ADDENDUM XII
TO
SPRINT PCS MANAGEMENT AGREEMENT AND
SPRINT PCS SERVICES AGREEMENT
AMENDING THESE AGREEMENTS FURTHER AND RESTATING CERTAIN PARAGRAPHS IN
ADDENDA I THROUGH XI
DATED JUNE 14, 2004
MANAGER: TEXAS TELECOMMUNICATIONS, LP
SERVICE AREA BTAS: ABILENE, TX # 3
ALBUQUERQUE, NM # 8
AMARILLO, TX # 13
CARLSBAD, NM # 68
EAGLE PASS, TX #121
EL PASO, TX # 128
FARMINGTON, NM-DURANGO, CO # 139
FLAGSTAFF, AZ # 144
GALLUP, NM # 162
GRAND JUNCTION, CO # 168
LAREDO, TX #242
LAS CRUCES, NM # 244
LUBBOCK, TX # 264
MIDLAND, TX # 296
ODESSA, TX # 327
PHOENIX, AZ # 347 (NAVAJO COUNTY, AZ)
PRESCOTT, AZ # 362
PUEBLO, CO # 366
ROSWELL, NM #386
SAN ANGELO, TX # 400
SANTA FE, NM # 407
EXPANSION SERVICE AREA BTAS:
BIG SPRING, TX # 40
CLOVIS, NM #87
COLORADO SPRINGS, CO # 89 (PORTION OF EL PASO COUNTY)
EL CENTRO-CALEXICO, CA # 124
HOBBS, NM # 191
LAS VEGAS, AZ # 245 (PORTION OF MOHAVE COUNTY)
PHOENIX, AZ # 347 (PORTION OF MARICOPA AND PINAL COUNTY)
SAN DIEGO, CA # 402 (PORTION OF SAN DIEGO COUNTY)
SIERRA VISTA-DOUGLAS, AZ # 420
TUCSON, AZ # 447 (PORTION OF PIMA COUNTY)
YUMA, AZ # 486
This Addendum XII (this "ADDENDUM") contains amendments to the Sprint PCS
Management Agreement, the Sprint PCS Services Agreement, the Sprint Trademark
and Service Mark License Agreement and the Sprint Spectrum Trademark and Service
Mark License Agreement, each of which was entered into on December 23, 1999 by
the same parties to this Addendum.
The Management Agreement, Services Agreement and Trademark License
Agreements were amended by:
(1) Addendum I dated December 23, 1999,
(2) Addendum II dated February 3, 2000,
(3) Addendum III dated April 25, 2000,
(4) Addendum IV dated June 23, 2000,
(5) Addendum V dated January 31, 2001,
(6) Addendum VI dated February 14, 2001,
(7) Addendum VII dated March 30, 2001,
(8) Addendum VIII dated July 19, 2002,
(9) Addendum IX dated November 29, 2002,
(10) Addendum X dated September 12, 2003, and
(11) Addendum XI dated March 26, 2004.
The purposes of this Addendum are to (1) amend the Management Agreement,
the Services Agreement, the Trademark License Agreements and the Schedule of
Definitions and restate those paragraphs in the addenda executed previously that
amend the Management Agreement, the Services Agreement, the Trademark License
Agreements and the Schedule of Definitions (see section A below), and (2)
provide cross-references to those paragraphs in addenda executed previously that
are not restated in this Addendum (see section B below).
The terms and provisions of this Addendum control over any conflicting
terms and provisions contained in the Management Agreement, the Services
Agreement, the Trademark License Agreements and the Schedule of Definitions. The
Management Agreement, the Services Agreement, the Trademark Licenses Agreements,
the Schedule of Definitions and all prior addenda continue in full force and
effect, except for express modifications made in this Addendum. This Addendum
does not change the effective date of any prior amendment made to the Management
Agreement, the Services Agreement, the Trademark License Agreements or the
Schedule of Definitions through previously executed addenda.
Capitalized terms used and not otherwise defined in this Addendum have the
meaning ascribed to them in the Schedule of Definitions or in prior addenda.
Section and Exhibit references are to sections and Exhibits of the Management
Agreement unless otherwise noted.
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The parties entered into Addendum XI dated March 26, 2004, but the parties
acknowledge that Addendum XI is superseded in its entirety by this Addendum. The
parties are executing this Addendum as of the date noted above, but this
Addendum becomes effective on (the "EFFECTIVE DATE") either (1) March 1, 2004,
if the parties execute all of the following addenda by June 14, 2004:
o Alamosa Missouri, LLC Addendum XII,
o Alamosa Wisconsin Limited Partnership Addendum XI,
o Southwest PCS, L.P. Addendum VII,
o Texas Telecommunications, LP Addendum XII, and
o Washington Oregon Wireless LLC Addendum VIII.
or (2) the first calendar day of the first calendar month after the above
addenda are executed if the parties execute the above addenda after June 14,
2004.
On the Effective Date the Management Agreement, the Services Agreement, the
Trademark License Agreements and the Schedule of Definitions are amended and
restated as follows:
A. NEW AMENDMENTS AND RESTATEMENT OF PREVIOUS AMENDMENTS TO SPRINT PCS
AGREEMENTS.
MANAGEMENT AGREEMENT
1. VENDOR PURCHASE AGREEMENTS - SOFTWARE FEES [ADDM XI,SS.1; REVISED BY
THIS ADDENDUM]. Section 1.3 is amended to read as follows:
Insert: "1.3.1 DISCOUNTED VOLUME-BASED PRICING." before the first
paragraph.
Insert: "1.3.2 SUBSCRIBER AND INFRASTRUCTURE EQUIPMENT." before the
second paragraph.
Insert: "1.3.3 EXCLUSIVE USE." before the third paragraph.
Add a new section 1.3.4 as follows:
1.3.4 SOFTWARE FEES.
(a) Manager acknowledges that Sprint PCS administers the testing and
implementation of the Software (i.e., pushing of the Software) into the
Service Area Network.
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(b) Sprint PCS, when obtaining software for its own use that is
identical to the Software, will use commercially reasonable efforts to
obtain a license from vendors providing for the right of Manager to use the
Software in connection with telecommunications equipment manufactured by
the vendor (collectively the software obtained by Sprint PCS for its own
use and the Software that operates on telecommunications equipment
manufactured by the vendor are for purposes of this section 1.3.4, the
"VENDOR SOFTWARE"; when the term "Vendor Software" is used with respect to
Manager, it means only the Software, and not the software used only by
Sprint PCS).
(c) Manager will arrange independently with the vendor to obtain a
license if Sprint PCS cannot reasonably obtain a license for Manager. Any
license that Manager obtains from a vendor must require the Vendor Software
to be tested in Sprint PCS test beds by Sprint PCS and require Sprint PCS,
not the vendor or Manager, to push the Vendor Software to the Service Area
Network unless Sprint PCS otherwise consents in advance in writing. Sprint
PCS agrees to test the Vendor Software in Sprint PCS test beds within a
reasonable period after Manager reasonably requests the tests in writing.
(d) Sprint PCS will:
(i) notify Manager in writing at least 60 days before the
date of an automatic renewal of, or Sprint PCS' unilateral act to
renew or extend, an agreement that provides Sprint PCS the right
to use the Vendor Software, or
(ii) use reasonable efforts to notify Manager in writing
before the date Sprint PCS intends to start negotiations with a
vendor regarding extension, renewal, pricing or other material
terms relating to Sprint PCS' and Manager's right to use the
Vendor Software (whether for new Software or renewal of an
existing license), and at least 60 days before the date Sprint
PCS executes an agreement, extension or renewal.
The notice by Sprint PCS will include the material terms and
conditions of any such agreement or negotiations to the extent known at the
time of the notice, including the network elements to be covered by the
right to use the Vendor Software. Manager must notify Sprint PCS in writing
within 30 days after receiving the notice described in the first sentence
of this section 1.3.4(d) if Manager wants Sprint PCS to attempt to obtain
or continue the right for Manager to use the Vendor Software. Sprint PCS
will renew or negotiate the agreement as if Manager will not be a user of
the Vendor Software if Manager does not provide notice to Sprint PCS within
the 30-day period. However, Sprint PCS may obtain pricing from the vendor
for the Vendor Software that includes Manager as a user if obtaining the
pricing does not obligate Manager to be a user.
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Sprint PCS will advise Manager upon Manager's reasonable request of
the status of the Software negotiations if Manager requested Sprint PCS to
obtain or continue the right for Manager to use the Vendor Software under
Sprint PCS' agreement with the vendor. Sprint PCS will use commercially
reasonable efforts to give Manager notice of the final pricing for the
right to use the Vendor Software no less than 20 days before the expected
execution or renewal of the agreement; provided that, in any event, Sprint
PCS will give Manager notice of the final pricing no less than 3 Business
Days before the expected execution or renewal of the agreement. If
necessary, Manager agrees to use commercially reasonable efforts to enter
into a nondisclosure agreement with the vendor to facilitate providing such
final pricing to Manager.
Manager may give Sprint PCS notice by the time set forth in Sprint
PCS' notice to Manager (which time will not be less than 10 Business Days)
that Manager does not intend to use the Vendor Software through the
agreement between Sprint PCS and the vendor. If Manager does not give this
final notice to Sprint PCS, Manager is deemed to agree to be a user of the
Vendor Software through the agreement between Sprint PCS and the vendor and
will pay the Allocable Software Fee (as defined below). Within 15 Business
Days after execution of an agreement between Sprint PCS and the vendor,
Sprint PCS will provide to Manager a forecast of Manager's Allocable
Software Fee, the estimated payment due dates relating to the Allocable
Software Fee, and the proportion of Manager's Allocable Software Fee
forecast to be due on each payment due date.
Sprint PCS does not have to obtain a license for Vendor Software for
Manager, even if Manager requests Sprint PCS to obtain such license, if at
any time before execution of the agreements granting the license Sprint PCS
reasonably believes that Manager is more likely than not to unreasonably
refuse to pay the Allocable Software Fee or Sprint PCS reasonably believes
that the Manager is in such financial condition that Manager is more likely
than not to be unable to pay the Allocable Software Fee.
If Manager accepts the Vendor Software, Sprint will give Manager,
Manager's proportional share of (i) any cash benefits relating specifically
to the Vendor Software that Sprint PCS obtains from the vendor, and (ii) to
the extent reasonably able to be made available to Manager, other benefits,
including training, relating specifically to the Vendor Software.
(e) Sprint PCS will pay all Software Fees relating to the Vendor
Software to the vendor if Sprint PCS obtains a license from the vendor that
provides Manager the right to use the Vendor Software and Manager agrees to
pay any applicable Allocable Software Fee in accordance with this section
1.3.4(e). Manager will be deemed to agree to pay any applicable Allocable
Software Fee if both:
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(i) Manager has not taken the action described in paragraph (d)
above to decline obtaining the right to use the Vendor Software
through the agreement between Sprint PCS and the vendor, and
(ii) Sprint PCS obtains a license providing for the right of
Manager to use the Vendor Software.
Manager will pay Sprint PCS the Allocable Software Fee within 30 days
after receipt of an invoice. Sprint PCS will invoice Manager only after
Sprint PCS pays the underlying Software Fee to the vendor. The Allocable
Software Fee will not include any amount for Software that is the same as
or functionally equivalent to any Software (y) that is a component of any
service for which a fee is charged under the Services Agreement or (z) for
which Sprint PCS otherwise charges Manager under this agreement.
Sprint PCS will calculate the "ALLOCABLE SOFTWARE FEE" as follows:
For each vendor, multiply:
(i) the Total Software Cost of the Software Fees
attributable to the Vendor Software for which Sprint PCS has
obtained for itself, Manager and Other Managers a license or
other right to use, by
(ii) the quotient of:
(A) the number of Customers and Reseller Customers with
an NPA-NXX assigned to the Service Area that are assigned to
a system using the Vendor Software, as reported in the most
recent monthly report that Sprint PCS issues before the date
that Sprint PCS prepares an Allocable Software Fee invoice,
divided by:
(B) the number of Customers and Reseller Customers that
are assigned to all systems using the Vendor Software, as
reported in the most recent monthly report that Sprint PCS
issues before the date that Sprint PCS prepares an Allocable
Software Fee invoice.
(f) Sprint PCS will include with the invoice for the Allocable
Software Fee a list of the component charges, if available from the Vendor.
The Software Fees that Sprint PCS pays to the vendor will reflect rates no
greater than commercial rates negotiated at arms' length. For purposes of
clarification, the parties acknowledge the vendor may insist on a
comprehensive fee without listing
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each component, but rather asserting that the fee covers all software
necessary to operate the equipment. But Sprint PCS will provide to Manager
a description of all the features and functionality in reasonable detail
for all Software for which Manager is to pay an Allocable Software Fee.
(g) Manager will not be charged the Allocable Software Fee for the
Vendor Software after Manager:
(i) notifies Sprint PCS in writing within the periods allowed in
section 1.3.4(d) that Manager declines to have Sprint PCS obtain a
right for Manager to use the Vendor Software or that it does not
intend to use the Vendor Software,
(ii) obtains its own license providing for Manager's right to use
the Vendor Software, and
(iii) complies with the requirements of section 1.3.4(h).
(h) Manager will obtain its own license providing for Manager's right
to use the Vendor Software from the vendor if Manager elects not to have
Sprint PCS attempt to obtain a right for Manager to use the Vendor Software
under section 1.3.4(d). Manager will notify Sprint PCS in writing and
deliver to Sprint PCS within 10 Business Days after Manager's execution of
Manager's separate license, a signed document from the vendor confirming
that:
(i) the vendor has provided Manager a separate license for the
necessary software and the term of that license, which term with
appropriate renewal rights, must be at least as long as the license
Sprint PCS has from the vendor,
(ii) the fees paid by Manager to the vendor reflect commercial
rates negotiated at arms' length,
(iii) the Vendor Software covered by Manager's license provides
the usage and functionality necessary for Manager to operate the
Service Area Network in compliance with the Sprint PCS Technical
Program Requirements, and
(iv) the Vendor Software may be tested in Sprint PCS test beds by
Sprint PCS and will be pushed to the Service Area Network by Sprint
PCS, not the vendor or Manager, unless Sprint PCS otherwise consents
in advance in writing. Sprint PCS agrees to test the Vendor Software
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in Sprint PCS test beds within a reasonable period after Manager
reasonably requests in writing.
2. INTERCONNECTION [ADDM XI,SS.2]. Section 1.4 is amended and restated in
its entirety to read as follows:
If Manager desires to interconnect a portion of the Service Area
Network with another carrier and Sprint PCS can interconnect with that
carrier at a lower rate, then to the extent that applicable laws, tariffs
and agreements permit, Sprint PCS will use commercially reasonable efforts
to arrange for the interconnection under its agreements with the carrier
within a commercially reasonable period. Sprint PCS will bill the
interconnection fees to Manager at actual cost.
3. FORECASTING [ADDM XI,SS.3]. Section 1.6 is amended and restated in its
entirety to read as follows:
1.6 FORECASTING. Manager and Sprint PCS will work cooperatively to
generate mutually acceptable forecasts of important business metrics that
they agree upon. The forecasts are for planning purposes only and do not
constitute either party's obligation to meet the quantities forecast.
4. FINANCING PLAN [ADDM I,SS.5 AND ADDM XI,SS.4; REVISED BY THIS ADDENDUM].
(a) Section 1.7 is amended to read as follows:
1.7 FINANCING. The construction and operation of the Service Area
Network requires a substantial financial commitment by Manager. The manner
in which Manager will finance the build-out of the Service Area Network and
provide the necessary working capital to operate the business is described
in detail on Exhibit 1.7. Manager will allow Sprint PCS an opportunity to
review before filing any registration statement or prospectus or any
amendment or supplement thereto and before distributing any offering
memorandum or amendment or supplement thereto, and agrees not to file or
distribute any such document if Sprint PCS reasonably objects in writing on
a timely basis to any portion of the document that refers to Sprint PCS,
its Related Parties, their respective businesses, this agreement or the
Services Agreement.
(b) Section 5(b) of Addendum I is deleted.
(c) Exhibit 1.7 attached to Addendum XI replaces Exhibit 1.7 attached
to Addendum VII.
5. INFORMATION [ADDM XI,SS.5]. A new section 1.9 is added to the Management
Agreement.
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1.9 ACCESS TO INFORMATION.
1.9.1 NETWORK OPERATIONS.Manager and Sprint PCS will have access
to, and may monitor, record or otherwise receive, information
processed through equipment, including switches, packet data switching
nodes and cell site equipment, that relates to the provision of Sprint
PCS Products and Services or to the provision of telecommunications
services to Reseller Customers in the Service Area Network, if the
access, monitoring, recording or receipt of the information is
accomplished in a manner that:
(i) Does not unreasonably impede Manager or Sprint PCS from
accessing, monitoring, recording or receiving the information,
(ii) Does not unreasonably encumber Manager's or Sprint PCS'
operations (including, without limitation, Sprint PCS' real-time
monitoring of the Sprint PCS Network status, including the
Service Area Network),
(iii) Does not unreasonably threaten the security of the
Sprint PCS Network,
(iv) Does not violate any law regarding the information,
(v) Complies with technical requirements applicable to the
Service Area Network,
(vi) Does not adversely affect any warranty benefiting
Manager or Sprint PCS (e.g., software warranties), and
(vii) With respect to the information processed through
Manager's equipment, including its switches, does not result in a
material breach of any agreement regarding the information (e.g.,
national security agreements).
Sprint PCS and Manager will immediately notify the other party and
reasonably cooperate to establish new procedures for allowing both Manager
and Sprint PCS to access, monitor, record and receive the information in a
manner that meets the criteria in clauses (i) through (vii) above if either
Manager or Sprint PCS reasonably determines that the other party is
accessing, monitoring, recording or receiving the information described in
this section 1.9.1 in a manner that does not meet the criteria in clauses
(i) through (vii) above.
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Manager owns the information regarding the performance of its
equipment. Each of Manager and Sprint PCS may use the information obtained
under this section 1.9.1 for any reasonable internal business purpose,
during the term of and after termination of this agreement, the Services
Agreement and the Trademark License Agreements, so long as the use would be
in accordance with those agreements if those agreements were still in
effect.
1.9.2 CUSTOMER INFORMATION. Manager is entitled to receive information
Sprint PCS accesses, monitors, records or receives concerning the Service
Area Network or the Customers with NPA-NXXs assigned to Manager's Service
Area, subject to the terms of this section 1.9.2 and section 1.9.3 and
Manager's compliance with CPNI requirements and any other legal
requirements applicable to the information.
Sprint PCS will provide the information in the format that Manager
requests at no additional charge to Manager if Sprint PCS accesses,
monitors, records, receives or reports for its own use the information
specific to Manager that Manager requests in the same format as Manager
requests. Sprint PCS will use commercially reasonable efforts to provide
the information within 5 Business Days.
Sprint PCS will provide the information in the format that Manager
requests if Sprint PCS accesses, monitors, records, receives or reports for
its own use the information that Manager requests, but not in the same
format that Manager requests, if Manager agrees to pay or reimburse Sprint
PCS for the costs Sprint PCS reasonably incurs. Sprint PCS will use
commercially reasonable efforts to provide the requested information within
15 Business Days.
If Sprint PCS accesses, monitors, records or receives the information
requested by Manager, but not in the same format that Manager requests,
then Sprint PCS will provide the requested information as raw data, if:
(i) Sprint PCS chooses not to provide the information as
described in the preceding paragraph, and
(ii) Manager agrees to pay or reimburse Sprint PCS for the costs
Sprint PCS reasonably incurs.
Sprint PCS will use commercially reasonable efforts to provide the raw
data within 15 Business Days.
Sprint PCS owns the information regarding the Customers. Each of
Manager and Sprint PCS may use the information obtained under
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this section 1.9.2 during the term of and after termination of this
agreement, the Services Agreement and the Trademark License Agreements so
long as the use would be in accordance with those agreements if those
agreements were still in effect.
1.9.3 LIMITATIONS AND OBLIGATIONS. Sprint PCS does not have to provide
any information that Manager reasonably requests under this agreement or
the Services Agreement that:
(i) Manager can obtain itself in accordance with section 1.9.1
(if Sprint PCS has provided Manager with any necessary specifications
requested by Manager as to how to obtain the information), unless
Sprint PCS already has the information in its possession and has not
previously delivered it to Manager,
(ii) Sprint PCS no longer maintains,
(iii) Manager has already received from Sprint PCS or its Related
Parties,
(iv) Sprint PCS does not access, monitor, record, receive or
report, or
(v) Sprint PCS must make system modifications to provide the raw
data, including without limitation modifying or adding data fields or
modifying code.
Sprint PCS will provide Manager a copy of the then-current Sprint PCS
document retention policy from time to time upon reasonable request.
1.9.4 CONTRACTS. Sprint PCS will disclose to Manager the relevant
terms and conditions of any agreement between Sprint PCS and any third
party:
(i) with which Manager must comply, directly or indirectly, under
the Management Agreement, the Services Agreement or any Program
Requirement,
(ii) from which Manager is entitled to any benefit, or
(iii) that relate to any pass-through amounts that Sprint PCS
charges Manager under this agreement or Settled-Separately Manager
Expenses under the Services Agreement.
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In each case Sprint PCS' disclosure will be in sufficient detail to enable
Manager to determine the obligations or benefits with which Manager must
comply or benefit or the charges or expenses to be paid by Manager. Sprint
PCS may provide to Manager copies of the agreements or the relevant terms
and conditions of such agreements in electronic format upon notice to
Manager, including by posting the copies or relevant terms and conditions
to a secure website to which Manager has access. Once each calendar year
and from time to time when a change is effected to any relevant term or
condition, Manager may request copies of the agreements that are not posted
to the secure website or whose relevant terms and conditions are not posted
to the secure website.
Sprint PCS will provide a copy of the agreement to Manager to the extent
permissible by the terms of the agreement. Sprint PCS will allow Manager or
its representatives to review a copy of the agreement to the extent
permissible by the agreement if the agreement prohibits Sprint PCS from
providing Manager a copy. Sprint PCS will satisfy the requirements of this
section 1.9.4 if it chooses to provide a copy of the agreement in
electronic form on a server that Sprint PCS designates. Sprint PCS will use
commercially reasonable efforts to obtain the right from the third party,
if required, to provide a complete copy to Manager of any agreement between
Sprint PCS and any third party of the type described in this section 1.9.4.
6. MOST FAVORED NATION [ADDM XI,SS.6; REVISED BY THIS ADDENDUM]. A new
section 1.10 is added to the Management Agreement:
1.10 SUBSEQUENT AMENDMENTS TO OTHER MANAGERS' MANAGEMENT AGREEMENTS
AND SERVICES AGREEMENTS. Manager has the right to amend the terms in its
Management Agreement and Services Agreement as described in this section
1.10 if during the period beginning on the date of this Addendum and ending
December 31, 2006, any of the terms of a 3M-pops Manager's Management
Agreement or Services Agreement are amended in any manner for any reason to
be more favorable to the 3M-pops Manager than the terms of Manager's
Management Agreement or Services Agreement are to Manager, subject to the
following:
(a) All of the Alamosa Managers must elect to accept all, but not
less than all, of the terms of the 3M-pops Manager's Management
Agreement and Services Agreement agreed to since the Effective Date
(including accepting existing terms that relate to the changes or
terms that were previously changed and not previously accepted by
Manager but that remain a part of the latest version of the 3M-pops
Manager's agreement) (collectively, but excluding the changes
described in paragraphs (b) and (c) below, the "OVERALL CHANGES"),
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(b) Manager will not be required to accept any changes involving
payment of specific disputed amounts arising under the Management
Agreement or Services Agreement of the 3M-pops Manager, and
(c) No amendments in Manager's Management Agreement and Services
Agreement will be made to reflect changes made in a 3M-pops Manager's
Management Agreement and Services Agreement if such changes are:
(i) made solely because the 3M-pops Manager owns spectrum on
which all or a portion of its network operates, unless the
3M-pops Manager acquired this spectrum from Sprint PCS or its
Related Parties after the Effective Date, or
(ii) compelled by a law, rule or regulation that applies to
the 3M-pops Manager, but not to Manager, or
(iii) made solely to modify the build-out plan.
Sprint PCS will prepare and deliver to Manager either an addendum
containing the Overall Changes that have been made to the 3M-pops Manager's
agreements in all of its addenda or copies of the 3M-pops Manager's amended
and restated Management Agreement, Services Agreement and Trademark License
Agreements (in each case redacted to protect the identity of the 3M-pops
Manager) within 10 Business Days after the later of the effective date
expressly stated in the addendum or other instrument containing these
changes and the date of the addendum or other instrument. Manager then has
30 days to notify Sprint PCS that Manager wants the Overall Changes.
If Manager does not notify Sprint PCS in this 30-day period in writing
that it wants the Overall Changes, no changes will be made in the
agreements between Manager and Sprint PCS and Manager will be deemed to
have waived its rights under this section 1.10 with respect to the Overall
Changes.
If Manager notifies Sprint PCS within the 30-day time period in
writing that it wants the Overall Changes, Sprint PCS will prepare, execute
and deliver to Manager an addendum reflecting the Overall Changes. The new
addendum will have the same effective date as the addendum or the restated
Management Agreement, Services Agreement and Trademark License Agreements
between Sprint PCS and the 3M-pops Manager that gave rise to the new
addendum. For purposes of clarification, if the addendum or other
instrument between Sprint PCS and
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the 3M-pops Manager provides or defines a specific date that is the
effective date of that addendum or other instrument then the effective date
of the new addendum will be the same as that specific date. Manager will
have 15 days to review the new addendum and notify Sprint PCS if Manager
determines any inaccuracies are reflected in the new addendum. Sprint will
correct those inaccuracies and provide a corrected new addendum to Manager
within 10 Business Days after Manager's notification.
No changes will be made in the agreements between Manager and Sprint
PCS if all the Alamosa Managers do not execute and return their respective
signed addenda within 30 days after receipt of the signed addenda (or the
corrected signed addenda, if applicable, pursuant to the previous
paragraph), in which case Manager will be deemed to have waived its rights
under this section 1.10 with respect to the Overall Changes contained in
the addendum presented.
If Manager and Sprint PCS disagree as to whether the terms of the
signed addendum accurately reflect the Overall Changes, then the parties
will submit to binding arbitration in accordance with section 14.2,
excluding the escalation process set forth in section 14.1. If the arbiter
rules in favor of Manager, then Sprint PCS will make changes to the signed
addendum that are necessary to reflect the arbiter's ruling and submit the
revised signed addendum to Manager within 10 days after receipt of the
arbiter's ruling. If the arbiter rules in favor of Sprint PCS, then Manager
will execute the signed addendum as proffered to Manager within 10 days
after Manager's receipt of the arbiter's ruling.
The parties acknowledge that Sprint PCS can disclose to Manager who
the 3M-pops Manager is that gave rise to the proposed addendum only if the
3M-pops Manager agrees to the disclosure.
7. MODIFICATION OF BUILD-OUT PLAN [ADDM IX, SS.2]. Exhibit 2.1 Build-Out
Plan Table and the Build-Out Plan Map are replaced by the Exhibit 2.1 Build-Out
Plan Table and Build-Out Plan Map attached to Addendum IX.
8. CONTINGENT COVERAGE AREA [ADDM VIII,SS.2 AND ADDM XI,SS.8]. Section 2.1
is supplemented with the following language:
2.1.1 DESCRIPTION OF CONTINGENT COVERAGE AREA. Manager is not required
to build out the following partial BTA:
(a) within the Las Vegas, Nevada BTA, along U.S. Highway 93 from
the Dolan Springs County Highway 25 interchange northwest to meet
Sprint PCS coverage of Boulder City, Nevada (the "HOOVER DAM
CONTINGENT COVERAGE AREA");
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(b) within the Las Vegas, Nevada BTA, along U.S. Highway 95 from
the Parker Dam south to the Phoenix, Arizona BTA border (the "PARKER
DAM CONTINGENT COVERAGE AREA"); and
(c) within the San Diego, California BTA, along I-8 west from the
El Centro-Calexico BTA border to Sprint PCS San Diego coverage (the
"SAN DIEGO COUNTY CONTINGENT COVERAGE AREA").
2.1.2 BUILD-OUT AND OPERATIONAL AND NETWORK READINESS.
(a) If Sprint PCS sends notice to Manager of a commitment to
build out along US Highway 93 in the Las Vegas, Nevada BTA to Hoover
Dam, Manager will have fourteen (14) months from the date Manager
receives the notice to build out and achieve "Operational and Network
Readiness," as defined below, for the Hoover Dam Contingent Coverage
Area.
(b) If Sprint PCS sends notice to Manager of a commitment to
build out along US Highway 95 in the Phoenix, Arizona BTA to Parker
Dam at the Las Vegas, Nevada BTA border, Manager will have fourteen
(14) months from the date Manager receives the notice to build out and
achieve Operational and Network Readiness for the Parker Dam
Contingent Coverage Area.
(c) If Sprint PCS sends notice to Manager of a commitment to
build out along I-8 in the San Diego, California BTA, Manager will
have fourteen (14) months from the date Manager receives the notice to
build out and achieve Operational and Network Readiness for the San
Diego County Contingent Coverage Area.
"OPERATIONAL AND NETWORK READINESS" and "OPERATIONAL AND NETWORK READY"
mean that Manager has (i) met all Program Requirements (which includes, but
is not limited to, completion of test plans, coverage definition,
assessment of site readiness, network optimization and operational and
systems readiness) and (ii) received Sprint PCS' approval to launch each of
the cell sites within either the Hoover Dam Contingent Coverage Area, the
Parker Dam Contingent Coverage Area or the San Diego County Contingent
Coverage Area, as applicable.
9. EXCLUSIVITY OF SERVICE AREA [ADDM VI,SS.6]. In section 2.3 and the
Schedule of Definitions, the phrase "wireless mobility communications network"
is replaced by the phrase "Wireless Mobility Communications Network".
15
10. COVERAGE ENHANCEMENT [ADDM I,SS.1 AND ADDM XI,SS.10]. Section 2.5 is
replaced by the following language:
2.5 MANAGER'S RIGHT OF FIRST REFUSAL FOR NEW COVERAGE BUILD-OUT.
Sprint PCS grants to Manager the right of first refusal to build-out New
Coverage. Sprint PCS will give to Manager a written notice of a New
Coverage within the Service Area that Sprint PCS decides should be
built-out. Manager must communicate to Sprint PCS within 90 days after
receipt of the notice whether it will build-out the New Coverage.
If Manager decides to build-out the New Coverage then Manager and
Sprint PCS will diligently negotiate and execute an amendment to the
Build-out Plan and proceed as set forth in sections 2.1 and 2.2. The
amended Build-out Plan will contain critical milestones that provide
Manager a commercially reasonable period in which to implement coverage in
the New Coverage. In determining what constitutes a "commercially
reasonable period" as used in this paragraph, the parties will consider
several factors, including local zoning processes and other legal
requirements, weather conditions, equipment delivery schedules, the need to
arrange additional financing, and other construction already in progress by
Manager. Manager will construct and operate the network in the New Coverage
in accordance with the terms of this agreement.
If Manager (i) does not communicate to Sprint PCS within such 90-day
period that it will build out the New Coverage, (ii) fails to agree with
Sprint PCS upon the amended Build-Out Plan, or (iii) fails to build-out the
New Coverage in accordance with the amended Build-Out Plan, then Sprint PCS
shall be entitled to (A) build-out the New Coverage itself or allow a
Sprint PCS Related Party to do so, or (B) offer third parties (including
Other Managers) the right to build-out the New Coverage on terms and
conditions that are no more favorable than those that were offered to and
rejected by Manager. If (x) neither Sprint PCS, a Sprint PCS Related Party,
nor any third party (with respect to such third party, on terms and
conditions that are no more favorable than those that were offered to and
rejected by Manager) commits to build-out such New Coverage within 150 days
of the original communication to Manager with respect thereto, or (y) more
favorable terms and conditions than those that were offered to and rejected
by Manager are offered to any third party to build-out the New Coverage,
then any build-out of such New Coverage shall again be subject to Manager's
right of first refusal (and, if applicable, on such more favorable terms
and conditions).
Sprint PCS has the right, in a New Coverage that it constructs or that
is constructed by a third party, to manage the network, allow a Sprint PCS
Related Party to manage the network, or hire a manager to operate the
network in the New Coverage. Any New Coverage that Sprint PCS or a third
party builds out is deemed removed from the Service Area and the
16
Service Area Exhibit is deemed amended to reflect the change in the Service
Area. If Manager does not exercise its right of first refusal with respect
to a New Coverage, Manager's right of first refusal does not terminate with
respect to the remainder of the Service Area.
11. MICROWAVE RELOCATION [ADDM IX,SS.5]. Section 2.7 is supplemented with
the following language:
If Manager chooses to offer Sprint PCS Services on the New Spectrum,
as provided in section 3 of Addendum IX, Sprint PCS will be responsible for
clearing interfering microwave sources in the New Spectrum, and upon such
clearing, Manager will reimburse Sprint PCS for any costs incurred by
Sprint PCS as a result of such clearing, including all cost-sharing
obligations Sprint PCS has incurred, and Manager will be entitled to
credits for any cost-sharing reimbursements Sprint PCS may receive that are
associated with any future links cleared in the New Spectrum.
12. LONG-DISTANCE PRICING [ADDM XI,SS.12]. Section 6 of Addendum I is
deleted. Additionally, section 3.4 of the Management Agreement is amended and
restated in its entirety to read as follows:
3.4 IXC SERVICES.
3.4.1. CUSTOMER LONG DISTANCE. Sprint PCS and Manager will from time
to time mutually define local calling areas in the Service Areas of Manager
that Sprint PCS and Manager will use to determine when a customer will be
billed for a "long distance call" under the applicable rate plan of the
Customer. The parties acknowledge that these local calling areas (i) may
change in geographic scope in response to competitive pressures or
perceived market opportunities, and (ii) may not be able to be changed
because of regulatory, industry, or system limitations. The parties will
not use local calling areas to determine "long distance telephony services"
under section 3.4.2. If the parties cannot agree on the extent of the local
calling area they will resolve the matter through the dispute resolution
process in section 14.
3.4.2. LONG DISTANCE SERVICES
(a) Required purchase. Manager must obtain (i) long-distance telephony
services through Sprint PCS or its Related Parties to provide long-distance
service to users of the Sprint PCS Network and (ii) telephony services
through Sprint PCS or its Related Parties to connect the Service Area
Network with the national platforms that Sprint PCS uses to provide
services to Manager under this agreement or the Services Agreement. The
term "long distance telephony service" means any inter-
17
LATA call for purposes of this section 3.4.2 as it relates to long-distance
telephony services provided to users of the Sprint PCS Network.
(b) Pricing and procedure. Sprint PCS will purchase for Sprint PCS,
Manager and Other Managers long-distance telephony services used in the
Sprint PCS Network from Sprint Communications Company L.P. or its Related
Parties ("SCCLP"). Sprint PCS will purchase these long-distance telephony
services at a price and terms at least as favorable to Sprint PCS, Manager
and the Other Managers (considering Sprint PCS, Manager and the Other
Managers as a single purchaser) as the best prices and terms SCCLP offers
to any wholesale customer of SCCLP in similar situations when taking into
account all relevant factors (e.g., volume, peak/off-peak usage, length of
commitment). Sprint PCS will pay the invoice from SCCLP, except for items
that SCCLP directly bills under section 3.4.2(c). Sprint PCS will bill to
Manager as an activity settled separately under the Services Agreement the
portion of the fees billed to Sprint PCS that relate to Manager's
operations and the activity of all Customers and Reseller Customers in the
Service Area, except for items SCCLP directly bills under section 3.4.2(c).
If Sprint Corporation no longer has its "PCS" tracking stock, Sprint
PCS will include the volume of long-distance telephony services of Manager
and Other Managers with the volume of Sprint PCS when negotiating the
Sprint PCS rate with the long distance division of Sprint Corporation
(currently SCCLP). The long distance division will continue to provide
long-distance telephony services to Sprint PCS for a price and upon terms
based on the same relevant factors described in the preceding paragraph and
in the same manner that it has under the present tracking stock policy.
(c) Call routing. Manager, acting as a single purchaser, may purchase
private line capacity (or other forms of capacity) from SCCLP for
inter-LATA calls to the extent that this capacity can be obtained on terms
more favorable to Manager (acting as a single purchaser). SCCLP will sell
that capacity to Manager at the best price that SCCLP offers to third
parties in similar situations when taking into account all relevant
factors. SCCLP will directly bill Manager for any purchase of capacity
under this section 3.4.2(c). The terms of section 1.3 do not apply to
purchases of capacity in this section 3.4.2(c).
(d) Pre-existing agreement. If before the date Addendum X to this
agreement is signed, Manager is bound by an agreement for long distance
services or an agreement for private line service and the agreement was not
made in anticipation of this agreement or Addendum X, then the requirements
of this section 3.4.2 do not apply during the term of the other agreement.
If the other agreement terminates for any reason,
18
then the requirements of this section 3.4.2 do apply from and after the
termination.
(e) Resale. Manager may not resell the long-distance telephony
services acquired under this section 3.4.2. For purposes of clarification,
resale under this section 3.4.2(e) includes Manager selling minutes to
carriers for ultimate resale to end users under a brand other than "Sprint"
or selling minutes to end users under a brand other than "Sprint". Manager
may engage in the following activities (i.e., these activities are not
treated as resale of long-distance telephony services):
(1) the transport of long-distance calls for Customers under
section 3.4.2(a),
(2) the transport of long-distance calls for resellers under
section 3.5, and
(3) the transport of long-distance calls for roaming under
section 4.3.
13. VOLUNTARY RESALE OF PRODUCTS AND SERVICES [NEW]. Section 4 of Addendum
I is deleted. Schedule 1 attached to this Addendum replaces and supersedes the
heading, preamble, general terms and all attachments to the Program Requirement
3.5.2 dated August 13, 2002, which is labeled "Exhibit 3.5.2 Program Requirement
for Voluntary Resale of Products and Services By Voluntary Resellers Under the
Private Label Solutions Program". Program Requirement 3.5.2 - VMU which is
labeled "Exhibit 3.5.2 - VMU Program Requirements for Voluntary Resale of
Products and Services by Virgin Mobile USA, LLC (version 7/07/02)" continues in
effect, as amended from time to time, except its label is amended to read
"Program Requirement 3.5.2 - VMU Program Requirements for Resale of Products and
Services By Virgin Mobile USA, LLC (version 7/07/02)".
Section 3.5.2 to the Management Agreement is amended and restated in its
entirety to read as follows:
3.5.2 RESALE OF PRODUCTS AND SERVICES. Sprint PCS may choose to offer
a resale product under which resellers will resell Sprint PCS Products and
Services under brand names other than the Brands, except Sprint PCS may
permit the resellers to use the Brands for limited purposes related to the
resale of Sprint PCS Products and Services (e.g., to notify people that the
handsets of the resellers will operate on the Sprint PCS Network). The
resellers may also provide their own support services (e.g., customer care
and billing) or may purchase the support services from Sprint PCS. Other
terms of the resale program are governed by Program Requirement 3.5.2.
Manager will continue to participate in any resale arrangements that,
before April 1, 2004, Manager had opted into under the Program Requirement
19
3.5.2, effective as of January 1, 2004, and before the amendment to the
Program Requirement 3.5.2 by this Addendum, except that those resale
arrangements will be governed by Program Requirement 3.5.2 as amended by
this Addendum. Compensation for Manager's participation in these resale
arrangements will be paid to Manager in accordance with section
10.4.1.1(a)(i) of this agreement, unless compensation was otherwise
negotiated between Manager and Sprint PCS (e.g., Virgin Mobile USA).
Manager will participate in all resale arrangements entered into,
renewed or extended during the Required Resale Participation Period
(regardless of whether Manager was participating in the resale arrangement
on or before April 1, 2004) in all cases with compensation being paid to
Manager as set forth in section 10.4.1.1(a)(ii) or (iii), whichever is
applicable. Additionally, Manager will continue to support resale
arrangements entered into, renewed or extended during the Required Resale
Participation Period to the end of their respective terms. Sprint PCS
agrees that the compensation, payment and other terms and conditions under
each resale arrangement entered into, renewed or extended during the
Required Resale Participation Period will be the same as the compensation,
payment and other terms and conditions applicable to Sprint PCS and each
Other Manager with respect to such reseller.
The resale arrangement between Sprint PCS and Virgin Mobile USA will
be treated as a new resale arrangement and subject to the compensation set
forth in section 10.4.1.1(a)(ii) or (iii), whichever is applicable, if
continued after the expiration of the initial term of the arrangement.
Except as required under the regulations and rules concerning
mandatory resale, Manager may not sell Sprint PCS Products and Services for
resale unless Sprint PCS consents to such sales in advance in writing.
14. INTRA-LATA CALLS AND BACKHAUL SERVICES [ADDM XI,SS.14]. Section 3.7 is
amended and restated in its entirety to read as follows:
3.7 INTRA-LATA CALLS AND BACKHAUL SERVICES. Manager, acting as a
single purchaser, may purchase capacity (including private line capacity)
from SCCLP for intra-LATA calls and backhaul services. SCCLP will sell that
capacity to Manager at the best price that SCCLP offers to third parties in
similar situations when taking into account all relevant factors.
Manager will offer to Sprint PCS or one of its Related Parties the
right to make to Manager the last offer to provide capacity for intra-LATA
calls and backhaul services for the Service Area Network if:
(i) Manager decides to use third parties for intra-LATA calls and
backhaul services rather than
20
self-provisioning the capacity or purchasing the capacity from Related
Parties of Manager, and
(ii) Sprint PCS or one of its Related Parties has provided
evidence to Manager that SCCLP or one of its Related Parties has
facilities to provide the capacity requested.
Manager will deliver to Sprint PCS the terms under which the
third party will provide the capacity. Sprint PCS or one of its
Related Parties will have a reasonable time to respond to Manager's
request for last offer to provide pricing for capacity for intra-LATA
calls and backhaul, which will be no greater than 5 Business Days
after receipt of the request for the pricing and the third party's
terms from Manager. Manager will acquire capacity for intra-LATA calls
and backhaul services from Sprint PCS or one of its Related Parties if
Sprint PCS or one of its Related Parties offers Manager pricing and
other terms for intra-LATA calls and backhaul services for the Service
Area Network that matches the terms, including pricing, or is better
than the terms and lower than the pricing offered by the third party.
For purposes of this section 3.7, the term "backhaul" means the
provision of services from a cell site of Manager to the corresponding
switch associated with the cell site.
If Manager has an agreement for these services in effect as of
the date Addendum X is signed and the agreement was not made in
anticipation of this agreement or Addendum X, then the requirements of
this section 3.7 do not apply during the term of the other agreement.
If the other agreement terminates for any reason, then the
requirements of this section 3.7 do apply from and after the
termination.
15. SPRINT PCS ROAMING AND INTER SERVICE AREA PROGRAM REQUIREMENTS [ADDM
XI,SS.15]. The second paragraph of section 4.3 is amended to read as follows:
Section 10.4.1 sets forth the settlement process that distributes
between the members making up the Sprint PCS Network (i.e., Sprint PCS,
Manager and all Other Managers) a fee for use of the Sprint PCS Network and
the Service Area Network (the "INTER SERVICE AREA FEE").
16. CHANGES TO PROGRAM REQUIREMENTS [ADDM XI, SS.16].
(a) The first sentence of section 9.2(e) is amended to read as
follows:
Manager must implement any changes in the Program Requirements
within a commercially reasonable period of time unless otherwise
consented to by Sprint PCS, subject to the terms of section 9.3.
(b) Section 9.3 is amended to read as follows:
21
9.3 MANAGER'S RIGHTS REGARDING CHANGES TO PROGRAM REQUIREMENTS.
9.3.1 PARAMETERS FOR REQUIRED PROGRAM REQUIREMENT IMPLEMENTATION.
Manager has the right to decline to implement any new Program Requirement
or any change to any existing Program Requirement (a "PROGRAM REQUIREMENT
CHANGE") if Manager determines that any such Program Requirement Change,
other than a change involving Sprint PCS National or Regional Distribution
Program Requirements, will have an adverse impact on Manager that meets or
exceeds the parameters set forth below in subparagraphs (a) through (d).
For purposes of this section 9.3 a Program Requirement Change will include
any change in any "guidelines," "policies," "standards" or "specifications"
proposed by Sprint PCS under this agreement, the Services Agreement or
either of the Trademark License Agreements, and the exercise by Sprint PCS
of any unilateral right under those agreements, except changes to the
Trademark Usage Guidelines, the Marketing Communications Guidelines, or the
definition of Sprint PCS Products and Services (other than the pricing of
those products and services, i.e. pricing is a Program Requirement Change).
If Manager determines to decline to implement any Program Requirement
Change, other than a change involving a national distribution program, then
Manager must, within 10 days after Sprint PCS provides Manager with notice
of the Program Requirement Change, give Sprint PCS (i) a written assessment
of the impact of the Program Requirement Change on Manager using the
parameters set forth in subparagraphs (a) through (d) below, and (ii)
written notice that Manager declines to implement the Program Requirement
Change. Manager may, without being deemed in default of this agreement,
decline to implement any Program Requirement Change that will:
(a) individually cause the combined peak negative cash flow of the
Alamosa Managers to be an amount greater than 3% of Alamosa Holdings,
Inc.'s Enterprise Value; or
(b) when combined with the original assessments made in accordance
with section 9.3.1(a) of all other Program Requirement Changes that Sprint
PCS announced and the Alamosa Managers agreed to implement, both within the
preceding 12 calendar months, cause the combined cumulative peak negative
cash flow of the Alamosa Managers to be an amount greater than 5% of
Alamosa Holdings, Inc.'s Enterprise Value; or
(c) individually cause a decrease in the forecasted 5-year discounted
cash flow of the Alamosa Managers (at the Alamosa Managers'
22
appropriate discount rate) of more than 3% on a combined net present value
basis; or
(d) when combined with the original assessments made in accordance
with section 9.3.1(c) of all other Program Requirement Changes that Sprint
PCS announced and Manager agreed to implement, both within the preceding 12
calendar months, cause a decrease in the forecasted 5-year discounted cash
flow of the Alamosa Managers (at the Alamosa Managers' appropriate discount
rate) of more than 5% on a combined net present value basis.
Manager may discuss with Sprint PCS in the manner described in section
9.7(c) any change that does not meet or exceed the parameters set forth in
this section 9.3.1, except any change involving Sprint PCS National or
Regional Distribution Program Requirements.
9.3.2. DISAGREEMENT WITH ASSUMPTIONS OR METHODOLOGY. Sprint PCS must
notify Manager of any disagreement with Manager's assumptions or
methodology within 10 days after its receipt of Manager's assessment under
section 9.3.1. Manager will not be required to implement the Program
Requirement Change if Sprint PCS fails to notify Manager of any
disagreement within such 10-day period unless Sprint PCS elects to require
such compliance under section 9.3.3 below. Either party may escalate the
review of the assumptions and methodology underlying the assessment to the
parties' respective Chief Financial Officers if Sprint PCS disagrees with
Manager's assessment and the parties are unable to agree on the assumptions
and methodology within 20 days after Sprint PCS notifies Manager of the
disagreement.
The parties will mutually select an independent investment banker in
the wireless telecommunications industry ("INVESTMENT BANKER") to determine
whether the implementation of the Program Requirement Change will exceed
one of the parameters if Sprint PCS and Manager are unable to agree on the
assumptions and methodology to perform the calculations within 30 days
after Sprint PCS notifies Manager of the disagreement. The American
Arbitration Association will select the Investment Banker if the parties do
not select the Investment Banker within 50 days after Sprint PCS notifies
Manager of the disagreement. Sprint PCS and Manager will cooperate fully
and provide all information reasonably requested by the Investment Banker;
except that any Investment Banker selected by the American Arbitration
Association, and its investment bank, must have no current engagement with
either Manager or Sprint PCS and must not have been engaged by either such
party within the 12 calendar months preceding the engagement under this
section. A business relationship between Manager or Sprint PCS and a
commercial bank or other organization affiliated with an investment bank
23
will not disqualify the investment bank. Sprint PCS and Manager will
cooperate fully and provide all information reasonably requested by the
Investment Banker. The Investment Banker will have 20 days from the date of
engagement to make its decision.
Manager will pay any Investment Banker's fees and implement the
Program Requirement Change if the parties agree or the Investment Banker
determines that implementing the Program Requirement Change will not exceed
any of the parameters described in section 9.3.1.
9.3.3 ONE OR MORE PARAMETERS EXCEEDED. Sprint PCS will pay the
Investment Banker's fees if the parties agree or the Investment Banker
determines that implementing the Program Requirement Change will exceed at
least one of the parameters described in section 9.3.1. Sprint PCS may
require Manager to implement the Program Requirement Change whether the
parties agree or disagree or the Investment Banker determines that
implementing the Program Requirement Change will exceed at least one of the
parameters described in section 9.3.1, if Sprint PCS agrees to compensate
Manager the amount necessary to prevent Manager from exceeding the
parameters set forth in section 9.3.1.
9.3.4 CHANGES WITH RESPECT TO PRICING PLANS AND ROAMING PROGRAM
REQUIREMENTS. Manager will implement a Program Requirement Change in the
manner requested by Sprint PCS that
(i) relates to a pricing plan under section 4.4 or roaming
program and
(ii) Sprint PCS reasonably determines must be implemented on an
immediate or expedited basis to respond to competitive market forces,
notwithstanding Manager's determination that implementation of the Program
Requirement Change will have an adverse impact on Manager that meets or
exceeds the parameters set forth in section 9.3.1. Manager's implementation
of the Program Requirement Change will not adversely affect Manager's right
to object to the implementation of the Program Requirement Change. Manager
will continue to comply with the Program Requirement Change if the parties
agree or the Investment Banker determines that implementing the Program
Requirement Change will not exceed any of the parameters described in
section 9.3.1. If Sprint PCS does not successfully challenge Manager's
assessment of the adverse impact of the Program Requirement Change on
Manager in accordance with section 9.3.2, Sprint PCS can require Manager
either to (i) continue to comply with the Program Requirement Change and
compensate Manager in the amount necessary to reimburse Manager for any
24
reasonable costs, expenses or losses that Manager incurred as a result of
its implementation of the Program Requirement Change net of any benefit
received by Manager, to the extent the costs, expenses and losses net of
the benefits exceed the parameters set forth in section 9.3.1 or (ii)
terminate its continued compliance with the Program Requirement Change and
compensate Manager in the amount necessary to reimburse Manager for any
reasonable costs, expenses or losses that Manager incurred as a result of
its implementation of the Program Requirement Change net of any benefit
received by Manager. Manager cannot terminate its continued compliance if
Sprint PCS elects to require Manager's continued compliance with the
Program Requirement Change under section 9.3.3 above.
(c) A new section 9.7 is added to the Management Agreement:
9.7 MANDATORY REQUIREMENTS; UNILATERAL CHANGES.
(a) Any "guidelines," "policies," "standards" or "specifications"
previously issued by Sprint PCS are mandatory requirements with which
Manager, the Other Managers and Sprint PCS must comply (subject to Sprint
PCS' right to grant waivers as provided in Article 9 of this agreement),
unless otherwise identified by Sprint PCS within 120 days after the date of
Addendum X.
(b) Any changes to or new "guidelines," "policies," "standards" or
"specifications" proposed by Sprint PCS under this agreement, the Services
Agreement or either of the Trademark License Agreements are mandatory
requirements with which Manager, the Other Managers and Sprint PCS must
comply (subject to Sprint PCS' right to grant waivers as provided in
Article 9 of this agreement). Sprint PCS will when issuing them reference
the applicable section of this agreement, the Services Agreement, the
Trademark License Agreements and if applicable, the Program Requirement to
which they relate.
(c) Sprint PCS and Manager will in good faith attempt to mutually
agree on how to mitigate the adverse economic impact on Manager of the
exercise of any unilateral right of Sprint PCS under this agreement, the
Services Agreement and either Trademark License Agreement to the extent
Manager believes such change will have a significant adverse economic
impact on Manager's operations, except with respect to changes involving
Sprint PCS National or Regional Distribution Program Requirements. For
purposes of clarification, the parties intend the preceding sentence to
obligate them to a robust discussion and open dialogue but understand the
discussion and dialogue may not lead to any particular solution of the
issues raised by Manager or Sprint PCS. By way of illustration, under the
second preceding sentence if Manager believed
25
that the exercise of the unilateral right to change the Trademark Usage
Guidelines or the designation of Sprint PCS Products and Services had an
adverse economic impact on Manager, then Manager and Sprint PCS will in
good faith attempt to mutually agree on how to mitigate the adverse impact
on Manager.
(d) A new section 9.8 is added to the Management Agreement.
9.8 BREACH FOR FAILURE TO IMPLEMENT PROGRAM REQUIREMENT.
Manager will be in material breach of a material term and Sprint PCS
may exercise its rights under section 11 if Manager declines to implement a
Program Requirement when required to do so under this agreement.
17. FEES [ADDM XI,SS.17; REVISED BY THIS ADDENDUM]. (a) Article 10 of the
Management Agreement is amended and restated in its entirety to read as follows:
10. FEES
10.1 GENERAL. Sprint PCS and Manager will pay to each other the fees
and apply the credits in the manner described in this section 10. The
amounts that Sprint PCS is paid or retains are for all obligations of
Manager under this agreement. Many of the definitions for the fees in
section 10.2 are found in section 10.3.
10.2 FEES.
10.2.1 FEE BASED ON BILLED REVENUE. Sprint PCS will pay to
Manager the Fee Based on Billed Revenue as determined in this section
10.2.1.
"BILLED REVENUE" is all customer account activity (e.g., all
activity billed, attributed or otherwise reflected in the customer
account but not including Customer Credits) during the calendar month
for which the fees and payments are being calculated (the "BILLED
MONTH") for Sprint PCS Products and Services related to all Customer
accounts within a customer service area ("CSA") assigned to the
Service Area, except (i) Outbound Roaming Fees, (ii) amounts handled
separately in this section 10 (including the amounts in sections
10.2.3 through 10.2.6, 10.4 and 10.8), (iii) amounts collected from
Customers and paid to governmental or regulatory authorities (e.g.,
Customer Taxes and USF Charges), and (iv) other amounts identified in
this agreement as not included in Billed Revenue (these Customer
accounts being "MANAGER ACCOUNTS").
26
Billed Revenue does not include new activity billed to the
Customer solely to recover costs incurred by Sprint PCS, Manager or
both related solely to such new activity. Manager and Sprint PCS will
share the revenues from this billing in proportion to the costs they
incur.
For purposes of clarification, the parties have in place
procedures to assign Customers to CSAs and expect those procedures to
remain in place after the Effective Date.
If Sprint PCS or Manager develops products or services that
bundle Sprint PCS Products and Services with other products or
services (e.g., local service or broadband wireline service), then
Sprint PCS and Manager will use commercially reasonable efforts to
agree on the proper allocation of revenue, bad debt expenses, credits
and promotions for the bundled products and services.
Sprint PCS will reasonably determine the amount of credits
applied to Manager Accounts during the Billed Month ("CUSTOMER
CREDITS").
"NET BILLED REVENUE" for a Billed Month is the amount of the
Billed Revenue less the Customer Credits.
The "FEE BASED ON BILLED REVENUE" for a Billed Month is equal to
92% of (a) Net Billed Revenue, less (b) the Allocated Write-offs for
Net Billed Revenue.
10.2.2 OUTBOUND ROAMING FEE. Sprint PCS will pay to Manager a fee
equal to the amount of Outbound Roaming Fees that Sprint PCS or its
Related Parties bills to Manager Accounts, less the Allocated
Write-offs for Outbound Roaming Fees. For purposes of clarification,
Sprint PCS will settle separately with Manager the direct cost of
providing the capability for the Outbound Roaming, including any
amounts payable to the carrier that handled the roaming call and the
clearinghouse operator for Outbound Roaming.
10.2.3 PHASE II E911 SURCHARGES. Sprint PCS will pay to Manager a
fee equal to a portion of the E911 Phase II Surcharges (attributable
to incremental costs for Phase II E911, including but not limited to
related handset costs, routing costs, implementation costs, trunks and
testing costs, and anticipated write-offs for bad debt) billed during
the Billed Month to Customers with an NPA-NXX assigned to the Service
Area, less the Allocated Write-offs for that portion of E911 Phase II
Surcharges in the Billed Month. The portion of the billed amount
attributed to Manager will be based on Manager's proportional cost (as
compared to Sprint PCS' proportional cost) to comply with Phase II of
the E911 requirements. Sprint PCS will determine from time to time the
rate
27
billed to Customers related to Phase II E911 and the portion payable
to Manager.
10.2.4 WIRELESS LOCAL NUMBER PORTABILITY SURCHARGES. Sprint PCS
will pay to Manager a fee equal to a portion of the Wireless Local
Number Portability Surcharges ("WLNP SURCHARGES") billed during the
Billed Month to Customers with an NPA-NXX assigned to the Service
Area, less the Allocated Write-offs for that portion of the WLNP
Surcharges in the Billed Month. The portion of the billed amount
attributed to Manager will be based on Manager's proportional cost (as
compared to Sprint PCS' proportional cost) to comply with Wireless
Local Number Portability requirements. Sprint PCS will determine from
time to time the rate billed to Customers related to WLNP Surcharges
and the portion payable to Manager.
10.2.5 CUSTOMER EQUIPMENT CREDITS. Sprint PCS will apply as a
credit to any other fees under this section 10.2 owing by Sprint PCS
to Manager an amount equal to the amount of the Customer Equipment
Credits less the Allocated Write-offs for Customer Equipment Credits.
10.2.6 WRITE-OFFS FOR CUSTOMER EQUIPMENT CHARGES. Sprint PCS will
apply as a credit to any other fees under this section 10.2 owing by
Sprint PCS to Manager an amount equal to the amount of the Allocated
Write-offs for Customer Equipment Charges.
10.3 DEFINITIONS USED IN FEE CALCULATIONS
10.3.1 WRITE-OFFS. Sprint PCS will determine the amounts written
off net of deposits applied (the "WRITE-OFFS") in the Sprint PCS
billing system during the Billed Month relating to Manager Accounts.
10.3.2 BILLED COMPONENTS. Each of the following amounts is
referred to as a "BILLED COMPONENT" and collectively they are referred
to as the "BILLED COMPONENTS".
10.3.2.1 Net Billed Revenue. The amount determined as
described in section 10.2.1.
10.3.2.2 Customer Equipment Credits. The reductions of
amounts billed to Manager Accounts related to the sale of
handsets and handset accessories from Sprint PCS inventory are
referred to as "CUSTOMER EQUIPMENT Credits". This is a negative
amount that reduces the Amount Billed (Net of Customer Credits).
28
10.3.2.3 100% Affiliate Retained Amounts. The amounts
referred to as "100% Affiliate Retained Amounts" on Exhibit 10.3,
to which Manager is entitled to 100% of the amounts that
Customers are billed for such items.
10.3.2.4 100% Sprint PCS Retained Amounts. The amounts
referred to as "100% Sprint PCS Retained Amounts" on Exhibit
10.3, to which Sprint PCS is entitled to 100% of the amounts that
Customers are billed for such items.
10.3.2.5 Customer Equipment Charges. The amounts that Sprint
PCS bills to Manager Accounts for subscriber equipment and
accessories sold or leased are referred to as "CUSTOMER EQUIPMENT
CHARGES".
10.3.2.6 E911 Phase II Surcharges. The amounts that Sprint
PCS bills to Manager Accounts to recover all costs related to
Phase II E911 functionality are referred to as "E911 PHASE II
SURCHARGES".
10.3.2.7 USF Charges. The amounts that Sprint PCS bills to
Manager Accounts relating to Universal Service Funds are referred
to as "USF CHARGES".
10.3.2.8 WLNP Surcharges. The amounts that Sprint PCS bills
to Manager Accounts to recover costs related to WLNP activities.
10.3.3 AMOUNT BILLED (NET OF CUSTOMER CREDITS). The "AMOUNT
BILLED (NET OF CUSTOMER CREDITS)" for a Billed Month is equal to the
sum of the Billed Components.
10.3.4 THE ALLOCATED WRITE-OFFS. The "ALLOCATED WRITE-OFFS" for
all or a portion of a Billed Component in a Billed Month is the
Write-offs for the Billed Month times the amount of the Billed
Component (or portion thereof) divided by the Amount Billed (Net of
Customer Credits).
10.4 OTHER FEES AND PAYMENTS. Sprint PCS and Manager will pay to each
other the fees and payments described below:
10.4.1 INTER SERVICE AREA FEES AND RESELLER CUSTOMER FEES.
10.4.1.1 Inter Service Area Fee and Reseller Customer Fee
Paid. Manager will pay to Sprint PCS an Inter Service Area Fee as
set forth in this section 10.4.1 for each billed minute or
kilobyte of use that a Customer with an NPA-NXX assigned to the
Service
29
Area uses a portion of the Sprint PCS Network other than the
Service Area Network. Sprint PCS will pay to Manager an Inter
Service Area Fee for each billed minute or kilobyte of use that a
Customer whose NPA-NXX is not assigned to the Service Area
Network uses the Service Area Network.
(a) Sprint PCS will pay to Manager the fees set forth
in this Section 10.4.1 for each billed minute or kilobyte of
use that a Reseller Customer uses the Service Area Network
unless otherwise negotiated (such fees are referred to in
this agreement as "RESELLER CUSTOMER FEES"):
(i) with respect to arrangements between Sprint
PCS and resellers in existence as of April 1, 2004,
that Manager has opted into, other than Virgin Mobile
USA, the amount of fees set forth in subsections
10.4.1.2 and 10.4.1.3, and with respect to Virgin
Mobile USA, the amount of fees set forth in Program
Requirement 3.5.2 - VMU; except, that the resale
arrangement between Sprint PCS and Virgin Mobile USA
will each be treated as a new resale arrangement and
subject to the compensation set forth in section
10.4.1.1(a)(ii) or (iii), whichever is applicable, if
continued after the expiration of the initial term of
the arrangement;
(ii) with respect to arrangements between Sprint
PCS and resellers that are entered into after April 1,
2004 and before January 1, 2007, or that are renewed or
extended during that period, the amount of fees
collected by Sprint PCS from the resellers as payment
for the Reseller Customer's use of the Service Area
Network; and
(iii) with respect to arrangements between Sprint
PCS and resellers that are entered into, renewed or
extended during the three-year period beginning on
January 1, 2007, or a subsequent three-year period
beginning on the third anniversary of the beginning of
the previous three-year period, the amount of fees
determined as described in section 10.4.1.1(c).
(b) With respect to resale arrangements described in
section 10.4.1.1(a)(ii), Sprint PCS will give Manager
Manager's proportional share of (i) any cash payments, in
addition to the reseller rate, relating specifically to the
resale arrangements (other than those cash payments for
reimbursement of expenses incurred to implement the resale
arrangement), and (ii) to the extent reasonably able to be
made available to Manager, non-cash payments relating
specifically to the resale arrangements. For
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purposes of clarification, payments made to Sprint PCS by
the other party to a resale arrangement to reimburse Sprint
PCS for actual costs incurred to implement some aspect of
the resale arrangement are not cash or non-cash payments
subject to this section. Each resale arrangement will
provide that the other party to the resale arrangement will
reimburse Manager for Manager's actual costs incurred to
implement the resale arrangement if (A) Sprint PCS obtains
from the other party to the resale arrangement a commitment
for that party to reimburse Sprint PCS for Sprint PCS'
actual costs of implementing the resale arrangement and (B)
Sprint PCS reasonably expects Manager to incur actual costs
in implementing the resale arrangement for the reseller.
If the reseller is a Related Party of Sprint PCS, then
Sprint PCS, Manager and all Other Managers must agree on the
Reseller Customer Fee to be paid by Sprint PCS to Manager and all
Other Managers and any proportional sharing of any other cash and
non-cash payments. If Manager does not so agree in writing with
any such reseller arrangement with a Related Party of Sprint PCS,
then Manager will have no obligation to opt into or support such
reseller arrangement.
(c) For each three-year period described in section
10.4.1.1(a)(iii):
(i) Sprint PCS will give Manager proposed terms,
fees and conditions applicable to Manager's
participation in resale arrangements by October 31 of
the calendar year before the calendar year in which the
then current reseller period ends (e.g., the initial
reseller period ends on December 31, 2006 so the amount
has to be presented by October 31, 2005). Manager's
representative and the Sprint PCS representative will
begin discussions regarding the proposed terms, fees
and conditions applicable to Manager's participation in
resale arrangements within 20 days after Manager
receives the proposed terms, fees and conditions
applicable to Manager's participation in resale
arrangements from Sprint PCS.
(ii) If the parties do not agree on the new terms,
fees and conditions applicable to Manager's
participation in resale arrangements within 30 days
after the discussions begin, then Manager may escalate
the discussion to the Sprint PCS Chief Financial
Officer or Sprint Spectrum may escalate the discussion
to Manager's Chief Executive Officer or Chief Financial
Officer.
(iii) If the parties cannot agree on the new
terms,
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fees and conditions applicable to Manager's
participation in resale arrangements through the
escalation process within 20 days after the escalation
process begins, then without Manager's prior written
consent, Manager will not be required to participate in
any resale arrangement that is entered into by Sprint
PCS, or renewed or extended, after the Required Resale
Participation Period. Manager will, however, continue
to allow resellers with executed contracts under resale
arrangements existing prior to or entered into, renewed
or extended during the Required Resale Participation
Period, with which Manager opted into or was required
to participate under this agreement, to activate
subscribers with an NPA-NXX assigned to Manager's
Service Area and support such resellers throughout the
then remaining term of their resale arrangement with
Sprint PCS, including any applicable renewal terms and
phase out periods. Manager will continue to receive
Reseller Customer Fees with respect to such resale
arrangements at the same rates in effect at the end of
the Required Resale Participation Period.
Sprint PCS may not amend, modify or change in any manner the
Inter Service Area Fees between Sprint PCS and Manager or
Reseller Customer Fees and other matters set forth in this
section 10.4.1 without Manager's prior written consent, except as
expressly provided in this section. For purposes of
clarification, the parties do not intend the above sentence to
limit Sprint PCS' ability to negotiate fees with resellers.
Sprint PCS will not be obligated to pay Manager those Inter
Service Area Fees not received by Sprint PCS from an Other
Manager who is a debtor in a bankruptcy proceeding with respect
to Inter Service Area Fees that Sprint PCS owes Manager because
of CSAs assigned to such Other Manager's Service Area traveling
in the Service Area. For clarification purposes, Sprint PCS does
not have to advance the Inter Service Area Fees for the Other
Manager who is involved in the bankruptcy proceeding to Manager,
to the extent that the Other Manager fails to pay the Inter
Service Area Fees. Manager bears the risk of loss of the Other
Manager who is involved in the bankruptcy proceeding not paying
the Inter Service Area Fees to Sprint PCS.
If relief is ordered under title 11 of the United States
Code for an Other Manager or an Other Manager files a voluntary
petition for relief under title 11 of the United States Code and
such Other Manager fails to pay to Sprint PCS amounts that such
Other Manager owes to Sprint PCS with respect to the Inter
Service Area Fees for travel into Manager's Service Area, Sprint
PCS will immediately assign to Manager all of its claims and
rights as a creditor of such Other Manager for those
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amounts owed with respect to Inter Service Area Fees for travel
in Manager's Service Area. Sprint PCS agrees to take all actions
necessary to effect this assignment of rights to Manager, and
further agrees that Manager will not be responsible for any
expenses related to such assignment. If Sprint PCS receives any
amounts from an Other Manager involved in a bankruptcy proceeding
with respect to Inter Service Area Fees for travel into the
Service Area, Sprint PCS will immediately remit those amounts to
Manager. If relief is ordered under title 11 of the United States
Code for Sprint PCS or Sprint PCS files a voluntary petition for
relief under title 11 of the United States Code, then Sprint PCS
will be deemed a trustee for Manager's benefit with respect to
any Inter Service Area Fees that Sprint PCS collects from Other
Managers for travel into Manager's Service Area, and Sprint PCS
has no rights to Manager's portion of such Inter Service Area
Fees.
Manager acknowledges that if the manner in which the CSAs
are assigned changes because of changes in the manner in which
the NPA-NXX is utilized, the manner in which the Inter Service
Area Fees and Reseller Customer Fees, if any, will be calculated
might be changed accordingly.
10.4.1.2 Voice and 2G Data Rate. The amount of the Inter
Service Area Voice and 2G Data Fee and Reseller Customer Voice
and 2G Data Fee for arrangements between Sprint PCS and resellers
inexistence as of April 1, 2004, will be as follows:
(a) The Inter Service Area Voice and 2G Data Fee for
each billed minute of use that a Customer uses an Away
Network and the Reseller Customer Fee for each billed minute
of use that a Reseller Customer uses the Service Area
Network, will be $0.058 from the Effective Date to December
31, 2006.
(b) For each calendar year during the Term of this
agreement beginning January 1, 2007, the Inter Service Area
Voice and 2G Data Fee for each billed minute of use that a
Customer uses an Away Network and the Reseller Customer Fee
for each billed minute of use that a Reseller Customer uses
the Service Area Network, will be an amount equal to 90% of
Sprint PCS' Retail Yield for Voice and 2G Data Usage for the
previous calendar year; provided that such amount for any
period will not be less than Manager's network costs
(including a reasonable return using Manager's weighted
average cost of capital applied against Manager's net
investment in the Service Area Network) to provide the
services that are subject to the Inter Service Area Voice
and 2G Data Fee. If the parties have a dispute relating to
the determination of the foregoing fees for any period, then
the parties will submit the dispute to binding arbitration
as set forth in section 10.4.1.3(b).
33
10.4.1.3 3G Data Rate. The amount of the Inter Service Area
3G Data Fee and Reseller Customer 3G Data Fee for arrangements
between Sprint PCS and resellers in existence as of April 1,
2004, will be as follows:
(a) From the Effective Date to December 31, 2006
("INITIAL 3G DATA FEE PERIOD"), the Inter Service Area 3G
Data Fee for each kilobyte of use that a Customer uses an
Away Network and the Reseller Customer 3G Data Fee for each
kilobyte of use that a Reseller Customer uses the Service
Area Network, will be $0.0020; except with respect to Sprint
3G Data Service as defined and set out in the Program
Requirement 3.5.2.
(b) The parties will reset the Inter Service Area 3G
Data Fee and the Reseller Customer 3G Data Fee after the
Initial 3G Data Fee Period ends. The Inter Service Area 3G
Data Fee and the Reseller Customer 3G Data Fee will be based
on an appropriate discount from the Sprint PCS Retail Yield
for 3G Data Usage for the previous calendar year to be
negotiated before December 31, 2006. Each subsequent fee
period will last three years with, for example, the second
pricing period beginning on January 1, 2007 and ending on
December 31, 2009.
The process for resetting the fees is as follows:
(i) Sprint PCS will give Manager a proposal for
the appropriate discount from the Sprint PCS Retail
Yield for 3G Data Usage by March 31 of the final year
of the then current pricing period. Manager's
representative and the Sprint PCS representative will
begin discussions regarding the proposed schedule of
fees within 20 days after Manager receives the proposed
schedule of fees from Sprint PCS.
(ii) Manager may escalate the discussion to the
Chief Financial Officer of Sprint PCS or Sprint PCS may
escalate the discussion to Manager's Chief Executive
Officer or Chief Financial Officer if the parties do
not agree on a new schedule of fees within 30 days
after the discussions begin.
(iii) If the parties cannot agree on a new
schedule of fees within 20 days after a party escalates
the discussion, then Manager may either agree to the
fees set forth in the Inter Service Area 3G Data Fee
and Reseller Customer 3G Data Fee proposal or submit
the determination of the Inter Service Area 3G Data Fee
and Reseller Customer 3G Data
34
Fee to binding arbitration based on a market-rate
determination of an appropriate Inter Service Area 3G
Data Fee and Reseller Customer 3G Data Fee in
accordance with section 14.2, excluding the escalation
process set forth in section 14.1.
(iv) If Manager submits the matter to arbitration
the fees that Sprint PCS proposed will apply starting
after December 31 of the first year of the appropriate
period as described in section 10.4.1.4 and will
continue in effect unless modified by the final
decision of the arbitrator. If the arbitrator imposes a
fee different than the ones in effect the new fees will
be applied as if in effect after December 31 of the
first year of the appropriate period as described in
section 10.4.1.4 and if on application of the new fees
one party owes the other party any amount after taking
into account payments the parties have already made
then the owing party will pay the other party within 30
days of the date of the final arbitration order.
10.4.1.4 Rate Changes - Effective Date. All rate changes
related to Inter Service Area Fees and Reseller Customer Fees
will be applied to all activity in a bill cycle regardless of
when the activity occurred, if the bill cycle ends after the
effective date of the rate change.
10.4.1.5 Long Distance. The long distance rates associated
with the Inter Service Area and Reseller Customer usage will be
equal to the actual wholesale transport and terminating costs
associated with the originating and terminating locations. The
rates are then applied to cumulative usage at a BID level for
settlement purposes.
10.4.2 INTERCONNECT FEES. Manager will pay to Sprint PCS (or to
other carriers as appropriate) monthly the interconnect fees, if any,
as provided under section 1.4.
10.4.3 TERMINATING AND ORIGINATING ACCESS FEE. Sprint PCS will
pay Manager 92% of any terminating or originating access fees Sprint
PCS collects from an IXC that are not subject to refund or dispute
(but it will not be Billed Revenue). For purposes of clarification,
Sprint Corporation's Related Parties are obligated to pay terminating
access to Sprint PCS only if MCI and AT&T pay terminating or
originating access to Sprint PCS. At the Effective Date of Addendum X,
neither MCI nor AT&T pays terminating access to Sprint PCS. The
ability of wireless carriers to collect access fees is currently
subject to legal challenge. The parties acknowledge that Sprint PCS
has limited ability to require IXCs to pay access fees.
35
10.4.4 REIMBURSEMENTS FOR MISTAKEN PAYMENTS. If one party
mistakenly pays an amount that the other party is obligated to pay
then the other party will reimburse the paying party, if the paying
party identifies the mistake and notifies the receiving party within 9
calendar months after the date on which the paying party makes the
mistaken payment.
10.5 TAXES AND PAYMENTS TO THE GOVERNMENT. Manager will pay or
reimburse Sprint PCS for any sales, use, gross receipts or similar tax,
administrative fee, telecommunications fee or surcharge for taxes or fees
that a governmental authority levies on the fees and charges payable by
Sprint PCS to Manager.
Manager will report all taxable property to the appropriate taxing
authority for ad valorem tax purposes. Manager will pay as and when due all
taxes, assessments, liens, encumbrances, levies and other charges against
the real estate and personal property that Manager owns or uses in
fulfilling its obligations under this agreement.
Manager is responsible for paying all sales, use or similar taxes on
the purchase and use of its equipment, advertising and other goods or
services in connection with this agreement.
Sprint PCS will be solely responsible for remitting to government
agencies or their designees any and all fees or other amounts owed as a
result of the services provided to the Customers under the Management
Agreement. As a consequence of this responsibility, Sprint PCS is entitled
to 100% of any amounts that Manager, Sprint PCS or their Related Parties
receives from Customers (including Customers whose NPA-NXX is assigned to
the Service Area) relating to these fees or other amounts.
10.6 UNIVERSAL SERVICE FUNDS.
10.6.1 PAID BY GOVERNMENT. Manager is entitled to 100% of any
federal and state subsidy funds (the "SUBSIDY FUNDS"), including
Universal Service Funds, that Manager or Sprint PCS receives from
government disbursements based on customers with mailing addresses
located in the Service Area and with NPA-NXXs assigned to the Service
Area, or such other method then in effect under the rules of the FCC,
Universal Service Administrative Company or other federal or state
administrator. For purposes of clarity, Universal Service Funds
provide support payments to Eligible Telecommunications Carriers
("ETC") serving in high cost areas or providing services to low income
individuals. Sprint PCS will file on behalf of itself or Manager
appropriate ETC documentation in those jurisdictions in which Sprint
PCS determines to make the filing.
36
If Manager asks Sprint PCS to make a filing in a jurisdiction and
Sprint PCS reasonably determines not to make the filing because making
the filing is detrimental to Sprint's best interests, then Sprint does
not have to make the filing. If Manager disagrees with the
reasonableness of Sprint PCS' determination not to make the filing,
then the parties will submit to binding arbitration in accordance with
section 14.2, excluding the escalation process set forth in section
14.1.
If the process set forth in the previous paragraph results in
Sprint PCS making a filing, Manager will pay all of Sprint PCS'
reasonable out-of-pocket costs associated with the filing and any
compliance obligations that arise from the filing or that are imposed
by the jurisdiction in which the filing is made (e.g. filing fees,
legal fees, expert witness retention, universal lifeline service,
enhancing customer care quality, and including, without limitation,
network upgrades). Sprint PCS will remit to Manager 50% of any Subsidy
Funds that Sprint PCS receives from filings Sprint PCS is required to
make under the preceding paragraph that are not payable to Manager
under the first paragraph of this section 10.6.1, until the aggregate
amount of the payments to Manager under this sentence equals 50% of
the amount Manager has paid Sprint PCS under the preceding sentence.
All Subsidy Funds received must be used to support the provision,
maintenance and upgrading of facilities and services for which the
funds are intended. Sprint PCS will attempt to recover from the
appropriate governmental authority Subsidy Funds and will remit the
appropriate recoveries to Manager.
10.6.2 PAID BY CUSTOMERS. Sprint PCS will be solely responsible
for remitting to government agencies or their designees, including but
not limited to the Universal Service Administrative Company, all
universal service fees. As a consequence of this responsibility,
Sprint PCS is entitled to 100% of any amounts that Manager, Sprint PCS
or their Related Parties receives from Customers (including Customers
whose NPA-NXX is assigned to the Service Area) relating to the
Universal Service Funds.
10.7 EQUIPMENT REPLACEMENT PROGRAM. Sprint PCS is entitled to 100% of
the amounts that Customers pay for participating in any equipment
replacement program billed on their Sprint PCS bills. Manager will not be
responsible for or in any way billed for any costs or expenses that Sprint
PCS or any Sprint PCS Related Party incurs in connection with any such
equipment replacement program.
10.8 CUSTOMER EQUIPMENT. Sprint PCS is entitled to 100% of the amounts
that Customers pay for subscriber equipment and accessories sold or leased
by Sprint PCS, and Manager is entitled to 100% of the
37
amounts that Customers pay for subscriber equipment and accessories that
Manager sold or leased, subject to the equipment settlement process in
section 4.1.2.
10.9 PHASE I E911. Sprint PCS is entitled to collect 100% of the E911
Phase I Surcharges (e.g., for equipment other than handsets, such as
platforms and networks). Sprint PCS will attempt to recover from the
appropriate governmental authority Phase I E911 reimbursements and will
remit the appropriate amounts to Manager.
10.10 MANAGER DEPOSITS INTO RETAIL BANK ACCOUNTS. Each Business Day,
Manager will deposit into bank accounts and authorize Sprint PCS or a
Related Party that Sprint PCS designates to sweep from such accounts the
amounts collected from Customers on behalf of Sprint PCS and its Related
Parties for Sprint PCS Products and Services. Manager will allow the funds
deposited in the bank accounts to be transferred daily to other accounts
that Sprint PCS designates. Manager will also provide the daily reports of
the amounts collected that Sprint PCS requires. Manager will not make any
changes to the authorizations and designations Sprint PCS designates for
the bank accounts without Sprint PCS' prior written consent.
10.11 MONTHLY STATEMENTS.
10.11.1 SECTION 10.2 STATEMENT. Each month Sprint PCS will
determine the amount payable to or due from Manager for a Billed Month
under section 10.2. Sprint PCS will deliver a monthly statement to
Manager that reports the amount due to Manager, the manner in which
the amount was calculated, the amount due to Sprint PCS and its
Related Parties under this agreement and the Services Agreement, and
the net amount payable to or due from Manager.
10.11.2 OTHER STATEMENTS. Sprint PCS will deliver a monthly
statement to Manager that reports amounts due to Manager or from
Manager, other than amounts described in section 10.12.1, the manner
in which the amounts were calculated, the amount due to Manager or to
Sprint PCS and its Related Parties under this agreement and the
Services Agreement, and the net amount payable to Manager.
10.11.3 THIRD PARTY CHARGES. Sprint PCS will include any third
party charges on Manager's statements within three calendar months
after the end of the calendar month during which Sprint PCS receives
the third party charge. Sprint PCS' failure to include these charges
on Manager's statements within the three calendar month-period will
mean that Sprint PCS cannot collect those third party charges from
Manager.
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10.12 PAYMENTS.
10.12.1 WEEKLY PAYMENTS. Sprint PCS will pay the amount payable
to Manager for a Billed Month under section 10.2 in equal weekly
payments on consecutive Thursdays beginning the second Thursday of the
calendar month following the Billed Month and ending on the first
Thursday of the second calendar month after the Billed Month. If
Sprint PCS is unable to determine the amount due to Manager in time to
make the weekly payment on the second Thursday of a calendar month,
then Sprint PCS will pay Manager for that week the same weekly amount
it paid Manager for the previous week. Sprint PCS will true-up any
difference between the actual amount due for the first weekly payment
of the Billed Month and amounts paid for any estimated weekly payments
after Sprint PCS determines what the weekly payment is for that month.
Sprint PCS will use reasonable efforts to true-up within 10 Business
Days after the date on which Sprint PCS made the estimated weekly
payment.
10.12.2 MONTHLY PAYMENTS. The amounts payable to Manager and
Sprint PCS and its Related Parties under this agreement and the
Services Agreement, other than the payments described in section
10.12.1, will be determined, billed and paid monthly in accordance
with section 10.12.3.
10.12.3 TRANSITION OF PAYMENT METHODS. (a) Sprint PCS and Manager
wish to conduct an orderly transition from making weekly payments to
Manager based on Collected Revenues to weekly payments based on Billed
Revenue. The method of calculating the weekly payments will change on
the first day of the calendar month after the Effective Date of
Addendum X (the "TRANSITION DATE"). The weekly amounts paid to Manager
during the calendar month before the Transition Date and on the first
Thursday after the Transition Date will be based on the Collected
Revenues method. The weekly amounts paid to Manager beginning on the
second Thursday of the second calendar month after the Transition Date
will be based on the Billed Revenue method described in this section
10. To effect an orderly transition, Sprint PCS will pay Manager for
the period beginning on the second Thursday after the Transition Date
and ending on the first Thursday of the calendar month after the
Transition Date an amount calculated as described below in section
10.12.3(b).
(b) Sprint PCS will apply the estimated collection percentages
that Sprint PCS uses before the Transition Date to the gross accounts
receivable aging categories for Customers with an NPA-NXX assigned to
the Service Area as of the close of business on the day before the
Transition Date to calculate the amount Sprint PCS anticipates
collecting on those accounts receivable. Sprint PCS will pay Manager
the amount estimated to be collected in equal weekly payments on
consecutive Thursdays beginning the second Thursday after the
Transition
39
Date and ending the first Thursday of the calendar month after the
Transition Date. Sprint PCS will also pay to Manager no later than the
second Thursday after the Transition Date any Collected Revenues
received after the Saturday before the Transition Date and before the
Transition Date.
(c) Sprint PCS will recalculate the estimated collection
percentages and apply the recalculated estimated collection
percentages to the gross accounts receivable aging categories
described in the first sentence of section 10.12.3(b) when all
applicable data is available. Sprint PCS will increase or decrease a
weekly payment by the amount of the difference between the amount paid
to Manager based on the initial estimated collection percentages and
the amount that would have been paid to Manager using the newer
estimated collection percentages.
10.13 DISPUTE OR CORRECTION OF STATEMENT AMOUNT. A party can only
dispute or correct an amount on a statement in good faith. If a party
disputes or corrects an amount on a statement, the disputing or correcting
party must give the other party written notice of the specific item
disputed or corrected, the disputed or corrected amount with respect to
that item and the reason for the dispute or correction within three
calendar months after the end of the calendar month during which the
disputed or erroneous statement was delivered.
Any dispute regarding a statement will be submitted for resolution
under the dispute resolution process in section 14. The parties must
continue to pay to the other party all amounts, except disputed amounts
(subject to the next paragraph), owed under this agreement and the Services
Agreement during the dispute resolution process. If the aggregate disputed
amount, combined with any aggregate disputed amount under section 10.14,
exceeds $1,000,000, and upon the written request of the other party, the
party disputing the amount (the "DISPUTING PARTY") will deposit the portion
of the disputed amount in excess of $1,000,000 into an escrow account that
will be governed by an escrow agreement in a form to be mutually agreed
upon by the parties. The Disputing Party will deposit the amount into the
escrow account within 10 Business Days after its receipt of the written
request from the other party in accordance with the foregoing. If the
Disputing Party complies with the requirements of this paragraph, then the
other party or its Related Parties may not declare the Disputing Party in
breach of this agreement or the Services Agreement because of nonpayment of
the disputed amount, pending completion of the dispute resolution process.
The escrow agent will be an unrelated third party that is in the
business of serving as an escrow agent for or on behalf of financial
institutions. The parties will share evenly the escrow agent's fees. The
escrow agent will invest and reinvest the escrowed funds in interest-
40
bearing money market accounts or as the parties otherwise agree. The escrow
agent will disburse the escrowed funds in the following manner based on the
determination made in the dispute resolution process:
(a) If the Disputing Party does not owe any of the disputed
amounts, then the escrow agent will return all of the escrowed funds
to the Disputing Party with the interest earned on the escrowed funds.
(b) If the Disputing Party owes all of the disputed amounts, then
the escrow agent will disburse all of the escrowed funds with the
interest earned on the escrowed funds to the non-disputing party. If
the interest earned is less than the amount owed based on the Default
Rate, then the Disputing Party will pay the non-disputing party the
difference between those amounts.
(c) If the Disputing Party owes a portion of the disputed
amounts, then the escrow agent will disburse to the non-disputing
party the amount owed with interest at the Default Rate from the
escrowed funds and disburse the balance of the escrowed funds to the
Disputing Party. The Disputing Party will pay the non-disputing party
the amount owed for interest at the Default Rate if the amount of the
escrowed funds is insufficient.
Manager and Sprint PCS will take all reasonable actions necessary to
allow the Disputing Party to continue to reflect the amounts deposited into
the escrow account by the Disputing Party as assets in the Disputing
Party's financial statements.
The parties will use the dispute resolution process under section 14.2
of this agreement, excluding the escalation process set forth in section
14.1, if they cannot agree on the form of escrow agreement.
The parties agree that, despite this section 10.13, Manager will pay
all disputed amounts due to Sprint PCS or any Related Party for fees for
CCPU Services and CPGA Services payable under the Services Agreement for
periods ending on or before December 31, 2006, subject to any other rights
and remedies that Manager has under this agreement and the Services
Agreement.
The dispute of an item in a statement does not stay or diminish a
party's other rights and remedies under this agreement, except that a party
must complete the dispute resolution process in section 14 before taking
any legal or equitable action against the other party.
10.14 DISPUTE OR CORRECTION OF A THIRD PARTY INVOICE AMOUNT. Sprint
PCS will include the applicable portion of any amount based on a
41
third party invoice in a statement to Manager within three calendar months
after Sprint PCS' receipt of the third party invoice. Sprint PCS' failure
to include the amount in a statement to Manager within the three calendar
month-period will mean that the third party charges will not be collectible
from Manager.
A party can dispute or correct an amount based on a third party
invoice only in good faith. Modified invoices received by Sprint PCS from a
third party vendor and then sent by Sprint PCS to Manager will be treated
as a new statement for purposes of this section, so long as the modified
statement was revised in good faith and not simply to provide Sprint PCS
additional time to resubmit a previous invoice.
If a party disputes or corrects an amount on a third party invoice or
the amount Sprint PCS attributed to Manager, the disputing party must give
the other party written notice of the specific item disputed or corrected,
the disputed or corrected amount with respect to that item and the reason
for the dispute or correction within three calendar months after the end of
the calendar month during which the disputed or erroneous statement was
delivered. Sprint PCS and Manager will cooperate with each other to obtain
the information needed to determine if the amounts billed by the third
party and allocated to Manager were correct.
Any dispute regarding the amount of the third party invoice Sprint PCS
attributed to Manager will be submitted for resolution under the dispute
resolution process in section 14. Manager must continue to pay to Sprint
PCS all amounts, except disputed amounts, owed under this agreement and the
Services Agreement during the information gathering and dispute resolution
process. If the aggregate disputed amount, combined with any aggregate
disputed amount under section 10.13, exceeds $1,000,000, and upon the
written request of Sprint PCS, Manager will deposit the portion of the
disputed amount in excess of $1,000,000 into an escrow account that will be
governed by an escrow agreement containing terms similar to the general
terms described in section 10.13 and in a form to be mutually agreed upon
by the parties. Manager will deposit the amount into the escrow account
within 10 Business Days after its receipt of the written request from
Sprint PCS in accordance with the foregoing. If Manager complies with the
requirements of this paragraph, then none of Sprint PCS or its Related
Parties may declare Manager in breach of this agreement or the Services
Agreement because of nonpayment of the disputed amount, pending completion
of the dispute resolution process.
The dispute of an item in a statement does not stay or diminish a
party's other rights and remedies under this agreement, except that the
parties must complete the dispute resolution process in section 14 before
taking any legal or equitable action against each other.
42
10.15 LATE PAYMENTS. Any amount due under this agreement or the
Services Agreement without a specified due date will be due 20 days after
Manager receives an invoice. Any amount due under this agreement and the
Services Agreement (including without limitation any amounts disputed under
those agreements that are ultimately determined to be due) that is not paid
by one party to the other party in accordance with the terms of the
applicable agreement will bear interest at the Default Rate beginning (and
including) the 6th day after the invoice or settlement due date until (and
including) the date paid.
10.16 SETOFF RIGHT IF FAILURE TO PAY AMOUNTS DUE. If Manager fails to
pay any undisputed amount due Sprint PCS or a Related Party of Sprint PCS
under this agreement, any undisputed amount due Sprint PCS or a Related
Party of Sprint PCS under the Services Agreement or any other agreement
with Sprint PCS or a Related Party of Sprint PCS, or any disputed amount
due to Sprint PCS or a Related Party for fees for CCPU Services or CPGA
Services payable under the Services Agreement, then 5 days after the
payment due date Sprint PCS may setoff against its payments to Manager
under this section 10 any such undisputed amount that Manager owes to
Sprint PCS or a Related Party of Sprint PCS. This right of setoff is in
addition to any other right that Sprint PCS or a Related Party of Sprint
PCS might have under this agreement, the Services Agreement or any other
agreements with Sprint PCS or a Related Party of Sprint PCS.
18. TERMINATION RIGHTS [ADDM XI,SS.18]. Section 11.3.7 is deleted, and all
references in the agreement to section 11.3.7 are also deleted.
19. NON-TERMINATION OF AGREEMENT [ADDM I,SS.8]. Sections 11.5.3 and 11.6.4
are replaced with the following paragraphs:
11.5.3 MANAGER'S ACTION FOR DAMAGES OR OTHER RELIEF. Manager, in
accordance with the dispute resolution process in section 14, may seek
damages or other appropriate relief, but such action does not
terminate this agreement.
11.6.4 SPRINT PCS' ACTION FOR DAMAGES OR OTHER RELIEF. Sprint
PCS, in accordance with the dispute resolution process in section 14,
may seek damages or other appropriate relief, but such action does not
terminate this agreement.
20. BUSINESS VALUATION [ADDM VI,SS.4]. A new subsection 11.7.4(f) is added
to the Management Agreement:
(f) In the event the Entire Business Value of Manager is being
determined, the entire value of any Operating Asset may be allocated among
Manager and one or more of the Other Affiliates, where appropriate, but the
sum of the values attributed to such Operating Asset in determining the
Entire
43
Business Value of Manager and the Other Affiliates shall not exceed the
value of such Operating Asset if it were used to calculate only Manager's
Entire Business Value (i.e., "double counting" is prohibited).
21. AUDIT [ADDM XI,SS.21]. Section 12.1.2 is amended and restated in its
entirety to read as follows:
12.1.2 AUDITS. On reasonable advance notice by one party, the other
party must provide its independent or internal auditors access to its
appropriate financial and operating records, including, without limitation,
vendor and distribution agreements, for purposes of auditing the amount of
fees (including the appropriateness of items excluded from the Fee Based on
Billed Revenue), costs, expenses (including operating metrics referred to
in this agreement and the Services Agreement relating to or used in the
determination of Inter Service Area Fees, Reseller Customer Fees, CCPU
Services or CPGA Services) or other charges payable in connection with the
Service Area for the period audited. The party that requested the audit may
decide if the audit is conducted by the other party's independent or
internal auditors. Manager and Sprint PCS may each request no more than one
audit per year.
(a) If the audit shows that Sprint PCS was underpaid then, unless
the amount is contested, Manager will pay to Sprint PCS the amount of
the underpayment within 10 Business Days after Sprint PCS gives
Manager written notice of the underpayment determination.
(b) If the audit determines that Sprint PCS was overpaid then,
unless the amount is contested, Sprint PCS will pay to Manager the
amount of the overpayment within 10 Business Days after Manager gives
Sprint PCS written notice of the overpayment determination.
The auditing party will pay all costs and expenses related to the
audit unless the amount owed to the audited party is reduced by more than
10% or the amount owed by the audited party is increased by more than 10%,
in which case the audited party will pay the costs and expenses related to
the audit.
Sprint PCS will provide a report issued in conformity with Statement
of Auditing Standard No. 70 "Reports on the Processing of Transactions by
Service Organizations" ("TYPE II REPORT" or "MANAGER MANAGEMENT REPORT") to
Manager annually. If Manager, on the advice of its independent auditors or
its legal counsel, determines that a statute, regulation, rule, judicial
decision or interpretation, or audit or accounting rule, policy or
literature published by the accounting or auditing profession or other
authoritative rule making body (such as the Securities
44
and Exchange Commission, the Public Company Accounting Oversight Board or
the Financial Accounting Standards Board) requires additional assurances
beyond SAS 70, then Sprint PCS will cooperate with Manager to provide the
additional assurances. Sprint PCS' independent auditors will prepare any
Type II Report or Manager Management Report provided under this section
12.1.2 and will provide an opinion on the controls placed in operation and
tests of operating effectiveness of those controls in effect at Sprint PCS
over Manager Management Processes. "Manager Management Processes" include
those services generally provided within this agreement, primarily billing
and collection of revenues.
22. SHARING CONFIDENTIAL INFORMATION WITH LENDERS [ADDM II,SS.7]. Section
12.2(b)(vii) of the Management Agreement is replaced with the following
paragraph:
(vii) is disclosed by the receiving party to a financial
institution or accredited investor (as that term is defined in Rule
501(a) under the Securities Act of 1933) that is considering providing
or has provided financing to the receiving party and which financial
institution or accredited investor has agreed to keep the Confidential
Information confidential in accordance with an agreement at least as
restrictive as this section 12.2.
23. REGULATORY NOTICES (COSTS) [ADDM I, SS.2]. The last sentence of section
16.4 is replaced with the following language: "If Sprint PCS chooses to respond
to such communications and complaints, Manager will not respond to them without
the consent of Sprint PCS. Sprint PCS will bear the cost of responding to any
such communications and complaints unless (1) such response is primarily the
result of Manager's acts or omissions that constitute negligence, willful
misconduct, or breach of any provision of this agreement (in which case Manager
will pay the costs of Sprint PCS' response), or (2) Manager's response is not
requested by Sprint PCS."
24. NOTICES [ADDM VIII,SS.10 AND ADDM XI,SS.24]. (a) Section 17.1 is
amended and restated in its entirety to read as follows:
17.1 NOTICES. (a) Any notice, payment, invoice, demand or
communication required or permitted to be given by any provision of this
agreement must be in writing and mailed (certified or registered mail,
postage prepaid, return receipt requested), sent by hand or overnight
courier, charges prepaid or sent by facsimile or email (in either instance
with acknowledgement or read receipt received), and addressed as described
below, or to any other address or number as the person or entity may from
time to time specify by written notice to the other parties. Sprint PCS may
give notice of changes to a Program Requirement by sending an email that
directs Manager to the changed Program Requirement on the affiliate
intranet website.
45
The subject line of any email notice that purports to amend any
Program Requirement must read "Program Requirement Change" and the first
paragraph must indicate (i) which Program Requirement is being modified,
(ii) what is being modified in the Program Requirement, and (iii) when the
Program Requirement will take effect. The email must also include either a
detailed summary of the Program Requirement Change or a redline comparison
between the old Program Requirement and the new Program Requirement.
Any notice, demand or communication intended to be notice of a breach
of an agreement or notice of an Event of Termination must:
(A) clearly indicate that intent,
(B) state the section(s) of the agreements allegedly breached,
and
(C) be mailed or sent by overnight courier in the manner
described in the first paragraph in this section 17.1.
Manager will promptly give Sprint PCS a copy of any notice Manager
receives from the Administrative Agent or any Lender, and a copy of any
notice Manager gives to the Administrative Agent or any Lender. Sprint PCS
will promptly give Manager a copy of any notice that Sprint PCS receives
from the Administrative Agent or any Lender and a copy of any notice that
Sprint PCS gives to the Administrative Agent or any Lender.
All notices and other communications given to a party in accordance
with the provisions of this agreement will be deemed to have been given
when received.
(b) The parties' notice addresses are as follows:
For all entities comprising Sprint PCS:
Sprint PCS
KSOPHJ0212-2A101
6130 Sprint Parkway
Overland Park, KS 66251
Telephone: 913-762-7929
Telecopier: 913-523-0539
Email: dbotto01@sprintspectrum.com
Attention: Vice President - Finance
with a copy to:
46
Sprint Law Department
KSOPHT0101-Z2020
6391 Sprint Parkway
Overland Park, KS 66251
Telephone: 913-315-9315
Telecopier: 913-523-9823
Email: john.w.chapman@mail.sprint.com
Attention: John Chapman
For Manager:
Texas Telecommunications, LP
5225 S. Loop 289
Suite 120
Lubbock, TX 79424
Telephone: 806-722-1100
Telecopier: 806-722-1127
Email: dsharbutt@alamosapcs.com
Attention: David Sharbutt, President
with a copy to:
Crenshaw, Dupree & Milam, L.L.P.
Wells Fargo Center
1500 Broadway, 8th Floor
Lubbock, Texas 79401
Telephone: 806-762-5281
Telecopier: 806-762-3510
Email: JMcCutchin@cdmlaw.com
Attention: Jack McCutchin, Jr.
and with copies to the following individuals' email addresses if a
notice of a Program Requirement Change is sent by email:
Kendall W. Cowan, Chief Financial Officer
Email: kcowan@alamosapcs.com
Stephen A. Richardson, Chief Operating Officer
Email: srichardson@alamosapcs.com
Loyd I. Rinehart, Senior Vice President of Corporate Finance
Email: lrinehart@alamosapcs.com
25. FORCE MAJEURE [ADDM XI,SS.25]. The second paragraph of section 17.9.3
is amended and restated in its entirety to read as follows:
47
Neither Manager nor Sprint PCS, as the case may be, is in breach of
any covenant in this agreement, and no Event of Termination will occur as a
result of the failure of such party to comply with any covenant, if the
party's non-compliance with the covenant results primarily from:
(i) any FCC order or any other injunction that any governmental
authority issues that impedes the party's ability to comply with the
covenant,
(ii) the failure of any governmental authority to grant any
consent, approval, waiver or authorization or any delay on the part of
any governmental authority in granting any consent, approval, waiver
or authorization,
(iii) the failure of any vendor to deliver in a timely manner any
equipment or service, or
(iv) any act of God, act of war or insurrection, riot, fire,
accident, explosion, labor unrest, strike, civil unrest, work
stoppage, condemnation or any similar cause or event not reasonably
within the control of the party.
26. GOVERNING LAW, JURISDICTION AND CONSENT TO SERVICE OF PROCESS [ADDM
VIII,SS.8]. Section 17.12 of the Management Agreement is replaced with the
following language:
17.12 GOVERNING LAW, JURISDICTION AND CONSENT TO SERVICE OF PROCESS.
17.12.1 GOVERNING LAW. The internal laws of the State of Kansas
(without regard to principles of conflicts of law) govern the validity
of this agreement, the construction of its terms, and the
interpretation of the rights and duties of the parties.
17.12.2 JURISDICTION; CONSENT TO SERVICE OF PROCESS.
(a) Each party hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive
jurisdiction of any Kansas State court sitting in the County of
Johnson or any Federal court of the United States of America
sitting in the District of Kansas, and any appellate court from
any such court, in any suit action or proceeding arising out of
or relating to this agreement, or for recognition or enforcement
of any judgment, and each party hereby irrevocably and
unconditionally agrees that all claims in respect of any such
suit, action or proceeding may be heard and determined in such
Kansas State Court or, to the extent permitted by law, in such
Federal court.
48
(b) Each party hereby irrevocably and unconditionally
waives, to the fullest extent it may legally do so, any objection
which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this
agreement in Kansas State court sitting in the County of Johnson
or any Federal court sitting in the District of Kansas. Each
party hereby irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance
of such suit, action or proceeding in any such court and further
waives the right to object, with respect to such suit, action or
proceeding, that such court does not have jurisdiction over such
party.
(c) Each party irrevocably consents to service of process in
the manner provided for the giving of notices pursuant to this
agreement, provided that such service shall be deemed to have
been given only when actually received by such party. Nothing in
this agreement shall affect the right of a party to serve process
in another manner permitted by law.
27. TRANSFER OF SPRINT PCS NETWORK [ADDM VI,SS.8]. The first sentence of
section 17.15.5 is replaced with the following sentence:
In conjunction with the sale of the Sprint PCS Network, Sprint PCS may
sell, transfer or assign the Sprint PCS Network and any of the Licenses,
including its rights and obligations under this agreement, the Services
Agreement and any related agreements, to a third party without Manager's
consent so long as the third party assumes the rights and obligations under
this agreement and the Services Agreement.
28. ANNOUNCED TRANSACTIONS [ADDM I,SS.9]. Section 17.24 is deleted.
29. ADDITIONAL TERMS AND PROVISIONS [ADDM I,SS.10 AND ADDM XI,SS.29].
Section 17.25 is replaced with the following paragraph:
17.25 ADDITIONAL TERMS AND PROVISIONS. Certain additional and
supplemental terms and provisions of this agreement, if any, are set forth
in the Addendum to Sprint PCS Management Agreement, which is incorporated
into this agreement by this reference. Manager represents and warrants that
all existing contracts and arrangements (written or verbal) that relate to
or affect the rights of Sprint PCS or any of its Related Parties under this
agreement (e.g., agreements relating to long-distance telephony services
(section 3.4)) are described on Exhibit 17.25, and Manager agrees to
deliver photocopies of such agreements to Sprint PCS upon request to the
extent permissible by the terms of the agreement.
30. FEDERAL CONTRACTOR COMPLIANCE [ADDM I, SS.11]. A new section 17.28, the
text of which is attached as Exhibit A to Addendum I, is added and incorporated
by this reference. When and to the extent required by applicable law, Manager
will comply with the requirement of this section 17.28.
49
31. YEAR 2000 COMPLIANCE [ADDM I,SS.12]. A new section 17.29 is added to
the Management Agreement:
17.29 YEAR 2000 COMPLIANCE. Sprint PCS and Manager each separately
represents and warrants that any system or equipment acquired, operated or
designated by it for use in the Service Area Network or for use to support
the Service Area Network, including (without limitation) billing, ordering
and customer service systems, will be capable of correctly processing and
receiving date data, as well as properly exchanging date data with all
products (for example, hardware, software and firmware) with which the
Service Area Network is designed to be used, and will not malfunction or
fail to function due to an inability to process correctly date data in
conformance with Sprint PCS requirements for "Year 2000 Compliance." If the
Service Area Network or any system used to support the Service Area Network
fails to operate as warranted due to defects or failures in any system or
equipment selected by Manager (including systems or equipment of third
party vendors and subcontractors selected by Manager rather than by Sprint
PCS) Manager will, at its own expense, make the repairs, replacements or
upgrades necessary to correct the failure and provide a Year 2000 Compliant
Service Area Network. If the Service Area Network or any system used to
support the Service Area Network fails to operate as warranted due to
defects or failures in any systems or equipment selected by Sprint PCS
(including systems or equipment of third party vendors and subcontractors
that Sprint PCS selects and requires Manager to use), Sprint PCS will, at
its own expense, make the repairs, replacements or upgrades necessary to
correct the failure and provide a Year 2000 Compliant Service Area Network.
"YEAR 2000 COMPLIANCE" means the functions, calculations, and other
computing processes of the Service Area Network (collectively "Processes")
that perform and otherwise process, date-arithmetic, display, print or pass
date/time data in a consistent manner, regardless of the date in time on
which the Processes are actually performed or the dates used in such data
or the nature of the date/time data input, whether before, during or after
January 1, 2000 and whether or not the date/time data is affected by leap
years. To the extent any part of the Service Area Network is intended to be
used in combination with other software, hardware or firmware, it will
properly exchange date/time data with such software, hardware or firmware.
The Service Area Network will accept and respond to two-digit year-date
input, correcting or supplementing as necessary, and store, print, display
or pass date/time data in a manner that is unambiguous as to century. No
date/time data will cause any part of the Service Area Network to perform
an abnormally ending routine or function within the Processes or generate
incorrect final values or invalid results.
32. CROSS-DEFAULT [ADDM VI,SS.2 AND ADDM VII,SS.2]. A new section 17.30 is
added to the Management Agreement:
17.30 CROSS-DEFAULT. A breach or Event of Termination under any of the
Sprint Agreements (as that term is defined in the Consent and Agreement) by
50
Alamosa Wisconsin Limited Partnership, a Wisconsin limited partnership,
Alamosa Missouri, LLC (f/k/a Roberts Wireless Communications, LLC), a
Missouri limited liability company, Southwest PCS, L.P., an Oklahoma
limited partnership, or Washington Oregon Wireless LLC, a Delaware limited
liability company, or their respective successors or assigns (collectively
the "OTHER AFFILIATES") also constitutes a breach or Event of Termination,
as the case may be, by Manager of the same provision of the applicable
Sprint Agreement to which Manager is a party, and the Sprint Parties (as
that term is defined in the Consent and Agreement) shall have the same
rights under the Sprint Agreements and the Consent and Agreement to which
Manager is a party as if the same breach or Event of Termination had
occurred under such Sprint Agreement. Such breach or Event of Termination
by an Other Affiliate shall not qualify as a force majeure under the Sprint
Agreements or the Consent and Agreement.
33. PERFORMANCE/PAYMENT OF OTHER AFFILIATES' OBLIGATIONS [ADDM VI,SS.3]. A
new section 17.31 is added to the Management Agreement:
17.31 PERFORMANCE/PAYMENT OF OTHER AFFILIATES' OBLIGATIONS. To induce
the Sprint Parties to enter into the Consent and Agreement with Citicorp,
Manager absolutely and unconditionally guarantees the prompt and punctual
performance and payment of the Obligations (as that term is defined in the
Consent and Agreement) of the Other Affiliates and their respective
successors or assigns when due and payable pursuant to the terms of the
Other Affiliates' Sprint Agreements as they may be amended and modified.
Manager agrees that the Sprint Parties shall not be required first to
collect from any other guarantor of any such obligation or to proceed
against or exhaust any collateral or security for any obligation before
requiring Manager to perform or pay the obligation guaranteed under this
section. Any Sprint Party may bring suit against Manager without joining
the Other Affiliates or any other guarantor. Manager agrees that notice
given by a Sprint Party to any Other Affiliate under such Other Affiliate's
Sprint Agreements or the Consent and Agreement constitutes notice to
Manager.
34. FINANCIAL INFORMATION [ADDM IV,SS.2]. A new section 17.32 is added to
the Management Agreement:
17.32 COPIES OF FINANCIAL INFORMATION. Manager agrees to give Sprint
PCS a copy of all financial information it gives the Administrative Agent
or any Lender (as such parties are defined in the Consent and Agreement).
SERVICES AGREEMENT
35. NON-EXCLUSIVE SERVICE [ADDM XI,SS.35]. Section 1.3 of the Services
Agreement is amended and restated in its entirety to read as follows:
1.3 NON-EXCLUSIVE SERVICES. Nothing contained in this agreement
confers upon Manager an exclusive right to any of the Services. Sprint
Spectrum may contract with others to provide expertise and
51
services identical or similar to those to be made available or provided to
Manager under this agreement.
36. CHANGES TO ARTICLE 2 [ADDM XI,SS.36; REVISED BY THIS ADDENDUM]. Article
2 of the Services Agreement is amended and restated in its entirety to read as
follows:
2. SERVICES
2.1 SERVICES.
2.1.1 SERVICES. Subject to the terms of this agreement, through
December 31, 2006, Manager will obtain the services set forth on
Schedule 2.1.1 attached to this agreement ("SERVICES") from Sprint
Spectrum in accordance with this section 2.1, and Sprint Spectrum will
provide all or none of the Services. For purposes of clarification, as
of the Effective Date of Addendum X through December 31, 2006, Sprint
Spectrum is providing all of the Services to Manager and Sprint
Spectrum will not provide individual Services.
The fees charged for the Services and the process for setting the
fees charged for the Services are set forth in section 3.2. Sprint
Spectrum may designate additional Services upon at least 60 days'
prior written notice to Manager by providing an amended Schedule 2.1.1
to Manager in accordance with the provisions of section 9.1.
Without Manager's prior written consent, neither Sprint Spectrum
nor any of its Related Parties will require Manager to pay for:
(A) any of those additional CCPU Services or CPGA Services to the
extent that they are the same as or functionally equivalent to any
service or benefit that Manager currently receives from Sprint
Spectrum or its Related Parties or Sprint PCS or its Related Parties
but for which Manager does not pay a separate fee immediately after
the Effective Date, or
(B) any other additional CCPU Services or CPGA Services through
December 31, 2006. After that date the fee for those other additional
Services will be included in the fees for CCPU Services and CPGA
Services.
2.1.2 DISCONTINUANCE OF SERVICES. If Sprint Spectrum determines
to no longer offer a Service, then Sprint Spectrum must
(i) notify Manager in writing a reasonable time before
discontinuing the Service, except Sprint will notify Manager at
least 9 months before Sprint plans to
52
discontinue a significant Service (e.g., billing, collection and
customer care).
(ii) discontinue the Service to all Other Managers.
If Manager determines within 90 days after receipt of notice of
discontinuance that it wants to continue to receive the Service,
Sprint Spectrum will use commercially reasonable efforts to:
(a) help Manager provide the Service itself or find another
vendor to provide the Service, and
(b) facilitate Manager's transition to the new Service
provider.
The fees charged by Sprint Spectrum for the CCPU Services and
CPGA Services will be reduced by any fees payable by Manager to a
vendor or new Service provider in respect of discontinued CCPU
Services and CPGA Services, if (x) Sprint Spectrum procures such CCPU
Services or CPGA Services from a vendor or a new Service provider and
bills those items as Settled-Separately Manager Expenses (as defined
in subsection 3.2.5 of this agreement), or (y) Manager procures such
CCPU Services or CPGA Services from a vendor or a new provider of
Services, or (z) Manager self-provisions the Service. No adjustment to
the fees will be made if Sprint Spectrum discontinues a CCPU Service
or CPGA Service and Sprint Spectrum does not provide the CCPU Service
or CPGA Service to end users.
2.1.3 PERFORMANCE OF SERVICES. Sprint Spectrum may select the
method, location and means of providing the Services. If Sprint
Spectrum wishes to use Manager's facilities to provide the Services,
Sprint Spectrum must obtain Manager's prior written consent.
2.2 THIRD PARTY VENDORS. Some of the Services might be provided by
third party vendors under arrangements between Sprint Spectrum and the
third party vendors. In some instances, Manager may receive Services from a
third party vendor under the same terms and conditions that Sprint Spectrum
receives those services. In other instances, Manager may receive Services
under the terms and conditions set forth in an agreement between Manager
and the third party vendor.
37. CHANGES TO ARTICLE 3 [ADDM XI,SS.37; REVISED BY THIS ADDENDUM]. (a)
Section 13 of Addendum I is deleted. Article 3 of the Services Agreement is
amended and restated in its entirety to read as follows:
3. FEES FOR SERVICES
53
3.1 SERVICES. Manager will pay Sprint Spectrum a fee for the Services
provided by or on behalf of Sprint Spectrum now or in the future, subject
to Section 2.1.1. Manager may not obtain these Services from other sources,
except as provided in this agreement.
If an accounting classification change has the effect of moving a
Service from a CCPU Service or CPGA Service to a Settled-Separately Manager
Expense, the fees for the CCPU Services or CPGA Services, as applicable,
charged by Sprint Spectrum will be reduced by the fees payable by Manager
for the new Settled-Separately Manager Expense.
3.2 FEES FOR SERVICES.
3.2.1 INITIAL PRICING PERIOD. The fees Manager will pay Sprint
Spectrum for the CCPU Services and CPGA Services provided to Manager
by or on behalf of Sprint Spectrum each month from the Effective Date
of Addendum XII until December 31, 2006 ("INITIAL PRICING PERIOD"),
will be:
(a) for the CCPU Services: $7.00 per subscriber multiplied
by the Number of Customers in Manager's Service Area, and
(b) for the CPGA Services: $23.00 per Gross Customer
Addition in Manager's Service Area multiplied by the Gross
Customer Additions in Manager's Service Area.
The fees will be paid as set forth in section 10 of the
Management Agreement.
3.2.2 PRICING PROCESS. The parties will reset the CCPU and CPGA
amounts to be applied in each pricing period after the Initial Pricing
Period ends. Each subsequent pricing period will last three years (if
Manager continues to use Sprint Spectrum or a Related Party to provide
these Services) with, for example, the second pricing period beginning
on January 1, 2007 and ending on December 31, 2009.
The process for resetting the amounts is as follows:
(a) Sprint Spectrum will give Manager proposed CCPU and CPGA
amounts by October 31 of the calendar year before the calendar year in
which the then current pricing period ends (e.g. if the pricing period
ends on December 31, 2006 then the amounts have to be presented by
October 31, 2005). The proposed amounts will be based on the amount
necessary to recover Sprint PCS' reasonable costs for providing the
CCPU Services and CPGA Services to Manager and the Other Managers.
Manager's representative and the Sprint PCS
54
representative will begin discussions regarding the proposed CCPU and
CPGA amounts within 20 days after Manager receives the proposed CCPU
and CPGA amounts from Sprint Spectrum.
(b) The fee Manager will pay Sprint Spectrum for the CCPU
Services provided to Manager by or on behalf of Sprint Spectrum each
month beginning on January 1, 2007 until December 31, 2008 under the
pricing process described in this section 3.2.2 will not exceed $8.50
per subscriber multiplied by the Number of Customers in Manager's
Service Area.
(c) If the parties do not agree on new CCPU and CPGA amounts
within 30 days after the discussions begin, then Manager may escalate
the discussion to the Sprint PCS Chief Financial Officer or Sprint
Spectrum may escalate the discussion to Manager's Chief Executive
Officer or Chief Financial Officer.
(d) If the parties cannot agree on the new CCPU and CPGA amounts
through the escalation process within 20 days after the escalation
process begins, then Manager may either
(i) submit the determination of the CCPU and CPGA amounts to
binding arbitration under section 14.2 of this agreement,
excluding the escalation process set forth in section 14.1 and
continue obtaining all of the CCPU Services and CPGA Services
from Sprint Spectrum at the CCPU and CPGA amounts the arbitrator
determines, or
(ii) procure from a vendor other than Sprint Spectrum or
self-provision all of the Services.
By December 1, 2006, the parties will agree on a service level
agreement for customer care services and collection services
("CUSTOMER-RELATED SERVICES") that will apply to Customer-Related
Services delivered by Sprint Spectrum starting on January 1, 2007. If
the parties cannot agree on a service level agreement by December 1,
2006, either party may submit a proposed service level agreement to
binding arbitration under section 14.2 of the Management Agreement,
excluding the escalation process set forth in section 14.1. If the
arbitration concludes after January 1, 2007 the service level
agreement, as agreed upon through the arbitration process, will be
effective as of January 1, 2007. The agreement will set forth 5
metrics for Customer-Related Services and will provide that Sprint
Spectrum will use commercially reasonable efforts to meet the industry
averages for those metrics as in effect on December 1, 2006. The 5
metrics are:
(a) Service Grade Rate defined as percentage of calls answered in
60
55
seconds or less after the customer enters the call queue.
(b) Average Hold Time defined as average time a customer waits to
talk to a customer service representative once the customer enters the
call queue.
(c) Abandoned Call Rate defined as the percentage of calls that
disconnect prior to talking to a customer service representative after
the customer enters the call queue.
(d) Net Write-Offs Rate defined as monthly write-offs of accounts
receivable, net of customer deposits, divided by monthly subscriber
revenue.
(e) Past-Due Accounts Receivable Aging Rates defined as
percentage of accounts receivable greater than 60 days from due date.
The service level agreement will provide that Sprint Spectrum
will give Manager a quarterly report on the above metrics. Beginning
in 2008, Manager will have the right to opt out of Sprint Spectrum
providing the Customer Related Services if the average of the metrics
reflected in the four quarterly reports for the prior calendar year
indicate that Sprint Spectrum is not in compliance with any 2 of the 5
metrics. To exercise the opt-out right, Manager must give its opt-out
notice to Sprint Spectrum during the first quarter of any calendar
year that Manager has an opt-out right. Upon receipt of an opt-out
notice, Manager and Sprint Spectrum will use commercially reasonable
efforts to transition the Customer-Related Services to Manager or a
third party vendor within 9 months after the opt-out notice date. Upon
the parties' completion of the transition, the parties will agree to
an adjustment to the CCPU Service Fee being charged by Sprint Spectrum
to Manager. If the parties cannot agree to an adjustment, Manager has
the right to submit the determination to binding arbitration under
section 14.2 of the Management Agreement, excluding the escalation
process set forth in section 14.1, and continue obtaining all the CPGA
Services and remaining CCPU services from Sprint Spectrum. Manager
will reimburse Sprint Spectrum for transition and continuing operation
costs in accordance with Section 3.2.4.
Manager's opt-out right described above is its sole remedy if
Sprint Spectrum is not in compliance with the metrics; Sprint
Spectrum's non-compliance with the metrics does not constitute a
breach of this agreement or any other agreement between the parties.
Manager has the right to propose to Sprint Spectrum that Manager
self-provision or procure from a vendor some, but not all, of the
Services. Sprint Spectrum will discuss the proposal with Manager, but
56
Manager can only self-provision or procure from a vendor some of the
Services if Sprint Spectrum agrees.
Manager will begin paying Sprint Spectrum under the CCPU and CPGA
amounts that Sprint Spectrum presents for discussion at the beginning
of the new pricing period until the date on which the parties agree or
until the arbitrator determines the new CCPU and CPGA amounts,
whichever occurs first. Within 30 days after the amounts are
determined (either by agreement or by arbitration), Sprint PCS will
recalculate the fees from the beginning of the new pricing period and
give notice to Manager of what the fees are and the amount of any
adjusting payments required. If Sprint PCS owes Manager a refund of
fees already paid, Sprint PCS may pay the amount to Manager or Sprint
PCS, in its sole discretion, may credit the amount of the refund
against any amounts Manager then owes to Sprint PCS. If Sprint PCS
chooses to pay the refund, it will make the payment at the time it
sends the notice to Manager; If Sprint PCS chooses to credit the
refund, it will in the notice indicate the amounts owing to which the
credit will be applied. If Manager owes Sprint PCS additional fees
Manager will pay those fees to Sprint PCS within 10 days after receipt
of the notice.
3.2.3 SPRINT SPECTRUM FIRST RIGHT OF REFUSAL. Manager must give
Sprint Spectrum written notice of Manager's decision to procure the
Services from a third party vendor the Services at least 120 days
before the end of the Initial Pricing Period or any subsequent
three-year pricing period and provide the third party vendor terms to
Sprint Spectrum. Sprint Spectrum will have 30 days from the date it
receives the third party vendor's terms to decide if it will provide
those Services to Manager under those terms.
Manager must agree to receive the Services from Sprint Spectrum
if Sprint Spectrum gives notice to Manager that it will provide the
Services to Manager on the third party vendor terms. If Sprint
Spectrum does not exercise its first right of refusal, Manager must
sign the agreement with the third party vendor on the same terms and
conditions as presented to Sprint Spectrum within 10 Business Days
after Sprint Spectrum notifies Manager of its decision not to exercise
the first right of refusal or the expiration of the 30-day period,
whichever occurs first. The procedure set forth in this section 3.2.3
will begin again if Manager does not sign the agreement with the third
party vendor as required in the preceding sentence.
3.2.4 TRANSITION AND CONTINUING OPERATING COSTS. Sprint Spectrum
will cooperate with Manager and work diligently and in good faith to
implement the transition to another service provider (including
Manager, if applicable), in a reasonably efficient and expeditious
manner.
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Manager will pay for all reasonable out-of-pocket costs that
Sprint Spectrum and its Related Parties actually incur to (i) transfer
any Service(s) provided to Manager to a third party vendor or to
enable Manager to self-provide any Service(s), and (ii) operate and
maintain systems, processes, licenses and equipment to support those
Services. Sprint Spectrum will bill Manager monthly for these costs.
3.2.5 SETTLED-SEPARATELY MANAGER EXPENSES. Manager will pay to or
reimburse Sprint Spectrum for any amounts that Sprint Spectrum or its
Related Parties pays for Settled-Separately Manager Expenses.
"SETTLED-SEPARATELY MANAGER EXPENSES" means those items the parties
choose to settle separately between themselves (e.g. accessory
margins, reciprocal retail store cost recovery) that are listed in
sections C and D of Schedule 2.1.1.
Sprint Spectrum will give Manager at least 60 days' prior written
notice by providing an amended Schedule 2.1.1 to Manager in accordance
with the provisions of section 9.1 of any additional Services added to
sections C and D of Schedule 2.1.1, but no additional service may be
added to the extent it is the same as, or functionally equivalent to,
either:
(a) any service that Sprint Spectrum or any of its Related
Parties currently provides to Manager as a CCPU Service or a CPGA
Service (unless the fees payable by Manager to Sprint Spectrum
hereunder are correspondingly reduced) or
(b) any service or benefit that Manager currently receives
from Sprint Spectrum or its Related Parties but for which Manager
does not pay a separate fee before the Effective Date.
For each Settled-Separately Manager Expense, Sprint Spectrum will
provide sufficient detail to enable Manager to determine how the
expense was calculated, including the unit of measurement (e.g., per
subscriber per month or per call) and the record of the occurrences
generating the expense (e.g., the number of calls attributable to the
expense). If an expense is not reasonably subject to occurrence level
detail, Sprint Spectrum will provide reasonable detail on the process
used to calculate the fee and the process must be reasonable. A detail
or process is reasonable if it is substantially in the form as is
customarily used in the wireless industry. The Settled-Separately
Manager Expenses will be paid as set forth in section 10 of the
Management Agreement. Sprint Spectrum and its Related Parties may
arrange for Manager to pay any of the Settled-Separately Manager
Expenses directly to the vendor after giving Manager reasonable
notice.
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Unless Manager specifically agrees otherwise, any
Settled-Separately Manager Expense that Sprint Spectrum or any of its
Related Parties is entitled to charge or pass through to Manager under
this agreement or the Management Agreement will reflect solely
out-of-pocket costs and expenses that Sprint Spectrum or its Related
Parties actually incur, will be usage-based or directly related to
revenue-generating products and services, and will not include any
allocation of Sprint PCS' or its Related Parties' internal costs or
expenses (including, but not limited to, allocations of general and
administrative expenses or allocations of employee compensation or
related expenses). For clarity, Sprint Spectrum's or its Related
Parties' out-of-pocket costs for handset and accessory inventory
consist of actual inventory invoice costs less any volume incentive
rebates and price protection credits that Sprint Spectrum or its
Related Parties receive from a vendor.
3.3 LATE PAYMENTS. Any payment due under this section 3 that Manager
fails to pay to Sprint Spectrum in accordance with this agreement will bear
interest at the Default Rate beginning (and including) the 6th day after
the due date stated on the invoice until (and including) the date on which
the payment is made.
3.4 TAXES. Manager will pay or reimburse Sprint Spectrum for any
sales, use, gross receipts or similar tax, administrative fee,
telecommunications fee or surcharge for taxes or fees that a governmental
authority levies on the fees and charges that Manager pays to Sprint
Spectrum or a Related Party.
38. AUDIT [ADDM XI,SS.38]. Section 5.1.2 of the Services Agreement is
amended and restated in its entirety to read as follows:
5.1.2 AUDITS. On reasonable advance notice by one party, the other
party must provide its independent or internal auditors access to its
appropriate financial and operating records, including, without limitation,
vendor and distribution agreements, for purposes of auditing the amount of
fees (including the appropriateness of items included in Settled-Separately
Manager Expenses), costs, expenses (including operating metrics referred to
in this agreement and the Services Agreement relating to or used in the
determination of Inter Service Area Fees, Reseller Customer Fees, CCPU
Services or CPGA Services) or other charges payable in connection with the
Service Area for the period audited. The party that requested the audit may
decide if the audit is conducted by the other party's independent or
internal auditors. Manager and Sprint Spectrum may each request no more
than one audit per year.
(a) If the audit shows that Sprint Spectrum was underpaid then,
unless the amount is contested, Manager will pay to Sprint Spectrum
the amount of the underpayment within 10
59
Business Days after Sprint Spectrum gives Manager written notice of
the underpayment determination.
(b) If the audit determines that Sprint Spectrum was overpaid
then, unless the amount is contested, Sprint Spectrum will pay to
Manager the amount of the overpayment within 10 Business Days after
Manager gives Sprint Spectrum written notice of the overpayment
determination.
The auditing party will pay all costs and expenses related to the
audit unless the amount owed to the audited party is reduced by more than
10% or the amount owed by the audited party is increased by more than 10%,
in which case the audited party will pay the costs and expenses related to
the audit.
If either party disputes the auditor's conclusion then the dispute
will be submitted to binding arbitration in accordance with section 14.2 of
the Management Agreement, excluding the escalation process set forth in
section 14.1 of the Management Agreement.
Sprint PCS will provide a Type II Report to Manager annually. If
Manager, on the advice of its independent auditors or its legal counsel,
determines that a statute, regulation, rule, judicial decision or
interpretation, or audit or accounting rule, policy or literature published
by the accounting or auditing profession or other authoritative rule making
body (such as the Securities and Exchange Commission, the Public Company
Accounting Oversight Board or the Financial Accounting Standards Board)
requires additional assurances beyond SAS 70, then Sprint Spectrum will
cooperate with Manager to provide the additional assurances. Sprint
Spectrum's independent auditors will prepare any Type II Report or Manager
Management Report provided under this section 5.1.2 and will provide an
opinion on the controls placed in operation and tests of operating
effectiveness of those controls in effect at Sprint PCS over Manager
Management Processes.
39. NOTICES [ADDM VIII,SS.10 AND ADDM XI,SS.39]. Section 9.1 of the
Services Agreement is amended and restated in its entirety to read as follows:
9.1 NOTICES. Any notice, payment, invoice, demand or communication
required or permitted to be given by any provision of this agreement must
be in writing and mailed (certified or registered mail, postage prepaid,
return receipt requested), sent by hand or overnight courier, charges
prepaid or sent by facsimile or email (in either instance with
acknowledgement or read receipt received), and addressed as described in
section 17.1(b) of the Management Agreement, or to any other address or
number as the person or entity may from time to time specify by written
notice to the other parties.
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The subject line of any email notice that purports to add any
additional service to Schedule 2.1.1 must read "Additional Service to
Schedule 2.1.1". The new Schedule 2.1.1 must also be attached to the email,
and notice will also be provided to those individuals listed for notices
for Manager regarding Program Requirement Changes set forth in section
17.1(b) of the Management Agreement.
Any notice, demand or communication intended to be notice of a breach
of an agreement or notice of an Event of Termination must clearly indicate
that intent, state the section(s) of the agreements allegedly breached, and
in addition to any other form of notice it must be mailed or sent by
overnight courier in the manner described in the first paragraph of this
section 9.1.
Manager will promptly give Sprint Spectrum a copy of any notice
Manager receives from the Administrative Agent or any Lender, and a copy of
any notice Manager gives to the Administrative Agent or any Lender. Sprint
Spectrum will promptly give Manager a copy of any notice that Sprint
Spectrum receives from the Administrative Agent or any Lender and a copy of
any notice that Sprint Spectrum gives to the Administrative Agent or any
Lender.
All notices and other communications given to a party in accordance
with the provisions of this agreement will be deemed to have been given
when received.
40. ENTIRE AGREEMENT; AMENDMENTS [ADDM XI,SS.40]. Section 9.6 of the
Services Agreement is amended and restated in its entirety to read as follows:
9.6 ENTIRE AGREEMENT; AMENDMENTS. The provisions of this agreement and
the Management Agreement including the exhibits to those agreements set
forth the entire agreement and understanding between the parties as to the
subject matter of this agreement and supersede all prior agreements, oral
or written, and other communications between the parties relating to the
subject matter of this agreement. Except for Sprint Spectrum's right to add
additional Services to Schedule 2.1.1 subject to the provisions of section
2.1.1 and section 3.2.5, this agreement may be modified or amended only by
a written amendment signed by the persons or entities authorized to bind
each party.
41. FORCE MAJEURE [ADDM XI,SS.41]. The second paragraph of section 9.8 of
the Services Agreement is amended and restated in its entirety to read as
follows:
Neither Manager nor Sprint Spectrum, as the case may be, is in breach
of any covenant in this agreement and no Event of Termination will occur as
a result of the failure of such party to comply with any covenant, if the
party's non-compliance with the covenant results
61
primarily from:
(i) any FCC order or any other injunction that any governmental
authority issues that impedes the party's ability to comply with the
covenant,
(ii) the failure of any governmental authority to grant any
consent, approval, waiver or authorization or any delay on the part of
any governmental authority in granting any consent, approval, waiver
or authorization,
(iii) the failure of any vendor to deliver in a timely manner any
equipment or service, or
(iv) any act of God, act of war or insurrection, riot, fire,
accident, explosion, labor unrest, strike, civil unrest, work
stoppage, condemnation or any similar cause or event not reasonably
within the control of the party.
42. GOVERNING LAW, JURISDICTION AND CONSENT TO SERVICE OF PROCESS [ADDM
VIII,SS.8]. Section 9.11 of the Services Agreement is replaced with the
following language:
9.11 GOVERNING LAW, JURISDICTION AND SERVICE OF PROCESS.
9.11.1 GOVERNING LAW. The internal laws of the State of Kansas
(without regard to principles of conflicts of law) govern the validity
of this agreement, the construction of its terms, and the
interpretation of the rights and duties of the parties.
9.11.2 JURISDICTION; CONSENT TO SERVICE OF PROCESS.
(a) Each party hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive
jurisdiction of any Kansas State court sitting in the County of
Johnson or any Federal court of the United States of America
sitting in the District of Kansas, and any appellate court from
any such court, in any suit action or proceeding arising out of
or relating to this agreement, or for recognition or enforcement
of any judgment, and each party hereby irrevocably and
unconditionally agrees that all claims in respect of any such
suit, action or proceeding may be heard and determined in such
Kansas State Court or, to the extent permitted by law, in such
Federal court.
(b) Each party hereby irrevocably and unconditionally
waives, to the fullest extent it may legally do so, any objection
which it may now or hereafter have to the laying of venue of any
62
suit, action or proceeding arising out of or relating to this
agreement in Kansas State court sitting in the County of Johnson
or any Federal court sitting in the District of Kansas. Each
party hereby irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance
of such suit, action or proceeding in any such court and further
waives the right to object, with respect to such suit, action or
proceeding, that such court does not have jurisdiction over such
party.
(c) Each party irrevocably consents to service of process in
the manner provided for the giving of notices pursuant to this
agreement, provided that such service shall be deemed to have
been given only when actually received by such party. Nothing in
this agreement shall affect the right of a party to serve process
in another manner permitted by law.
TRADEMARK LICENSE AGREEMENTS
43. NOTICES [ADDM VIII,SS.10 AND ADDM XI,SS.43]. Section 15.1 of each of
the Trademark License Agreements is amended and restated in its entirety to read
as follows:
Section 15.1. Notices. Any notice, payment, invoice, demand or
communication required or permitted to be given by any provision of this
agreement must be in writing and mailed (certified or registered mail,
postage prepaid, return receipt requested), sent by hand or overnight
courier, or sent by facsimile (with acknowledgment received), charges
prepaid and addressed as described in section 17.1(b) of the Management
Agreement, or to any other address or number as the person or entity may
from time to time specify by written notice to the other parties.
Any notice, demand or communication intended to be notice of a breach
of an agreement or notice of an Event of Termination must clearly indicate
that intent, state the section(s) of the agreements allegedly breached, and
be mailed or sent by overnight courier in the manner described in the
preceding paragraph.
Licensee will promptly give Licensor a copy of any notice Licensee
receives from any Administrative Agent or any Lender, and a copy of any
notice Licensee gives to any Administrative Agent or any Lender. Licensor
will promptly give Licensee a copy of any notice that Licensor receives
from the Administrative Agent or any Lender and a copy of any notice that
Licensor gives to the Administrative Agent or any Lender.
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All notices and other communications given to a party in accordance
with the provisions of this agreement will be deemed to have been given
when received.
44. GOVERNING LAW [ADDM VIII,SS.8]. Section 15.8 of each of the Trademark
License Agreements is replaced by the following language:
15.8 Governing Law. The internal laws of the State of Kansas (without
regard to principles of conflicts of law) govern the validity of this
agreement, the construction of its terms, and the interpretation of the
rights and duties of the parties.
45. JURISDICTION [ADDM VIII,SS.8]. Section 15.13 of each of the
Trademark License Agreements is replaced by the following language:
15.13 Jurisdiction; Consent to Service of Process.
(a) Each party hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of any
Kansas State court sitting in the County of Johnson or any Federal
court of the United States of America sitting in the District of
Kansas, and any appellate court from any such court, in any suit
action or proceeding arising out of or relating to this agreement, or
for recognition or enforcement of any judgment, and each party hereby
irrevocably and unconditionally agrees that all claims in respect of
any such suit, action or proceeding may be heard and determined in
such Kansas State Court or, to the extent permitted by law, in such
Federal court.
(b) Each party hereby irrevocably and unconditionally waives, to
the fullest extent it may legally do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this agreement in Kansas
State court sitting in the County of Johnson or any Federal court
sitting in the District of Kansas. Each party hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such suit, action or
proceeding in any such court and further waives the right to object,
with respect to such suit, action or proceeding, that such court does
not have jurisdiction over such party.
(c) Each party irrevocably consents to service of process in the
manner provided for the giving of notices pursuant to this agreement,
provided that such service shall be deemed to have been given only
when actually received by such party. Nothing in this agreement shall
affect the right of a party to serve process in another manner
permitted by law.
SCHEDULE OF DEFINITIONS
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46. DELETED DEFINITION [ADDM XI,SS.46]. The definition of "Available
Services" is deleted.
47. ADDITIONAL, AMENDED OR SUPPLEMENTED DEFINITIONS [ADDM XI,SS.47; REVISED
BY THIS ADDENDUM]. The following are new or amended definitions, unless
otherwise indicated.
"ALAMOSA MANAGERS" means Manager and the Other Managers controlled by
Alamosa Holdings, Inc.
"ALLOCABLE SOFTWARE FEE" has the meaning set forth in section 1.3.4(e)
of the Management Agreement.
"ALLOCATED WRITE-OFFS" has the meaning set forth in section 10.3.4 of
the Management Agreement.
"AMOUNT BILLED (NET OF CUSTOMER CREDITS)" has the meaning set forth in
section 10.3.3 of the Management Agreement.
"AWAY NETWORK" means:
(i) any portion of the Sprint PCS Network other than Manager's
Service Area Network, in the case of Customers with an NPA-NXX
assigned to the Service Area (or any other such designation in
accordance with section 17.17 of the Management Agreement), and
(ii) Manager's Service Area Network, in the case of Customers
with an NPA-NXX assigned to an area outside the Service Area (or any
other such designation in accordance with section 17.17 of the
Management Agreement).
"BILLED COMPONENT(S)" has the meaning set forth in section 10.3.2 of
the Management Agreement.
"BILLED MONTH" has the meaning set forth in section 10.2.1 of the
Management Agreement.
"BILLED REVENUE" has the meaning set forth in section 10.2.1 of the
Management Agreement.
"CCPU SERVICES" means those Services listed in section A of Schedule
2.1.1 to the Services Agreement.
"CHIEF FINANCIAL OFFICER OF SPRINT PCS", "SPRINT PCS CHIEF FINANCIAL
OFFICER" and other references to the Chief Financial Officer of Sprint PCS
mean
65
the Senior Vice President - Finance of Sprint Corporation designated to
serve as the chief financial officer of Sprint PCS or if none, the
individual serving in that capacity.
"CPGA SERVICES" means those Services listed in section B of Schedule
2.1.1 to the Services Agreement.
"CSA" has the meaning set forth in section 10.2.1 of the Management
Agreement.
"CUSTOMER" means any customer, except Reseller Customers or customers
of third parties for which Manager provides solely switching services, who
purchases Sprint PCS Products and Services, regardless of where their
NPA-NXX is assigned.
"CUSTOMER CREDITS" has the meaning set forth in section 10.2.1 of the
Management Agreement.
"CUSTOMER EQUIPMENT CHARGES" has the meaning set forth in section
10.3.2.5 of the Management Agreement.
"CUSTOMER EQUIPMENT CREDITS" has the meaning set forth in section
10.3.2.2 of the Management Agreement.
"CUSTOMER-RELATED SERVICES" has the meaning set forth in section 3.2.2
of the Services Agreement.
"CUSTOMER TAXES" means the amounts that Sprint PCS bills to Manager
Accounts for taxes, including, without limitation, federal, state, and
local sales, use, gross and excise tax.
"EFFECTIVE DATE" has the meaning set forth in the preamble of this
Addendum.
"ENTERPRISE VALUE" means either:
(i) if the entity has issued publicly-traded equity, the combined book
value of the entity's outstanding debt and preferred stock less cash plus
the fair market value of each class of its publicly-traded equity other
than any publicly-traded preferred stock. For the purposes of this
definition, the fair market value of a class of the entity's
publicly-traded equity (other than publicly-traded preferred stock) is
equal to the product of:
(A) the number of issued and outstanding shares of the class of
publicly-traded equity as of the date of determination, times
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(B) the applicable average closing price (or average closing bid,
if traded on the over-the-counter market) per share of the class of
publicly-traded equity over the 21 consecutive trading days
immediately preceding the date of determination; or
(ii) if the entity does not have issued publicly-traded equity, the
combined book value of the entity's outstanding debt and equity less cash.
"E911 PHASE I SURCHARGES" means all costs related to Phase I E911
functionality.
"E911 PHASE II SURCHARGES" has the meaning set forth in section
10.3.2.6 of the Management Agreement.
"ETC" has the meaning set forth in section 10.6.1 of the Management
Agreement.
"FEE BASED ON BILLED REVENUE" has the meaning set forth in section
10.2.1 of the Management Agreement.
"GROSS CUSTOMER ADDITIONS IN MANAGER'S SERVICE AREA" means the average
number of Customers activated (without taking into consideration the number
of Customers lost) during the previous month with an NPA-NXX assigned to
the Service Area as reported in Sprint PCS' most recent monthly KPI report.
"HOOVER DAM CONTINGENT COVERAGE AREA" [ADDM VIII, SS.2 AND ADDM XI,
SS.47] has the meaning set forth in section 2.1.1 of the Management
Agreement.
"INITIAL 3G DATA FEE PERIOD" has the meaning set forth in section
10.4.1.3(a) of the Management Agreement.
"INITIAL PRICING PERIOD" has the meaning set forth in section 3.2.1 of
the Services Agreement.
"INTER SERVICE AREA FEE" has the meaning set forth in section 4.3 of
the Management Agreement.
"INVESTMENT BANKER" has the meaning set forth in section 9.3.2 of the
Management Agreement.
"MANAGER ACCOUNTS" has the meaning set forth in section 10.2.1 of the
Management Agreement.
"MANAGER MANAGEMENT PROCESS" has the meaning set forth in section
12.1.2 of the Management Agreement.
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"MANAGER MANAGEMENT REPORT" has the meaning set forth in section
12.1.2 of the Management Agreement.
"NET BILLED REVENUE" has the meaning set forth in section 10.2.1 of
the Management Agreement.
"NEW COVERAGE" means the build-out in the Service Area that is in
addition to the build-out required under the then-existing Build-out Plan,
which build-out Sprint PCS or Manager decides should be built-out.
"NPA-NXX" means NPA-NXX or an equivalent identifier, such as a network
access identifier (NAI).
"NUMBER OF CUSTOMERS IN MANAGER'S SERVICE AREA" means the average
number of Customers with NPA-NXXs assigned to the Service Area reported in
Sprint PCS' most recent monthly KPI report.
"OPERATIONAL AND NETWORK READINESS" and "OPERATIONAL AND NETWORK
READY" [ADDM VIII, SS.2 AND ADDM XI, SS.47] have the meaning set forth in
section 2.1 of the Management Agreement.
"OTHER AFFILIATES" [ADDM VI, SS.2 AND ADDM VII, SS.2] has the meaning
set forth in section 17.30 of the Management Agreement.
"OUTBOUND ROAMING FEES" means the amounts that Sprint PCS or its
Related Parties bills to Manager Accounts for calls placed on a non-Sprint
PCS Network.
"OVERALL CHANGES" has the meaning set forth in section 1.10(a) of the
Management Agreement.
"PARKER DAM CONTINGENT COVERAGE AREA" [ADDM VIII, SS.2 AND ADDM XI,
SS.47] has the meaning set forth in section 2.1.2 of the Management
Agreement.
"PROGRAM REQUIREMENT CHANGE" has the meaning set forth in section
9.3.1 of the Management Agreement.
"RELATED PARTY" [ADDM V, SS.8 AND ADDM XI, SS.47] means, with respect
to any Person, any other Person that directly or indirectly through one or
more intermediaries controls, is controlled by, or is under common control
with the Person. For purposes of the Management Agreement, Sprint Spectrum
L.P., WirelessCo, L.P., SprintCom, Inc., American PCS Communications, LLC,
APC PCS, LLC, PhillieCo Partners I, L.P., PhillieCo, L.P., Sprint Telephony
PCS, L.P. and Sprint PCS License, L.L.C. will be deemed to be Related
Parties. For purposes of this definition, the term "controls" (including
its correlative meanings "controlled by" and "under common control with")
means the possession, direct or indirect, of the power to direct or cause
the direction of the management and
68
policies of a Person, whether through the ownership of voting securities,
by contract or otherwise.
For purposes of the Management Agreement and the OSP Agreement, an OSP
and any entity that controls, is controlled by or is under common control
with an OSP (each an "OSP Affiliate") shall be deemed to be a "Related
Party" under the definition of "Operating Assets." All leases entered into
between Manager and an OSP or an OSP Affiliate will be transferable to
Sprint PCS or its permitted assigns and successors without the consent of
the lessor.
"REQUIRED RESALE PARTICIPATION PERIOD" means the period from April 1,
2004, until the later of (1) December 31, 2006 and (2) the expiration of
any three-year period beginning after December 31, 2006, for which Sprint
PCS and Manager have reached agreement in accordance with section
10.4.1.1(c) with respect to the terms, fees and conditions applicable to
Manager's participation in resale arrangements entered into by Sprint PCS.
"RESELLER CUSTOMER" means customers of companies or organizations with
a Private Label PCS Services or similar resale agreement with Sprint PCS or
Manager.
"RESELLER CUSTOMER FEES" has the meaning set forth in section 10.4.1.1
of the Management Agreement.
"SAN DIEGO COUNTY CONTINGENT COVERAGE AREA" [ADDM VIII, SS.2 AND ADDM
XI, SS.47] has the meaning set forth in section 2.1.3 of the Management
Agreement.
"SCCLP" has the meaning set forth in section 3.4.2(b) of the
Management Agreement.
"SELECTED SERVICES" means Services.
"SERVICE AREA NETWORK" means the network that is directly required for
the provision of telecommunications services to Customers and is managed by
Manager under the Management Agreement in the Service Area under the
License.
"SERVICES" has the meaning set forth in section 2.1.1 of the Services
Agreement.
"SETTLED-SEPARATELY MANAGER EXPENSES" has the meaning set forth in
section 3.2.5 of the Services Agreement.
"SOFTWARE" means only that software and software features currently
existing or developed in the future that are used in connection with
telecommunications equipment owned or leased by Manager in Manager's
provisioning of wireless services in the Service Area and
69
includes, without limitation, software maintenance, updates, improvements,
upgrades and modifications. "Software" expressly excludes:
(i) software "rights to use" licenses to the extent paid to the
licensor directly by Manager, and
(ii) software operating Sprint PCS' national platforms, billing
system platforms, customer service platforms and like applications.
"SOFTWARE FEES" means costs associated (including applicable license
fees) with procuring software, software maintenance, software upgrades and
other software costs needed to provide uniform and consistent operation of
the wireless systems within the Sprint PCS Network.
"SPRINT PCS" means any or all of the following Related Parties who are
License holders or signatories to the Management Agreement: Sprint Spectrum
L.P., a Delaware limited partnership, WirelessCo, L.P., a Delaware limited
partnership, SprintCom, Inc., a Kansas corporation, PhillieCo Partners I,
L.P., a Delaware limited partnership, PhillieCo, L.P., a Delaware limited
partnership, Sprint Telephony PCS, L.P., a Delaware limited partnership,
Sprint PCS License, L.L.C., a Delaware limited liability company, American
PCS Communications, LLC, a Delaware limited liability company, and APC PCS,
LLC, a Delaware limited liability company. Any reference in the Management
Agreement or Services Agreement to Cox Communications PCS, L.P., a Delaware
limited partnership, or Cox PCS License, L.L.C., a Delaware limited
liability company, is changed to Sprint Telephony PCS, L.P., a Delaware
limited partnership, or Sprint PCS License, L.L.C., a Delaware limited
liability company, respectively, to reflect name changes filed with the
Delaware Secretary of State in 2002.
"SPRINT PCS ARPU" means the average revenue per user publicly
announced by Sprint PCS or its Related Parties for the most recent calendar
year. Sprint PCS ARPU is generally calculated by dividing wireless service
revenues by average wireless subscribers.
"SPRINT PCS RETAIL YIELD FOR VOICE AND 2G DATA USAGE" means the
quotient calculated by dividing (a) Sprint PCS ARPU less the 3G data
component in the Sprint PCS ARPU by (b) the reported minutes of use per
subscriber for the calendar year for which the Sprint PCS ARPU was
calculated. "SPRINT PCS RETAIL YIELD FOR 3G DATA USAGE" means the quotient
calculated by dividing (a) the 3G data component in the Sprint PCS ARPU by
(b) the kilobytes of use for 3G data usage per subscriber for the calendar
year for which the Sprint PCS ARPU was calculated.
70
"SUBSIDY FUNDS" has the meaning set forth in section 10.6.1 of the
Management Agreement.
"3M-POPS MANAGER" means any Other Manager whose ultimate parent entity
(as defined by the Hart-Scott-Rodino Antitrust Improvements Act of 1976)
controls entities with 3 million or more covered pops.
"TOTAL SOFTWARE COST" means the amount paid by Sprint PCS to the
vendor directly associated with the Software used by Sprint PCS, Manager
and Other Managers (if and to the extent Manager and the Other Managers
have agreed to pay any Allocable Software Fee) for the Sprint PCS Network
for which Manager is not obligated to pay the Software vendor directly, net
of any discounts or rebates and excluding any mark-up by Sprint PCS for
administrative or other fees.
"TRANSITION DATE" has the meaning set forth in section 10.12.3 of the
Management Agreement.
"TYPE II REPORT" has the meaning set forth in section 12.1.2 of the
Management Agreement.
"ULTIMATE PARENT" has the meaning set forth in the Hart-Scott-Rodino
Antitrust Improvements Act of 1976.
"USF CHARGES" has the meaning set forth in section 10.3.2.7 of the
Management Agreement.
"VENDOR SOFTWARE" has the meaning set forth in section 1.3.4(b) of the
Management Agreement.
"WIRELESS MOBILITY COMMUNICATIONS NETWORK" means a radio
communications system operating in the 1900 MHz spectrum range under the
rules designated as Subpart E of Part 24 of the FCC's rules.
"WLNP SURCHARGES" has the meaning set forth in section 10.2.4 of the
Management Agreement.
"WRITE-OFFS" has the meaning set forth in section 10.3.1 of the
Management Agreement.
"YEAR 2000 COMPLIANCE" has the meaning set forth in section 17.29 of
the Management Agreement.
B. CROSS-REFERENCES TO OTHER PARAGRAPHS IN PREVIOUS ADDENDA.
Listed below are those paragraphs in the previous addenda that are
interpretations or applications of the Management Agreement, the Services
Agreement, the Trademark License Agreements or the Schedule of Definitions that
are not listed
71
above. These serve as cross-references to facilitate finding provisions in the
previous addenda. The number shown at the beginning of each item is the
paragraph reference in the designated Addendum.
Addendum I
----------
3. Compliance with Retail Store and Customer Service requirements in
smaller population centers
14. Put of San Diego assets to Manager
Addendum II
-----------
1. Consent and Agreement ("C&A")-Related: Restrictions on Manager's
use of loan proceeds
2. C&A-Related: C&A not assignable
3. C&A-Related: Notices (superseded by subsequent addendum)
4. C&A-Related: Financing Plan (superseded by subsequent addendum)
5. C&A-Related: No default under Credit Agreement or Management
Agreement
6. C&A-Related: No known breach under Management Agreement
8. Reaffirmation of Agreements (superseded by subsequent addendum)
9. Counterparts (superseded by subsequent addendum)
Addendum III
------------
1. C&A-Related: Restrictions on Manager's use of loan proceeds
Addendum IV
-----------
1. C&A-Related: Restrictions on Manager's use of loan proceeds
Addendum V (All are related to Outsource Service Provider ("OSP") Program)
----------
1. Approval of form of agreement
2. Sprint PCS consent to OSPs
3. Criteria for OSPs
4. Trademark License Agreements
5. Inclusion in Service Area Network
6. Review of Offering Documents
7. Microwave Relocation
9. EBV Determination
10. Appeal Process if OSP not approved by Sprint PCS
11. Force Majeure
72
12. Manager's indemnification obligations for acts or omissions of
OSP
13. Notices from OSP
Addendum VI
-----------
1. C&A-Related: Restrictions on Manager's use of loan proceeds
5. Reaffirmation of Agreements (superseded by subsequent addendum)
7. Expiration of limited remedies period
9. C&A-Related: Financing Plan (superseded by subsequent addendum)
10. Counterparts (superseded by subsequent addendum)
Addendum VII
------------
1. C&A-Related: Restrictions on Manager's use of loan proceeds
3. Financing Plan (superseded by subsequent addendum)
4. Reaffirmation of Agreements (superseded by subsequent addendum)
5. Counterparts (superseded by subsequent addendum)
Addendum VIII
-------------
1. Spectrum-swap related: Modification of buildout plan (superseded
by subsequent addendum)
3. Spectrum-swap related: Change in spectrum frequency ranges
(superseded by subsequent addendum)
4. Spectrum-swap related: Build-out schedule (superseded by
subsequent addendum)
5. Spectrum-swap related: Microwave relocation (superseded by
subsequent addendum)
6. Spectrum-swap related: Consideration for entering into swap
(superseded by subsequent addendum)
7. Spectrum-swap related: Expenses of swap (superseded by subsequent
addendum)
9. Notice addresses (superseded by subsequent addendum)
11. Counterparts (superseded by subsequent addendum)
Addendum IX
-----------
1. Spectrum-swap related: Superseding certain sections of Addendum
VIII
3. Spectrum-swap related: Change in spectrum range
4. Spectrum-swap related: Buildout schedule
6. Spectrum-swap related: Consideration for entering into swap
73
7. Spectrum-swap related: Expenses of swap
8. Spectrum-swap related: Counterparts (superseded by subsequent
addendum)
Addendum X (initial simplified pricing addendum)
------------------------------------------------
None (all superseded by Addendum XI).
Addendum XI
-----------
None (all superseded by this Addendum).
74
C. OTHER PROVISIONS.
1. MANAGER AND SPRINT PCS' REPRESENTATIONS. Manager and Sprint PCS each
represents and warrants that its respective execution, delivery and performance
of its obligations described in this Addendum have been duly authorized by
proper action of its governing body and do not and will not violate any material
agreements to which it is a party. Each of Manager and Sprint PCS also
represents and warrants that there are no legal or other claims, actions,
counterclaims, proceedings or suits, at law or in arbitration or equity, pending
or, to its knowledge, threatened against it, its Related Parties, officers or
directors that question or may affect the validity of this Addendum, the
execution and performance of the transactions contemplated by this Addendum or
that party's right or obligation to consummate the transactions contemplated by
this Addendum.
2. REAFFIRMATION OF SPRINT AGREEMENTS. Each of the undersigned reaffirms in
their entirety the Management Agreement, the Services Agreement and the
Trademark License Agreements, together with their respective rights and
obligations under those agreements.
3. COUNTERPARTS. This Addendum may be executed in one or more counterparts,
including facsimile counterparts, and each executed counterpart will have the
same force and effect as an original instrument as if the parties to the
aggregate counterparts had signed the same instrument.
[THE REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY.]
75
The parties have caused this Addendum XII to be executed as of the date
first above written.
SPRINT SPECTRUM L.P.
By: /s/ Steve Nielsen
-------------------------------------
Name: Steve Nielsen
Title: SVP Finance
WIRELESSCO, L.P.
By: /s/ Steve Nielsen
-------------------------------------
Name: Steve Nielsen
Title: SVP Finance
SPRINT COMMUNICATIONS
COMPANY L.P.
By: /s/ Tom Murphy
-------------------------------------
Name: Tom Murphy
Title: Senior Vice President -
Corporate Communication &
Brand Management
TEXAS TELECOMMUNICATIONS, LP
a Texas limited partnership
By: ALAMOSA DELAWARE GP, L.L.C.
a Delaware limited liability company,
as the sole general partner
By: /s/ David E. Sharbutt
---------------------------------
David E. Sharbutt
President
76
SCHEDULE 1
Program Requirement 3.5.2 dated August 13, 2002, and labeled "Exhibit 3.5.2
Program Requirement for Voluntary Resale of Products and Services By Voluntary
Resellers Under the Private Label Solutions Program" is amended by replacing the
title, preamble and general terms with the following, and by deleting all
attachments:
PROGRAM REQUIREMENT FOR RESALE OF PRODUCTS AND SERVICES
BY
RESELLERS UNDER THE PRIVATE LABEL SOLUTIONS PROGRAM
(5/1/04)
Sprint PCS' Resale Program ("RESALE PROGRAM") is described in Section 3.5.2
of the Sprint PCS Management or Affiliations Agreement and consists of this
Program Requirement 3.5.2 (the "PROGRAM REQUIREMENT 3.5.2") and separate
attachments to the Program Requirement 3.5.2 ("Attachment(s)"). Each Attachment
is a separate Resale Program and includes a specific list of companies with
which Sprint PCS contracts to sell Sprint PCS Products and Services under brand
names other than the Brands.
"Capitalized terms used and not otherwise defined in this Program
Requirement 3.5.2 have the meaning ascribed to them in the Schedule of
Definitions in the Management or Affiliations Agreement. Section and Exhibit
references are to Sections and Exhibits of the Management or Affiliations
Agreement unless otherwise noted.
"As used in this Program Requirement "NPA-NXX" of Manager or Affiliate
means a NPA-NXX in the Service Area of that Manager or Affiliate or an
equivalent identifier, such as a network access identifier (NAI).
GENERAL TERMS
Unless otherwise specified, the Program Requirements outlined below apply to the
resellers set forth in the Attachments.
1. PRODUCTS AND SERVICES OFFERED. Sprint PCS may from time to time limit
the Sprint PCS Products and Services that are provided to resellers. Manager
will provide to resellers those Sprint PCS Products and Services that Sprint PCS
provides to the resellers, and Manager will support products and services
offered resellers in the same fashion that Manager supports similar Sprint PCS
Products and Services.
2. INFORMATION AND MINS. Manager will allow Sprint PCS access to
information necessary to bill resellers, including Call Detail Records and basic
provisioning information. For purposes of clarification, all such information
will constitute "Confidential Information" for purposes of the Management
Agreement. Neither Sprint PCS nor Manager will have access to
77
resellers' end-users' personal information. Sprint PCS will administer NPA-NXXs
available for resellers in a manner substantially the same as the MIN allocation
process in place for Sprint PCS owned markets. Sprint PCS will provide resellers
with an unbranded coverage map and zip code information for the Manager's
service area(s) substantially the same as the coverage map and zip code
information provided for Sprint PCS owned service areas.
3. CONTACTS AND DISPUTES. Manager will direct any questions or disputes
regarding a reseller or resale arrangement to the designated representative(s)
within the Management Agreement and will not contact the resellers directly. Any
disputes between Manager and Sprint PCS regarding a resale arrangement will be
resolved under the terms of the Management Agreement.
4. PRICING: SIX-SECOND INCREMENT BILLING. For all QuickNet Connect (QNC)
data and other traffic on the Manager's Service Area Network for which Sprint
PCS bills a reseller in six-second increments or some other incremental
measurement other than one-minute ("OTHER INCREMENT"), Sprint PCS will settle
with Manager in six-second increments or such Other Increment, as applicable.
Billed charges (per call or event) that result in fractional cents may be
rounded up to the next whole cent.
5. SPRINT 3G DATA SERVICE. In addition to reselling certain Sprint PCS
Products and Services under brand names other than the Brands, some resellers
are also permitted to sell Sprint's 1XRTT advanced multimedia data services and
premium services associated with the PCS Vision service ("SPRINT 3G DATA
SERVICE") using the Sprint and PCS Vision service marks. If Manager specifically
consented to a reseller's use of the Brands in selling Sprint 3G Data Service in
the Manager's Service Area, the Manager will be compensated for Sprint 3G Data
Service as follows:
The revenue for Sprint 3G Data Service sold by resellers using
the Brands to reseller subscribers having an NPA-NXX of Manager
will be treated as Billed Revenue under the Management Agreement.
Billed Revenue will be based on reseller specific Sprint 3G Data
Service pricing set forth in Attachment 1.1 to Program
Requirement 3.5.2. From time to time, Sprint may amend the rates
charged to Voluntary Resellers for Sprint 3G Data Service.
6. SHORT MESSAGE SERVICE (SMS). For SMS messages on the Manager's network
used by subscribers of Voluntary Resellers with an NPA-NXX of Manager, Manager
will be compensated at the rate set forth in Attachment 1.2 to Program
Requirement 3.5.2, which may be amended from time to time in accordance with the
Management Agreement. For SMS messages used by subscribers of Voluntary
Resellers with an NPA-NXX of Manager, there will be no compensation either paid
or owed when such subscribers are traveling outside of the Manager's Service
Area.
SMS messages means circuit-switched short alphanumeric messages on a
Voluntary Reseller subscriber's handset.
78
7. FUTURE SERVICES. If Sprint PCS elects to enter into resale arrangement
with any then existing resellers or new resellers for any services other than
those services described in the current Attachments to this Program Requirement
3.5.2 ("FUTURE SERVICES"), Manager is not required to activate subscribers for
the Future Services with an NPA-NXX of Manager until the next available opt out
date. If Manager does not elect to opt out of a Future Services at the first opt
out date following the date that Manager is notified in writing of the resale
arrangement for Future Services, Manager must allow the then existing resellers
of the Future Services and all future resellers of the Future Services to
activate subscribers with an NPA-NXX of Manager and Manager must support those
resellers of Future Services throughout the term of their resale arrangements
with Sprint PCS, including any renewal or phase out periods. Sprint PCS will
compensate Manager for the resale of Future Services at rates to be established
in future Attachments to Program Requirement 3.5.2, as amended from time to time
in accordance with the Management Agreement, which rates will be communicated in
writing to Manager in advance.
79
ATTACHMENT NO. 1.0 TO PROGRAM REQUIREMENT 3.5.2
RESALE PROGRAM
This Attachment No. 1.0 to Program Requirement 3.5.2 contains the list of
resellers included in the Resale Program as of April 1, 2004.
RESELLERS
Effective Renewal Renewal
Date Date Period *
---- ---- --------
Vartec Telecom, Inc. (Excel) 9/15/2000 12/15/2003 3 Years
ZefCom, L.L.C. (Telespire) 11/17/2000 11/17/2003 3/31/2006
Working Assets Funding Service, Inc.(Working Assets) 12/1/2001 12/31/2003 3 Years
Wherify Wireless, Inc. (Wherify Wireless) 1/7/2002 1/7/2005
QUALCOMM Incorporated (Qualcomm / GlobalTracs) 1/8/2002 1/8/2005
Star Number, Inc. (Liberty Wireless) 8/2/2002 8/2/2005
Telco Group, Inc. (STI Mobile) 2/25/2003 2/25/2006
TRANZACT (Sears Connect) 3/21/2003 3/21/2006
Hal Inc. (U-Mobile PCS) 6/12/2003 6/12/2006
Wireless Retail Inc. (Airlink Mobile) 6/17/2003 6/17/2006
Phonetec, L.P. (PhoneTec) 6/26/2003 6/26/2006
Qwest Wireless, LLC (Qwest) 8/3/2003 3/3/2009
TracFone Wireless, Inc. (TracFone) 1/22/2004 1/22/2007
* If applicable. Not including phase out periods.
Attachment No. 1.0 to Program Requirement 3.5.2 will be updated as new resellers
enter into a resale arrangement with Sprint PCS.
80
ATTACHMENT NO. 1.1 TO PROGRAM REQUIREMENT 3.5.2
SPRINT 3G DATA SERVICE PRICING
A) QWEST WIRELESS
Listed below are the Qwest monthly recurring charges ("MRC") and Adjustment
Rates for Sprint 3G Data Service. Qwest will be billed the following MRC and
Adjustment Rate for each subscriber that uses any Qwest service enabled by
Sprint 3G Data Service.
HANDSET DATA SERVICE
Data Transport/Web Browsing/Third Party Instant Messaging
o MRC $8.10 (unlimited)
o Adjustment Rate $0.002 per Kb
ADJUSTMENT RATE:
On a monthly basis, Sprint will calculate (as described below) the Sprint
average kilobytes per retail handset subscriber ("SAKPS") and the Qwest average
kilobytes per handset subscriber ("QAKPS"). If the QAKPS exceeds the SAKPS,
Sprint will charge Qwest an amount equal to the difference between the SAKPS and
the QAKPS multiplied by the total number of End users, multiplied by the
Adjustment Rate detailed above.
Sprint will calculate SAKPS by using the total number of kilobytes generated by
Sprint retail handset end users divided by the average number of Sprint retail
handset end users for the previous fiscal quarter. For example, the SAKPS for
May will be divided by the average number of Sprint retail handset end users for
the 1st fiscal quarter (January-March).
Average number of Sprint retail handset end users for the quarter is equal to
the beginning number of Sprint retail handset end users plus the ending number
of Sprint retail handset end users, divided by two.
QAKPS is equal to the total number of kilobytes generated by Qwest handset End
Users divided by the average number of Qwest handset End Users for the previous
fiscal quarter.
AVERAGE NUMBER OF QWEST HANDSET END USERS FOR THE QUARTER IS EQUAL TO THE
BEGINNING NUMBER OF QWEST HANDSET END USERS PLUS THE ENDING NUMBER OF QWEST
HANDSET END USERS, DIVIDED BY TWO.
In making the calculations described in this section, PDAs, "smart phones" and
other similar devices along with air cards will not be considered "handsets" as
that term is used therein.
THE PRICING IN THIS ATTACHMENT NO. 1.1 TO PROGRAM 3.5.2 IS SUBJECT TO CHANGE AS
SPRINT RETAIL PRICES OR INCLUDED SERVICES CHANGE.
81
ATTACHMENT NO. 1.2 TO PROGRAM REQUIREMENT 3.5.2
SHORT MESSAGE SERVICE PRICING
Unless otherwise specified in this Attachment 1.2 to Program Requirement 3.5.2,
Manager will be compensated at the rates listed below by Voluntary Reseller.
Short Message Service Rate: $0.0246 per SMS message
Qwest SMS Rate: $0.0110 per SMS message
82
EXHIBIT 10.3
100% AFFILIATE RETAINED AMOUNTS
Roaming Revenue
International Roaming Credits
Affiliate Equip Sale On Acct
100% SPRINT PCS RETAINED AMOUNTS
Accrued Sales Taxes
Accrued Federal Excise Taxes
Collected Insurance
83
EXHIBIT 1
ILLUSTRATIVE CALCULATION FOR CASH SETTLEMENT
CASH SIMPLIFICATION
ILLUSTRATIVE ONLY
- -----------------
MONTHLY
--------------------------
WRITE-OFFS $ 1,235
BILLED REVENUE $10,350
CUSTOMER CREDITS (970)
---------------
NET BILLED REVENUE $ 9,380 82.5%
CUSTOMER EQUIPMENT CREDITS (66) -0.6%
100% AFFILIATE RETAINED AMOUNTS 235 2.1%
100% SPRINT PCS RETAINED AMOUNTS 1,479 13.0%
CUSTOMER EQUIPMENT CHARGES 175 1.5%
E911 SURCHARGES 65 0.6%
WIRELESS LOCAL NUMBER PORTABILITY CHARGES 26 0.2%
USF CHARGES 74 0.7%
--------------------------
AMOUNT BILLED (NET OF CUSTOMER CREDITS) $11,368 100.0%
FEE CALCULATION
- ---------------
NET BILLED REVENUE $ 9,380
ALLOCATED WRITE-OFF (1,019)
---------------
$ 8,361
92%
---------------
FEE BASED ON BILLED REVENUE $ 7,692
100% AFFILIATE RETAINED AMOUNTS $ 235
ALLOCATED WRITE-OFF (26)
PHASE II E911 SURCHARGES 53
ALLOCATED WRITE-OFF (6)
WIRELESS LOCAL NUMBER PORTABILITY CHARGES 2
ALLOCATED WRITE-OFF (0)
CUSTOMER EQUIPMENT CREDITS (66)
ALLOCATED WRITE-OFF 7
WRITE-OFF FOR CUSTOMER EQUIPMENT CHARGES (19)
---------------
$ 180
TOTAL $ 7,872
84
Schedule 2.1.1
-SECTION A-
PRESENTLY OFFERED CCPU SERVICES - Activity Applied as % to Sprint PCS
reported CCPU
3G Fees
A/P Backhaul/Facility Disputes
Affiliate Utilities
ATM Soft Hand Off
Bank Fees
BI Performance Services - Initiation
BI Performance Services - Maintenance
Bid Cost
Billing
Check Free
Clarify Maintenance Fee
CO Usage
Collection Agency Fees
Conferences
Costs associated with rollout of new products and services
Credit Card Processing/Fees
Customer Care
Customer Solutions - Mature Life
Directory Assistance
DS3
E - Commerce PT
Enhanced Voicemail
Entrance Facility Expenses (Includes Terminating/Trunking Charge)
Ford Revenue
Ford Telematics
Gift Card Payable
Gift Card Receivable
Hal Riney Ad Kit
High Speed Remote Access Server
ICS Clearing House Costs (Includes Illuminet, Roaming Clearing House, and TSI)
IMT Charges
Interconnection
Inter-Machine Trunk
IT (Includes E-Commerce)
LD Verification
LIDB / CNAM
Local Loop, COC, ACF, IXC, etc. (National Platform Expense - Local Loop Cost,
Central Office Connection (COC), access Coordination Fee (ACF),
Co-Location Charges, and Inter Exchange Carrier (IXC) Charges)
Lockbox 261
MCI Disconnect Adjusted
National Platform - COA
National Platform Disputes
National Platform (2G) (Includes Voice Activated Dialing)
85
NATIONAL PLATFORM COMPONENT
FCAPS (FAULT, CONFIGURATION, ACCOUNTING, PERFORMANCE, SECURITY)
Capital Projects
Expense Projects
Circuit Expense
CLOH
Labor
Forecasts
IN (INTELLIGENT NETWORK)
Capital Expense
Expense Projects
Circuit Expense
CLOH
Labor
Forecasts
OSSN
Capital Expense
Expense Projects
Circuit Expense
CLOH
Labor
Forecasts
3G
Capital Projects
Expense Projects
Circuit Expense
CLOH
Labor
Forecasts
OPERATOR SERVICE
Vendor Fee
WIRELESS WEB
Capital Projects
Expense Projects
Circuit Expense
CLOH
Labor
Forecasts
MESSAGING
Capital Projects
Expense Projects
Circuit Expense
CLOH
Labor
86
Forecasts
VAD
Capital Projects
Expense Projects
Circuit Expense
CLOH
Labor
Forecasts
VOICE MAIL
Capital
Expense Projects
Circuit Expense
CLOH
Labor
Forecasts
SOFTWARE MAINTENANCE
Openwave
Hewlett Packard
Comverse
Marconi
Lucent
Commworks
Four Corners
Other Vendors (39)
Northwest Frequent Flyer
Premium Vision Services
PreNet
Pricing
Pro Text Messaging Plan
Ringers & More (Includes SBF and PT fees)
Roadside Rescue
Sprint Synch Services
Telecheck Charge
Telematics
Text Messaging Plan
TSC Usage
Type 1 Affiliate Long Distance
Voice Command Web
Wireless Web
-SECTION B-
PRESENTLY OFFERED CPGA SERVICES - Activity Applied as % to Sprint PCS
reported CPGA
500 Minute Promotion Credit
87
Activations - Customer Solutions
Activations - E-Commerce (Includes On Line (Web) Activations)
Activations - Telesales
Credit Check Fee
Customer Solutions - Early Life
Demo Phones
EarthLink
Hal Riney Service
Handset Logistics
Handset Obsolesence Fee and Carrying Costs
Local/Indirect Commission
Marketing Collateral Destruction
NAM/CAM
One Sprint
Telesales
PGA Expenses
PLS Commission
SmartWorks Printing
-SECTION C-
PRESENTLY OFFERED CCPU SERVICES - Activity Settled Separately
Affiliate Project Authorizations
Long Distance
E911 Phase I Revenue
Microwave Clearing
Roaming
Software Fees
Sprint Local Telephone Usage
Taxes Paid on Behalf of Type III Affiliates
Tower Lease
Travel Revenue and Expense
Upgrade Commission - 2 Step Channel
Vendor Usage-Based Charges on New Products
Wholesale Revenue and Expense
-SECTION D-
PRESENTLY OFFERED CPGA SERVICES -Activity Settled Separately
3G Device Logistics Fee
3rd Party Spiffs
Accessory Margin
Commissions - National 3rd Party
Commissions - Other 3rd Party
Coop Advertising - Local 3rd Party
Coop Advertising - National 3rd Party
Handset returns
Handset subsidies
Handsets
88
Marketing Collateral (excluding destruction)
Meeting Competition Fund
RadioShack Promos (Includes RadioShack Golden Quarter, Jumpstart, Relaunch,
Sprint to Vegas, and Break the Bank)
Rebate Administrative Expense
Rebates
Reciprocal Retail Store Cost Recovery
Sprint LDD Commission
Third Party Promotions
Upgrade Commission - RadioShack
89
