cause; however, nothing contained in the Plan or in any Option granted under the Plan shall affect any contractual rights of an Employee pursuant to a written employment agreement. 11. Amendment and Termination of the Plan. (a) Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan in whole or in part. (b) Shareholder Approval. The Company shall obtain shareholder approval of any Plan amendment in such a manner and to the extent necessary and desirable to comply with Rule 16b-3 or with Section 422 of the Code (or with any successor rule or statute or other Applicable Law, rule or regulation including the requirements of any exchange or quotation system on which the Common Stock is then listed or quoted). (c) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall impair the rights or increase the obligations of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. 12. Loans. In order to assist an Optionee in the acquisition of Shares pursuant to an Option granted under the Plan, the Administrator may authorize, at either the time of the grant of an Option or the time of the acquisition of Shares under the Option, (i) the extension of a loan to the Optionee by the Company, or (ii) the guarantee by the Company of a loan obtained by the Optionee from a third party. The terms of any loans or guarantees, including the amount, interest rate and terms of repayment, will be subject to the discretion of the Administrator and applicable covenants contained in Company loan agreements. Loans and guarantees may be granted without security, the maximum credit available being the Exercise Price of the Shares acquired plus the maximum federal and state income and employment tax liability that may be incurred in connection with the acquisition. 13. Withholding. (a) Obligation. The Company's obligation to deliver stock certificates upon the exercise of an Option will be subject to the Optionee's satisfaction, in the Administrator's sole discretion, of all applicable federal, state and local income and employment tax withholding requirements. (b) Payment. In the event that an Optionee is required to pay to the Company an amount with respect to income and employment tax withholding obligations in connection with the exercise of an Option, the Administrator may, in its discretion and subject to such limitations and rules as it may adopt, permit the Optionee to satisfy the obligation, in whole or in part, by delivering shares of Common Stock already held by the Optionee or by making an irrevocable election that a portion of the total value of the Shares subject to the Option be paid in the form of cash in lieu of the issuance of Common Stock, and that such cash payment be applied to the satisfaction of the withholding obligations. 14. Option Exchange Program. The Administrator will have the authority to effect, at any time and from time to time, with the consent of the affected Optionees, the cancellation of any or all outstanding Options under the Plan and to grant in substitution therefor new Options under the Plan covering the same or different numbers of Shares, but, in accordance with Section 6 hereof, having an Exercise Price not less than 7 one hundred percent (100%) of the Fair Market Value on the new grant date, unless otherwise permitted by the Administrator. 15. Compliance with Federal and State Laws. Shares will not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares shall comply with all relevant provisions of law and the requirements of any stock exchange or quotation system upon which the Shares may then be listed or quoted, and shall be further subject to the approval of counsel for the Company with respect to such compliance. As a condition to the grant or exercise of an Option, or to the issuance of any Shares under any Option, the Administrator may require the Optionee to provide such written representations, covenants, warranties and agreements which, in the opinion of counsel for the Company, are required to comply with applicable law or satisfy the requirements of any stock exchange or quotation system upon which the Shares may then be listed or quoted. The Company undertakes to use all reasonable efforts to either register the Shares of Common Stock issuable upon exercise of an Option or assure that an exemption from registration is available in connection with such exercise. In the event that the Company shall deem it necessary or desirable to register any shares of Common Stock with respect to which the Option shall have been or may be exercised, or to qualify any such shares for exemptions pursuant to applicable statutes, then the Company may take such action and may require from the Optionee such information in writing for use in any registration statement, supplementary registration statement, prospectus, preliminary prospectus, offering circular or any other document that is reasonably necessary for such purpose and may require reasonable indemnity to the Company and its officers and directors from the Optionee against all losses, claims, damage and liabilities arising from such use of the information so furnished and caused by any untrue statement of any material fact therein or caused by the omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made. 16. Reservation of Shares. During the term of this Plan, the Company will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. 17. Grants Exceeding Allotted Shares. If the Optioned Stock covered by an Option exceeds, as of the date of grant, the number of Shares which may be issued under the Plan without additional shareholder approval, such Option shall be void with respect to such excess Optioned Stock, unless approved by the Board and shareholder approval of an amendment sufficiently increasing the number of Shares subject to the Plan is timely obtained in accordance with Section 11 hereof. 18. Effective Date; Shareholder Approval; Term of Plan. The effective date of the Plan shall be the date of its adoption by the Board, subject to approval by the shareholders of the Company within 12 months after the effective date if required under Applicable Laws. Such shareholder approval shall be obtained in the manner and to the degree required under applicable federal and state law. Options may be granted by the Administrator as provided herein subject to such subsequent shareholder approval. The Plan shall continue for a term of ten (10) years from the date of original approval by the Board unless terminated earlier under Section 11 hereof. 19. Rule 16b-3. Notwithstanding any provision of the Plan, the Plan shall always be administered, and Options shall always be granted and exercised, in such a manner as to conform to the provisions of Rules 16b-3, unless the Administrator determines that Rule 16b-3 is not applicable to the Plan. 20. Governing Law. The Plan shall be governed by and construed in accordance with the laws of the state of Washington. 21. Use of Proceeds. All cash proceeds to the Company under the Plan shall constitute general funds of the Company. 22. Terms Applicable to Incentive Stock Options Only. In addition to, and notwithstanding, the other provisions hereof that apply to all Options granted pursuant to this Plan, the following paragraphs shall apply to any options granted under this Plan which are Incentive Stock Options. 8 (a) Conformance with the Code: Options granted under this Plan which are "Incentive Stock Options" shall conform to, be governed by, and be interpreted in accordance with Section 422 of the Code and any regulations promulgated thereunder and amendments to the Code and Regulations. Only Employees may be granted Incentive Stock Options hereunder. (b) Option Price: The option or purchase price of each Share optioned under the Incentive Stock Option provisions of this Plan shall be determined by the Board at the time of the action for the granting of the option but shall not, in any event, be less than the Fair Market Value of the Company's common stock on the date of grant. (c) Limitation on Amount of Incentive Stock Option: The aggregate Fair Market Value of the Incentive Stock Options (determined on the date of grant) with respect to which an employee has the right to purchase vesting in any one calendar year (under all Plans of the Company, its Subsidiaries, and any parent corporation) shall not exceed $100,000. (d) Limitation on Grants to Substantial Shareholders: An Employee may not, immediately prior to the grant of an Incentive Stock Option hereunder, own stock in the Company representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company unless the per share option price specified by the Board for the Incentive Stock Options granted such an Employee is at least one hundred ten percent (110%) of the Fair Market Value of the Company's stock on the date of grant and such option, by its terms, is not exercisable after the expiration of five (5) years from the date such option is granted. (e) Method of Exercise of Option: The amount to be paid by the Optionee upon exercise of an Incentive Stock Option shall be the full purchase price thereof provided in the option. 9 EX-10.3 5 v83292exv10w3.txt EXHIBIT 10.3 May 7, 2002 Eric Hertz Dear Eric: This letter (the "Letter Agreement") sets forth the terms of your employment with Western Wireless Corporation ("WWC"), effective May 10, 2002 (or date of execution). 1. ROLE: Your title will be Chief Operating Officer. In that capacity you will report to the Chief Executive Officer of WWC (the "CEO"). 2. RESPONSIBILITIES: Your responsibilities will include supervision of all operating functions of WWC including sales and marketing, customer service, information technology and engineering together with such other duties as may be assigned to you by the CEO. You will devote substantially all of your business time and attention to the obligations delineated in this Letter Agreement. 3. CASH COMPENSATION: Your base compensation will be $325,000, payable in accordance with standard payroll practices of WWC. In addition, you will have an opportunity, as determined by WWC, to earn a performance bonus targeted at $225,000 per year, to be paid annually at yearend. The bonus will be based on a formula based on growth, cash flow and leadership. Your first year's bonus will be prorated for your start date. It is understood that nothing contained herein will prevent WWC, in its sole and absolute discretion, from, at any time, increasing your compensation, either permanently or for a limited period, whether in base compensation, by bonus or otherwise, if WWC in its sole discretion, shall deem it advisable to do so in order to recognize and fairly compensate you for the value of your services to WWC; provided, however, that nothing contained in this paragraph three shall in any manner obligate WWC to make any such increase or provide any such additional compensation or benefits. 4. STOCK OPTIONS: You will receive an option to purchase 100,000 shares of WWC's common stock at an exercise price per share as of the closing price of the stock on your acceptance of this offer or other mutually agreed upon date. Your options will have a 4-year vesting and shall contain Change of Control protection consistent with other officers of WWC. You will be eligible to continue, during the course of your employment, to participate in the option program at a level to be determined by the CEO and the Compensation Committee. 5. RESTRICTED STOCK GRANT: You will receive a restricted stock grant of 35,000 shares and a cash tax gross up upon your start. The shares will be fully vested when granted but subject to forfeiture if you terminate your employment voluntarily without Cause or your employment is terminated by WWC with Cause prior to your one year anniversary with WWC. This forfeiture restriction will terminate if there is a Change of Control of WWC. For the purposes of this Letter Agreement, "Change of Control" shall be as defined in the WWC Stock Option Agreement. 6. RELOCATION: We will pay you a flat payment of $200,000, which is intended to cover your costs of relocation including moving your belongings, vehicles and animals, the costs associated with buying and selling houses and any other costs associated with the move. This payment is intended to cover all costs of relocation except that it is understood that the company will separately reimburse you for the cost of travel to and from Seattle prior to your relocation, the cost of temporary housing in the Seattle area and the cost of house hunting trips for your family to come to the Seattle area. 7. BENEFITS: You will also be eligible to participate in the WWC's Employee Benefit Programs upon eligibility, which includes a group health insurance program; life insurance and 401(k) plan with matching. Page 2 You will be entitled to four weeks of vacation annually. 8. EXPENSES: WWC will reimburse you for all reasonable out-of-pocket business expenses paid or incurred by you in connection with the performance of your duties, upon submission of signed, itemized lists of such expenses on general forms established for that purpose by WWC. 9. INDEMNIFICATION: WWC will enter into an Indemnification Agreement with you pursuant to which WWC will agree to indemnify you against certain liabilities arising by reason of your affiliation with WWC. 10. NON-DISCLOSURE: You agree not to disclose at any time, whether during the term of this Letter Agreement or thereafter, any secret or confidential information relating to WWC's or any of its subsidiaries' businesses, financial condition or prospects, which information you have obtained while employed by WWC or by any of its subsidiaries or any of the predecessors in interest of any of them, except (i) as may be required in furtherance of the businesses of WWC or of any of its subsidiaries, (ii) with WWC's express prior written consent, (iii) if such information is made generally available to the public through no fault of yours, or (iv) if such disclosure is required by applicable law or regulation or by legal process and then only with prompt written notice to WWC in advance of any such disclosure. 11. NON-COMPETE: You agree that, during the term of your employment by WWC and for a period of one (1) year immediately following the termination of your employment with WWC for any reason whatsoever, you will not, either directly or indirectly, for compensation or any other consideration, individually or as an employee, broker, agent, consultant, lender, contractor, advisor, solicitor, stockholder (provided that ownership of 5% or less of the outstanding stock of any corporation listed on a national securities exchange is not prohibited), proprietor, partner, or person having any other material economic interest in, affiliated with or rendering services to any other entity, engage in or provide services to or for a business that is substantially the same as or similar to WWC's or its subsidiaries businesses and which competes within the applicable commercial mobile radio services markets serviced by WWC or its subsidiaries, directly or indirectly. 12. EMPLOYMENT AT WILL: Notwithstanding any other provision of this Letter Agreement, your employment by WWC may be terminated by WWC at any time, with or without Cause, as defined below. In the event of a termination for Cause you will have no rights to severance payments. Termination for "Cause" means (i) your gross neglect or willful material breach of your principal employment responsibilities or duties, (ii) a final judicial adjudication that you are guilty of a felony, (iii) fraudulent conduct as determined by a court of competent jurisdiction in the course of your employment with WWC or any of its subsidiaries, (iv) the breach by you of the covenant set forth in paragraph nine, below, or (v) the material breach by you of any other provision of this Letter Agreement which continues uncured for a period of thirty (30) days after notice thereof by WWC. In the event of your voluntary termination of employment with WWC, you will have no rights to severance benefits. In the event of an involuntary termination for other than Cause (which shall include your resignation as a direct result of (i) a reduction in your base compensation and/or incentive bonus target percentage, or (ii) the material breach by the Company of any provision of this Letter Agreement which continues uncured for a period of thirty (30) days after notice thereof by you), then (A) you will be entitled to receive a severance payment in an amount equal to your accrued but unpaid existing annual targeted incentive bonus through the date of termination, twelve (12) months of your then base compensation and an amount equal to twelve (12) months of your existing annual targeted incentive bonus; (B) WWC will, at its expense, make all COBRA benefit payments on behalf of you and your dependents for twelve (12) months following such involuntary termination; and (C) with respect to any stock options previously granted to you by WWC which remain unvested at the time of the involuntary termination, notwithstanding the vesting language in the stock option agreement pursuant to which such options were granted, there shall be immediate vesting Page 3 of that portion of each such grant of unvested stock options as equals the product of the total number of such options under such grant which remain unvested multiplied by a fraction the numerator of which is the sum of (i) the number of days from the date on which the last vesting of options under such grant took place to and including the date on which the termination occurs plus (ii) 365 and the denominator of which is the number of days remaining from the date on which the last vesting of options under such grant took place to and including the date on which the final vesting under such grant would have occurred. Your death or permanent disability will be deemed an involuntary termination for other than Cause. "Permanent disability" shall mean your inability substantially to render the services required hereunder for eight (8) months in any eighteen (18) month period because of a physical or mental condition, it being understood that until you have received notice from WWC terminating this Letter Agreement, you will continue to receive your base compensation and all other benefits to which you are entitled under this Letter Agreement. You agree that upon termination of your employment by WWC for any reason you will surrender to WWC all proprietary records, lists and other documents obtained by you or entrusted to you during the course of your employment by WWC, together with all copies of all such documents. This Letter Agreement contains the entire agreement between you and WWC with respect to your employment by WWC, other than human resource and corporate policies, which are to be executed by all employees. This Letter Agreement may not be amended, waived, changed, modified or discharged except by an instrument in writing executed by or on behalf of you and WWC. 13. NOTICES: All notices, requests, demands and other communications with respect to this Letter Agreement will be in writing and will be deemed to have been duly given if delivered by hand, registered or certified mail (first class postage and fees prepaid, return receipt requested), telecopier or overnight courier guaranteeing next-day delivery, as follows: Western Wireless Corporation 3650 - 131st Avenue SE, #400 Bellevue, Washington 98006 Attention: General Counsel Telecopy: (425) 586-8102 Eric Hertz and to such other persons as either you or WWC has specified in writing to the other by notice as aforesaid. 14. ENFORCEMENT: If any part of this Letter Agreement is hereafter construed to be invalid or unenforceable in any jurisdiction, the same will not affect the remainder of the Letter Agreement or the enforceability of such part in any other jurisdiction, which will be given full effect, without regard to the invalid portions or the enforceability in such other jurisdiction. If any part of this Letter Agreement is held to be unenforceable because of the scope thereof, you and WWC agree that the court making such determination will have the power to reduce the duration and/or area of such provision and, in its reduced form, said provision shall be enforceable; provided, however, that such court's determination will not affect the enforceability of this Letter Agreement in any other jurisdiction beyond such court's authority. 15. JURISDICTION: This Letter Agreement will be governed by and construed and interpreted in accordance with the laws of the State of Washington without reference to conflicts of laws principles. Page 4 Please signify your acceptance of the terms of this Letter Agreement by signing where indicated below. Sincerely yours, WESTERN WIRELESS CORPORATION By: --------------------------------- John W. Stanton Chief Executive Officer AGREED TO AND ACCEPTED: - --------------------------------- Eric Hertz -----END PRIVACY-ENHANCED MESSAGE-----

EX-10.1

                         TELE.RING TELEKOM SERVICE GMBH
                              Hainburger Strasse 33
                                 A--1030 Vienna
                                     Austria

                         EHG EINKAUFS- UND HANDELS GMBH
                                 Seilergasse 16
                                  A-1010 Vienna
                                     Austria

                                  April 5, 2002

Vodafone AG (as universal successor of
Mannesmann Eurokom GmbH)
Mannesmannufer 3
D-40213 Dusseldorf
Attention: Christian Sommer

EKOM Telecommunications Holding AG
Fichtenstrasse 7
A-4020 Linz
Attention: Christian Sommer

               Re:  Resolution of Certain Disputes

Ladies and Gentlemen:

        Reference is made to the Agreement dated May 4, 2001, for the sale and
purchase of 100% of the shares in tele.ring Telekom Service GmbH, 100% of the
partnership interest in tele.ring Telekom Service GmbH & Co KEG and for the
call-option regarding the sale and purchase of 100% of the shares in Mannesmann
3G Mobilfunk GmbH, together with the Annexes and Schedules thereto (the
"Agreement"); the Closing Memorandum dated June 29, 2001, together with the
Annexes thereto (the "Closing Memorandum"); and the Term Loan Agreement dated
June 29, 2001 (the "Loan Agreement"). All terms used herein and not otherwise
defined shall have the meanings ascribed thereto in the Agreement, the Closing
Memorandum or the Loan Agreement, as the case may be.

        Upon execution of this settlement agreement (the "Letter Agreement") in
the space provided, each of you and we, now and for all time, agree as set forth
herein in respect of the final settlement and resolution of the matters
described below.

A. RESOLUTION OF CERTAIN DISPUTES AND RELATED AGREEMENTS

        With respect to:

        1. our claim that you owe us EUR 483,274 in order to reimburse us for
certain bonus payments we paid to former managers of tele.ring GmbH referred to
in Annex 20



to the Closing Memorandum (the "Bonus Dispute"): concurrently with your
execution hereof you shall pay to a bank account designated by us, by wire
transfer of immediately available funds, EUR 483,274 in full and final
settlement of the Bonus Dispute; we, acting for and on behalf of ourselves, our
subsidiaries, affiliates, successors and assigns hereby waive and do remise,
release, acquit and discharge you, each and every one of your shareholders,
subsidiaries, affiliates and directors, officers, employees, agents and
attorneys, heirs, predecessors, successors and assigns of and from any and all
claims in connection with Annex 20 in full and final settlement of the Bonus
Dispute.

        2. our claim that you owe us EUR 2,791,000 in connection with KPMG's
determination made on December 21, 2001 regarding the Consolidated Closing Net
Working Capital (the "Closing Balance Sheet Dispute"): we shall, upon your
execution hereof be deemed to have waived and released such claim in full and
final settlement thereof; we, acting for and on behalf of ourselves, our
subsidiaries, affiliates, successors and assigns hereby waive and do remise,
release, acquit and discharge you, each and every one of your shareholders,
subsidiaries, affiliates and directors, officers, employees, agents and
attorneys, heirs, predecessors, successors and assigns of and from any and all
claims in connection with Schedule 13 to the Agreement, the engagement letter
dated November 30, 2001 and signed by Vodafone AG, EHG Einkaufs-und Handels GmbH
and KPMG Alpen-Treuhand Wirtschaftsprufungs-und Steuerberatungsgesellschaft
m.b.H. and the determination issued by KPMG Alpen-Treuhand
Wirtschaftsprufungs-und Steuerberatungsgesellschaft m.b.H. on December 21, 2001
in full and final settlement of the Closing Balance Sheet Dispute.

        3. your claim that we owe you the Non Roll-Out Equipment referred to in
Annex 23 to the Agreement (the "Alcatel Equipment Dispute"): you shall,
automatically upon your execution hereof, be deemed (i) to have waived and
released such claim and (ii) to have acknowledged and agreed that we shall
retain, and are entitled to retain, all of the aforesaid Alcatel Equipment free
and clear of all liens, claims and encumbrances, in each case in full and final
settlement of such claim; you, acting for and on behalf of yourselves, your
subsidiaries, affiliates, successors and assigns hereby waive and do remise,
release, acquit and discharge us, each and every one of our shareholders,
subsidiaries, affiliates and directors, officers, employees, agents and
attorneys, heirs, predecessors, successors and assigns of and from any and all
claims in connection with Annex 23 in full and final settlement of the Alcatel
Equipment Dispute.

        4. your claim that we owe you or any of your affiliates EUR 585,919.68
as reimbursement for interest due to you in respect of the guaranty (the
"Guaranty") issued by you in favor of the Regulator relating to the GSM license
(the "GSM Guaranty Dispute"): you shall, automatically upon your execution
hereof, be deemed to have waived and released such claim in full and final
settlement thereof; you, acting for and on behalf of yourselves, your
subsidiaries, affiliates, successors and assigns hereby waive and do remise,
release, acquit and discharge us, each and every one of our shareholders,
subsidiaries, affiliates and directors, officers, employees, agents and
attorneys, heirs, predecessors, successors and assigns of and from any and all
claims in connection with interest due on the guaranty issued by you in favor of
the Regulator relating to the GSM license in full and final settlement of the
GSM Guaranty Dispute.


                                       2



        5. advances under the Loan Agreement: Subject to the results of your
review of the information that will be provided to and/or reviewed by you under
this Subsection A.5, you further acknowledge and agree that we are not in breach
of any provision of the Loan Agreement and that the Loan Agreement remains in
full force and effect, with all obligations on our part to the date hereof
having been fulfilled. We acknowledge and agree that you or your third party
advisors who are subject to a contractual or professional duty of
confidentiality shall be granted access to the relevant books and records of
tele.ring GmbH in order to evidence that the Advances made by you prior to the
date hereof have been spent in accordance with the Business Plan and generally
in accordance with the Schedule of Proposed Expenditures that accompanied such
prior Advances.

        We acknowledge and agree that the Facility and the Commitment (as
defined in the Loan Agreement) shall immediately be reduced to an aggregate
amount of EUR 250 million (Euro two hundred fifty million). We, acting for and
on behalf of ourselves, our subsidiaries, affiliates, successors and assigns
hereby waive and do remise, release, acquit and discharge you, each and every
one of your shareholders, subsidiaries, affiliates and directors, officers,
employees, agents and attorneys, heirs, predecessors, successors and assigns of
and from any and all claims in connection with the immediate reduction of the
Facility and the Commitment to EUR 250 million.

        Upon execution of this Letter Agreement you agree to release the
remaining EUR 10 million requested in the last Drawdown Request issued by
tele.ring GmbH.

B. PROJECTIONS, COMPARISON, NOTIFICATION AND REVIEW

        1. We agree to provide you, or we shall cause tele.ring GmbH to provide
you, with the following for your information:

            (a) Upon execution of this Letter Agreement, we shall provide you
with a copy of projections in the form of Exhibit A hereto (the "Projections")
prepared by tele.ring GmbH in good faith, on the basis of which tele.ring GmbH
may reasonably believe that it will be able to repay all obligations outstanding
under the Loan Agreement on the due dates thereof by means of (i) internally
generated funds of tele.ring GmbH, (ii) a refinancing of the Loan Agreement,
(iii) a sale of an equity interest in tele.ring GmbH, or (iv) otherwise.

            (b) Commencing with the year 2003, on or before March 1 of each year
until all obligations outstanding under the Loan Agreement have been repaid in
full, we shall provide you with a copy of then current Projections on the basis
of which tele.ring GmbH may reasonably believe it will be able to repay all
obligations outstanding under the Loan Agreement on the due dates thereof in the
manner provided in Subsection B.1.(a).

            (c) Commencing with the year 2002, on or before March 31 of each
year until all outstanding obligations under the Loan Agreement have been repaid
in full, we shall provide you with a comparison (the "Comparison") of (i) the
actual performance of tele.ring GmbH for the prior calendar year and (ii) the
Projections for such prior calendar


                                       3


year, which Comparison shall be in the form of Exhibit A hereto; except that the
Comparison with respect to the year 2001 shall only be required for the period
from July 1, 2001 through December 31, 2001, and that the Comparison for such
period in 2001 shall be provided to you by no later than ten (10) Business Days
after the date hereof.

            (d) Commencing with the year 2002, on or before March 31 of each
year we shall provide you with the financial statements that tele.ring GmbH is
required to file pursuant to Section 277 and Section 221 HGB (Austrian
Commercial Code).

            (e) Commencing on the date of this Letter Agreement and continuing
until all obligations outstanding under the Loan Agreement have been repaid in
full, we shall give you prompt notice of any event that severely and adversely
impacts the business of tele.ring GmbH.

        2. We agree that all Projections shall be prepared by us in good faith
based upon reasonable assumptions at the time such Projections were prepared and
each time said Projections are provided to you, we shall provide you, or we
shall cause tele.ring GmbH to provide you, with a certificate of tele.ring GmbH,
to the effect that such Projections were prepared in good faith and based upon
reasonable assumptions at the time such Projections were prepared.

        3. We agree to grant to you or your designated representatives, during
the period of thirty (30) days following execution of this Letter Agreement,
upon your request and at reasonable times that do not unreasonably interfere
with tele.ring GmbH's ability to conduct its business, access to the relevant
books and records of tele.ring GmbH for a minimum of 10 full Business Days in
order to evidence that the Advances made by you prior to the date hereof have
been spent in accordance with the Business Plan and generally in accordance with
the Schedule of Proposed Expenditures that accompanied such prior Advances.
Provided we grant you access to such books and records for a minimum of 10 full
Business Days, you agree to complete your review of such books and records
during such thirty (30) day period.

        4. During ten (10) Banking Days after the date of each Drawdown Request
issued by us after the date of this Letter Agreement, we agree to grant to you
or your designated representatives, upon your request and at reasonable times
that do not unreasonably interfere with tele.ring GmbH's ability to conduct its
business, access to the relevant books and records of tele.ring GmbH for a
minimum of 5 full Business Days in order to demonstrate that the Advance
received by tele.ring GmbH immediately prior to the date of each such Drawdown
Request was spent in accordance with the Business Plan and generally in
accordance with the Schedule of Proposed Expenditures that accompanied such
immediately prior Advances. Provided we grant you access to such books and
records for a minimum of 5 full Business Days, you agree to complete your review
of such books and records during such ten (10) Banking Day period.

        5. Within thirty (30) days following your receipt of a copy of the
Projections (Subsections B.1.(a), (b) and (c)), we shall make available, at a
mutually agreeable date and time, appropriate members of tele.ring GmbH's
management who will answer any


                                       4


reasonable questions that you or your third party advisors who are subject to a
professional or contractual duty of confidentiality may have in connection with
the Projections, Comparisons and the underlying assumptions and numbers for a
minimum of 1 full Business Day. You agree that the Projections, Comparisons and
all documents and other information obtained by you as a result of your review
of the Projections, Comparisons and our books and records as described herein,
shall be used by you and/or your representatives solely for information purposes
and shall not be used by you, your affiliates or any of your representatives,
for any other purpose, nor shall any such documents or information be disclosed
to any other person, firm or entity without our prior written consent. With the
exception of your right to receive certain information from us under this Letter
Agreement, nothing contained in this Letter Agreement shall be deemed to
increase or decrease any rights of the Lender or be deemed a waiver of any
rights of the Lender under the Loan Agreement.

C. MM3G

        We hereby exercise the MM3G Call Option and designate May 21, 2002 as
the Closing Date for the purchase of the MM3G Shares. You acknowledge and agree
that we have exercised the MM3G Call Option in a timely manner and that subject
to the fulfillment of the conditions set forth in Section 7.1 of the Agreement
and the payment by us of the MM3G Exercise Price, you shall deliver the MM3G
Shares to us at the Closing.

        In the event that during the period commencing on the Closing of the
exercise of the MM3G Call Option and ending on the date that we, acting in good
faith, file with Telekom-Control-Kommission a notice that we have satisfied the
requirements of Article 8, Section 2, item 1 (relating to coverage of 25%) in
accordance with Article 9 of the UMTS License, with respect to the UMTS License,
we, or we cause any of our affiliates to, (a) return or waive the UMTS License
to the Regulator and as a result thereof the Regulator or the Republic of
Austria refunds to us or you or any of our or your affiliates all or any portion
of the license fee paid by you or any of your affiliates for the UMTS License,
you and we agree to share, or cause our affiliate(s) to share, on a 60 (you) :
40 (we) basis any such refund (after deducting from the gross amount of the
refund all expenses directly and reasonably incurred by us or MM3G (or any of
our affiliates, as the case may be) in connection with the UMTS License,
including but not limited to the cost of equipment or other property relating to
the system constructed or to be constructed pursuant to the UMTS License, any
fines paid to the Regulator or otherwise related to failure to construct all or
any portion of the system relating to the UMTS License, or relating to the
negotiation of any such refund); or (b) otherwise dispose of or sell the shares
and/or assets of MM3G, which sale includes the UMTS License (provided that (i)
corporate restructuring measures within the Western Wireless group and (ii)
corporate measures of MM3G for the purpose of raising capital to build or
operate the tele.ring GmbH and/or MM3G system (including, for the avoidance of
doubt, the pledging of the shares or assets of MM3G), shall not entitle you to
any sharing of such proceeds contemplated herein, provided that the proceeds
thereof are used for the purpose of constructing or operating the tele.ring GmbH
and/or MM3G system, i.e. are not distributed to MM3G's shareholders or the
shareholders of any of our affiliates, as the case may be), which disposal or
sale is not combined with the actual sale or disposal of


                                       5


any other significant non-Austrian-based business, businesses or assets owned or
controlled by Western Wireless International Corporation ("WWIC") or any of its
affiliates directly or indirectly and used in the telecommunications business,
we agree to share, or cause our affiliate(s) to share, on a 60 (you):40 (we)
basis the proceeds of any such sale or disposal that are attributable to the
UMTS License, without duplication of any amount payable to you pursuant to the
terms of that letter dated June 29, 2001 by and between you and WWIC (which
terms shall remain unaffected by the provisions of this Letter Agreement) (after
deducting from the gross proceeds all expenses directly and reasonably incurred
by us or MM3G (or any of our affiliates, as the case may be) in connection with
the UMTS License or the UMTS business, including but not limited to the cost of
equipment or other property relating to the system constructed or to be
constructed pursuant to the UMTS License, any fines paid to the Regulator or
otherwise related to failure to construct all or any portion of the system
relating to the UMTS License, or relating to the negotiation of such sale).

        As used in this Subsection C, the term (a) "dispose" or "disposal" shall
not include, among other things, the pledge of or granting a security interest,
lien or other encumbrance, in or with respect to the shares or assets of MM3G,
if the purpose thereof is the raising of capital or purchasing of equipment for
use in the tele.ring GmbH and/or MM3G telecommunications business; and (b)
"significant" means any existing non-Austrian-based business, businesses,
shares, assets or system(s) owned or controlled by WWIC with a value in excess
of EUR fifty (50) million.

        We agree to pay to you your share of any such refund or any such
proceeds, if any, within ten (10) days after receipt by us of any such refund or
any such proceeds. You and, at your request, your third party advisors who are
subject to a contractual or professional duty of confidentiality shall have the
right within the thirty (30) day period after receipt of any such sale proceeds
or any such refund by us, to be granted access to any documents or other
information relating to the amount to be paid to you, in order to review such
documents or other information in accordance with the next paragraph for a
minimum of 10 full Business Days. Provided you and/or your advisors are granted
access to such documents and other information for a minimum of 10 full Business
Days, such review shall be completed within such thirty (30) day period.

        In the event that we and you (i) disagree about whether you are entitled
to a share of any refund or proceeds hereunder, and/or (ii) disagree about the
actual amount of any refund or proceeds to be allocated to the disposal or sale
of the shares and/or assets of MM3G that are attributable to the UMTS License,
and/or (iii) disagree about the amount to be paid to you under this Section C,
the Parties shall meet in order to attempt to resolve any differences. If such
resolution cannot be achieved within 10 days, either Party may, by notice to the
other, designate an accounting firm (the "First Firm") to determine (a) whether
you are entitled to a share of any refund or proceeds under this Section C, (b)
the actual amount of the proceeds to be allocated to any sale or disposal of the
shares and/or assets of MM3G that are attributable to the UMTS License and/or
(c) the amount to be paid to you under this Section C (the "Determination"). The
First Firm shall promptly make its Determination unless the other Party elects,
within 5 days after receipt of the notice, to designate another accounting firm
(the "Second Firm") by giving notice to the


                                       6



Party which designated the First Firm. The First and Second Firms shall within 3
days of the appointment of the Second Firm select a Third accounting firm (the
"Third Firm") to make such Determination. If the First Firm and the Second Firm
fail to mutually agree on the Third Firm within 3 days, the Third Firm shall be
appointed by the President of the Vienna Chamber of Accountants upon request
from either Party. The Third Firm shall make the Determination as promptly as
practicable but in any event within 30 days of its appointment. The Third Firm
shall be requested to give both Parties the opportunity to present their views.
The Determination of the Third Firm shall be final and binding on the Parties
and not subject to further review or appeal. We shall pay you the amount to be
paid to you, as determined in accordance with this Section C, without delay and
in any event within 5 days following receipt of the Determination. Each Party
shall pay the costs of the firm that it designated and the costs of the Third
Firm shall be shared equally.

        We, acting for and behalf of ourselves and our subsidiaries, affiliates,
successors and assigns, acknowledge, agree and shall procure that you or any of
your third party advisors who are subject to a contractual or professional duty
of confidentiality, will be granted prompt access to any and all records, books,
documents and other information which are relevant to determine the details of
the disposal of the UMTS License and/or the actual amount of proceeds or other
benefits within the meaning of the immediately preceding paragraphs of this
Letter Agreement. You shall treat any information obtained through accessing
such books, records, documents or other information in accordance with Clause 14
of the Agreement and shall not use such information for any purpose other than
protecting or enforcing your rights under this Letter Agreement.

D. RELEASE

        Following your and our execution hereof, other than in respect of the
covenants and agreements specifically set forth herein, each of you and we
generally releases and forever discharges the other and their respective
affiliates from any and all claims, demands, liabilities, suits, damages,
losses, expenses, attorneys' fees and costs, obligations or causes of action,
known or unknown, of any kind and every nature whatsoever, fixed or contingent,
and whether or not accrued or matured, which you or we or our respective
affiliates, ever had or may have arising out of or relating to:

        -      the Bonus Dispute;

        -      the Closing Balance Sheet Dispute;

        -      the Alcatel Equipment Dispute; and

        -      the GSM Guaranty Dispute.

in each case including but not limited to any claim against the other or our
respective affiliates based on or relating to breach of contract (whether oral
or written), tort, fraud, defamation, negligence, promissory estoppel or
otherwise. Further, following your and our execution hereof, each of you and we
covenant on our own behalf and on behalf of our respective affiliates, to cease,
terminate and forego, and forever not to assert, file,


                                       7


prosecute, maintain, commence, institute or sponsor (or purposely facilitate any
person in connection with the foregoing), any complaint, arbitration or lawsuit
or any legal, equitable or administrative proceeding of any nature, against the
other in connection with any matter released hereby.

E. REPRESENTATIONS AND WARRANTIES

        1. Each of you represents and warrants to us as follows:

            (a) Authorization. The execution and delivery by you of this Letter
Agreement, and the performance by you of your obligations hereunder, have been
duly authorized by all necessary action and no other proceedings on your part
which have not been taken are necessary to authorize this Letter Agreement or
the agreements contained herein.

            (b) Enforceability. This Letter Agreement has been duly and
voluntarily executed and delivered by you and constitutes your legal, valid and
binding obligation, enforceable against you in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights or remedies generally.

            (c) No Conflict. The execution, delivery and performance by you of
this Letter Agreement will not result in the violation of, or be in conflict
with, or constitute a default under, any term of your organizational documents
or any law, mortgage, indenture, contract, agreement or instrument to which your
are a Party or by which you are bound, which violation, conflict or default
would have a material adverse effect on you or on the agreements contained
herein.

            (d) No Assignment. You have not assigned or transferred to any other
person or entity, including without limitation, any parent, subsidiary or
affiliate of yours, any portion of any claim, right, demand, action or cause of
action under the Agreement, the Loan Agreement, the Closing Memorandum and the
transactions contemplated thereby.

        2. We represent and warrant to you as follows:

            (a) Authorization. The execution and delivery by us of this Letter
Agreement, and the performance by us of our obligations hereunder, have been
duly authorized by all necessary action and no other proceedings on our part
which have not been taken are necessary to authorize this Letter Agreement or
the agreements contained herein.

            (b) Enforceability. This Letter Agreement has been duly and
voluntarily executed and delivered by us and constitutes our legal, valid and
binding obligation, enforceable against us in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights or remedies generally.


                                       8


            (c) No Conflict. The execution, delivery and performance by us of
this Letter Agreement will not result in the violation of, or be in conflict
with, or constitute a default under, any term of our organizational documents or
any law, mortgage, indenture, contract, agreement or instrument to which we are
a Party or by which we are bound, which violation, conflict or default would
have a material adverse effect on us or on the agreements contained herein.

            (d) No Assignment. We have not assigned or transferred to any other
person or entity, including without limitation, any parent, subsidiary or
affiliate of ours, any portion of any claim, right, demand, action or cause of
action under the Agreement, the Loan Agreement, the Closing Memorandum and the
transactions contemplated thereby.

F. GOVERNING LAW

        This Letter Agreement shall be governed by and construed in accordance
with the laws of Austria without regard to the principles of conflict of laws
thereof.

G. DISPUTE RESOLUTION

        In the event of any dispute, controversy or claim arising out of or in
connection with this Letter Agreement (including any exhibit, schedule or
attachment hereto) or the breach, termination or validity of this Letter
Agreement, each of you and we shall use all reasonable endeavours to resolve the
matter on an amicable basis. If one Party serves formal written notice on the
other Party or parties that a material dispute, controversy or claim of such a
description has arisen and the parties are unable to resolve the dispute within
a period of thirty (30) days from the service of such notice, then the dispute,
controversy or claim shall be referred to our respective senior executives. No
recourse to arbitration by one Party against the other Party or parties under
this Letter Agreement shall take place unless and until such procedure has been
followed.

        If our respective senior executives shall have been unable to resolve
any dispute, controversy or claim referred to them under the foregoing paragraph
within a period of ten (10) days from referral to such senior executives, that
dispute, controversy or claim shall be referred to and finally settled by
arbitration under and in accordance with the Rules of Arbitration of the
International Chamber of Commerce by three arbitrators appointed in accordance
with those rules. The place of arbitration shall be Zurich, Switzerland. The
arbitration proceedings shall be conducted, and the award shall be rendered, in
the English language.

        Each of you and we hereby waive any rights of application and appeal to
any court or tribunal of competent jurisdiction (including without limitation
the courts of Germany, Austria, Switzerland, the United States and England) to
the fullest extent permitted by law in connection with any question of law
arising in the course of the arbitration or with respect to any award made
except for actions relating to enforcement of the arbitration agreement or an
arbitral award and except for actions seeking interim or other provisional
relief in aid of arbitration in any court of competent jurisdiction.

H. MISCELLANEOUS


                                       9


        No original copy of this document shall be brought into Austria unless a
legal requirement to do so exists. Any Party hereto who either brings its
original copy of this document into Austria, or permits its original copy to be
so brought into Austria in violation of the foregoing shall be solely
responsible for any and all consequences with respect to Austrian stamp duty
legislation and shall indemnify the other Party for and against any and all such
consequences.

I. NOTICES

        1. Any notice or other communication given or made under or in
connection with the matters contemplated by this Letter Agreement shall be in
writing.

        2. Any such notice or other communication shall be addressed as provided
in Subsection I.3 and, if so addressed, shall be deemed to have been duly given
or made as follows:

            (a) if sent by personal delivery, upon delivery at the address of
the relevant Party;

            (b) if sent by international commercial courier, upon delivery; and

            (c) if sent by facsimile, when dispatched, but only so long as the
facsimile communication is followed immediately by dispatch by international
commercial courier;

provided that if, in accordance with the above provisions, any such notice or
other communication would otherwise be deemed to be given or made outside
Working Hours, such notice or other communication shall be deemed to be given or
made at the start of Working Hours on the next Business Day.

        3. The relevant addressee, address and facsimile number of each Party
for the purposes of this Letter Agreement, subject to Subsection I.4, are:



Name of Party                                   Address                     Facsimile No.
- -------------                                   -------                     -------------
                                                                      
Vodafone AG (as universal successor of
Mannesmann Eurokom                              Mannesmannufer 3            +49-211-820-2493
GmbH)                                           D-40213 Dusseldorf
Attn:  Christian Sommer                         Germany

EKOM Telekommunications                         Mannesmannufer 3            +49-211-820-2493
Holding AG                                      D-40213 Dusseldorf
Attn:  Christian Sommer                         Germany

EHG Einkaufs- und Handels GmbH                  3650 131st Avenue S.E.      001-425-586-8222
c/o Western Wireless International Corporation  Suite 400
Attn:  Bradley Horwitz                          Bellevue, WA 98006


                                       10




                                                                      
tele.ring Telekom Service GmbH                  Hainburger Strasse 33       +43-1-931-012-8035
Attn:  Gina Haggerty                            A-1030 Vienna
                                                Austria


        4. A Party may notify the other Party or Parties to this Letter
Agreement of a change to its name, relevant addressee, address or facsimile
number for the purposes of Subsection I.3 provided that such notification shall
only be effective on:

            (a) the date specified in the notification as the date on which the
change is to take place; or

            (b) if no date is specified or the date specified is less than 5
(five) clear Business Days after the date on which notice is given, the date
falling 5 (five) clear Business Days after notice of any such change has been
given.

J. ANNOUNCEMENTS

        1. Subject to Subsection J.2, no announcement concerning this Letter
Agreement shall be made by any Party without the prior written approval of the
other Party or Parties, such approval not to be unreasonably withheld or
delayed.

        2. Any Party may make an announcement or filing with a securities
exchange or regulatory or governmental body concerning this Letter Agreement or
any ancillary matter if required by:

            (a) the law of any relevant jurisdiction;

            (b) any securities exchange or regulatory or governmental body to
which either Party is subject or submits, wherever situated, whether or not the
requirement has the force of law, in which case the Party concerned shall take
all such steps as may be reasonable and practicable in the circumstances to
agree the contents of such announcement or filing with the other Party or
Parties before making such announcement or filing.

        3. The restrictions contained in this Subsection I shall continue to
apply after signing this Letter Agreement without limit in time.

K. CONFIDENTIALITY

        1. Subject to Subsection K.2, each Party shall treat as strictly
confidential all information received or obtained as a result of entering into
or performing this Letter Agreement which relates to:

            (a) the provisions of this Letter Agreement;

            (b) the negotiations relating to this Letter Agreement;

            (c) the subject matter of this Letter Agreement; or


                                       11


            (d) the other Party or Parties.

        2. Any Party may disclose information which would otherwise be
confidential if and to the extent:

            (a) required by the law of any relevant jurisdiction;

            (b) required by any rule or regulation issued by any securities
exchange or regulatory or governmental body to which either Party is subject or
submits, wherever situated, whether or not any such rule or regulation for
information has the force of law;

            (c) disclosed to the professional advisers, auditors and bankers of
each Party, provided that the disclosing Party shall ensure that such advisers,
auditors and bankers are bound by materially identical confidentiality
obligations;

            (d) the information has come into the public domain through no fault
of that Party; or

            (e) the other Party has or the other Parties have given prior
written approval to the disclosure, such approval not to be unreasonably
withheld or delayed,

provided that any such information disclosed pursuant to paragraph (a) or (b) of
this Subsection K.2 shall be disclosed only after three (3) Business Days prior
written notice to the other Party.

        3. The restrictions contained in this Subsection K shall continue to
apply after signing this Letter Agreement without limit in time.

L. COUNTERPARTS

        1. This Letter Agreement may be executed in any number of counterparts,
and by the Parties on separate counterparts, but shall not be effective until
each Party has executed at least one counterpart.

        2. Each counterpart shall constitute an original of this Letter
Agreement, but all the counterparts shall together constitute but one and the
same instrument.

M. LANGUAGE

        1. With the exception of the notarial deeds and regulatory filings
required to give effect to the transaction contemplated hereunder, each notice,
demand, request, statement, instrument, certificate, or other communication
given, delivered or made by one Party to another under this Letter Agreement
shall be:

            (a) in English; or

            (b) accompanied by an English translation.


                                       12


        2. The receiving Party shall be entitled to assume the accuracy of, and
to rely upon, any English translation of any document provided pursuant to
Subsection M.1(b).

N. EXPENSES

        Each of the Parties shall pay their own expenses, including all legal
fees and expenses, incurred by them in connection with the negotiation and
execution of this Letter Agreement.

        This Letter Agreement (a) constitutes and contains the entire agreement
and understanding between each of you and us in respect of the matters described
herein and supersedes and replaces all prior negotiations and all agreements
proposed or otherwise, whether written or oral, concerning the subject matter
hereof and (b) shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.

        Should any provision of this Letter Agreement be or become wholly or in
part invalid or unenforceable, the validity or enforceability of all remaining
provisions of this Letter Agreement shall not be affected thereby. The invalid
or unenforceable provision shall be deemed replaced by such valid and
enforceable provision which serves best the economic interest of the parties
originally pursued with the invalid or unenforceable provision. The same shall
apply in the case of an omission in this Letter Agreement.

                                            Intending to be legally bound,

                                            tele.ring Telekom Service GmbH



                                            By:  /s/   Richard M. Hoffman
                                                --------------------------------
                                                Name:  Richard M. Hoffman
                                                Title: Attorney-in-Fact


                                            EHG Einkaufs- und Handels GmbH


                                            By:  /s/   Brad Horwitz
                                                --------------------------------
                                                Name:  Brad Horwitz
                                                Title: Geschaftsfurher


                                       13



Vodafone AG (as universal successor of
Mannesmann Eurokom GmbH)



By:   /s/   J. Peters                               /s/   C. Sommer
     -------------------------------               -----------------------------
     Name:  J. Peters                              Name:  C. Sommer
     Title: Officer                                Title: Officer



EKOM Telecommunications Holding AG



By:   /s/   Peter Walz
     -------------------------------
     Name:  Peter Walz
     Title: Vorstand


                                       14

EX-10.2

                          WESTERN WIRELESS CORPORATION

                           AMENDED AND RESTATED 1994
                     MANAGEMENT INCENTIVE STOCK OPTION PLAN

     1. Establishment and Purpose. This 1994 Management Incentive Stock Option
Plan was established to provide an important inducement for management to
generate shareholder value by giving certain key personnel of Western Wireless
Corporation and its subsidiaries a stake in the equity of the Company. The
Company believes that the key managers participating in the Plan will seek to
build personal financial security through creating and maintaining value in the
Company for all shareholders. This Plan allows the Company to grant two types of
options, namely (1) Nonstatutory Stock Options; and (2) Incentive Stock Options
as the latter are defined and governed by Section 422 of the Internal Revenue
Code of 1986, as amended.

     2. Definitions. As used herein, the following definitions shall apply.

     "Administrator" means the Board or any Committee designated by the Board to
administer the Plan in accordance with Section 4 hereof.

     "Applicable Laws" means the legal requirements relating to the
administration and operation of stock option plans under federal and state
corporate and securities laws and the Code.

     "Board" means the Board of Directors of the Company, as constituted from
time to time.

     "Code" means the Internal Revenue Code of 1986, as amended.

     "Committee" means a committee appointed by the Board, in accordance with
Section 4 hereof. If no such committee has been appointed, "Committee" means the
full Board.

     "Common Stock" means the Common Stock of the Company, par value $.001 per
share.

     "Company" means Western Wireless Corporation, a Washington corporation.

     "Consultant" shall mean any person engaged by the Company who is not an
Employee.

     "Director" means a member of the Board.

     "Disability" means total and permanent disability as defined in Section
22(e)(3) of the Code.

     "Employee" means any person, including Officers and Directors, who is an
employee (within the meaning of Section 3401(c) of the Code and the regulations
thereunder) of the Company, a Parent or a Subsidiary.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     "Exercise Price" means the price at which one Share of the Common Stock may
be purchased upon exercise of an Option, as specified by the Administrator in
the applicable Option Agreement.

     "Fair Market Value" means, as of any date, the value of Common Stock
determined as follows:

          (i) If the Common Stock is listed on any established stock exchange or
     a national market system, including without limitation the National Market
     System of the National Association of Securities Dealers, Inc. Automated
     Quotation ("NASDAQ") System, the Fair Market Value of a Share of Common
     Stock shall be the closing sales price for such stock (or the closing bid,
     if no sales were reported) as quoted on such system or exchange (or the
     exchange with the greatest volume of trading in Common Stock) on the last
     market trading day prior to the day of determination, as reported in the
     Wall Street Journal or such other source as the Administrator deems
     reliable;

          (ii) If the Common Stock is quoted on the NASDAQ System (but not on
     the National Market System thereof) or is regularly quoted by a recognized
     securities dealer but selling prices are not reported,


                                       1



     the Fair Market Value of a Share of Common Stock shall be the mean between
     the high bid and low asked prices for the Common Stock on the last market
     trading day prior to the day of determination, as reported in the Wall
     Street Journal or such other source as the Administrator deems reliable;

          (iii) In the absence of an established market for the Common Stock,
     the Fair Market Value shall be determined in good faith by the
     Administrator as required.

     "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422(b) of the Code and the
regulations promulgated thereunder.

     "Nonstatutory Stock Option" means an Option not intended to qualify as an
incentive stock option within the meaning of Section 422(b) of the Code and the
regulations promulgated thereunder

     "Officer" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

     "Option" means a stock option granted pursuant to the Plan.

     "Option Agreement" means a written agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan, but may be
modified in the discretion of the Administrator.

     "Option Exchange Program" means a program whereby outstanding Options are
surrendered in exchange for Options with a lower exercise price.

     "Optioned Stock" means the Common Stock subject to an Option.

     "Optionee" means an Employee who holds an outstanding Option.

     "Parent" means a "parent corporation" (other than the Company), whether now
or hereafter existing, as defined in Section 424(e) of the Code.

     "Plan" means this 1994 Management Incentive Stock Option Plan of Western
Wireless Corporation, as it may be amended.

     "Publicly Traded" means that the Common Stock is listed on an established
stock exchange or traded on the Nasdaq Stock Market.

     "Rule 16b-3" means Rule 16b-3 under the Exchange Act or any successor to
Rule 16b-3, as in effect when discretion is being exercised with respect to the
Plan.

     "Service" means service as an Employee.

     "Share" means one share of the Common Stock, as adjusted in accordance with
Section 8 hereof.

     "Subsidiary" means a "subsidiary corporation" (other than the Company),
whether now or hereafter existing, as defined in Section 424(f) of the Code.

     3. Stock Subject to the Plan. Shares offered under the Plan shall be
authorized but unissued or reacquired Common Stock. The maximum aggregate number
of Shares issuable under the Plan shall not exceed ten million one hundred
thousand (10,100,000) Shares of the Company, subject to (i) adjustment pursuant
to Section 8 hereof, or (ii) amendment hereof approved by the shareholders of
the Company. If an outstanding Option for any reason expires or is terminated or
canceled or otherwise becomes unexercisable before being exercised in full, or
is surrendered pursuant to an Option Exchange Program, the Shares allocable to
the unexercised portion of such Option will not be charged against the
limitations of this Section and will become available for future grant or sale
under the Plan. Shares issued pursuant to the exercise of an Option that are
repurchased by the Company will not be available for subsequent Option grants
under the Plan.

     4. Administration of the Plan. The Plan shall be administered by a
Committee appointed by the Board consisting of two or more members of the Board,
which Committee shall be constituted to comply with Applicable Laws, including
Rule 16b-3, if applicable. If no such Committee is appointed, the Plan shall be
administered by the Board. The members of a Committee will serve for such term
as the Board may


                                       2


determine. From time to time, the Board may increase the size of the Committee
and appoint additional members, remove members, fill vacancies (however caused),
and remove all members of the Committee and thereafter directly administer the
Plan. Decisions of a Committee made within the discretion delegated to it by the
Board will be final and binding on all persons who have an interest in the Plan.

     (a) Administration With Respect to Directors and Officers Subject to
Section 16(b). The composition of any Committee responsible for administration
of the Plan with respect to Optionees who are subject to the trading
restrictions of Section 16(b) of the Exchange Act with respect to securities of
the Company will comply with the applicable requirements of Rule 16b-3.

     (b) Authority of the Administrator. The Administrator of the Plan will have
full authority to administer the Plan within the scope of its delegated
responsibilities, including authority to interpret and construe any relevant
provision of the Plan, to adopt such rules and regulations as it may deem
necessary, and to determine the terms and conditions of Option grants made under
the Plan (which need not be identical). Without limiting the foregoing, the
Administrator will have the authority, in its discretion:

          (i) to determine whether and to what extent Options are granted
     hereunder;

          (ii) to select the Employees to whom Options may be granted hereunder;

          (iii) to determine the number of Shares to be covered by each Option
     granted hereunder;

          (iv) to determine the Fair Market Value of the Common Stock;

          (v) to approve forms of the Option Agreement for use under the Plan;

          (vi) to determine the time period during which an Option may be
     exercised, provided that the time period for an Incentive Stock Option may
     not be more than ten (10) years;

          (vii) to determine the terms and conditions not inconsistent with
     those of the Plan, of any award of an Option granted hereunder, including,
     but not limited to, the Exercise Price; the time or times when Options may
     be exercised; all vesting provisions; any waiver of forfeiture
     restrictions; and any restriction or limitation regarding any Option or the
     Shares relating thereto, based in each case on such factors as the
     Administrator, in its sole discretion, shall determine;

          (viii) to determine whether and to what extent the Company should
     grant or permit loans or guarantee loans in connection with the grant or
     the exercise of an Option by an Optionee pursuant to Section 12 hereof;

          (ix) with the consent of the affected Optionee, to effect, at any time
     and from time to time, the cancellation of any or all outstanding Options
     under the Plan and to grant new Options in substitution therefor, in
     accordance with Section 14 hereof;

          (x) to prescribe, amend and rescind rules and regulations relating to
     the Plan;

          (xi) to modify, amend or waive the terms, conditions and restrictions
     of any outstanding Option; provided, however, no such modification,
     amendment or waiver shall, without the written consent of the Optionee,
     impair the Optionee's rights or increase the Optionee's obligations with
     respect to such Option;

          (xii) to authorize any person to execute on behalf of the Company any
     instrument required to effect the grant of an Option previously granted by
     the Administrator;

          (xiii) to institute an Option Exchange Program; and

          (xiv) to make all other determinations deemed necessary or advisable
     for administering the Plan.

     (c) Effect of Administrator's Decision. The Administrator's decisions,
determinations and interpretations shall be final and binding on all Optionees
and any other holders of Options.

     5. Eligibility. From time to time, the Administrator may, in its
discretion, select individuals from among the Employees, Directors and
Consultants of the Company or any of its Subsidiaries to receive Options under
the Plan.


                                       3



     6. Terms and Conditions of Options.

     (a) Option Agreement. Each Option granted under the Plan will be evidenced
by an Option Agreement between the Optionee and the Company. Such Options will
be subject to all applicable terms and conditions of the Plan and such
instruments may contain other terms and conditions which are not inconsistent
with the purpose of the Plan and which the Administrator deems appropriate for
inclusion in an Option Agreement. Notwithstanding the foregoing, an Option
Agreement or any other written agreement between the Company and an Optionee may
contain other terms and conditions concerning the Option (including, without
limitation, terms and conditions relating to vesting) as are mutually agreed to
by the Optionee and the Company. The provisions of the various Option Agreements
or other agreements entered into under the Plan need not be identical.

     (b) Number of Shares. Each Option Agreement shall specify the number of
Shares that are subject to the Option and shall provide for the adjustment of
such number in accordance with Section 8 hereof.

     (c) Character of Options. Each Option granted under the Plan shall be
designated in the Option Agreement as either a Nonstatutory Stock Option or an
Incentive Stock Option, as the case may be.

     (d) Exercise Price. Each Option Agreement shall specify the Exercise Price.
Subject to the discretion of the Administrator, the Exercise Price of an Option
shall be the Fair Market Value per Share on the date of grant.

     (e) Payment. The Exercise Price of each Option will be payable immediately
and in full upon exercise; provided, however, that the Administrator may, either
at the time the Option is granted or at the time it is exercised and subject to
such limitations as it may determine, authorize payment of all or a portion of
the Exercise Price in one or a combination of the following forms:

          (i) cash;

          (ii) check;

          (iii) a promissory note (but only if authorized or allowed pursuant to
     Sections 12 and 22(e) hereof);

          (iv) other Shares of Common Stock which have a Fair Market Value on
     the date of surrender equal to the aggregate Exercise Price of the Shares
     as to which the Option will be exercised;

          (v) delivery of a properly executed exercise notice together with
     irrevocable instructions to a broker to promptly deliver to the Company the
     amount of sale or loan proceeds to pay the Exercise Price;

          (vi) utilization of the cashless exercise method described in Section
     6(h) hereof; (vii) any combination of the foregoing methods of payment; or

          (viii) such other consideration and method of payment for the issuance
     of Shares to the extent permitted by Applicable Laws.

     In the event that the Company's Common Stock is Publicly Traded, unless
otherwise provided in the Option Agreement, the methods of payment set forth in
subparagraphs (iii) and (vi) above shall not be permitted hereunder.

     (f) Exercisability. Each Option Agreement shall specify the date when all
or any portion of the Option will become exercisable, any conditions which must
be satisfied before the Option may be exercised and the term of the Option.

     (g) Nontransferability of Options. An Option may not be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner other than by
will or by the laws of descent and distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.

     (h) Termination of Employment. In the event that an Optionee's employment
by the Company or a Parent or Subsidiary terminates (other than upon the
Optionee's death or Disability), or a Subsidiary ceases to be a Subsidiary (in
which event the employment of such company's employees will be deemed to be


                                       4



terminated under this Plan), the Optionee may exercise his or her Option, but
only within such applicable period of time as is set forth below, and, except as
otherwise provided by written agreement between the Optionee and the Company,
only to the extent that the Optionee was entitled to exercise it at the date of
termination (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement). If, after termination, the
Optionee does not exercise his or her Option within the applicable time period
specified below, the Option shall terminate. For purposes of this Subsection
6(h), the Optionee's employment shall not be considered to have been terminated
in the case of any leave of absence approved by the Board, including sick leave,
military leave, or any other personal leave. For Incentive Stock Options,
Optionee shall have a period of three (3) months from the date of termination of
employment. For Nonstatutory Stock Options, in the event that the Common Stock
of the Company is then Publicly Traded, Optionee shall have a period of six (6)
months and one day from the date of termination of employment, and in the event
that the Common Stock of the Company is not then Publicly Traded, Optionee shall
have a period of twelve (12) months and one day from the date of termination of
employment. During the applicable period the Optionee may either (i) exercise
his or her Option by delivery of the Exercise Price pursuant to Section 7 hereof
or, if the Common Stock of the Company is not then Publicly Traded and if
provided for in Optionee's Option Agreement, (ii) deliver the requisite Exercise
Price by utilizing a cashless election procedure at a price per share equal to
the Fair Market Value of a Share of Common Stock as of the date of termination
of employment (provided that the Administrator is not otherwise prohibited by
Company loan agreements or related contractual obligations from permitting such
cashless election procedure.) The cashless election procedure is also available
to Optionee, at anytime prior to termination of employment, if provided for as a
designated method in the Option Agreement and subject to the other terms and
conditions of the Plan and the Option Agreement. If the Company is publicly
traded, the Company, working with the brokerage firm, if any, designated by the
Company to facilitate exercises of options and sales of shares under this Plan,
may from time to time amend the procedures set forth herein and may specify
additional or different procedures for a cashless exercise for any or all
Optionees. Optionee shall be responsible for satisfying all applicable federal,
state, local and employment tax withholding requirements associated with such
exercise and must evidence the ability to satisfy such withholding requirements
prior to such exercise.

     (i) Disability of Optionee. In the event that an Optionee's employment
terminates as a result of the Optionee's Disability, the Optionee may exercise
his or her Option at any time within twelve (12) months from the date of such
termination, but, except as otherwise provided by written agreement between the
Optionee and the Company, only to the extent that the Optionee was entitled to
exercise it at the date of such termination (but in no event later than the
expiration of the term of such Option as set forth in the Option Agreement). If,
after termination of employment, the Optionee does not exercise his or her
Option within the time specified herein, the Option shall terminate.

     (j) Death of Optionee. In the event of the death of an Optionee, the Option
may be exercised at any time within twenty-four (24) months following the date
of death (but in no event later than the expiration of the term of such Option
as set forth in the Option Agreement), by the Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but,
except as otherwise provided by written agreement between the Optionee and the
Company, only to the extent that the Optionee was entitled to exercise the
Option at the date of death. If, after death, the Optionee's estate or a person
who acquired the right to exercise the Option by bequest or inheritance does not
exercise the Option within the time specified herein, the Option shall
terminate.

     7. Procedure for Exercise. Any Option granted hereunder shall be
exercisable according to the terms of the Plan and at such times and under such
conditions as determined by the Administrator and set forth in the Option
Agreement. An Option may not be exercised for a fraction of a Share.

     An Option shall be deemed exercised when the Company receives: (i) written
notice of exercise (in accordance with the Option Agreement) from the person
entitled to exercise the Option, and (ii) full payment for the Shares with
respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted in the Option Agreement and the Plan. If the Company is publicly
traded, the Company, working with the brokerage firm, if any, designated by


                                       5



the Company to facilitate exercises of options and sales of shares under this
Plan, may from time to time amend the procedures set forth herein and may
specify additional or different procedures.

     Shares issued upon exercise of an Option shall be issued in the name of the
Optionee or, if requested by the Optionee, in the name of the Optionee and his
or her spouse. Until the stock certificate evidencing such Shares is issued (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive dividends
or any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Company will issue or
cause to be issued such stock certificate promptly after the Option is
exercised. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the stock certificate is issued, except as
provided in Section 8 hereof.

     8. Adjustments.

     (a) Changes in Capitalization. In the event of a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock, or
any other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company, the number of shares
of Common Stock covered by each outstanding Option, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock. Any conversion of any convertible securities of the Company shall not be
deemed to have been "effected without receipt of consideration." Such adjustment
shall be made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an Option.

     (b) Corporate Structure. In the event of a merger, consolidation,
acquisition of property or stock, separation, reorganization or other change to
the capital or business structure of the Company (including, without limitation,
by means of an exchange offer or other transaction) (collectively, a
"Reorganization" ) the effect of which is to organize a parent company of the
Company which will own not less than 50% of the capital stock of the Company
(such parent company is hereinafter referred to as "Company Holdings" ), the
Administrator shall have the authority to effect, without the consent of the
Optionees, (x) the cancellation of all outstanding Options granted under the
Plan and substitute therefor options to purchase shares of Company Holdings
("New Options"), or (y) the assumption by Company Holdings of Options granted
under the Plan; provided, however, that (i) immediately after the Reorganization
the excess of the aggregate fair market value of all shares subject to New
Options over the aggregate option prices of all shares subject to New Options
shall equal but not be more than the excess of the aggregate fair market value
immediately preceding the Reorganization of all shares subject to Options
granted under the Plan over the aggregate option prices of all shares subject to
Options granted under the Plan, and (ii) New Options, or the assumption or
substitution of Options granted under the Plan, do not give an Optionee
additional benefits which such Optionee did not have under Options granted under
the Plan. Such a Reorganization shall not be treated as a Triggering Event or a
Change of Control (as defined in the Option Agreement, as applicable) for
purposes of the Plan and related Option Agreement. The grant of Options under
this Plan will in no way affect the right of the Company to adjust, reclassify,
reorganize, or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate, sell or transfer all or any part of its
business or assets or effect any other Reorganization.

     (c) Substitutions and Assumptions. The Board shall have the right to
substitute or assume options in connection with mergers, reorganizations,
separations, or other "corporate transactions" as that term is defined in and
said substitutions and assumptions are permitted by Section 424 of the Code (as
however amended or superseded) and the regulations promulgated thereunder. Any
shares or Options issued upon the assumption of or in substitution for
outstanding awards made by a corporation or other business entity acquired by
the Company shall not reduce the number of Shares or Options issuable under the
Plan (unless such shares or


                                       6



Options are made available to individuals who become, upon the acquisition, an
Officer or otherwise an individual subject to Section 16 of the Exchange Act).

     9. Date of Grant. Subject to applicable statutory approval, the date of the
grant of an Option shall be, for all purposes, the date on which the
Administrator makes the determination to grant such Option, or such other date
as is determined by the Administrator. Notice of the determination to grant an
Option shall be provided to the Optionee within a reasonable time after the date
of such grant.

     10. No Employment Rights. Neither the Plan nor any Option shall confer upon
any Employee any right to continue in the employ of the Company of any affiliate
or constitute a contract or agreement of employment or interfere in any way with
any right that the Company or an affiliate may have to reduce such Employee's
compensation or to terminate such Employee's employment at any time with or
without cause; however, nothing contained in the Plan or in any Option granted
under the Plan shall affect any contractual rights of an Employee pursuant to a
written employment agreement.

     11. Amendment and Termination of the Plan.

     (a) Amendment and Termination. The Board may at any time amend, alter,
suspend or terminate the Plan in whole or in part.

     (b) Shareholder Approval. The Company shall obtain shareholder approval of
any Plan amendment in such a manner and to the extent necessary and desirable to
comply with Rule 16b-3 or with Section 422 of the Code (or with any successor
rule or statute or other Applicable Law, rule or regulation including the
requirements of any exchange or quotation system on which the Common Stock is
then listed or quoted).

     (c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights or increase the
obligations of any Optionee, unless mutually agreed otherwise between the
Optionee and the Administrator, which agreement must be in writing and signed by
the Optionee and the Company.

     12. Loans. In order to assist an Optionee in the acquisition of Shares
pursuant to an Option granted under the Plan, the Administrator may authorize,
at either the time of the grant of an Option or the time of the acquisition of
Shares under the Option, (i) the extension of a loan to the Optionee by the
Company, or (ii) the guarantee by the Company of a loan obtained by the Optionee
from a third party. The terms of any loans or guarantees, including the amount,
interest rate and terms of repayment, will be subject to the discretion of the
Administrator and applicable covenants contained in Company loan agreements.
Loans and guarantees may be granted without security, the maximum credit
available being the Exercise Price of the Shares acquired plus the maximum
federal and state income and employment tax liability that may be incurred in
connection with the acquisition.

     13. Withholding.

     (a) Obligation. The Company's obligation to deliver stock certificates upon
the exercise of an Option will be subject to the Optionee's satisfaction, in the
Administrator's sole discretion, of all applicable federal, state and local
income and employment tax withholding requirements.

     (b) Payment. In the event that an Optionee is required to pay to the
Company an amount with respect to income and employment tax withholding
obligations in connection with the exercise of an Option, the Administrator may,
in its discretion and subject to such limitations and rules as it may adopt,
permit the Optionee to satisfy the obligation, in whole or in part, by
delivering shares of Common Stock already held by the Optionee or by making an
irrevocable election that a portion of the total value of the Shares subject to
the Option be paid in the form of cash in lieu of the issuance of Common Stock,
and that such cash payment be applied to the satisfaction of the withholding
obligations.

     14. Option Exchange Program. The Administrator will have the authority to
effect, at any time and from time to time, with the consent of the affected
Optionees, the cancellation of any or all outstanding Options under the Plan and
to grant in substitution therefor new Options under the Plan covering the same
or different numbers of Shares, but, in accordance with Section 6 hereof, having
an Exercise Price not less than


                                       7



one hundred percent (100%) of the Fair Market Value on the new grant date,
unless otherwise permitted by the Administrator.

     15. Compliance with Federal and State Laws. Shares will not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares shall comply with all relevant provisions
of law and the requirements of any stock exchange or quotation system upon which
the Shares may then be listed or quoted, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.

     As a condition to the grant or exercise of an Option, or to the issuance of
any Shares under any Option, the Administrator may require the Optionee to
provide such written representations, covenants, warranties and agreements
which, in the opinion of counsel for the Company, are required to comply with
applicable law or satisfy the requirements of any stock exchange or quotation
system upon which the Shares may then be listed or quoted.

     The Company undertakes to use all reasonable efforts to either register the
Shares of Common Stock issuable upon exercise of an Option or assure that an
exemption from registration is available in connection with such exercise. In
the event that the Company shall deem it necessary or desirable to register any
shares of Common Stock with respect to which the Option shall have been or may
be exercised, or to qualify any such shares for exemptions pursuant to
applicable statutes, then the Company may take such action and may require from
the Optionee such information in writing for use in any registration statement,
supplementary registration statement, prospectus, preliminary prospectus,
offering circular or any other document that is reasonably necessary for such
purpose and may require reasonable indemnity to the Company and its officers and
directors from the Optionee against all losses, claims, damage and liabilities
arising from such use of the information so furnished and caused by any untrue
statement of any material fact therein or caused by the omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they were
made.

     16. Reservation of Shares. During the term of this Plan, the Company will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

     17. Grants Exceeding Allotted Shares. If the Optioned Stock covered by an
Option exceeds, as of the date of grant, the number of Shares which may be
issued under the Plan without additional shareholder approval, such Option shall
be void with respect to such excess Optioned Stock, unless approved by the Board
and shareholder approval of an amendment sufficiently increasing the number of
Shares subject to the Plan is timely obtained in accordance with Section 11
hereof.

     18. Effective Date; Shareholder Approval; Term of Plan. The effective date
of the Plan shall be the date of its adoption by the Board, subject to approval
by the shareholders of the Company within 12 months after the effective date if
required under Applicable Laws. Such shareholder approval shall be obtained in
the manner and to the degree required under applicable federal and state law.
Options may be granted by the Administrator as provided herein subject to such
subsequent shareholder approval. The Plan shall continue for a term of ten (10)
years from the date of original approval by the Board unless terminated earlier
under Section 11 hereof.

     19. Rule 16b-3. Notwithstanding any provision of the Plan, the Plan shall
always be administered, and Options shall always be granted and exercised, in
such a manner as to conform to the provisions of Rules 16b-3, unless the
Administrator determines that Rule 16b-3 is not applicable to the Plan.

     20. Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the state of Washington.

     21. Use of Proceeds. All cash proceeds to the Company under the Plan shall
constitute general funds of the Company.

     22. Terms Applicable to Incentive Stock Options Only. In addition to, and
notwithstanding, the other provisions hereof that apply to all Options granted
pursuant to this Plan, the following paragraphs shall apply to any options
granted under this Plan which are Incentive Stock Options.


                                       8



     (a) Conformance with the Code:

          Options granted under this Plan which are "Incentive Stock Options"
     shall conform to, be governed by, and be interpreted in accordance with
     Section 422 of the Code and any regulations promulgated thereunder and
     amendments to the Code and Regulations. Only Employees may be granted
     Incentive Stock Options hereunder.

     (b) Option Price:

          The option or purchase price of each Share optioned under the
     Incentive Stock Option provisions of this Plan shall be determined by the
     Board at the time of the action for the granting of the option but shall
     not, in any event, be less than the Fair Market Value of the Company's
     common stock on the date of grant.

     (c) Limitation on Amount of Incentive Stock Option:

          The aggregate Fair Market Value of the Incentive Stock Options
     (determined on the date of grant) with respect to which an employee has the
     right to purchase vesting in any one calendar year (under all Plans of the
     Company, its Subsidiaries, and any parent corporation) shall not exceed
     $100,000.

     (d) Limitation on Grants to Substantial Shareholders:

          An Employee may not, immediately prior to the grant of an Incentive
     Stock Option hereunder, own stock in the Company representing more than ten
     percent (10%) of the total combined voting power of all classes of stock of
     the Company unless the per share option price specified by the Board for
     the Incentive Stock Options granted such an Employee is at least one
     hundred ten percent (110%) of the Fair Market Value of the Company's stock
     on the date of grant and such option, by its terms, is not exercisable
     after the expiration of five (5) years from the date such option is
     granted.

     (e) Method of Exercise of Option:

          The amount to be paid by the Optionee upon exercise of an Incentive
     Stock Option shall be the full purchase price thereof provided in the
     option.


                                       9

EX-10.3

May 7, 2002

Eric Hertz

Dear Eric:

This letter (the "Letter Agreement") sets forth the terms of your employment
with Western Wireless Corporation ("WWC"), effective May 10, 2002 (or date of
execution).

     1.  ROLE: Your title will be Chief Operating Officer. In that capacity you
         will report to the Chief Executive Officer of WWC (the "CEO").

     2.  RESPONSIBILITIES: Your responsibilities will include supervision of all
         operating functions of WWC including sales and marketing, customer
         service, information technology and engineering together with such
         other duties as may be assigned to you by the CEO. You will devote
         substantially all of your business time and attention to the
         obligations delineated in this Letter Agreement.

     3.  CASH COMPENSATION: Your base compensation will be $325,000, payable in
         accordance with standard payroll practices of WWC. In addition, you
         will have an opportunity, as determined by WWC, to earn a performance
         bonus targeted at $225,000 per year, to be paid annually at yearend.
         The bonus will be based on a formula based on growth, cash flow and
         leadership. Your first year's bonus will be prorated for your start
         date. It is understood that nothing contained herein will prevent WWC,
         in its sole and absolute discretion, from, at any time, increasing your
         compensation, either permanently or for a limited period, whether in
         base compensation, by bonus or otherwise, if WWC in its sole
         discretion, shall deem it advisable to do so in order to recognize and
         fairly compensate you for the value of your services to WWC; provided,
         however, that nothing contained in this paragraph three shall in any
         manner obligate WWC to make any such increase or provide any such
         additional compensation or benefits.

     4.  STOCK OPTIONS: You will receive an option to purchase 100,000 shares of
         WWC's common stock at an exercise price per share as of the closing
         price of the stock on your acceptance of this offer or other mutually
         agreed upon date. Your options will have a 4-year vesting and shall
         contain Change of Control protection consistent with other officers of
         WWC. You will be eligible to continue, during the course of your
         employment, to participate in the option program at a level to be
         determined by the CEO and the Compensation Committee.

     5.  RESTRICTED STOCK GRANT: You will receive a restricted stock grant of
         35,000 shares and a cash tax gross up upon your start. The shares will
         be fully vested when granted but subject to forfeiture if you terminate
         your employment voluntarily without Cause or your employment is
         terminated by WWC with Cause prior to your one year anniversary with
         WWC. This forfeiture restriction will terminate if there is a Change of
         Control of WWC. For the purposes of this Letter Agreement, "Change of
         Control" shall be as defined in the WWC Stock Option Agreement.

     6.  RELOCATION: We will pay you a flat payment of $200,000, which is
         intended to cover your costs of relocation including moving your
         belongings, vehicles and animals, the costs associated with buying and
         selling houses and any other costs associated with the move. This
         payment is intended to cover all costs of relocation except that it is
         understood that the company will separately reimburse you for the cost
         of travel to and from Seattle prior to your relocation, the cost of
         temporary housing in the Seattle area and the cost of house hunting
         trips for your family to come to the Seattle area.

     7.  BENEFITS: You will also be eligible to participate in the WWC's
         Employee Benefit Programs upon eligibility, which includes a group
         health insurance program; life insurance and 401(k) plan with matching.




Page 2



         You will be entitled to four weeks of vacation annually.

     8.  EXPENSES: WWC will reimburse you for all reasonable out-of-pocket
         business expenses paid or incurred by you in connection with the
         performance of your duties, upon submission of signed, itemized lists
         of such expenses on general forms established for that purpose by WWC.

     9.  INDEMNIFICATION: WWC will enter into an Indemnification Agreement with
         you pursuant to which WWC will agree to indemnify you against certain
         liabilities arising by reason of your affiliation with WWC.

     10. NON-DISCLOSURE: You agree not to disclose at any time, whether during
         the term of this Letter Agreement or thereafter, any secret or
         confidential information relating to WWC's or any of its subsidiaries'
         businesses, financial condition or prospects, which information you
         have obtained while employed by WWC or by any of its subsidiaries or
         any of the predecessors in interest of any of them, except (i) as may
         be required in furtherance of the businesses of WWC or of any of its
         subsidiaries, (ii) with WWC's express prior written consent, (iii) if
         such information is made generally available to the public through no
         fault of yours, or (iv) if such disclosure is required by applicable
         law or regulation or by legal process and then only with prompt written
         notice to WWC in advance of any such disclosure.

     11. NON-COMPETE: You agree that, during the term of your employment by WWC
         and for a period of one (1) year immediately following the termination
         of your employment with WWC for any reason whatsoever, you will not,
         either directly or indirectly, for compensation or any other
         consideration, individually or as an employee, broker, agent,
         consultant, lender, contractor, advisor, solicitor, stockholder
         (provided that ownership of 5% or less of the outstanding stock of any
         corporation listed on a national securities exchange is not
         prohibited), proprietor, partner, or person having any other material
         economic interest in, affiliated with or rendering services to any
         other entity, engage in or provide services to or for a business that
         is substantially the same as or similar to WWC's or its subsidiaries
         businesses and which competes within the applicable commercial mobile
         radio services markets serviced by WWC or its subsidiaries, directly or
         indirectly.

     12. EMPLOYMENT AT WILL: Notwithstanding any other provision of this Letter
         Agreement, your employment by WWC may be terminated by WWC at any time,
         with or without Cause, as defined below. In the event of a termination
         for Cause you will have no rights to severance payments. Termination
         for "Cause" means (i) your gross neglect or willful material breach of
         your principal employment responsibilities or duties, (ii) a final
         judicial adjudication that you are guilty of a felony, (iii) fraudulent
         conduct as determined by a court of competent jurisdiction in the
         course of your employment with WWC or any of its subsidiaries, (iv) the
         breach by you of the covenant set forth in paragraph nine, below, or
         (v) the material breach by you of any other provision of this Letter
         Agreement which continues uncured for a period of thirty (30) days
         after notice thereof by WWC. In the event of your voluntary termination
         of employment with WWC, you will have no rights to severance benefits.

         In the event of an involuntary termination for other than Cause (which
         shall include your resignation as a direct result of (i) a reduction in
         your base compensation and/or incentive bonus target percentage, or
         (ii) the material breach by the Company of any provision of this Letter
         Agreement which continues uncured for a period of thirty (30) days
         after notice thereof by you), then (A) you will be entitled to receive
         a severance payment in an amount equal to your accrued but unpaid
         existing annual targeted incentive bonus through the date of
         termination, twelve (12) months of your then base compensation and an
         amount equal to twelve (12) months of your existing annual targeted
         incentive bonus; (B) WWC will, at its expense, make all COBRA benefit
         payments on behalf of you and your dependents for twelve (12) months
         following such involuntary termination; and (C) with respect to any
         stock options previously granted to you by WWC which remain unvested at
         the time of the involuntary termination, notwithstanding the vesting
         language in the stock option agreement pursuant to which such options
         were granted, there shall be immediate vesting




Page 3



         of that portion of each such grant of unvested stock options as equals
         the product of the total number of such options under such grant which
         remain unvested multiplied by a fraction the numerator of which is the
         sum of (i) the number of days from the date on which the last vesting
         of options under such grant took place to and including the date on
         which the termination occurs plus (ii) 365 and the denominator of which
         is the number of days remaining from the date on which the last vesting
         of options under such grant took place to and including the date on
         which the final vesting under such grant would have occurred.

         Your death or permanent disability will be deemed an involuntary
         termination for other than Cause. "Permanent disability" shall mean
         your inability substantially to render the services required hereunder
         for eight (8) months in any eighteen (18) month period because of a
         physical or mental condition, it being understood that until you have
         received notice from WWC terminating this Letter Agreement, you will
         continue to receive your base compensation and all other benefits to
         which you are entitled under this Letter Agreement.

         You agree that upon termination of your employment by WWC for any
         reason you will surrender to WWC all proprietary records, lists and
         other documents obtained by you or entrusted to you during the course
         of your employment by WWC, together with all copies of all such
         documents. This Letter Agreement contains the entire agreement between
         you and WWC with respect to your employment by WWC, other than human
         resource and corporate policies, which are to be executed by all
         employees. This Letter Agreement may not be amended, waived, changed,
         modified or discharged except by an instrument in writing executed by
         or on behalf of you and WWC.

     13. NOTICES: All notices, requests, demands and other communications with
         respect to this Letter Agreement will be in writing and will be deemed
         to have been duly given if delivered by hand, registered or certified
         mail (first class postage and fees prepaid, return receipt requested),
         telecopier or overnight courier guaranteeing next-day delivery, as
         follows:

         Western Wireless Corporation
         3650 - 131st Avenue SE, #400
         Bellevue, Washington 98006
         Attention:  General Counsel
         Telecopy:  (425) 586-8102

         Eric Hertz

         and to such other persons as either you or WWC has specified in writing
         to the other by notice as aforesaid.

     14. ENFORCEMENT: If any part of this Letter Agreement is hereafter
         construed to be invalid or unenforceable in any jurisdiction, the same
         will not affect the remainder of the Letter Agreement or the
         enforceability of such part in any other jurisdiction, which will be
         given full effect, without regard to the invalid portions or the
         enforceability in such other jurisdiction. If any part of this Letter
         Agreement is held to be unenforceable because of the scope thereof, you
         and WWC agree that the court making such determination will have the
         power to reduce the duration and/or area of such provision and, in its
         reduced form, said provision shall be enforceable; provided, however,
         that such court's determination will not affect the enforceability of
         this Letter Agreement in any other jurisdiction beyond such court's
         authority.

     15. JURISDICTION: This Letter Agreement will be governed by and construed
         and interpreted in accordance with the laws of the State of Washington
         without reference to conflicts of laws principles.




Page 4



Please signify your acceptance of the terms of this Letter Agreement by signing
where indicated below.

                                            Sincerely yours,

                                            WESTERN WIRELESS CORPORATION



                                            By:
                                               ---------------------------------
                                                    John W. Stanton
                                                    Chief Executive Officer
AGREED TO AND ACCEPTED:



- ---------------------------------
Eric Hertz