CONFIDENTIAL TREATMENT REQUESTED
Confidential Portions of This Agreement Which Have Been Redacted Are Marked
With Brackets ("[***]"). The Omitted Material Has Been Filed Separately With The
Securities and Exchange Commission.
SPRINT PCS
MANAGEMENT AGREEMENT
BETWEEN
SPRINT SPECTRUM L.P.
SPRINTCOM, INC.
AND
HORIZON, PERSONAL
COMMUNICATIONS, INC.
JUNE 8, 1998
CONFIDENTIAL TREATMENT REQUESTED
Confidential Portions of This Agreement Which Have Been Redacted Are Marked
With Brackets ("[***]"). The Omitted Material Has Been Filed Separately With The
Securities and Exchange Commission.
SPRINT PCS MANAGEMENT AGREEMENT
This SPRINT PCS MANAGEMENT AGREEMENT is made June 8, 1998, between
SprintCom, Inc., a Kansas corporation, and Horizon Personal Communications,
Inc., an Ohio corporation (but not any Related Party) ("Manager"). The
definitions for this agreement are set forth on the attached "Schedule of
Definitions."
RECITALS
A. Sprint Spectrum L.P., a Delaware limited partnership, SprintCom, Inc., a
Kansas corporation, American PCS Communications, LLC, a Delaware limited
liability company, PhillieCo Partners I, L.P., a Delaware limited partnership,
and Cox Communications PCS, L.P., a Delaware limited partnership, hold and
exercise, directly or indirectly, control over licenses to operate wireless
services networks.
B. The entity or entities named in Recital A that execute this agreement
hold, directly or indirectly, the Licenses for the areas identified on the
Service Area Exhibit and are referred to in this agreement as "Sprint PCS."
Because this agreement addresses the rights and obligations of each license
holder with respect to each of its Licenses, each reference in this agreement to
"Sprint PCS" refers to the entity that owns, directly or indirectly, the License
referred to in that particular instance or application of the provision of this
agreement. If Sprint Spectrum does not own the License, it will provide on
behalf of Sprint PCS most or all of the services required under this agreement
to be provided by Sprint PCS.
C. The Sprint PCS business was established to use the Sprint PCS Network, a
nationwide wireless services network, to offer seamless, integrated voice and
data services using wireless technology. Sprint PCS offers the services to
customers under a single national brand.
D. This agreement, therefore, includes provisions defining Manager's
obligations with respect to:
- The design, construction and management of the Service Area Network;
- Offering and promoting products and services designated by Sprint PCS
as the Sprint PCS Products and Services of the Sprint PCS Network;
- Adherence to Program Requirements established by Sprint PCS to ensure
seamless interoperability throughout the Sprint PCS Network and
uniform and consistent quality of product and service offerings;
- Adherence to Customer Service Program Requirements established by
Sprint PCS to ensure consistency in interactions with customers
(including billing, customer care, etc.); and
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- Adherence to Program Requirements relating to the marketing, promotion
and distribution of Sprint PCS Products and Services.
E. Manager wishes to enter into this agreement to help construct, operate,
manage and maintain for Sprint PCS a portion of the Sprint PCS Network in the
Service Area. Sprint PCS has determined that permitting Manager to manage a
portion of the Sprint PCS Network in accordance with the terms of this agreement
will facilitate Sprint PCS' expansion of fully digital, wireless coverage under
the License and will enhance the wireless service for customers of Sprint PCS.
F. All managers of a portion of the business of Sprint PCS, including
Manager, must construct facilities and operate in accordance with Program
Requirements established by Sprint PCS with respect to certain aspects of the
development and offering of wireless products and services and the presentation
of the products and services to customers, to establish and operate the Sprint
PCS Network successfully by providing seamless, integrated voice and data
services, using wireless technology.
AGREEMENT
In consideration of the recitals and mutual covenants and agreements
contained in this agreement, the sufficiency of which are hereby acknowledged,
the parties, intending to be bound, agree as follows:
1. MANAGER
----------
1.1 Hiring of Manager. Sprint PCS hires Manager:
(a) to construct and manage the Service Area Network in compliance
with the License and in accordance with the terms of this agreement;
(b) to distribute continuously during the Term the Sprint PCS Products
and Services and to establish distribution channels in the Service Area;
(c) to conduct continually during the Term advertising and promotion
activities in the Service Area (including mutual decisions to "go dark", with
respect to advertising and promotion activities, for reasonable periods of
time); and
(d) to manage that portion of the customer base of Sprint PCS that has
the NPA-NXX assigned to the Service Area Network.
Sprint PCS has the right to unfettered access to the Service Area Network
to be constructed by Manager under this agreement. The fee to be paid to Manager
by Sprint PCS under Section 10 is for Manager's utilization of the Service Area
Network, sales and marketing costs, management of the Service Area Network, and
for all other obligations of Manager under this agreement.
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1.2 Program Requirements. Manager must adhere to the Program-Requirements
established by Sprint PCS and as modified from time to time to ensure uniform
and consistent operation of all wireless systems within the Sprint PCS Network
and to present the Sprint PCS Products and Services to customers in a uniform
and consistent manner under the Brands.
1.3 Vendor Purchase Agreements. Manager may participate in discounted
volume-based pricing on wireless-related products and services and in the
warranties Sprint PCS receives from its vendors, as is commercially reasonable
and to the extent permitted by applicable procurement agreements (e.g.,
agreements related to network infrastructure equipment, subscriber equipment,
interconnection, and collocation). Sprint PCS will use commercially reasonable
efforts to obtain for managers the same price Sprint PCS receives from vendors;
this does not prohibit Sprint PCS from entering into procurement agreements that
do not provide managers with the Sprint PCS prices.
Manager must purchase subscriber and infrastructure equipment from a Sprint
PCS approved list of products, which will include a selection from a variety of
manufacturers. Where required, the products must include proprietary software
developed by the manufacturers for Sprint PCS to allow seamless interoperability
in the Sprint PCS Network. Sprint PCS or the vendor may require Manager to
execute a separate license agreement for the software prior to Manager's use of
the software.
Manager may only make purchases under this Section 1.3 for items to be used
exclusively in the Service Area (e.g., Manager may not purchase base stations
under a Sprint PCS contract for use in a system not affiliated with Sprint PCS).
1.4 Interconnection. 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 permitted by applicable laws,
tariffs and contracts, Sprint PCS may arrange for the interconnection under its
agreements with the carrier and if it does so, Sprint PCS will bill the
interconnection fees to Manager.
1.5 Seamlessness. Manager will design and operate its systems, platforms,
products and services in the Service Area and the Service Area Network so as to
seamlessly interface them into the Sprint PCS Network.
1.6 Forecasting. Manager and Sprint PCS will work cooperatively to generate
mutually acceptable forecasts of important business metrics including traffic
volumes, handset sales, subscribers and Collected Revenue for the Sprint PCS
Products and Services. The forecasts are for planning purposes only and do not
constitute Manager's obligation to meet the quantities forecast.
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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 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.
1.8 Ethical Conduct and Related Covenants. Each party must perform its
obligations under this agreement in a diligent, legal, ethical, and professional
manner.
2. BUILD-OUT OF NETWORK
-----------------------
2.1 Build-out Plan. Manager will build-out the Service Area Network in the
Service Area in accordance with a Build-out Plan. Sprint PCS and Manager will
jointly develop each Build-out Plan, except Sprint PCS must approve the final
Build-out Plan. Manager will report to Sprint PCS its performance regarding the
critical milestones included in the Build-out Plan on a periodic basis as
mutually agreed to by the parties, but no less frequently than quarterly. The
Build-out Plan and the Service Area Network as built must comply with Sprint PCS
Program Requirements and federal and local regulatory requirements.
Any modifications, additions or expansions to a Build-out Plan will be
subject to prior written approval by Sprint PCS. The Build-out Plan in effect as
of the date of this agreement is attached as Exhibit 2.1. Each new or amended
Build-out Plan will also become part of Exhibit 2.1.
2.2 Compliance with Regulatory Rules. During the build-out of the Service
Area Network, Sprint PCS authorizes Manager to make all filings with regulatory
authorities regarding the build-out, including filings with the Federal Aviation
Administration, environmental authorities, and historical districts. Manager may
further delegate its duty under this Section 2.2 to a qualified site acquisition
company. Manager must ensure that a copy of every filing is given to Sprint PCS.
Manager must ensure that Sprint PCS is notified in writing of any contact by a
regulatory agency including the FCC with Manager or Manager's site acquisition
company regarding any filing. Sprint PCS has the right to direct any proceeding,
inquiry, dispute, appeal or other activity with a regulatory or judicial
authority regarding any filing made on behalf of Sprint PCS. Manager will amend,
modify, withdraw, refile and otherwise change any filing as Sprint PCS requires.
Notwithstanding the preceding sentences in this Section 2.2, and in conjunction
with Section 16, Sprint PCS is solely responsible for making any and all filings
with the FCC regarding the build-out. Manager will notify Sprint PCS of any
activity, event or condition related to the build-out that might require an FCC
filing.
2.3 Exclusivity of Service Area. Manager will be the only person or entity
that is a manager or operator for Sprint PCS with respect to the Service Area
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and neither Sprint PCS nor any of its Related Parties will own, operate, build
or manage another wireless mobility communications network in the Service Area
so long as this agreement remains in full force and effect and there is no Event
of Termination that has occurred giving Sprint PCS the right to terminate this
agreement, except that:
(a) Sprint PCS may cause Sprint PCS Products and Services to be sold
in the Service Area through the Sprint PCS National Accounts Program
Requirements and Sprint PCS National or Regional Distribution Program
Requirements;
(b) A reseller of Sprint PCS Products and Services may sell its
products and services in the Service Area;
(e) Sprint PCS may build-out and sell Sprint PCS Products and Services
in a New Area, or permit a third party to do so, if Manager has chosen not to
build-out the New Area; and
(d) Sprint PCS and its Related Parties may engage in the activities
described in Sections 2.4(a) and 2.4(b) with Manager in the geographic areas
within the Service Area in which one of them owns an incumbent local exchange
carrier as of the date of this agreement.
2.4 Restriction. In geographic areas within the Service Area in which
Sprint PCS or any of its Related Parties owns an incumbent local exchange
carrier as of the date of this agreement, Manager must not offer any Sprint PCS
Products or Services specifically designed for the competitive local exchange
market ("fixed wireless local loop"), except that:
(a) Manager may designate the local exchange carrier that is a Related
Party of Sprint to be the exclusive distributor of the fixed wireless local loop
product in the territory served by the local exchange carrier, even if a portion
of its territory is within the Service Area; or
(b) Manager may sell the fixed wireless local loop product under the
terms and conditions specified by Sprint PCS (e.g., including designation by
Sprint PCS of an exclusive distribution agent for the territory).
This restriction exists with respect to a particular geographic area only so
long as Sprint PCS or its Related Party owns such incumbent local exchange
carrier.
Nothing in this Section 2.4 prohibits Manager from offering Sprint PCS
Products and Services primarily designed for mobile functionality. The
restricted markets as of the date of this agreement are set forth on Exhibit
2.4.
2.5 Manager's Right of First Refusal for New Area Build-out. Sprint PCS
grants to Manager the right of first refusal to build-out New Areas. Sprint PCS
will give to Manager a written notice of a New Area 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
Area, otherwise Manager's right of first refusal terminates with regard to the
New Area described in the' notice.
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If Manager decides to build-out the New Area 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 Area. 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 the Manager. Manager will construct and operate the network in the New Area
in accordance with the terms of this agreement.
If Manager declines to exercise its right of first refusal or Manager fails
to build-out the New Area in accordance with the amended Build-out Plan then
Sprint PCS may construct the New Area itself or allow a Sprint PCS Related Party
or an Other Manager to construct the New Area. Sprint PCS has the right, in a
New Area 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 Area. Any New Area that Sprint PCS or
a third party builds-out is deemed removed from the Service Area and the 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 Area,
Manager's right of first refusal does not terminate with respect to the
remainder of the Service Area.
2.6 Purchase of Assets by Manager. If Sprint PCS has assets located in the
Service Area that Manager could reasonably use in its construction of the
Service Area Network and if Sprint PCS is willing to sell such assets, then
Manager agrees to purchase from Sprint PCS and Sprint PCS agrees to sell to
Manager the assets in accordance with the terms and conditions of the asset
purchase agreement attached as Exhibit 2.6.
2.7 Microwave Relocation. Sprint PCS will relocate interfering microwave
sources in the spectrum in the Service Area to the extent necessary to permit
the Service Area Network to carry the anticipated call volume as set out in the
Build-out Plan. If the spectrum cleared is not sufficient to carry the actual
call volume then Sprint PCS will clear additional spectrum of its choosing to
accommodate the call volume. Sprint PCS may choose to clear spectrum one carrier
at a time. The parties will share equally all costs associated with clearing
spectrum under this Section 2.7.
2.8 Determination of pops. If any provision in this agreement requires the
determination of pops in a given area, then the pops will be determined using
the census block group pop forecast then used by Sprint PCS, except that a
different forecast will be used for any FCC filing and in preparing the
Build-out Plan if required by the FCC. Sprint PCS presently uses the forecast of
Equifax/NDS, but it may choose in its sole discretion to use another service
that provides comparable data.
6
3. PRODUCTS AND SERVICES; IXC SERVICES
--------------------------------------
3.1 Sprint PCS Products and Services. Manager must offer for sale, promote
and support all Sprint PCS Products and Services within the Service Area, unless
the parties otherwise agree in advance in writing. Within the Service Area,
Manager may only sell, promote and support wireless products and services that
are Sprint PCS Products and Services or are other products and services
authorized under Section 3.2. The Sprint PCS Products and Services as of the
date of this agreement are attached as Exhibit 3.1. Sprint PCS may modify the
Sprint PCS Products and Services from time to time in its sole discretion by
delivering to Manager a new Exhibit 3.1.
3.2 Other Products and Services. Manager may offer wireless products and
services that are not Sprint PCS Products and Services, on the terms Manager
determines, if the offer of the additional products and services:
(a) does not violate the obligations of Manager under this agreement;
(b) does not cause distribution channel conflict with or consumer
confusion regarding Sprint PCS' regional and national offerings of Sprint PCS
Products and Services;
(c) complies with the Trademark License Agreements; and
(d) does not materially impede the development of the Sprint PCS
Network.
Manager will not offer any products or services under this Section 3.2 that
are confusingly similar to Sprint PCS Products and Services. Manager must
request that Sprint PCS determine whether Sprint PCS considers a product or
service to be confusingly similar to any Sprint PCS Products and Services by
providing advance written notice to Sprint PCS that describes those products and
services that could be interpreted to be confusingly similar to Sprint PCS
Products and Services. If Sprint PCS fails to provide a response to Manager
within 30 days after receiving the notice, then the products and services are
deemed to create confusion with the Sprint PCS Products and Services and the
request therefore rejected. In rejecting any request Sprint PCS must provide the
reasons for the rejection. If the rejection is based on Sprint PCS' failure to
respond within 30 days and Manager requests an explanation for the deemed
rejection, then Sprint PCS must provide within 30 days the reasons for the
rejection.
3.3 Cross-selling with Sprint. Manager and Sprint and Sprint's Related
Parties may enter into arrangements to sell Sprint's services, including long
distance service (except those long distance services governed by Section 3.4),
Internet access, customer premise equipment, prepaid phone cards, and any other
services that Sprint or its Related Parties make available from time to time.
Sprint's services may be packaged with the Sprint PCS Products and Services.
If Manager chooses to resell the long distance services, Internet access or
competitive local telephony services including prepaid phone cards, of third
parties (other than Manager's Related Parties), Manager will give Sprint the
7
right of last offer to provide those services on the same terms and conditions
as the offer to which Manager is prepared to agree, subject to the terms of any
existing agreements Manager was subject to prior to execution of this agreement.
Within the Service Area, Manager will facilitate sales by Sprint of the
Sprint PCS Products and Services, including the packaging of wireless, local
exchange and other products and services with Sprint products and services.
3.4 IXC Services. Manager must purchase from Sprint long distance telephony
services for the Sprint PCS Products and Services at wholesale rates. Long
distance telephone calls are those calls between the local calling area for the
Service Area Network and areas outside the local calling area. The local calling
area will be defined by mutual agreement of Sprint PCS and Manager. 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. Any arrangement
must have terms at least as favorable to Manager (in all material respects) as
those offered by Sprint to any wholesale customer of Sprint in comparable
circumstances (taking into consideration volume, traffic patterns, etc.). If
Manager is bound by an agreement for these services and the agreement was not
made in anticipation of this agreement, then the requirements of this Section
3.4 do not apply during the term of the other agreement. If the other agreement
terminates for any reason then the requirements of this Section 3.4 do apply.
3.5 Resale of Products and Services
3.5.1 Mandatory Resale of Products and Services. Sprint PCS must,
under FCC rules, permit Sprint PCS' service plans to be resold by a purchaser of
the service plan. Sprint PCS will not grant the purchaser of a service plan the
right to use any of the support services offered by Sprint PCS, including
customer care, billing, collection, and advertising, nor the right to use the
Brands. The reseller only has the right to use the service purchased.
Consequently, Manager agrees not to interfere with any purchaser of the Sprint
PCS Products or Services who resells the service plans in accordance with this
agreement and applicable law. Manager will notify purchaser that the purchaser
does not have a right to use the Brands or Sprint PCS' support services. In
addition, Manager will notify Sprint PCS if it reasonably believes a reseller of
retail service plans is using the support services or Brands.
3.5.2 Voluntary 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. If Sprint PCS chooses to
offer a voluntary resale product, it will adopt a program that will be a Program
Requirement under this agreement and that addresses the manner in which Manager
and Other Managers interact with the resellers. Sprint PCS will discuss such
program with Manager during development.
8
Manager must not sell Sprint PCS Products and Services for resale unless
Sprint PCS consents to such sales in advance in writing, except as required
under the regulations and rules concerning mandatory resale.
3.6 Non-competition. Neither Manager nor any of its Related Parties may
offer Sprint PCS Products and Services outside of the Service Area without the
prior written approval of Sprint PCS.
Within the Service Area, Manager and Related Parties may offer, market or
promote telecommunications products or services only under the following brands:
(a) products or services with the Brands;
(b) other products and services approved under Section 3.2, except no
brand of a significant competitor of Sprint PCS or its Related Parties in the
telecommunications business may be used by Manager's Related Parties on these
products and services;
(c) products or services with Manager's brand; or
(d) products or services with the brands of Manager's Related Parties,
except no brand of a significant competitor of Sprint PCS or its Related Parties
in the telecommunications business may be used by Manager's Related Parties on
these products and services.
If Manager or any of its Related Parties has licenses to provide broadband
personal communication services outside the Service Area, neither Manager nor
such Related Party may utilize the spectrum to offer Sprint PCS Products and
Services without prior written consent from Sprint PCS. Additionally, when
Manager's customers from inside the Service Area travel or roam to other
geographic areas, Manager will route the customers' calls, both incoming and
outgoing, according to the Sprint PCS Network Roaming and Inter Service Area
Program Requirements, without regard to any wireless networks operated by
Manager or its Related Parties. For example, Manager will program the preferred
roaming list for handsets sold in the Service Area to match the Sprint PCS
preferred roaming list.
3.7 Right of Last Offer. Manager will offer to Sprint the right to make to
Manager the last offer to provide backhaul and transport services for call
transport for the Service Area Network if Manager decides to use third parties
for backhaul and transport services rather than self-provisioning the services
or purchasing the services from Related Parties of Manager. Sprint will have a
reasonable time to respond to Manager's request for last offer to provide
backhaul and transport pricing and services, which will be no greater than 5
Business Days after receipt of the request for the services and pricing from
Manager.
If Manager has an agreement in effect as of the date of this agreement for
these services and the agreement was not made in anticipation of this agreement,
9
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.
4. MARKETING AND SALES ACTIVITIES
4.1 Sprint PCS National or Regional Distribution Program Requirements.
During the term of this agreement, Manager must participate in any Sprint PCS
National or Regional Distribution Program (as in effect from time to time), and
will pay or receive compensation for its participation in accordance with the
terms and conditions of that program. The Sprint PCS National or Regional
Distribution Program Requirements in effect as of the date of this agreement are
attached as Exhibit 4.1.
4.1.1 Territorial Limitations on Manager's Distribution Activities.
Neither Manager nor any of its Related Parties will market, sell or distribute
Sprint PCS Products and Services outside of the Service Area, except:
(a) as otherwise agreed upon by the parties in advance in writing; or
(b) Manager may place advertising in media that has distribution
outside of the Service Area, so long as that advertising is intended by Manager
to reach primarily potential customers within the Service Area.
Manager may establish direct local distribution programs in accordance with
the Sprint PCS Distribution Program Requirements, subject to the terms and
conditions of the Trademark License Agreements and the non-competition and other
provisions contained in this agreement.
4.1.2 Settlement of Equipment Sales. Sprint PCS will establish a
settlement policy and process that will be included in the Sprint PCS National
or Regional Distribution Program Requirements to:
(a) reconcile sales of subscriber equipment made in the service areas
of Sprint PCS or Other Managers of Sprint PCS, that result in activations in the
Service Area; and
(b) reconcile sales of subscriber equipment made in the Service Area
that result in activations in service areas of Sprint PCS or Other Managers.
In general, the policy will provide that the party in whose service area
the subscriber equipment is activated will be responsible for the payment of any
subsidy (i.e., the difference between the price paid to the manufacturer and the
suggested retail price for direct channels and the difference between the price
paid to the manufacturer and the wholesale price for third party retailers) and
for other costs associated with the sale, including logistics, inventory
carrying costs, direct channel commissions and other retailer compensation.
4.1.3 Use of Third-Party Distributors. Manager may request that Sprint
PCS and a local distributor enter into Sprint PCS' standard distribution
agreement regarding the purchase from Sprint PCS of handsets and accessories.
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Sprint PCS will use commercially reasonable efforts to reach agreement with the
local distributor. Sprint PCS may refuse to enter into a distribution agreement
with a distributor for any reasonable reason, including that the distributor
fails to pass Sprint PCS' then current credit and background checks or the
distributor fails to agree to the standard terms of the Sprint PCS distribution
agreement. Any local distributor will be subject to the terms of the Trademark
License Agreements or their equivalent. Manager will report to Sprint PCS the
activities of any local distributor that Manager believes to be in violation of
the distribution agreement.
4.2 Sprint PCS National Accounts Program Requirements. During the term of
this agreement, Manager must participate in the Sprint PCS National Accounts
Program (as in effect from time to time), and will be entitled to compensation
for its participation and will be required to pay the expenses of the program in
accordance with the terms and conditions of that program. The Sprint PCS
National Accounts Program Requirements in effect as of the date of this
agreement are attached as Exhibit 4.2.
4.3 Sprint PCS Roaming and Inter Service Area Program Requirements. Manager
will participate in the Sprint PCS Roaming and Inter Service Area Program
established and implemented by Sprint PCS, including roaming price plans and
inter-carrier settlements. The Sprint PCS Roaming and Inter Service Area Program
Requirements in effect as of the date of this agreement are attached as Exhibit
4.3.
As part of the Sprint PCS Roaming and Inter Service Area Program
Requirements, Sprint PCS will establish a settlement policy and process to
equitably distribute between the members making up the Sprint PCS Network (i.e.,
Sprint PCS, Manager and all Other Managers) the revenues received by one member
for services used by its customers when they travel into other members' service
areas.
4.4 Pricing. Manager will offer and support all Sprint PCS pricing plans
designated for regional or national offerings of Sprint PCS Products and
Services (e.g., national inter service area rates, regional home rates, and
local price points). The Sprint PCS pricing plans as of the date of this
agreement are attached as Exhibit 4.4. Sprint PCS may modify the Sprint PCS
pricing plans from time to time in its sole discretion by delivering to Manager
a new Exhibit 4.4.
Additionally, with prior approval from Sprint PCS, which approval will not
be unreasonably withheld, Manager may establish price plans for Sprint PCS
Products and Services that are only offered in its local market, subject to:
(a) the non-competition and other provisions contained in this
agreement;
(b) consistency with regional and national pricing plans;
(c) regulatory requirements; and
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(d) capability and cost of implementing rate plans in Sprint PCS
systems (if used.)
Manager must provide advance written notice to Sprint PCS with details of
any pricing proposal for Sprint PCS Products or Services in the Service Area. If
Sprint PCS fails to respond to Manager within 20 days after receiving such
notice, then the price proposed for those Sprint PCS Products or Services is
deemed approved.
At the time Sprint PCS approves a pricing proposal submitted by Manager,
Sprint PCS will provide Manager an estimate of the costs and expenses Sprint PCS
will incur to implement the proposed pricing plan. Manager agrees to promptly
reimburse Sprint PCS for any cost or expense incurred by Sprint PCS to implement
such a pricing plan, which will not exceed the amount estimated by Sprint PCS if
Manager waited for Sprint PCS' response to Manager's proposal.
4.5 Home Service Area. Sprint PCS and Manager will agree to the initial
home service area for each base station in the Service Area Network prior to the
date the Service Area Network goes into commercial operation. If the parties
cannot agree to the home service area for each base station in the Service Area
Network, then the parties will use the dispute resolution process in Section 14
of this agreement to assign each base station to a home service area.
5. USE OF BRANDS
----------------
5.1 Use of Brands.
(a) Manager must enter into the Trademark License Agreements on or
before the date of this agreement.
(b) Manager must use the Brands exclusively in the marketing,
promotion, advertisement, distribution, lease or sale of any Sprint PCS Products
and Services within the Service Area, except Manager may use other brands to the
extent permitted by the Trademark License Agreements and not inconsistent with
the terms of this agreement.
(c) Neither Manager nor any of its Related Parties may market,
promote, advertise, distribute, lease or sell any of the Sprint PCS Products and
Services or Manager's products and Services on a non-branded, "private label"
basis or under any brand, trademark, trade name or trade dress other than the
Brands, except (i) for sales to resellers required under this agreement, or (ii)
as permitted under the Trademark License Agreements.
(d) The provisions of this Section 5.1 do not prohibit Manager from
including Sprint PCS Products and Services under the Brands within the Service
Area as part of a package with its other products and services that bear a
different brand or trademark. The provisions of this Section 5.1 do not apply to
the extent that they are inconsistent with applicable law or in conflict with
the Trademark License Agreements.
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5.2 Conformance to Marketing Communications Guidelines. Manager must
conform to the Marketing Communications Guidelines in connection with the
marketing, promotion, advertisement, distribution, lease and sale of any of the
Sprint PCS Products and Services. The Marketing Communications Guidelines in
effect as of the date of this agreement have been provided to Manager. Sprint
and Sprint Spectrum may amend the Marketing Communications Guidelines from time
to time in accordance with the terms of the Trademark License Agreements.
5.3 Joint Marketing With Third Parties.
(a) Manager may engage in various joint marketing activities (e.g.,
promotions with sports teams and entertainment providers or tournament
sponsorships) with third parties in the Service Area from time to time during
the term of this agreement with respect to the Sprint PCS Products and Services,
except that Manager may engage in the joint marketing activities only if the
joint marketing activities:
(i) Are conducted in accordance with the terms and conditions of
the Trademark License Agreements and the Marketing Communications
Guidelines;
(ii) Do not violate the terms of this agreement;
(iii) Are not likely (as determined by Sprint PCS, in its sole
discretion) to cause confusion between the Brands and any other
trademark or service mark used in connection with the activities;
(iv) Are not likely (as determined by Sprint, in its sole
discretion) to cause confusion between the Sprint Brands and any other
trademark or service mark used in connection with the activities; and
(v) Are not likely (as determined by Sprint PCS, in its sole
discretion) to give rise to the perception that the Sprint PCS
Products and Services are being advertised, marketed or promoted under
any trademark or service mark other than the Brands, except as
provided in the Trademark License Agreements. Manager will not engage
in any activity that includes co-branding involving use of the Brands
(that is, the marketing, promotion, advertisement, distribution, lease
or sale of any of the Sprint PCS Products and Services under the
Brands and any other trademark or service mark), except as provided in
the Trademark License Agreements.
(b) Manager must provide advance written notice to Sprint PCS
describing those joint marketing activities that may:
(i) cause confusion between the Brands and any other trademark or
service mark used in connection with the proposed activities; or (ii)
13
give rise to the perception that the Sprint PCS Products and Services
are being advertised, marketed or promoted under any trademark or
service mark other than the Brands, except as provided in the
Trademark License Agreements.
(c) If Sprint PCS fails to provide a response to Manager within 20
days after receiving such notice, then the proposed activities are deemed, as
the case may be:
(i) not to create confusion between the Brands and any other
trademark or service mark; or
(ii) not to give rise to the perception that Manager's products
and services are being advertised, marketed or promoted under any
trademark or set-vice mark other than the Brands, except as provided
in the Trademark License Agreements.
5.4 Prior Approval of Use of Brands. Manager must obtain advance written
approval from Sprint for use of the Sprint Brands to the extent required by the
Sprint Trademark License Agreement and from Sprint PCS for use of the Sprint PCS
Brands to the extent required by the Sprint PCS Trademark License Agreement.
Sprint PCS will use commercially reasonable efforts to facilitate any review of
Manager's use of the Brands, if Sprint PCS is included in the review process.
5.5 Duration of Use of Brand. Manager is entitled to use the Brands only
during the term of the Trademark License Agreements and any transition period
during which Manager is authorized to use the Brands following their
termination.
6. ADVERTISING AND PROMOTION
----------------------------
6.1 National Advertising and Promotion. Sprint PCS is responsible for (a)
all national advertising and promotion of the Sprint PCS Products and Services,
including the costs and expenses related to national advertising and promotions,
and (b) all advertising and promotion of the Sprint PCS Products and Services in
the markets where Sprint PCS operates without the use of a Manager.
6.2 In-Territory Advertising and Promotion. Manager must advertise and
promote the Sprint PCS Products and Services in the Service Area (and may do so
in the areas adjacent to the Service Area so long as Manager intends that such
advertising or promotion primarily reach potential customers within the Service
Area). Manager must advertise and promote the Sprint PCS Products and Services
in accordance with the terms and conditions of this agreement, the Trademark
License Agreements and the Marketing Communication Guidelines. Manager is
responsible for the costs and expenses incurred by Manager with respect to
Manager's advertising and promotion activities in the Service Area.
Manager will be responsible for a portion of the cost of any promotion or
advertising done by third party retailers in the Service Area (e.g., Best Buy)
in accordance with any cooperative advertising arrangements based on per unit
handset sales.
14
Sprint PCS has the right to use in any promotion or advertising done by
Sprint PCS any promotion or advertising materials developed by Manager from time
to time with respect to the Sprint PCS Products and Services. Sprint PCS will
reimburse Manager for the reproduction costs related to such use.
Sprint PCS will make available to Manager the promotion or advertising
materials developed by Sprint PCS from time to time with respect to Sprint PCS
Products and Services in current use by Sprint PCS (e.g., radio ads, television
ads, design of print ads, design of point of sale materials, retail store
concepts and designs, design of collateral). Manager will bear the cost of using
such materials (e.g., cost of local radio and television ad placements, cost of
printing collateral in quantity, and building out and finishing retail stores).
6.3 Review of Advertising and Promotion Campaigns. Sprint PCS and Manager
will jointly review the upcoming marketing and promotion campaigns of Manager
with respect to Sprint PCS Products and Services (including advertising and
promotion expense budgets) and will use good faith efforts to coordinate
Manager's campaign with Sprint PCS' campaign to maximize the market results of
both parties. Sprint PCS and Manager may engage in cooperative advertising or
promotional activities during the term of this agreement as the parties may
agree in writing.
6.4 Public Relations. If Manager conducts local public relations efforts,
then Manager must conduct the local public relations efforts consistent with the
Sprint PCS Communications Policies. The Sprint PCS Communications Policies as of
the date of this agreement are attached as Exhibit 6.4. Sprint PCS may modify
the Sprint PCS Communications Policies from time to time by delivering to
Manager a new Exhibit 6.4.
7. SPRINT PCS TECHNICAL PROGRAM REQUIREMENTS
--------------------------------------------
7.1 Conformance to Sprint PCS Technical Program Requirements.
(a) Manager must meet or exceed the Sprint PCS Technical Program
Requirements established by Sprint PCS from time to time for the Sprint PCS
Network. Manager will be deemed to meet the Sprint PCS Technical Program
Requirements if:
(i) Manager operates the Service Area Network at a level equal to
or better than the lower of the Operational Level of Sprint PCS or the
operational level contemplated by the Sprint PCS Technical Program
Requirements; or
(ii) Sprint PCS is responsible under the Services Agreement to
ensure the Service Area Network complies with the Sprint PCS Technical
Program Requirements.
(b) Manager must demonstrate to Sprint PCS that Manager has complied
with the Sprint PCS Technical Program Requirements prior to connecting the
Service Area Network to the rest of the Sprint PCS Network. Once the Service
15
Area Network is connected to the Sprint PCS Network, Manager must continue to
comply with the Sprint PCS Technical Program Requirements. Sprint PCS agrees
that the Sprint PCS Technical Program Requirements adopted for Manager will be
the same Sprint PCS Technical Program Requirements applied by Sprint PCS to the
Sprint PCS Network.
7.2 Establishment of Sprint PCS Technical Program Requirements. Sprint PCS
has delivered to Manager a copy of the current Sprint PCS Technical Program
Requirements, attached as Exhibit 7.2. Sprint PCS drafted the Sprint PCS
Technical Program Requirements to ensure a minimum, base-line level of quality
for the Sprint PCS Network. The Sprint PCS Technical Program Requirements
include standards relating to voice quality, interoperability, consistency
(seamlessness) of coverage, RF design parameters, system design, capacity, and
call blocking ratio. Sprint PCS has selected code division multiple access as
the initial air interface technology for the Sprint PCS Network (subject to
change in accordance with Section 7.3).
7.3 Handoff to Adjacent Networks. If technically feasible and commercially
reasonable, Manager will operate the Service Area Network in a manner that
permits a seamless handoff of a call initiated on the Service Area Network to
any adjacent PCS network that is part of the Sprint PCS Network, as specified in
the Sprint PCS Technical Program Requirements. Sprint PCS agrees that the terms
and conditions for seamless handoffs adopted for the Service Area Network will
be the same as the terms Sprint PCS applies to the other parts of the Sprint PCS
Network for similar configurations of equipment.
8. SPRINT PCS CUSTOMER SERVICE PROGRAM REQUIREMENTS
---------------------------------------------------
8.1 Compliance With Sprint PCS Customer Service Program Requirements.
Manager must comply with the Sprint PCS Customer Service Program Requirements in
providing the Sprint PCS Products and Services to any customer of Manager,
Sprint PCS or any Sprint PCS Affiliate. Manager will be deemed to meet the
standards if:
(a) Manager operates the Service Area Network at a level equal to or
better than the lower of the Operational Level of Sprint PCS or the operational
level contemplated by the Program Requirements; or
(b) Manager has delegated to Sprint PCS under the Services
Agreement responsibility to ensure the Service Area Network complies with the
Sprint PCS Customer Service Standards.
Sprint PCS has delivered to Manager a copy of the Sprint PCS Customer
Service Standards, which are attached as Exhibit 8. 1.
9. SPRINT PCS PROGRAM REQUIREMENTS
----------------------------------
9.1 Program Requirements Generally. This agreement contains numerous
references to Sprint PCS National and Regional Distribution Program
Requirements, Sprint PCS National Accounts Program Requirements, Sprint PCS
16
Roaming and Inter Service Area Program Requirements, Sprint PCS Technical
Program Requirements and Sprint PCS Customer Service Program Requirements.
Sprint PCS may unilaterally amend from time to time in the manner described in
Section 9.2 all Program Requirements, guidelines and policies mentioned in this
agreement. The most current version of the requirements programs, guidelines and
policies mentioned in the first sentence of this Section 9.1 have been provided
to Manager.
9.2 Amendments to Program Requirements. Sprint PCS may amend any of the
Sprint PCS Program Requirements, subject to the following conditions:
(a) The applicable Program Requirements, as amended, will apply
equally to Manager, Sprint PCS and each Other Manager, except if Manager and
Sprint PCS agree otherwise or if Sprint PCS grants a waiver to Manager. Sprint
PCS may grant waivers to Other Managers without affecting Manager's obligation
to comply with the Program Requirements;
(b) Each amendment will be reasonably required to fulfill the purposes
set forth in Section 1.2 with respect to uniform and consistent operations of
the Sprint PCS Network and the presentation of Sprint PCS Products and Services
to customers in a uniform and consistent manner;
(c) Each amendment will otherwise be on terms and conditions that are
commercially reasonable with respect to the construction, operation and
management of the Sprint PCS Network. With respect to any amendment to Program
Requirements, Sprint PCS may provide for reasonable transition periods and,
where appropriate, grandfathering provisions for existing activities by Manager
that were permitted under the applicable Program Requirements before the
amendment;
(d) Sprint PCS must give Manager reasonable, written notice of the
amendment, but in any event the notice will be given at least 30 days prior to
the effective date of the amendment; and
(e) Manager must implement any changes in the Program Requirements
within a commercially reasonable period of time unless otherwise consented to by
Sprint PCS. Sprint PCS will determine what constitutes a commercially reasonable
period of time taking into consideration relevant business factors, including
the strategic significance of the changes to the Sprint PCS Network, the
relationship of the changes to the yearly marketing cycle, and the financial
demands on and capacity generally of Other Managers. Notwithstanding the
preceding two sentences, Manager will not be required to implement any change in
the Service Area Network or the business of Manager required by an amendment to
a Program Requirement until Sprint PCS has implemented the required changes in
substantially all of that portion of the Sprint PCS Network that Sprint PCS
operates without the use of a manager, unless the amendment to the Program
Requirement relates to an obligation regarding the Service Area Network mandated
by law. When necessary for reasons related to new technical standards, new
17
equipment or strategic reasons, Sprint PCS can require Manager to implement the
changes in the Service Area Network or Manager's business concurrently with
Sprint PCS, in which case Sprint PCS will reimburse Manager for its costs and
expenses if Sprint PCS discontinues the Program Requirement changes prior to
implementation.
Sprint PCS may grant Manager appropriate waivers and variances from the
requirements of any Program Requirements. Sprint PCS has the right to adopt any
Program Requirements that implement any obligation regarding the Service Area
Network mandated by law.
Any costs and expenses incurred by Manager in connection with conforming to
any change to the Program Requirements during the term of this agreement are the
responsibility of Manager.
9.3 Manager's Right to Request Review of Changes. If Sprint PCS announces a
change to a Program Requirement that will:
(a) cause the Manager to spend an additional amount greater than 5% of
Manager's shareholder's equity or capital account plus Manager's long-term debt
(i.e., notes that mature more than one year from the date issued), as reflected
on Manager's books; or
(b) cause the long term operating expenses of Manager on a per unit
basis using a 10-year time frame to increase by more than 10% on a net present
value basis, then Manager may give Sprint PCS a written notice requesting Sprint
PCS to reconsider the change.
The Sprint PCS Vice President or the designee of the Sprint PCS Chief
Officer in charge of the group that manages the Sprint PCS relationship with
Manager will review Manager's request. If after the review and decision by the
Vice President, Manager is still dissatisfied, then Manager may ask that the
Chief Officer to whom the Vice President reports review the matter. If Sprint
PCS still requires Manager to implement the change to the Program Requirement,
then upon Manager's failure to implement the change Sprint PCS will have the
rights under Section 11.
9.4 Sprint PCS' Right to Implement Changes. If Manager requests Sprint PCS
to reconsider a change to a Program Requirement as permitted under Section 9.3
and Sprint PCS decides it will not require Manager to make the change, Sprint
PCS may, but is not required to, implement the change at Sprint PCS' expense, in
which event Manager will be required to operate the Service Area Network, as
changed, but Sprint PCS will be entitled to any revenue derived from the change.
9.5 Rights of Inspection. Sprint PCS and its authorized agents and
representatives may enter upon the premises of any office or facility operated
by or for Manager at any time, with reasonable advance notice to Manager if
possible, to inspect, monitor and test in a reasonable manner the Service Area
Network, including the facilities, equipment, books and records of Manager, to
ensure that Manager has complied or is in compliance with all covenants and
obligations of Manager under this agreement, including Manager's obligation to
conform to the Program Requirements. The inspection, monitoring and testing may
not disrupt the operations of the office or facility, nor impede Manager's
access to the Service Area Network.
18
9.6 Manager's Responsibility to Interface with Sprint PCS. Manager will use
platforms fully capable of interfacing with the Sprint PCS platforms in
operating the Service Area Network and in providing Sprint PCS Products and
Services. Manager will pay the expense of making its platforms fully capable of
interfacing with Sprint PCS, including paying for the following:
(i) Connectivity;
(ii) Any changes that Manager requests Sprint PCS to make to
Sprint PCS systems to interconnect with Manager's systems that Sprint
PCS, in its sole discretion, agrees to make;
(iii) Equipment to run Manager's software;
(iv) License fees for Manager's software; and
(v) Manager upgrades or changes to its platforms.
10. FEES
--------
10.1 Fees and Payments.
10.1.1 Fee Based on Collected Revenue. Sprint PCS will pay to Manager
a weekly fee equal to 92% of Collected Revenues for the week for: (a)
utilization of the Service Area Network; (b) sales and marketing costs; (c)
Manager's management of the Service Area Network; and (d) all other obligations
of Manager under this Agreement. The fee will be due on Thursday of the week
following the week for which the fee is calculated.
10.1.2 Payment of Universal Service Funds. Sprint PCS and Manager will
share any federal and state subsidy funds (e.g., payments by a state of
universal service fund subsidies to Sprint PCS or Manager), if any, received by
Sprint PCS or Manager for customers who reside in the portion of the Service
Area served by the Service Area Network. Manager is entitled to 92% of any
amount received by either party and Sprint PCS is entitled to 8% of such
amounts.
10.1.3 Inter Service Area Fees. Sprint PCS will pay to Manager monthly
a fee as set out in the Sprint PCS Roaming and Inter Service Area Program, for
each minute of use that a customer of Sprint PCS or one of the Other Managers
whose NPA-NXX is not assigned to the Service Area Network uses the Service Area
Network. Manager will pay to Sprint PCS a fee, as set out in the Sprint PCS
Roaming and Inter Service Area Program, for each minute of use that a customer
whose NPA-NXX is assigned to the Service Area Network uses a portion of the
Sprint PCS Network other than the Service Area Network. Manager acknowledges
that the manner in which the NPA-NXX is utilized could change, which will
require a modification in the manner in which the inter service area fees, if
any, will be calculated.
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10.1.4 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.
10.1.5 Outbound Roaming Fees. If not otherwise provided under any
Program Requirement:
(a) Sprint PCS will pay to Manager monthly the amount of
Outbound Roaming fees that Sprint PCS collects for the month from end users
whose NPA-NXX is assigned to the Service Area; and
(b) Manager will pay to Sprint PCS (or to a clearinghouse or other
carrier as appropriate) 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.
10.1.6 Reimbursements. Manager will pay to or reimburse Sprint PCS for
any amounts that Sprint PCS is required to pay to a third party (e.g., a
telecommunications carrier) to the extent Sprint PCS already paid such amount to
Manager under this Section 10.
10.2 Monthly True Up. Manager will report to Sprint PCS monthly the amount
of Collected Revenue received directly by the Manager (e.g., customer mails
payment to the business address of Manager rather than to the lockbox or a
customer pays a direct sales force representative in cash). Sprint PCS will on a
monthly basis true up the fees and payments due under Section 10.1 against the
actual payments made by Sprint PCS to Manager. Sprint PCS will provide to
Manager a true up report each month showing the true up and the net amount due
from one party to the other, if any. If the weekly payments made to Manager
exceed the actual fees and payments due to Manager, then Manager will remit the
amount of the overpayment to Sprint PCS within 5 Business Days after receiving
the true up report from Sprint PCS. If the weekly payments made to Manager are
less than the actual fees and payments due to Manager, then Sprint PCS will
remit the shortfall to Manager within 5 Business Days after sending the true up
report to Manager.
If a party disputes any amount on the true up report, the disputing party
must give the other party written notice of the disputed amount and the reason
for the dispute within 90 days after it receives the true up report. The dispute
will be resolved through the dispute resolution process in Section 14. The
parties must continue to pay to the other party any undisputed amounts owed
under this agreement during the dispute resolution process. The dispute of an
item does not stay or diminish a party's other rights and remedies under this
agreement.
10.3 Taxes. 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 levied by a governmental authority on the fees and
charges payable by Sprint PCS to Manager.
20
10.4 Collected Revenues Definition. "Collected Revenues" means actual
payments received by or on behalf of Sprint PCS or Manager for Sprint PCS
Products and Services from others including the customers whose NPA-NXX is the
same as that for the portion of the Service Area served by the Service Area
Network. In determining Collected Revenues the following principles will apply.
(a) The following items will be treated as follows:
(i) Collected Revenues do not include revenues from federal and
state subsidy funds; they are handled separately as noted in Section
10.1.2;
(ii) Collected Revenues do include any amounts received for the
payment of Inbound Roaming charges and interconnect fees when calls
are carried on the Service Area Network; and
(iii) Collected Revenues do not include any amounts received with
respect to any changes made by Sprint PCS under Section 9.4.
(b) The following items are not Collected Revenues; Sprint PCS is
obligated to remit the amounts received with respect to such items, if any, to
Manager, as follows:
(i) Inter service area payments will be paid as provided under
Section 10.1.3;
(ii) Outbound Roaming and related charges will be paid as
provided under Section 10.1.5;
(iii) Proceeds from the sale or lease of subscriber equipment and
accessories will be paid to Manager, subject to the equipment
settlement process in Section 4.1.2;
(iv) Proceeds from sales not in the ordinary course of business
(e.g., sales of switches, cell sites, computers, vehicles or other
fixed assets); and
(v) Any amounts collected with respect to sales and use taxes,
gross receipts taxes, transfer taxes, and similar taxes,
administrative fees, telecommunications fees, and surcharges for taxes
and fees that are collected by a carrier for the benefit of a
governmental authority, subject to Manager's obligation under Section
10.3.
(c) The following items are not Collected Revenues; neither party will
collect any amounts respecting such items:
(i) Reasonable adjustments of a customer's account (e.g., if
Sprint PCS or Manager reduces a customer's bill, then the amount of
the adjustment is not Collected Revenue); and
21
(ii) Amount of bad debt and fraud associated with customers whose
NPA-NXX is assigned to the Service Area (e.g., if Sprint PCS or
Manager writes off a customer's bill as a bad debt, there is no
Collected Revenue on which a fee is due to Manager).
10.5 Late Payments. Any amount due under this Section 10 that is not paid
by one party to the other party in accordance with the terms of this agreement
will bear interest at the Default Rate beginning (and including) the 3rd day
after the due date until (and including) the date paid.
10.6 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, the Services Agreement, or any other agreement with Sprint PCS or a
Related Party, then Sprint PCS may setoff against standard payment intervals
(e.g. weekly) against the amounts paid to Manager under Section 10.1 until such
time as Manager pays any such unpaid amounts.
Sprint PCS may setoff the following amounts:
(a) any amount that Manager owes to Sprint PCS or a Related Party of
Sprint PCS, including amounts due under the Services Agreement; and
(b) any amount that Sprint PCS reasonably estimates will be due to
Sprint PCS for the current month under the Services Agreement (e.g., if under
the Services Agreement customer care calls are billed monthly, Sprint PCS can
deduct from the weekly payment to Manager an amount Sprint PCS reasonably
estimates will be due Sprint PCS under the Services Agreement).
On a monthly basis Sprint PCS will true up the estimated amounts deducted
against the actual amounts due Sprint PCS. If the estimated amounts deducted by
Sprint PCS exceed the actual amounts due to Sprint PCS, then Sprint PCS will
remit the excess to Manager with the next weekly payment. If the estimated
amounts deducted are less than the actual amounts due to Sprint PCS and its
Related Parties, then Sprint PCS may continue to setoff the payments to Manager
against the amounts due to Sprint PCS. This right of setoff is in addition to
any other right that Sprint PCS may have under this agreement.
11. TERM; TERMINATION; EFFECT OF TERMINATION
--------------------------------------------
11.1 Initial Term. This agreement commences on the date of execution and,
unless terminated earlier in accordance with the provisions of this Section 11,
continues for a period of 20 years (the "Initial Term").
11.2 Renewal Terms. Following expiration of the Initial Term, this
agreement will automatically renew for 3 successive 10-year renewal periods (for
a maximum of 50 years including the Initial Term), unless at least 2 years prior
to the commencement of any renewal period either party notifies the other party
in writing that it does not wish to renew this agreement.
22
11.2.1 Non-renewal Rights of Manager. If this agreement will terminate
because Sprint PCS gives Manager timely written notice of non-renewal of this
agreement, then Manager may exercise its rights under Section 11.2.1.1 or, if
applicable, its rights under Section 11.2.1.2.
11.2.1.1 Manager's Put Right. Manager may within 30 days after the
date Sprint PCS gives notice of non-renewal put to Sprint PCS all of the
Operating Assets. Sprint PCS will pay to Manager for the Operating Assets an
amount equal to 80% of the Entire Business Value. The closing of the purchase of
the Operating Assets will occur within 20 days after the later of (a) the
receipt by Sprint PCS of the written notice of determination of the Entire
Business Value provided by the appraisers under Section 11.7 or (b) the receipt
of all materials required to be delivered to Sprint PCS under Section 11.8. Upon
closing the purchase of the Operating Assets this agreement will be deemed
terminated. The exercise of the put, the determination of the Operating Assets,
the representations and warranties made by Manager with respect to the Operating
Assets and the business, and the process for closing the purchase will be
subject to the terms and conditions set forth in Section 11.8.
11.2.1.2 Manager's Purchase Right.
(a) If Sprint PCS owns 20 MHz or more of PCS spectrum in the Service
Area under the License on the date this agreement is executed, then Manager may,
subject to receipt of FCC approval of the necessary disaggregation and
partition, purchase from Sprint PCS the Disaggregated License for an amount
equal to the greater of (1) the original cost of the License to Sprint PCS (pro
rated on a pops and spectrum basis) plus the microwave relocation costs paid by
Sprint PCS or (2) 10% of the Entire Business Value.
(b) Upon closing the purchase of the spectrum this agreement will be
deemed terminated. The closing of the purchase of the Disaggregated License will
occur within the later of:
(1) 20 days after the receipt by Manager of the written
notice of determination of the Entire Business Value by the appraisers
under Section 11.7; or
(2) 10 days after the approval of the sale of the
Disaggregated License by the FCC.
(c) The exercise of the purchase right, the determination of the
geographic extent of the Disaggregated License coverage, the representations and
warranties made by Sprint PCS with respect to the Disaggregated License, and the
process for closing the purchase will be subject to the terms and conditions set
forth in Section 11.8.
23
(d) After the closing of the purchase Manager will allow:
(1) subscribers of Sprint PCS to roam on Manager's network;
and
(2) Sprint PCS to resell Manager's Products and Services.
Manager will charge Sprint PCS a MFN price in either case.
11.2.2 Non-renewal Rights of Sprint PCS. If this agreement will
terminate because of any of the following five (5) events, then Sprint PCS may
exercise its rights under Section 11.2.2.1 or, if applicable, its rights under
Section 11.2.2.2:
(a) Manager gives Sprint PCS timely written notice of non-renewal of
this agreement;
(b) both parties give timely written notices of non-renewal;
(c) this agreement expires with neither party giving a written notice
of non-renewal;
(d) either party elects to terminate this agreement under Section
11.3.4(a); or
(e) Manager elects to terminate this agreement under Section
11.3.4(b).
11.2.2.1 Sprint PCS' Purchase Right. Sprint PCS may purchase from
Manager all of the Operating Assets. Sprint PCS will pay to Manager an amount
equal to 80% of the Entire Business Value. The closing of the purchase of the
Operating Assets will occur within 20 days after the later of (a) the receipt by
Sprint PCS of the written notice of determination of the Entire Business Value
provided by the appraisers under Section 11.7 or (b) the receipt of all
materials required to be delivered to Sprint PCS under Section 11.8. Upon
closing the purchase of the Operating Assets this agreement will be deemed
terminated. The exercise of the purchase right, the determination of the
Operating Assets, the representations and warranties made by Manager with
respect to the Operating Assets and the business, and the process for closing
the purchase will be subject to the terms and conditions set forth in Section
11.8.
24
11.2.2.2 Sprint PCS' Put Right.
(a) Sprint PCS may, subject to receipt of FCC approval, put to Manager
the Disaggregated License for a purchase price equal to the greater of (1) the
original cost of the License to Sprint PCS (pro rated on a pops and spectrum
basis) plus the microwave relocation costs paid by Sprint PCS or (2) 10% of the
Entire Business Value.
(b) Upon closing the purchase of the Disaggregated License this
agreement will be deemed terminated. The closing of the purchase of the
Disaggregated License will occur within the later of:
(1) 20 days after the receipt by Sprint PCS of the written
notice of determination of the Entire Business Value by the appraisers
under Section 11.7; or
(2) 10 days after the approval of the sale of the
Disaggregated License by the FCC.
(c) The exercise of the put, the determination of the geographic
extent of the Disaggregated License coverage, the representations and warranties
made by Sprint PCS with respect to the Disaggregated License, and the process
for closing the purchase will be subject to the terms and conditions set forth
in Section 11.8.
(d) Manager may, within 10 days after it receives notice of Sprint
PCS' exercise of its put, advise Sprint PCS of the amount of spectrum (not to
exceed 10 MHz) it wishes to purchase. After the purchase Manager will allow:
(1) subscribers of Sprint PCS to roam on Manager's network;
and
(2) Sprint PCS to resell Manager's Products and Services.
Manager will charge Sprint PCS a MFN price in either case.
11.2.2.3 Extended Term Awaiting FCC Approval. If Manager is buying the
Disaggregated License as permitted or required under Sections 11.2.1.2 or
11.2.2.2, then the Term of this agreement will extend beyond the original
expiration date until the closing of the purchase of the Disaggregated License.
The parties agree to exercise their respective commercially reasonable efforts
to obtain FCC approval of the transfer of the Disaggregated License.
11.3 Events of Termination. An "Event of Termination" is deemed to occur
when a party gives written notice to the other party of the Event of Termination
as permitted below:
25
11.3.1 Termination of License.
(a) At the election of either party this agreement may be terminated
at the time the FCC revokes or fails to renew the License. Unless Manager has
the right to terminate this agreement under Section 11.3.1(b), neither party has
any claim against the other party if the FCC revokes or fails to renew the
License, even if circumstances would otherwise permit one party to terminate
this agreement based on a different Event of Termination, except that the
parties will have the right to pursue claims against each other as permitted
under Section 11.4(b).
(b) If the FCC revokes or fails to renew the License because of a
breach of this agreement by Sprint PCS, then Manager has the right to terminate
this agreement under Section 11.3.3 and not this Section 11.3.1.
11.3.2 Breach of Agreement. Payment of Money Terms. At the election of
the non-breaching party this agreement may be terminated upon the failure by the
breaching party to pay any amount due under this agreement or any other
agreement between the parties or their respective Related Parties, if the breach
is not cured within 30 days after the breaching party's receipt of written
notice of the nonpayment from the non-breaching party.
11.3.3 Breach of Agreement: Other Terms. At the election of the
non-breaching party this agreement may be terminated upon the material breach by
the breaching party of any material term contained in this agreement that does
not regard the payment of money, if the breach is not cured within 30 days after
the breaching party's receipt of written notice of the breach from the
non-breaching party, except the cure period will continue for a reasonable
period beyond the 30-day period, but will under no circumstances exceed 180 days
after the breaching party's receipt of written notice of the breach, if it is
unreasonable to cure the breach within the 30-day period, and the breaching
party takes action prior to the end of the 30-day period that is reasonably
likely to cure the breach and continues to diligently take action necessary to
cure the breach.
11.3.4 Regulatory Considerations.
(a) At the election of either party this agreement may be terminated
if this agreement violates any applicable law in any material respect where such
violation (i) is classified as a felony or (ii) subjects either party to
substantial monetary fines or other substantial damages, except that before
causing any termination the parties must use best efforts to modify this
agreement, as necessary to cause this agreement (as modified) to comply with
applicable law and to preserve to the extent possible the economic arrangements
set forth in this agreement.
(b) At the election of Manager this agreement may be terminated if the
regulatory action described under 11.3.4(a) is the result of a deemed change of
control of the License and the parties are unable to agree upon a satisfactory
resolution of the matter with the regulatory authority without a complete
termination of this agreement.
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11.3.5 Termination of Trademark License Agreements. If either
Trademark License Agreement terminates under its terms, then:
(a) Manager may terminate this agreement if the Trademark License
Agreement terminated because of a breach of the Trademark License Agreement by
Sprint PCS or Sprint; and
(b) Sprint PCS may terminate this agreement if the Trademark License
Agreement terminated because of a breach of the Trademark License Agreement by
Manager.
11.3.6 Financing Considerations. At the election of Sprint PCS this
agreement may be terminated upon the failure of Manager to obtain the financing
described in Exhibit 1.7 by the deadline(s) set forth on such Exhibit.
11.3.7 Bankruptcy of a Party. At the election of the non-bankrupt
party, this agreement may be terminated upon the occurrence of a Voluntary
Bankruptcy or an Involuntary Bankruptcy of the other party.
"Voluntary Bankruptcy" means:
(a) The inability of a party generally to pay its debts as the debts
become due, or an admission in writing by a party of its inability to pay its
debts generally or a general assignment by a party for the benefit of creditors;
(b) The filing of any petition or answer by a party seeking to
adjudicate itself a bankrupt or insolvent, or seeking any liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief, or composition
for itself or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking, consenting to, or acquiescing
in the entry of an order for relief or the appointment of a receiver, trustee,
custodian or other similar official for itself or for substantially all of its
property; or
(c) Any action taken by a party to authorize any of the actions set
forth above.
"Involuntary Bankruptcy" means, without the consent or acquiescence of
a party:
(a) The entering of an order for relief or approving a petition for
relief or reorganization;
27
(b) Any petition seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or other similar relief under any present
or future bankruptcy, insolvency or similar statute, law or regulation;
(c) The filing of any petition against a party, which petition is not
dismissed within 90 days; or
(d) Without the consent or acquiescence of a party, the entering of an
order appointing a trustee, custodian, receiver or liquidator of party or of all
or any substantial part of the property of the party, which order is not
dismissed within 90 days.
11.4 Effect of an Event of Termination.
(a) Upon the occurrence of an Event of Termination, the party with the
right to terminate this agreement or to elect the remedy upon the Event of
Termination, as the case may be, may:
(i) in the case of an Event of Termination under Sections
11.3.1(a) or 11.3.7, give the other party written notice that the
agreement is terminated effective as of the date of the notice, in
which case neither party will have any other remedy or claim for
damages (except any claim the non-bankrupt party has against the
bankrupt party and any claims permitted under Section 11.4(b)); or
(ii) in the case of an Event of Termination other than under
Section 11.3.1(a), give the other party written notice that the party
is exercising one of its rights, if any, under Section 11.5 or Section
11.6.
(b) If the party terminates this agreement under Section 11.4(a)(i)
then all rights and obligations of each party under this agreement will
immediately cease, except that:
(i) Any rights arising out of a breach of any terms of this
agreement will survive any termination of this agreement;
(ii) The provisions of this Section 11.4 and of Sections 12.2,
13, 14 and 16 will survive any termination of this agreement;
(iii) The payment obligations under Section 10 will survive any
termination of this agreement if, and to the extent, any costs or fees
have accrued or are otherwise due and owing as of the date of
termination of this agreement from Manager to Sprint PCS or any Sprint
PCS Related Party or from Sprint PCS to Manager or any Manager Related
Party;
(iv) Either party may terminate this agreement in accordance with
the terms of this agreement without any liability for any loss or
28
damage arising out of or related to such termination, including any
loss or damage arising out of the exercise by Sprint PCS of its rights
under Section 11.6.3;
(v) The parties will use all commercially reasonable efforts to
cease immediately all of their respective efforts to market, sell,
promote or distribute the Sprint PCS Products and Services;
(vi) Sprint PCS has the option to buy from Manager any new unsold
subscriber equipment and accessories, at the prices charged to
Manager;
(vii) The parties will immediately stop making any statements or
taking any action that might cause third parties to infer that any
business relationship continues to exist between the parties, and
where necessary or advisable, the parties will inform third parties
that the parties no longer have a business relationship; and
(viii) If subscriber equipment and accessories are in transit
when this agreement is terminated, Sprint PCS may, but does not have
the obligation to, cause the freight carrier to not deliver the
subscriber equipment and accessories to Manager but rather to deliver
the subscriber equipment and accessories to Sprint PCS.
(c) If the party exercises its rights under Section 11.4(a)(ii), this
agreement will continue in full force and effect until otherwise terminated.
(d) If this agreement terminates for any reason other than Manager's
purchase of the Disaggregated License, Manager will not, for 3 years after the
date of termination compile, create, or use for the purpose of selling
merchandise or services similar to the Sprint PCS Products or Services, or sell,
transfer or otherwise convey to a third party, a list of customers who
purchased, leased or used Sprint PCS Products or Services. Manager may use such
a list for its own internal analysis of its business practices and operations.
If this agreement terminates because of Manager's purchase of the Disaggregated
License, then Sprint PCS will transfer to Manager the Sprint PCS customers with
a MIN assigned to the Service Area covered by the Disaggregated License, but
Sprint PCS retains the customers of a national account and any resellers who
have entered into a resale agreement with Sprint PCS. Manager agrees not to
solicit, directly or indirectly, any customers of Sprint PCS not transferred to
Manager under this Section 11.4(d) for 2 years after the termination of this
agreement.
11.5 Manager's Event of Termination Rights and Remedies. In addition to any
other right or remedy that Manager may have under this agreement, the parties
agree that Manager will have the rights and remedies set forth in this Section
11.5 and that such rights and remedies will survive the termination of this
agreement. If Manager has a right to terminate this agreement as the result of
the occurrence of an Event of Termination under Sections 11.3.2, 11.3.3, 11.3.5
or 11.3.7 (if Manager is the non-bankrupt party), then Manager has the right to
elect one of the following three (3) remedies, except Manager cannot elect its
29
remedies under Sections 11.5.1 or 11.5.2 during the first 2 years of the Initial
Term with respect to an Event of Termination under Section 11.3.3.
11.5.1 Manager's Put Right. Manager may put to Sprint PCS within 30
days after the Event of Termination all of the Operating Assets. Sprint PCS will
pay to Manager an amount equal to 80% of the Entire Business Value. The closing
of the purchase of the Operating Assets will occur within 20 days after the
later of:
(a) the receipt by Sprint PCS of the written notice of determination
of the Entire Business Value by the appraisers under Section 11.7; or
(b) the receipt of all materials required to be delivered to Sprint
PCS under Section 11.8.
Upon closing the purchase of the Operating Assets this agreement will be
deemed terminated. The exercise of the put, the determination of the Operating
Assets, the representations and warranties made by the Manager with respect to
the Operating Assets and the business, and the process for closing the purchase
will be subject to the terms and conditions set forth in Section 11.8.
11.5.2 Manager's Purchase Right.
(a) If Sprint PCS owns 20 MHz or more of PCS spectrum in the Service
Area under the License on the date this agreement is executed, then Manager may,
subject to receipt of FCC approval, purchase from Sprint PCS the Disaggregated
License for the greater of (1) the original cost of the License to Sprint PCS
(pro rated on a pops and spectrum basis) plus the microwave relocation costs
paid by Sprint PCS or (2) 9% (10% minus a 10% penalty) of the Entire Business
Value.
(b) Upon closing the purchase of the Disaggregated License this
agreement will be deemed terminated. The closing of the purchase of the
Disaggregated License will occur within the later of:
(1) 20 days after the receipt by Manager of the written
notice of determination of the Entire Business Value by the appraisers
under Section 11.7; or
(2) 10 days after the approval of the sale of the
Disaggregated License by the FCC.
The exercise of the purchase right, the determination of the
geographic extent of the Disaggregated License coverage, the
representations and warranties made by Sprint PCS with respect to the
Disaggregated License, and the process for closing the purchase will
be subject to the terms and conditions set forth in Section 11. 8.
30
(c) After the closing of the purchase Manager will allow:
(1) subscribers of Sprint PCS to roam on Manager's network;
and
(2) Sprint PCS to resell Manager's Product and Services.
Manager will charge Sprint PCS a MFN price in either case.
11.5.3 Manager's Action for Damages or Other Relief. Manager may seek
damages or other appropriate relief in accordance with the dispute resolution
process in Section 14.
11.6 Sprint PCS' Event of Termination Rights and Remedies. In addition to
any other right or remedy that Sprint PCS may have under this agreement, the
parties agree that Sprint PCS will have the rights and remedies set forth in
this Section 11.6 and that such rights and remedies will survive the termination
of this agreement. If Sprint PCS has a right to terminate this agreement as the
result of the occurrence of an Event of Termination under Sections 11.3.2,
11.3.3, 11.3.5, 11.3.6 or 11.3.7 (if Sprint PCS is the non-bankrupt party), then
Sprint PCS has the right to elect one of the following four (4) remedies, except
that (i) if Sprint PCS elects the remedies under Sections 11.6.1, 11.6.2 or
11.6.4, Sprint PCS may pursue its rights under Section 11.6.3 concurrently with
its pursuit of one of the other three remedies, (ii) Sprint PCS cannot elect its
remedies under Sections 11.6.1 or 11.6.2 during the first 2 years of the Initial
Term with respect to an Event of Termination under Section 11.3.3 (unless the
Event of Termination is caused by a breach related to the Build-out Plan or the
build-out of the Service Area Network), and (iii) Sprint PCS cannot elect its
remedy under Section 11.6.2 during the first 2 years of the Initial Term with
respect to an Event of Termination under Section 11.3.6.
11.6.1 Sprint PCS' Purchase Right. Sprint PCS may purchase from
Manager all of the Operating Assets. Sprint PCS will pay to Manager an amount
equal to 72% (80% minus a 10% penalty) of the Entire Business Value. The closing
of the purchase of the Operating Assets will occur within 20 days after the
later of.
(a) the receipt by Sprint PCS of the written notice of determination
of the Entire Business Value by the appraisers pursuant to Section 11.7; or
(b) the receipt of all materials required to be delivered to Sprint
PCS under Section 11.8.
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Upon closing the purchase of the Operating Assets this agreement will be
deemed terminated. The exercise of the purchase right, the determination of the
Operating Assets, the representations and warranties made by Manager with
respect to the Operating Assets and the business, and the process for closing
the purchase will be subject to the terms and conditions set forth in Section
11.8.
11.6.2 Sprint PCS' Put Right.
(a) Sprint PCS may, subject to receipt of FCC approval, put to Manager
the Disaggregated License for a purchase price equal to the greater of (1) the
original cost of the License to Sprint PCS (pro rated on a pops and spectrum
basis) plus the microwave relocation costs paid by Sprint PCS or (2) 10% of the
Entire Business Value.
(b) Upon closing the purchase of the Disaggregated License this
agreement will be deemed terminated. The closing of the purchase of the
Disaggregated License will occur within the later of:
(1) 20 days after the receipt by Sprint PCS of the written
notice of determination of the Entire Business Value by the appraisers
under Section 11.7; or
(2) 10 days after the approval of the sale of the
Disaggregated License by the FCC.
(c) The exercise of the put, the determination of the geographic
extent of the Disaggregated License coverage, the representations and warranties
made by Sprint PCS with respect to the Disaggregated License, and the process
for closing the purchase will be subject to the terms and conditions set forth
in Section 11.8.
(d) Manager may, within 10 days after it receives notice of Sprint
PCS' exercise of its put, advise Sprint PCS of the amount of spectrum (not to
exceed 10 MHz) it wishes to purchase. After the closing of the purchase Manager
will allow:
(1) subscribers of Sprint PCS to roam on Manager's network;
and
(2) Sprint PCS to resell Manager's Products and Services.
32
Manager will charge Sprint PCS a MFN price in either case.
11.6.3. Sprint PCS' Right to Cause A Cure.
(a) Sprint PCS' Right. Sprint PCS may, but is not obligated to, take
such action as it deems necessary to cure Manager's breach of this agreement,
including assuming operational responsibility for the Service Area Network to
complete construction, continue operation, complete any necessary repairs,
implement changes necessary to comply with the Program Requirements and terms of
this agreement, or take such other steps as are appropriate under the
circumstances, or Sprint PCS may designate a third party or parties to do the
same, to assure uninterrupted availability and deliverability of Sprint PCS
Products and Services in the Service Area, or to complete the build-out of the
Service Area Network in accordance with the terms of this agreement. In the
event that Sprint PCS elects to exercise its right under this Section 11.6.3,
Sprint PCS will give Manager written notice of such election. Upon giving such
notice:
(1) Manager will collect and make available at a convenient,
central location at its principal place of business, all documents,
books, manuals, reports and records related to the Build-out Plan and
required to operate and maintain the Service Area Network; and
(2) Sprint PCS, its employees, contractors and designated
third parties will have the unrestricted right to enter the facilities
and offices of Manager for the purpose of curing the breach and, if
Sprint PCS deems necessary, operate the Service Area Network.
Manager agrees to cooperate with and assist Sprint PCS to the extent
requested by Sprint PCS to enable Sprint PCS to exercise its rights
under this Section 11.6.3.
(b) Liability. Sprint PCS' exercise of its rights under this Section
11.6.3 will not be deemed an assumption by Sprint PCS of any liability
attributable to Manager or any other party, except that, without limiting the
provisions of Section 13, during the period that Sprint PCS is curing a breach
under this agreement or operating any portion of the Service Area Network
pursuant to this Section 11.6.3, Sprint PCS will indemnify and defend Manager
and its directors, partners, officers, employees and agents from-and against,
and reimburse and pay for, all claims, demands, damages, losses, judgments,
awards, liabilities, costs and expenses (including reasonable attorneys' fees,
court costs and other expenses of litigation), whether or not arising out of
third party claims, in connection with any suit, claim, action or other legal
proceeding relating to the bodily injury, sickness or death of persons or the
damage to or destruction of property, real or personal, resulting from or
arising out of Sprint PCS' negligence or willful misconduct in curing the breach
or in the operation of the Service Area Network. Sprint PCS' obligation under
this Section 11.6.3(b) will not apply to the extent of any claims, demands,
damages, losses, judgments, awards, liabilities, costs and expenses resulting
from the negligence or willful misconduct of Manager or arising from any
contractual obligation of Manager.
33
(c) Costs and Payments. During the period that Sprint PCS is curing a
breach or operating the Service Area Network under this Section 11.6.3, Sprint
PCS and Manager will continue to make any and all payments due to the other
party and to third parties under this agreement, the Services Agreement and any
other agreements to which such party is bound, except that Sprint PCS may deduct
from its payments to Manager all reasonable costs and expenses incurred by
Sprint PCS in connection with the exercise of its right under this Section
11.6.3. Sprint PCS' operation of the Service Area Network pursuant to this
Section 11.6.3 is not a substitution for Manager's performance of its
obligations under this agreement and does not relieve Manager of its other
obligations under this agreement.
(d) Length of Right. Sprint PCS may continue to operate the Service
Area Network in accordance with Section 11.6.3 until (i) Sprint PCS cures all
breaches by Manager under this agreement; (ii) Manager cures all breaches and
demonstrates to Sprint PCS' satisfaction that it is financially and
operationally willing, ready and able to perform in accordance with this
agreement and resumes such performance; (iii) Sprint PCS consummates the
purchase of the Operating Assets under Section 11.6.1 or the sale of the
Disaggregated License under Section 11.6.2; or (iv) Sprint PCS terminates this
agreement.
(e) Not Under Services Agreement. The exercise by Sprint PCS of its
right under this Section 11.6.3 does not represent services rendered under the
Services Agreement, and therefore it does not allow Manager to be deemed in
compliance with the Program Requirements under Sections 7.1(a)(ii), 8.1(b).
11.6.4 Sprint PCS' Action for Damages or Other Relief. Sprint PCS may
seek damages or other appropriate relief in accordance with the dispute
resolution process in Section 14.
11.7 Determination of Entire Business Value.
11.7.1 Appointment of Appraisers. Sprint PCS and Manager must each
designate an independent appraiser within 30 days after giving the Purchase
Notice under Exhibit 11.8. Sprint PCS and Manager will direct the two appraisers
to jointly select a third appraiser within 15 days after the day the last of
them is appointed. Each appraiser must be an expert in the valuation of wireless
telecommunications businesses. Sprint PCS and Manager must direct the three
appraisers to each determine, within 45 days after the appointment of the last
appraiser, the Entire Business Value. Sprint PCS and Manager will each bear the
costs of the appraiser appointed by it, and they will share equally the costs of
the third appraiser.
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11.7.2 Manager's Operating Assets. The following assets are included
in the Operating Assets (as defined in the Schedule of Definitions):
(a) network assets, including all personal property, real property
interests in cell sites and switch sites, leasehold interests, collocation
agreements, easements, and rights of way;
(b) all of the real, personal, tangible and intangible property and
contract rights that Manager owns and uses in conducting the business of
providing the Sprint PCS Products and Services, including the goodwill resulting
from Manager's customer base;
(c) sale and distribution assets primarily dedicated (i.e., at least
80% of their revenue is derived from the sale of Sprint PCS Products and
Services) to the sale by Manager of Sprint PCS Products and Services. For
example, a retail store that derives at least 80% of its revenue from the sale
of Sprint PCS Products and Services is an operating asset. A store that derives
65% of its revenue from Sprint PCS Products and Services is not an operating
asset;
(d) customers, if any, that use both the other products and services
approved under Section 3.2 and the Sprint PCS Products and Services;
(e) handset inventory;
(f) books and records of the wireless business, including all
engineering drawings and designs and financial records;
(g) all contracts used by Manager in operating the wireless business
including TI service agreements, service contracts, interconnection agreements,
distribution agreements, software license agreements, equipment maintenance
agreements, sales agency agreements and contracts with all equipment suppliers.
11.7.3 Entire Business Value. Utilizing the valuation principles set
forth below and in Section 11.7.4, "Entire Business Value" means the fair market
value of Manager's wireless business in the Service Area, valued on a going
concern basis.
(a) The fair market value is based on the price a willing buyer would
pay a willing seller for the entire on-going business.
(b) The appraisers will use the then-current customary means of
valuing a wireless telecommunications business.
35
(c) The business is conducted under the Brands and existing agreements
between the parties and their respective Related Parties.
(d) Manager owns the Disaggregated License (in the case where Manager
will be buying the Disaggregated License under Sections 11.2.1.2, 11.2.2.2,
11.5.2 or. 11.6.2) or Manager owns the spectrum and the frequencies actually
used by Manager under this agreement (in the case where Sprint PCS will be
buying the Operating Assets under Sections 11.2.1.1, 11.2.2.1, 11.5.1 or
11.6.1).
(e) The valuation will not include any value for the business
represented by Manager's Products and Services or any business not directly
related to Sprint PCS Products and Services.
11.7.4 Calculation of Entire Business Value. The Entire Business Value
to be used to determine the purchase price of the Operating Assets or the
Disaggregated License under this agreement is as follows:
(a) If the highest fair market value determined by the appraisers is
within 10% of the lowest fair market value, then the Entire Business Value used
to determine the purchase price under this agreement will be the arithmetic mean
of the three appraised fair market values.
(b) If two of the fair market values determined by the appraisers are
within 10% of one another, and the third value is not within 10% of the other
fair market values, then the Entire Business Value used to determine the
purchase price under this agreement will be the arithmetic mean of the two more
closely aligned fair market values.
(c) If none of the fair market values is within 10% of the other two
fair market values, then the Entire Business Value used to determine the
purchase price under this agreement will be the middle value of the three fair
market values.
11.8 Closing Terms and Conditions. The closing terms and conditions for the
transactions contemplated in this Section 11 are attached as Exhibit 11.8.,
11.9 Contemporaneous and Identical Application. The parties agree that any
action regarding renewal or non-renewal and any Event of Termination will occur
contemporaneously and identically with respect to all Licenses. For example, if
Manager exercises its purchase right under Section 11.5.2, it must exercise such
right with respect to all of the Licenses under this agreement. The Term of this
agreement will be the same for all Licenses; Manager will not be permitted to
operate a portion of the Service Area Network with fewer than all of the
Licenses.
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12. BOOKS AND RECORDS; CONFIDENTIAL INFORMATION; INSURANCE
12.1 Books and Records.
12.1.1 General. Each party must keep and maintain books and records to
support and document any fees, costs, expenses or other charges due in
connection with the provisions set forth in this agreement. The records must be
retained for a period of at least 3 years after the fees, costs, expenses or
other charges to which the records relate have accrued and have been paid, or
such other period as may be required by law.
12.1.2 Audit. On reasonable advance notice, each party must provide
access to appropriate records to the independent auditors selected by the other
party for purposes of auditing the amount of fees, costs, expenses or other
charges payable in connection with the Service Area with respect to the period
audited. The auditing party will conduct the audit no more frequently than
annually. 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 determination of the underpayment. 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
Sprint PCS determines Sprint PCS was overpaid.
Notwithstanding the above provisions of this Section 12.1.2, Sprint PCS may
elect to have its own independent auditors certify to the accuracy of the
charges with respect to Manager, rather than allow Manager's independent
auditors access to Sprint PCS' records.
12.1.3 Contesting an Audit. If the party that did not select the
independent auditor does not agree with the findings of the audit, then such
party can contest the findings by providing notice of such disagreement to the
other party (the "Dispute Notice"). The date of delivery of such notice is the
"Dispute Notice Date." If the parties are unable to resolve the disagreement
within 10 Business Days after the Dispute Notice Date, they will resolve the
disagreement in accordance with the following procedures.
The two parties and the auditor that conducted the audit will all agree on
an independent certified public accountant with a regional or national
accounting practice in the wireless telecommunications industry (the "Arbiter")
within 15 Business Days after the Dispute Notice Date. If, within 15 Business
Days after the Dispute Notice Date, the three parties fail to agree on the
Arbiter, then at the request of either party to this agreement, the Arbiter will
be selected pursuant to the rules then in effect of the American Arbitration
Association. Each party will submit to the Arbiter within 5 Business Days after
its selection and engagement all information reasonably requested by the Arbiter
to enable the Arbiter to independently resolve the issue that is the subject of
the Dispute Notice. The Arbiter will make its own determination of the amount of
fees, costs, expenses or other charges payable under this agreement with respect
to the period audited. The Arbiter will issue a written report of its
determination in reasonable detail and will deliver a copy of the report to the
parties within 10 Business Days after the Arbiter receives all of the
information reasonably requested. The determination made by the Arbiter will be
37
final and binding and may be enforced by any court having jurisdiction. The
parties will cooperate fully in assisting the Arbiter and will take such actions
as are necessary to expedite the completion of and to cause the Arbiter to
expedite its assignment.
If the amount owed by a contesting party is reduced by more than 10% or the
amount owed to a contesting party is increased by more than 10% then the
non-contesting party will pay the costs and expenses of the Arbiter, otherwise
the contesting party will pay the costs and expenses of the Arbiter.
12.2 Confidential Information.
(a) Except as specifically authorized by this agreement, each of the
parties must, for the Term and 3 years after the date of termination of this
agreement, keep confidential, not disclose to others and use only for the
purposes authorized in this agreement, all Confidential Information disclosed by
the other party to the party in connection with this agreement, except that the
foregoing obligation will not apply to the extent that any Confidential
Information:
(i) is or becomes, after disclosure to a party, publicly known by
any means other than through unauthorized acts or omissions of the
party or its agents; or
(ii) is disclosed in good faith to a party by a third party
entitled to make the disclosure.
(b) Notwithstanding the foregoing, a party may use, disclose or
authorize the disclosure of Confidential Information that it receives that:
(i) has been published or is in the public domain, or that
subsequently comes into the public domain, through no fault of the
receiving party;
(ii) prior to the effective date of this agreement was properly
within the legitimate possession of the receiving party, or subsequent
to the effective date of this agreement, is lawfully received from a
third party having rights to publicly disseminate the Confidential
Information without any restriction and without notice to the
recipient of any restriction against its further disclosure;
(iii) is independently developed by the receiving party through
persons or entities who have not had, either directly or indirectly,
access to or knowledge of the Confidential Information;
(iv) is disclosed to a third party consistent with the terms of
the written approval of the party originally disclosing the
information;
(v) is required by the receiving party to be produced under order
of a court of competent jurisdiction or other similar requirements of
38
a governmental agency, and the Confidential Information will otherwise
continue to be Confidential Information required to be held
confidential for purposes of this agreement;
(vi) is required by the receiving party to be disclosed by
applicable law or a stock exchange or association on which the
receiving party's securities (or those of its Related Parties) are or
may become listed; or
(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
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.
(c) Notwithstanding the foregoing, Manager authorizes Sprint PCS to
disclose to the public in public relations announcements and regulatory filings
Manager's identity and the Service Area to be developed and managed by Manager.
(d) The party making a disclosure under Sections 12.2(b)(v),
12.2(b)(vi) or 12.2(b)(vii) must inform the disclosing party as promptly as is
reasonably necessary to enable the disclosing party to take action to, and use
the party's reasonable best efforts to, limit the disclosure and maintain
confidentiality to the extent practicable.
(e) Manager will not, except when serving in the capacity of Manager
under this agreement, use any Confidential Information of any kind that it
receives under or in connection with this agreement. For example, if Manager
operates a wireless company in a different license area, Manager may not use any
of the Confidential Information received under or in connection with this
agreement in operating the other wireless business.
12.3 Insurance
12.3.1 General. During the term of this agreement, Manager must obtain
and maintain, and will cause any subcontractors to obtain and maintain, with
financially reputable insurers licensed to do business in all jurisdictions
where any work is performed under this agreement and who are reasonably
acceptable to Sprint PCS, the insurance described in the Sprint PCS Insurance
Requirements. The Sprint PCS Insurance Requirements as of the date of this
agreement are attached as Exhibit 12.3. Sprint PCS may modify the Sprint PCS
Insurance Requirements as is commercially reasonable from time to time by
delivering to Manager a new Exhibit 12.3.
12.3.2 Waiver of Subrogation. Manager must look first to any insurance
in its favor before making any claim against Sprint PCS or Sprint, and their
respective directors, officers, employees, agents or representatives for
recovery resulting from injury to any person (including Manager's or its
subcontractor's employees) or damage to any property arising from any cause,
regardless of negligence. Manager does hereby release and waive to the fullest
39
extent permitted by law, and will cause its respective insurers to waive, all
rights of recovery by subrogation against Sprint PCS or Sprint, and their
respective directors, officers, employees, agents or representatives.
12.3.3 Certificates of Insurance. Manager and all of its
subcontractors, if any, must, as a material condition of this agreement and
prior to the commencement of any work under and any renewal of this agreement,
deliver to Sprint PCS a certificate of insurance, satisfactory in form and
content to Sprint PCS, evidencing that the above insurance, including waiver of
subrogation, is in force and will not be canceled or materially altered without
first giving Sprint PCS at least 30 days prior written notice and that all
coverages are primary to any insurance carried by Sprint PCS, its directors,
officers, employees, agents or representatives.
Nothing contained in this Section 12.3.3 will limit Manager's liability to
Sprint PCS, its directors, officers, employees, agents or representatives to the
limits of insurance certified or carried.
13. INDEMNIFICATION
-------------------
13.1 Indemnification by Sprint PCS. Sprint PCS agrees to indemnify, defend
and hold harmless Manager, its directors, managers, officers, employees, agents
and representatives from and against any and all claims, demands, causes of
action, losses, actions, damages, liability and expense, including costs and
reasonable attorneys' fees, against Manager, its directors, managers, officers,
employees, agents and representatives arising from or relating to the violation
by Sprint PCS of any law, regulation or ordinance applicable to Sprint PCS or by
Sprint PCS' breach of any representation, warranty or covenant contained in this
agreement or any other agreement between Sprint PCS or its Related Parties and
Manager or its Related Parties except where and to the extent the claim, demand,
cause of action, loss, action, damage, liability and/or expense results solely
from the negligence or willful misconduct of Manager.
13.2 Indemnification by Manager. Manager agrees to indemnify, defend and
hold harmless Sprint PCS and Sprint, and their respective directors, managers,
officers, employees, agents and representatives from and against any and all
claims, demands, causes of action, losses, actions, damages, liability and
expense, including costs and reasonable attorneys' fees, against Sprint PCS or
Sprint, and their respective directors, managers, officers, employees, agents
and representatives arising from or relating to Manager's violation of any law,
regulation or ordinance applicable to Manager, Manager's breach of any
representation, warranty or covenant contained in this agreement or any other
agreement between Manager or its Related Parties and Sprint PCS and its Related
Parties, Manager's ownership of the operating assets or the operation of the
Service Area Network, or the actions or failure to act of any of Manager's
contractors, subcontractors, agents, directors, managers, officers, employees
and representatives of any of them in the performance of any work under this
agreement, except where and to the extent the claim, demand, cause of action,
loss, action, damage, liability and expense results solely from the negligence
or willful misconduct of Sprint PCS or Sprint, as the case may be.
40
13.3 Procedure.
13.3.1 Notice. Any party being indemnified ("Indemnitee") will give
the party making the indemnification ("Indemnitor") written notice as soon as
practicable but no later than 5 Business Days after the party becomes aware of
the facts, conditions or events that give rise to the claim for indemnification
if:
(a) Any claim or demand is made or liability is asserted against
Indemnitee; or
(b) Any suit, action, or administrative or legal proceeding is
instituted or commenced in which Indemnitee is involved or is named as a
defendant either individually or with others.
Failure to give notice as described in this Section 13.3.1 does not modify
the indemnification obligations of this provision, except if Indemnitee is
harmed by failure to provide timely notice to Indemnitor, then Indemnitor does
not have to indemnify Indemnitee for the harm caused by the failure to give the
timely notice.
13.3.2 Defense by Indemnitor. If within 30 days after giving notice
Indemnitee receives written notice from Indemnitor stating that Indemnitor
disputes or intends to defend against the claim, demand, liability, suit, action
or proceeding, then Indemnitor will have the right to select counsel of its
choice and to dispute or defend against the claim, demand, liability, suit,
action or proceeding, at its expense.
Indemnitee will fully cooperate with Indemnitor in the dispute or defense
so long as Indemnitor is conducting the dispute or defense diligently and in
good faith. Indemnitor is not permitted to settle the dispute or claim without
the prior written approval of Indemnitee, which approval will not be
unreasonably withheld. Even though Indemnitor selects counsel of its choice,
Indemnitee has the right to retain additional representation by counsel of its
choice to participate in the defense at Indemnity's sole cost and expense.
13.3.3 Defense by Indemnitee. If no notice of intent to dispute or
defend is received by Indemnitee within the 30-day period, or if a diligent and
good faith defense is not being or ceases to be conducted, Indemnitee has the
right to dispute and defend against the claim, demand or other liability at the
sole cost and expense of Indemnitor and to settle the claim, demand or other
liability, and in either event to be indemnified as provided in this Section
13.3.3. Indemnitee is not permitted to settle the dispute or claim without the
prior written approval of Indemnitor, which approval will not be unreasonably
withheld.
13.3.4 Costs. Indemnitor's indemnity obligation includes reasonable
attorneys' fees, investigation costs, and all other reasonable costs and
expenses incurred by Indemnitee from the first notice that any claim or demand
41
has been made or may be made, and is not limited in any way by any limitation on
the amount or type of damages, compensation, or benefits payable under
applicable workers' compensation acts, disability benefit acts, or other
employee benefit acts.
14. DISPUTE RESOLUTION
----------------------
14.1 Negotiation. The parties will attempt in good faith to resolve any
dispute arising out of or relating to this agreement promptly by negotiation
between or among representatives who have authority to settle the controversy.
Either party may escalate any dispute not resolved in the normal course of
business to the appropriate (as determined by the party) officers of the parties
by providing written notice to the other party.
Within 10 Business Days after delivery of the notice, the appropriate
officers of each party will meet at a mutually acceptable time and place, and
thereafter as often as they deem reasonably necessary, to exchange relevant
information and to attempt to resolve the dispute.
Either party may elect, by giving written notice to the other party, to
escalate any dispute arising out of or relating to the determination of fees
that is not resolved in the normal course of business or by the audit process
set forth in Sections 12.1.2 and 12.1.3, first to the appropriate financial or
accounting officers to be designated by each party. The designated officers will
meet in the manner described in the preceding paragraph. If the matter has not
been resolved by the designated officers within 30 days after the notifying
party's notice, either party may elect to escalate the dispute to the
appropriate (as determined by the party) officers in accordance with the prior
paragraphs of this Section 14.1.
14.2 Unable to Resolve. If a dispute has not been resolved within 60 days
after the notifying party's notice, either party may continue to operate under
this agreement and sue the other party for damages or seek other appropriate
remedies as provided in this agreement. If, and only if, this agreement does not
provide a remedy (as in the case of Sections 3.4 and 4.5, where the parties are
supposed to reach an agreement), then either party may give the other party
written notice that it wishes to resolve the dispute or claim arising out of the
parties' inability to agree under such Sections of this agreement by using the
arbitration procedure set forth in this Section 14.2. Such arbitration will
occur in Kansas City, Missouri, unless the parties otherwise mutually agree,
with the precise location being as agreed upon by the parties or, absent such
agreement, at a location in Kansas City, Missouri selected by Sprint PCS. Such
arbitration will be conducted pursuant to the procedures prescribed by the
Missouri Uniform Arbitration Act, as amended from time to time, or, if none,
pursuant to the rules then in effect of the American Arbitration Association (or
at any other place and by any other form of arbitration mutually acceptable to
the parties). Any award rendered in such arbitration will be confidential and
will be final and conclusive upon the parties, and a judgment on the award may
be entered in any court of the forum, state or federal, having jurisdiction. The
expenses of the arbitration will be borne equally by the parties to the
arbitration, except that each party must pay for and bear the cost of its own
experts, evidence, and attorneys' fees.
The parties must each, within 30 days after either party gives notice to
the other party of the notifying party's desire to resolve a dispute or claim
42
under the arbitration procedure in this Section 14.2, designate an independent
arbitrator, who is knowledgeable with regard to the wireless telecommunications
industry, to participate in the arbitration hearing. The two arbitrators thus
selected will select a third independent arbitrator, who is knowledgeable with
regard to the wireless telecommunications industry, who will act as chairperson
of the board of arbitration. If, within 15 days after the day the last of the
two named arbitrators is appointed, the two named arbitrators fail to agree upon
the third, then at the request of either party, the third arbitrator shall be
selected pursuant to the rules then in effect of the American Arbitration
Association. The three independent arbitrators will comprise the board of
arbitration, which will preside over the arbitration hearing and will render all
decisions by majority vote. If either party refuses or neglects to appoint an
independent arbitrator within such 30-day period, the independent arbitrator who
has been appointed as of the 31st day after the notifying party's notice will be
the sole independent arbitrator and will solely preside over the arbitration
hearing. The arbitration hearing will commence no sooner than 30 days after the
date the last arbitrator is appointed and no later than 60 days after such date.
The arbitration hearing will be conducted during normal working hours on
Business Days without interruption or adjournment of more than 2 Business Days
at any one time or 6 Business Days in the aggregate.
The arbitrators will deliver their decision to the parties in writing
within 10 days after the conclusion of the arbitration hearing. The arbitration
award will be accompanied by findings of fact and a statement of reasons for the
decision. There will be no appeal from the written decision, except as permitted
by applicable law. The arbitration proceedings, the arbitrators' decision, the
arbitration award, and any other aspect, matter, or issue of or relating to the
arbitration are confidential, and disclosure of such confidential information is
an actionable breach of this agreement.
Notwithstanding any other provision of this agreement, arbitration will not
be required of any issue for which injunctive relief is properly sought by
either party.
14.3 Attorneys and Intent. If an officer intends to be accompanied at a
meeting by an attorney, the other party's officer will be given at least 3
Business Days prior notice of the intention and may also be accompanied by an
attorney. All negotiations under Section 14.1 are confidential and will be
treated as compromise and settlement negotiations for purposes of the Federal
Rules of Civil Procedure and state rules of evidence and civil procedure.
14.4 Tolling of Cure Periods. Any cure period under Section 11.3 that is
less than 90 days will be tolled during the pendency of the dispute resolution
process. Any cure period under Section 11.3 that is 90 days or longer will not
be tolled during the pendency of the dispute resolution process.
15. REPRESENTATIONS AND WARRANTEES
----------------------------------
Each party for itself makes the following representations and warranties to
the other party:
43
15.1 Due Incorporation or Formation; Authorization of Agreements. The party
is either a corporation, limited liability company, or limited partnership duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. Manager is qualified to do business and in
good standing in every jurisdiction in which the Service Area is located. The
party has the full power and authority to execute and deliver this agreement and
to perform its obligations under this agreement.
15.2 Valid and Binding Obligation. This agreement constitutes the valid and
binding obligation of the party, enforceable in accordance with its terms,
except as may be limited by principles of equity or by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally.
15.3 No Conflict; No Default. Neither the execution, delivery and
performance of this agreement nor the consummation by the party of the
transactions contemplated in this agreement will conflict with, violate or
result in a breach of (a) any law, regulation, order, writ, injunction, decree,
determination or award of any governmental authority or any arbitrator,
applicable to such party, (b) any term, condition or provision of the articles
of incorporation, certificate of limited partnership, certificate of
organization, bylaws, partnership agreement or limited liability company
agreement (or other governing documents) of such party or of any material
agreement or instrument to which such party is or may be bound or to which any
of its material properties or assets is subject.
15.4 Litigation. No action, suit, proceeding or investigation is pending
or, to the knowledge of the party, threatened against or affecting the party or
any of its properties, assets or businesses in any court or before or by any
governmental agency that could, if adversely determined, reasonably be expected
to have a material adverse effect on the party's ability to perform its
obligations under this agreement. The party has not received any currently
effective notice of any default that could reasonably be expected to result in a
breach of the preceding sentence.
16. REGULATORY COMPLIANCE
-------------------------
16.1 Regulatory Compliance. Manager will construct, operate, and manage the
Service Area Network in compliance with applicable federal, state, and local
laws and regulations, including Siting Regulations. Nothing in this Section 16.1
will limit Manager's obligations under Section 2.2 and the remainder of this
Section 16. Manager acknowledges that failure to comply with applicable federal,
state, and local laws and regulations in its construction, operation, and
management of the Service Area Network may subject the parties and the License
to legal and administrative agency actions, including forfeiture penalties and
actions that affect the License, such as license suspension and revocation, and
accordingly, Manager agrees that it will cooperate with Sprint PCS to maintain
the License in full force and effect.
Manager will write and implement practices and procedures governing
construction and management of the Service Area Network in compliance with
Siting Regulations. Manager will make its Siting Regulations practices and
44
procedures available upon request to Sprint PCS in the manner specified by
Sprint PCS for its inspection and review, and Manager will modify those Siting
Regulations practices and procedures as may be requested by Sprint PCS. Every
six months, and at the request of Sprint PCS, Manager will provide a written
certification from one of Manager's chief officers that Manager's Service Area
Network complies with Siting Regulations. Manager's first certification of
compliance with Siting Regulations will be provided to Sprint PCS six months
after the date of this agreement.
Manager will conduct an audit and physical inspection of its Service Area
Network at the request of Sprint PCS to confirm compliance with Siting
Regulations, and Manager will report the results of the audit and physical
inspection to Sprint PCS in the form requested by Sprint PCS. Manager will bear
the cost of Siting Regulations compliance audits and physical inspections
requested by Sprint PCS.
Manager will retain for 3 years records demonstrating compliance with
Siting Regulations, including compliance audit and inspection records. Manager
will make those records available upon request to Sprint PCS for production,
inspection, and copying in the manner specified by Sprint PCS. Sprint PCS will
bear the cost of production, inspection, and copying.
16.2 FCC Compliance. The parties agree to comply with all applicable FCC
rules governing the License or the Service Area Network and specifically agree
as follows:
(a) The party billing a customer will advise the customer that service
is provided over spectrum licensed to Sprint PCS. Neither Manager nor Sprint PCS
will represent itself as the legal representative of the other before the FCC or
any other third party, but will cooperate with each other with respect to FCC
matters concerning the License or the Service Area Network.
(b) Sprint PCS will use commercially reasonable efforts to maintain
the License in accordance with the terms of the License and all applicable laws,
policies and regulations and to comply in all material respects with all other
legal requirements applicable to the operation of the Sprint PCS Network and its
business. Sprint PCS has sole responsibility, except as specifically provided
otherwise in Section 2.2, for keeping the License in full force and effect and
for preparing submissions to the FCC or any other relevant federal, state or
local authority of all reports, applications, interconnection agreements,
renewals, or other filings or documents. Manager must cooperate and coordinate
with Sprint PCS to comply with regulatory regulations, with cooperation and
coordination must include, without limitation, the provision to Sprint PCS of
all information that Sprint PCS deems necessary to comply with the regulatory
requirements. Manager must refrain from taking any action that could impede
Sprint PCS from fulfilling its obligations under the preceding sentence, and
must not take any action that could cause Sprint PCS to forfeit or cancel the
License.
(c) Sprint PCS and Manager are familiar with Sprint PCS'
responsibility under the Communications Act of 1934, as amended, and applicable
FCC rules. Nothing in this agreement is intended to diminish or restrict Sprint
PCS' obligations as an FCC Licensee and both parties desire that this agreement
and each party's obligations under this agreement be in compliance with the FCC
rules.
45
(d) Nothing in this agreement will preclude Sprint PCS from permitting
or facilitating resale of Sprint PCS Products and Services to the extent
required or elected under applicable FCC regulations. Manager will take the
actions necessary to facilitate Sprint PCS' compliance with FCC regulations. To
the extent permitted by applicable regulations, sprint PCS will not authorize a
reseller that desires to sell services and products in only the Service Area to
resell Sprint PCS wholesale products and services, unless Manager agrees in
advance to such sales.
(e) If a change in FCC policy or rules makes it necessary to obtain
FCC consent for the implementation, continuation or further effectuating of any
term or provision of this agreement, Sprint PCS will use all commercially
reasonable efforts diligently to prepare, file and prosecute before the FCC all
petitions, waivers, applications, amendments, rule-making comments and other
related documents necessary to secure and/or retain FCC approval of all aspects
of this agreement. Manager will use commercially reasonable efforts to provide
to Sprint PCS any information that Sprint PCS may request from Manager with
respect to any matter involving Sprint PCS, the FCC, the License, the Sprint PCS
Products and Services or any other products and services approved under Section
3.2. Each party will bear its own costs of preparation of the documents and
prosecution of the actions.
(f) If the FCC determines that this agreement is inconsistent with the
terms and conditions of the License or is otherwise contrary to FCC policies,
rules and regulations, or if regulatory or legislative action subsequent to the
date of this agreement alters the permissibility of this agreement under the
FCC's rules or other applicable law, rules or regulations, then the parties must
use best efforts to modify this agreement as necessary to cause this agreement
(as modified) to comply with the FCC policies, rules, regulations and applicable
law and to preserve to the extent possible the economic arrangements set forth
in this agreement.
16.3 Marking and Lighting. Manager will conform to applicable FAA standards
when Siting Regulations require marking and lighting of Manager's Service Area
Network cell sites. Manager will cooperate with Sprint PCS in reporting lighting
malfunctions as required by Siting Regulations.
16.4 Regulatory Notices. Manager will, within 2 Business Days after its
receipt, give Sprint PCS written notice of all oral and written communications
it receives from regulatory authorities (including but not limited to the FCC,
the FAA, state public service commissions, environmental authorities, and
historic preservation authorities) and complaints respecting Manager's
construction, operation, and management of the Service Area Network that could
result in actions affecting the License as well as written notice of the details
respecting such communications and complaints, including a copy of any written
material received in connection with such communications and complaints. Manager
will cooperate with Sprint PCS in responding to such communications and
complaints received by Manager. Sprint PCS has the right to respond to all such
46
communications and complaints, with counsel and consultants of its own choice.
If Sprint PCS chooses to respond to such communications and complaints, Manager
will not respond to them without the consent of Sprint PCS, and Manager will pay
the costs of Sprint PCS' responding to such communications and complaints,
including reasonable attorneys' and consultants' fees, investigation costs, and
all other reasonable costs and expenses incurred by Sprint PCS.
16.5 Regulatory Policy-Setting Proceedings. Manager will not intervene in
or otherwise participate in a rulemaking, investigation, inquiry, contested
case, or similar regulatory policy setting proceedings before a regulatory
authority concerning the License or construction, operation, and management of
the Service Area Network and the Sprint PCS business operated using the Service
Area Network.
17. GENERAL PROVISIONS
----------------------
17.1 Notices. Any notice, payment, 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 and a copy sent by overnight courier), charges prepaid
and addressed as described on the Notice Address Schedule attached to the Master
Signature Page, 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.
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.
17.2 Construction. This agreement will be construed simply according to its
fair meaning and not strictly for or against either party.
17.3 Headings. The table of contents, section and other headings contained
in this agreement are for reference purposes only and are not intended to
describe, interpret, define, limit or expand the scope, extent or intent of this
agreement.
17.4 Further Action. Each party agrees to perform all further acts and
execute, acknowledge, and deliver any documents that may be reasonably
necessary, appropriate, or desirable to carry out the intent and purposes of
this agreement.
17.5 Counterpart Execution. This agreement may be executed in any number of
counterparts with the same effect as if both parties had signed the same
document. All counterparts will be construed together and will constitute one
agreement.
17.6 Specific Performance. Each party agrees with the other party that the
party would be irreparably damaged if any of the provisions of this agreement
were not performed in accordance with their specific terms and that monetary
damages alone would not provide an adequate remedy. Accordingly, in addition to
any other remedy to which the non-breaching party may be entitled, at law or in
equity, the non-breaching party will be entitled to injunctive relief to prevent
breaches of this agreement and specifically to enforce the terms and provisions
of this agreement,
47
17.7 Entire Agreement; Amendments. The provisions of this agreement, the
Services Agreement and the Trademark License Agreements (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 PCS' right
to amend the Program Requirements in accordance with Section 9.2 and its right
to unilaterally modify and amend certain other provisions as expressly provided
in this agreement, this agreement may be modified or amended only by a written
amendment signed by persons or entities authorized to bind each party and, with
respect to the sections set forth on the signature page for Sprint, the persons
or entities authorized to bind Sprint.
17.8 Limitation on Rights of Others. Except as set forth on the signature
page for Sprint, nothing in this agreement, whether express or implied, will be
construed to give any person or entity other than the parties any legal or
equitable right, remedy or claim under or in respect of this agreement.
17.9 Waivers.
17.9.1 Waivers - General. The observance of any term of this agreement
may be waived (whether generally or in a particular instance and either
retroactively or prospectively) by the party entitled to enforce the term, but
any waiver is effective only if in a writing signed by the party against which
the waiver is to be asserted. Except as otherwise provided in this agreement, no
failure or delay of either party in exercising any power or right under this
agreement will operate as a waiver of the power or right, nor will any single or
partial exercise of any right or power preclude any other or further exercise of
the right or power or the exercise of any other right or power.
17.9.2 Waivers - Managers. Manager is not in breach of any covenant in
this agreement and no Event of Termination will have occurred as a result of the
occurrence of any event, if Manager had delegated to Sprint Spectrum under the
Services Agreement (or any successor to that agreement) responsibility for
taking any action necessary to ensure compliance with the covenant or to prevent
the occurrence of the event.
17.9.3 Force Majeure. 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 have occurred as a result of the occurrence of the event, if such party's
non-compliance with the covenant results primarily from:
(i) any FCC order or any other injunction issued by any
governmental authority impeding the party's ability to comply with the
covenant;
48
(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 services; 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 such party.
17.10 Waiver of Jury Trial. EACH PARTY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
17.11 Binding Effect. Except as otherwise provided in this agreement, this
agreement is binding upon and inures to the benefit of the parties and their
respective and permitted successors, transferees, and assigns, including any
permitted successor, transferee or assignee of the Service Area Network or of
the License. The parties intend that this agreement bind only the party signing
this agreement and that the agreement is not binding on the Related Parties of a
party unless the agreement expressly provides that Related Parties are bound.
17.12 Governing Law. The internal laws of the State of Missouri (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.
17.13 Severability. The parties intend every provision of this agreement to
be severable. If any provision of this agreement is held to be illegal, invalid,
or unenforceable for any reason, the parties intend that a court enforce the
provision to the maximum extent permissible so as to effect the intent of the
parties (including the enforcement of the remaining provisions). If necessary to
effect the intent of the parties, the parties will negotiate in good faith to
amend this agreement to replace the unenforceable provision with an enforceable
provision that reflects the original intent of the parties.
17.14 Limitation of Liability. NO PARTY WILL BE LIABLE TO THE OTHER PARTY
FOR SPECIAL, INDIRECT, INCIDENTAL, EXEMPLARY, CONSEQUENTIAL OR PUNITIVE DAMAGES,
OR LOSS OF PROFITS, ARISING FROM THE RELATIONSHIP OF THE PARTIES OR THE CONDUCT
OF BUSINESS UNDER, OR BREACH OF, THIS AGREEMENT, EXCEPT WHERE SUCH DAMAGES OR
LOSS OF PROFITS ARE CLAIMED BY OR AWARDED TO A THIRD PARTY IN A CLAIM OR ACTION
AGAINST WHICH A PARTY TO THIS AGREEMENT HAS A SPECIFIC OBLIGATION TO INDEMNIFY
ANOTHER PARTY TO THIS AGREEMENT.
49
17.15 No Assignment; Exceptions.
17.15.1 General. Neither party will, directly or indirectly, assign
this agreement or any of the party's rights or obligations under this agreement
without the prior written consent of the other party, except as otherwise
specifically provided in this Section 17. Sprint PCS may deny its consent to any
assignment or transfer in its sole discretion except as otherwise provided in
this Section 17.
Any attempted assignment of this agreement in violation of this Section
17.15 will be void and of no effect.
A party may assign this agreement to a Related Party of the party, except
that Manager cannot assign this agreement to a Related Party that is a
significant competitor of Sprint, Sprint PCS or their respective Related Parties
in the telecommunications business. Except as provided in Section 17.15.5, an
assignment does not release the assignor from its obligations under this
agreement unless the other party to this agreement consents in writing in
advance to the assignment and expressly grants a release to the assignor.
Except as provided in Section 17.15.5, Sprint PCS must not assign this
agreement to any entity that does not also own the License covering the Service
Area directly or indirectly through a Related Party. Manager must not assign
this agreement to any entity (including a Related Party), unless such entity
assumes all rights and obligations under the Services Agreement, the Trademark
License Agreements and any related agreements.
17.15.2 Assignment Right of Manager to Financial Lender. If Manager is
no longer able to satisfy its financial obligations and other duties, then
Manager has the right to assign its obligations and rights under this agreement
to its Financial Lender, if:
(a) Manager or Financial Lender provides Sprint PCS at least 10 days
advance written notice of such assignment;
(b) Financial Lender cures or commits to cure any outstanding material
breach of this agreement by Manager prior to the end of any applicable cure
period. If Financial Lender fails to make a timely cure then Sprint PCS may
exercise its rights under Section 11;
(c) Financial Lender agrees to serve as an interim trustee for the
obligations and duties of Manager under this agreement for a period not to
exceed 180 days. During this interim period, Financial Lender must identify a
proposed successor to assume the obligations and rights of Manager under this
agreement;
(d) Financial Lender assumes all of Manager's rights and obligations
under the Services Agreement, the Trademark License Agreements and any related
agreements; and
(e) Financial Lender provides to Sprint PCS advance written notice of
the proposed successor to Manager that Financial Lender has identified
50
("Successor Notice"). Sprint PCS may give to Financial Lender written notice of
Sprint PCS' decision whether to consent to such proposed successor within 30
days after Sprint PCS' receipt of the Successor Notice. Sprint PCS may not
unreasonably withhold such consent, except that Sprint PCS is not required to
consent to a proposed successor that:
(i) has, in the past, materially breached prior agreements with
Sprint PCS or its Related Parties;
(ii) is a significant competitor of Sprint PCS or its Related
Parties in the telecommunications business;
(iii) does not meet Sprint PCS' reasonable credit criteria;
(iv) fails to execute an assignment of all relevant documents
related to this agreement including the Services Agreement and the
Trademark License Agreements; or
(v) refuses to assume the obligations of Manager under this
Agreement, the Services Agreement, the Trademark License Agreements
and any related agreements.
If Sprint PCS fails to provide a response to Financial Lender within 30
days after receiving the Successor Notice, then the proposed successor is deemed
rejected. Any Financial Lender disclosed on the Build-out Plan on Exhibit 2.1 is
deemed acceptable to Sprint PCS.
17.15.3 Change of Control Rights. If there is a Change of Control of
Manager, then:
(a) Manager must provide to Sprint PCS advance written notice
detailing relevant and appropriate information about the new ownership interests
effecting the Change of Control of Manager.
(b) Sprint PCS must provide to Manager written notice of its
decision whether to consent to or reject the proposed Change of Control within
30 days after its receipt of such notice. Sprint PCS may not unreasonably
withhold such consent, except that Sprint PCS is not required to consent to a
Change of Control in which:
(i) the final controlling entity or any of its Related Parties
has in the past materially breached prior agreements with Sprint PCS
or its Related Parties;
(ii) the final controlling entity or any of its Related Parties
is a significant competitor of Sprint PCS or its Related Parties in
the telecommunications business;
(iii) the final controlling entity does not meet Sprint PCS'
reasonable credit criteria;
51
(iv) the final controlling entity fails to execute an assignment
of all relevant documents related to this agreement including the
Services Agreement and the Trademark License Agreements; or
(v) the final controlling entity or its Related Parties refuse to
assume the obligations of Manager under this agreement.
(c) In the event that Sprint PCS provides notice that it does not
consent to the Change of Control, Manager is entitled to either:
(i) contest such determination pursuant to the dispute resolution
procedure in Section 14; or
(ii) abandon the proposed Change of Control.
(d) Nothing in this agreement requires Sprint PCS' consent to:
(i) a public offering of Manager that does not result in a Change
of Control (i.e., a shift from one party being in control to no party
being in control is not a Change of Control); or
(ii) a recapitalization or restructuring of the ownership
interests of Manager that Manager determines is necessary to:
(A) facilitate the acquisition of commercial financing and
lending arrangements that will support Manager's operations and
efforts to fulfill its obligations under this agreement; and
(B) does not constitute a Change of Control.
(e) "Change of Control" means that in any one transaction or series of
related transactions occurring during any 365-day period, the ultimate parent
entity of the Manager changes. The ultimate parent entity is to be determined
using the Hart-Scott-Rodino Antitrust Improvements Act of 1976 rules. A Change
of Control does not occur if:
(i) a party changes the form of its organization without
materially changing their ultimate ownership (e.g., converting from a
limited partnership to a limited liability company); or
(ii) one of the owners of the party on the date of this agreement
or on the date of the closing of Manager's initial equity offering for
purposes of financing its obligations under this agreement ultimately
gains control over the party, unless such party is a significant
competitor of Sprint PCS or its Related Parties in the
telecommunications business.
52
17.15.4 Right of First Refusal. Notwithstanding any other provision in
this agreement, Manager grants Sprint PCS the right of first refusal described
below. If Manager determines it wishes to sell an Offered Interest, upon
receiving any Offer to purchase an Offered Interest, Manager agrees to promptly
deliver to Sprint PCS an Offer Notice. The Offer Notice is deemed to constitute
an offer to sell to Sprint PCS, on the terms set forth in the Offer, all but not
less than all of the Offered Interest. Sprint PCS will have a period of 60 days
from the date of the Offer Notice to notify Manager that it agrees to purchase
the Offered Interest on such terms. If Sprint PCS timely agrees in writing to
purchase the Offered Interest, the parties will proceed to consummate such
purchase not later than the 180th day after the date of the Offer Notice. If
Sprint PCS does not agree within the 60-day period to purchase the Offered
Interest, Manager will have the right, for a period of 120 days after such 60th
day, subject to the restrictions set forth in this Section 17, to sell to the
person or entity identified in the Offer Notice all of the Offered Interest on
terms and conditions no less favorable to Manager than those set forth in the
Offer. If Manager fails to sell the Offered Interest to such person or entity on
such terms and conditions within such 120-day period, Manager will again be
subject to the provisions of this Section 17.15.4 with respect to the Offered
Interest.
17.15.5 Transfer of Sprint PCS Network. Sprint PCS may sell, transfer
or assign the Sprint PCS Network, 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. Manager agrees
that Sprint PCS and its Related Parties will be released from any and all
obligations under and with respect to any and all such agreements upon such
sale, transfer or assignment in accordance with this Section 17.15.5, without
the need for Manager to execute any document to effect such release.
17.16 Provision of Services by Sprint Spectrum. As described in the
Recitals, the party or parties to this agreement that own the Licenses are
referred to in this agreement as "Sprint PCS." Sprint Spectrum will provide most
or all of the services required to be provided by Sprint PCS under this
agreement on behalf of Sprint PCS, other than the services to be rendered by
Manager. For example, Sprint Spectrum is the party to the contracts relating to
the national distribution network, the roaming and long distance services, and
the procurement arrangements. Accordingly, Sprint PCS and Manager will deal with
Sprint Spectrum to provide many of the attributes of the Sprint PCS Network.
17.17 Number Portability. Manager understands that the manner in which
customers are assigned to the Service Area Network could change as telephone
numbers become portable without any relation to the service area in which they
are initially activated. To the extent the relationship between NPA-NXX and the
Service Area changes, Sprint PCS will develop an alternative system to attempt
to assign customers who primarily live and work in the Service Area to the
Service Area. The terms of this agreement will be deemed to be amended to
reflect the new system that Sprint PCS develops.
53
17.18 Disclaimer of Agency. Neither party by this agreement makes the other
party a legal representative or agent of the party, nor does either party have
the right to obligate the other party in any manner, except if the other party
expressly permits the obligation by the party or except for provisions in this
agreement expressly authorizing one party to obligate the other.
17.19 Independent Contractors. The parties do not intend to create any
partnership, joint venture or other profit-sharing arrangement, landlord-tenant
or lessor-lessee relationship, employer-employee relationship, or any other
relationship other than that expressly provided in this agreement. Neither party
to this agreement has any fiduciary duty to the other party.
17.20 Expense. Each party bears the expense of complying with this
agreement except as otherwise expressly provided in this agreement. The parties
must not allocate any employee cost or other cost to the other party, except as
otherwise provided in the Program Requirements or to the extent the parties
expressly agree in advance to the allocation.
17.21 General Terms. (a) This agreement is to be interpreted in accordance
with the following rules of construction:
(i) The definitions in this agreement apply equally to both the
singular and plural forms of the terms defined unless the context
otherwise requires.
(ii) The words "include," "includes" and "including" are deemed
to be followed by the phrase "without limitation".
(iii) All references in this agreement to Sections and Exhibits
are references to Sections of, and Exhibits to, this agreement, unless
otherwise specified; and
(iv) All references to any agreement or other instrument or
statute or regulation are to it as amended and supplemented from time
to time (and, in the case of a statute or regulation, to any
corresponding provisions of successor statutes or regulations), unless
the context otherwise requires.
(b) Any reference in this agreement to a "day" or number of "days"
(without the explicit qualification of "Business") is a reference to a calendar
day or number of calendar days. If any action or notice is to be taken or given
on or by a particular calendar day, and the calendar day is not a Business Day,
then the action or notice may be taken or given on the next Business Day.
17.22 Conflicts with Other Agreements. The provisions of the Management
Agreement govern over those of the Services Agreement if the provisions
contained in this agreement conflict with analogous provisions in the Services
Agreement. The provisions of each Trademark License Agreement governs over those
of this agreement if the provisions contained in this agreement conflict with
analogous provisions in a Trademark License Agreement.
54
17.23 Announced Transaction. Sprint Enterprises, L.P., TCI Telephony
Services, Inc., Comcast Telephony Services and Cox Telephony Partnership have
executed a Restructuring and Merger Agreement and related agreements that
provide for restructuring the ownership of Sprint Spectrum L.P., SprintCom,
Inc., PhillieCo Partners I,. L.P., and Cox Communications PCS, L.P. Upon
consummation of the transactions contemplated by those agreements, Sprint would
control each of the four entities. While Sprint and Sprint PCS anticipate the
proposed transactions will be consummated, there can be no assurances.
17.24 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 attached hereto and incorporated herein by this
reference. Manager represents and warrants that the Addendum also describes all
existing contracts and arrangements (written or verbal) that relate to or affect
the rights of Sprint PCS or Sprint under this agreement (e.g., agreements
relating to long distance telephone services (Section 3.4) or backhaul and
transport services (Section 3.7)).
17.25 Master Signature Page. Each party agrees that it will execute the
Master Signature Page that evidences such party's agreement to execute, become a
party to and be bound by this agreement, which document is incorporated herein
by this reference.
55
CONFIDENTIAL TREATMENT REQUESTED
Confidential Portions of This Agreement Which Have Been Redacted Are Marked
With Brackets ("[***]"). The Omitted Material Has Been Filed Separately With The
Securities and Exchange Commission.
ADDENDUM I
TO
SPRINT PCS MANAGEMENT AGREEMENT
MANAGER: HORIZON PERSONAL COMMUNICATIONS, INC.
SERVICE AREA: ATHENS, OH BTA
CHARLESTON WV BTA
CHILLICOTHE, OH BTA
HUNTINGTON, WV - ASHLAND KY BTA
PARKERSBURG, WV - MARIETTA, OH BTA
PORTSMOUTH, OH BTA
ZANESVILLE - CAMBRIDGE, OH BTA
This Addendum contains certain additional and supplemental terms and
provisions of that certain Sprint PCS Management Agreement (the "MANAGEMENT
AGREEMENT") entered into contemporaneously with and by the same parties as this
Addendum. The terms and provisions of this Addendum control, superseded and
amend any conflicting terms and provisions contained in the Management
Agreement. Except for express modifications made in this Addendum, the
Management Agreement continues in full force and effect.
Capitalized terms used and not otherwise defined in this Addendum have the
meanings ascribed to them in that certain Schedule of Definitions executed
contemporaneously with and by the same parties as this Addendum. Section and
Exhibit references are to Sections and Exhibits of the Management Agreement
unless otherwise noted.
The Management Agreement is modified as follows:
1. TRANSITION PERIOD. Because Manager is already operating a wireless
communications business in the Service Area under the "Horizon" brand name, the
parties agree to a "TRANSITION PERIOD" under the following terms:
(a) The Transition Period will commence upon the execution of the
Management Agreement by the parties and will continue until December 7, 1998,
unless on or before that date the parties agree in writing that Manager is
meeting all Program Requirements or the parties extend the Transition Period (in
either case, the Transition Period ends on the date set forth above or in such
written instrument).
1
[***] CONFIDENTIAL TREATMENT REQUESTED
(b) During the Transition Period the network seemlessness required in
the Management Agreement is limited to a roaming relationship between the
parties. The terms of such roaming relationship will be consistent with the
terms of the roaming agreement that currently exists between the parties, except
with [***]. During the TransitionPeriod, Manager will not be required to meet
the Program Requirements contained in the Management Agreement; however, Manager
will, during the Transition Period, exercise commercially reasonable efforts to
prepare its operations to become compliant with the Program Requirements.
(c) During the Transition Period, Manager will continue to operate the
Service Area Network under the "Horizon" brand name, utilizing the transitional
branding guidelines to be set forth in the Trademark License Agreements (i.e., a
tag-line of "A Sprint PCS Network Member").
(d) During the Transition Period only, the reference in Section 10.1.1
to 92% is changed to 100%.
(d) Upon termination of the Transition Period, any roaming agreements
or other agreements entered into by the parties to facilitate Manager's
transition during the Transition Period will automatically terminate, and the
terms and conditions of the Management Agreement will become effective in those
situations.
2. POST TRANSITION PERIOD CO-BRANDING. After the Transition Period, Manager
may utilize the co-branding conventions to be described in the Trademark License
Agreements for Manager's brand for the Term of the Management Agreement (i.e., a
tag-line of "Horizon Is A Sprint PCS Network Partner", using the Horizon logo).
3. MANAGER'S EXISTING SERVICE OFFERINGS. Sprint PCS agrees that current
local exchange, paging, Internet access, long distance and IMTS service
offerings of Manager or its Related Parties, as currently branded, do not
violate any provision of the Management Agreement. This approval does not,
however, represent approval of any changes to such offerings that do not comply
with the Management Agreement.
4. BUILD-OUT PLAN. Sprint PCS, pursuant to Section 2.1, approves Manager's
Build-out Plan as detailed in Exhibit 2.1 to the Management Agreement. Sprint
PCS agrees that its approval of modifications, additions and expansions of the
Build-Out Plan will not be unreasonably withheld or delayed.
5. COMPLIANCE WITH REGULATORY RULES. The following sentence replaces the
fourth sentence of Section 2.2: "Manager must ensure that Sprint PCS is notified
in writing of all contact after the date of this agreement by a regulatory
agency, including but not limited to the FCC, with Manager or Manager's site
acquisition company regarding any filing."
2
6. EXCLUSIVITY. In Section 2.3, the phrase "wireless mobility
communications network" shall have the meaning of 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.
7. MANAGER'S RIGHT OF FIRST REFUSAL FOR NEW AREA BUILD-OUT. For purposes of
Section 2.5, Sprint PCS agrees that it will not propose any New Area, and thus
will not give Manager a written notice regarding a New Area during the first two
years after the effective date of the Management Agreement.
8. MICROWAVE RELOCATION. Sprint PCS will bear all costs associated with
clearing spectrum under Section 2.7. The last sentence of Section 2.7 is
deleted.
9. EXISTING IXC SERVICES ARRANGEMENT. Sprint PCS agrees that Manager's
existing exclusive arrangement and associated right of first refusal for
wireless long distance telephony services with Cincinnati Bell Long Distance
will not violate Section 3.4 if and so long as Manager provides its own
switching services. Manager agrees that after the earliest date which such
exclusive arrangement may expire, Manager will conform to the requirements of
Section 3.4. Manager agrees that if Sprint PCS or any of its Related Parties
provides switching services for Manager, the requirements of Section 3.4
described above will not be waived.
10. VOLUNTARY RESALE OF PRODUCTS AND SERVICE. The next to the last sentence
of the first paragraph of Section 3.5.2 is amended to read: "If Sprint PCS
chooses to offer a voluntary resale product, it will adopt a commercially
reasonable program that will be a Program Requirement under this agreement and
that addresses the manner in which Manager and Other Managers interact with the
resellers and in which the Manager will be compensated."
11. NON-COMPETITION. The phrase "and Related Parties" is deleted from the
second paragraph under Section 3.6. The phrase "or its Related Parties" is
deleted from Section 3.6(b) and the term "Manager" is substituted for the phrase
"Manager's Related Parties" in Section 3.6(b). However, if a Related Party of
Manager offers a product or service of a significant competitor of Sprint PCS or
its Related Parties in the telecommunications business, then Manager may not
allow such Related Party of Manager to offer any Sprint PCS Products or
Services.
12. EXISTING BACKHAUL CONTRACTS. Sprint PCS agrees that Manager's existing
contracts for backhaul and transport services do not violate Section 3.7 of the
Management Agreement. Manager agrees to allow such contracts to expire or
otherwise terminate at the earliest possible date, after which date Manager will
conform to the requirements of Section 3.7.
13. SPRINT PCS ROAMING AND INTER SERVICE AREA PROGRAM REQUIREMENTS. The
following sentence is added at the end of Exhibit 4.3: "The reciprocal fee
permitted for Inter Service Area usage when Sprint PCS customers travel within
the seven BTAs listed on the first page of this Addendum and when customers with
3
[***] CONFIDENTIAL TREATMENT REQUESTED
NPA-NXX's assigned to the Service Area travel into the Sprint PCS Cincinnati or
Columbus markets, will be [***], subject to adjustment by mutual agreement of
the parties on an annual basis beginning in February, 1999, including Manager's
unilateral right to revert to the fee(s) contained in the then current Exhibit
4.3."
14. USE OF BRANDS. The following is inserted as Section 5.1(e): "(e) Sprint
and Sprint Spectrum agree to provide Manager with the use of the Brands during
the Term of this agreement under the terms of the Trademark License Agreements."
15. IN-TERRITORY ADVERTISING AND PROMOTION. The following sentence is added
at the end of Section 6.2: "Any such cooperative advertising arrangements will
be commercially reasonable and will consistently applied to Sprint PCS and to
manager and the Other Managers."
16. CONFORMANCE TO SPRINT PCS TECHNICAL PROGRAM REQUIREMENTS. The first
sentence of Section 7.1(b) is replaced by the following sentence: "Manager must
demonstrate to Sprint PCS' reasonable satisfaction that Manager has complied
with the Sprint PCS Technical Program Requirements prior to connecting the
Service Area Network to the rest of the Sprint PCS Network."
17. ESTABLISHMENT OF SPRINT PCS TECHNICAL PROGRAM REQUIREMENTS. The
following parenthetical is deleted from the last sentence of Section 7.2:
"(subject to change in accordance with Section 7.3)".
18. EXISTING NETWORK RF DESIGN COMPLIANCE. Sprint PCS agrees that as of the
effective date of this Addendum, Manager's existing wireless communications
network, which will become part of the Service Area Network, is substantially in
compliance with the RF design specifications contained in Exhibit 7.2. Sprint
PCS agrees that Manager's existing cell sites and switching location, if built
to generally accepted construction standards in the wireless industry, will be
deemed in compliance with the applicable construction standards contained in the
Sprint PCS Technical Program Requirements.
19. AMENDMENTS TO PROGRAM REQUIREMENTS. The following phrase is added to
the end of the first sentence in Section 9.2(c): "and the service area networks
of Other Managers that are similar in size and scope to Manager's Service Area."
The second sentence of Section 9.2(c) is amended by replacing the phrase "Sprint
PCS may provide" with the phrase "Sprint PCS will provide".
20. MANAGER'S RIGHT TO REQUEST REVIEW OF CHANGES. The reference in Section
9.3(b) [***]. The following sentence is added to the end of
Section 9.3: "For purposes of the above calculations, the additional cost
resulting from a proposed Program Requirement change will be added to the
additional cost incurred (or to be incurred) by Manager with respect to any
other Program Requirement changes that were announced within 12 months prior to
the current proposed change.
21. SPRINT PCS' RIGHT TO IMPLEMENT CHANGES. The word "incremental" is
inserted between the words "any" and "revenue" in Section 9.4.
4
[***] CONFIDENTIAL TREATMENT REQUESTED
22. UNIVERSAL SERVICE FUNDS. Section 10.1.2 is revised to provide that
federal and state subsidy funds pertaining to services provided or to be
provided in the Service Area [***].
22. UNIVERSAL SERVICE FUNDS. Section 10.1.2 is revised to provide that
federal and state subsidy funds pertaining to services provided or to be
provided in the Service Area [***].
23. REVENUES FROM OF SALE OF MANAGER'S PRODUCTS AND SERVICE. The following
is added as a new Section 10.4(b)(vi): "Manager will be entitled to 100% of all
revenues received by Sprint PCS with respect to sales of Manager's Products and
Services."
24. TERM. Section 11.1 is modified to provide for a 10 year Initial Term.
Section 11.2 is modified to provide for 4 successive 10-year automatic renewal
periods, unless at least 2 years prior to the commencement of any renewal period
either party notifies the other party in writing that it does not wish to renew
the Management Agreement.
25. DISAGGREGATED LICENSE TRANSFER APPLICATION. Within one year prior to
the expiration of the term of the License, upon Manager's request received no
later than 60 days prior to the expiration of the License, Sprint PCS will use
commercially reasonable efforts to file an application for FCC approval to
transfer the Disaggregated License from Sprint PCS to Manager or a Related Party
of Manager. Manager agrees to promptly reimburse Sprint PCS for all legal and
other costs associated with the development, filing and prosecution of such
application. Such application will request advance approval only for the
Disaggregated License transfer, and will not constitute Sprint PCS' intention to
transfer the Disaggregated License. If Sprint PCS elects not to renew the
License upon its expiration and the FCC approves such application for transfer,
then upon Manager's request, Sprint PCS will use commercially reasonable efforts
to transfer the Disaggregated License to Manager or its designated Related Party
prior to the License expiration, in accordance with the terms of Section 11.2.1
and 11.2.2, as amended.
26. NON-RENEWAL RIGHTS. If the Management Agreement terminates because of
the events described in Sections 11.2.2(a) through 11.2.2(e), then with respect
to the Athens, Chillicothe, Huntington - Ashland, Parkersburg - Marietta, and
Zanesville - Cambridge BTAs, Manager may exercise its rights under Section
11.2.1.2 with respect to all, but not fewer than all, of the Disaggregated
Licenses; however, if Manager gives Sprint PCS written notice of its desire to
not exercise such rights within 5 Business Days (30 Business Days in the case of
11.2.2(d)) following the occurrence of the relevant triggering event, then
Sprint PCS may exercise its rights under Section 11.2.2 with respect to the
Operating Assets and Disaggregated Licenses for such BTAs. If no such notice is
received by Sprint PCS, Manager's rights will be deemed exercised.
27. SPRINT PCS' RIGHTS AND REMEDIES UPON CHARLESTON BTA BUILD-OUT BREACH.
Upon a material breach by Manager solely of its Build-out Plan obligations for
the Charleston BTA under Section 11.3.3, Sprint PCS' rights and remedies under
Section 11.6 can be applied only to the Licenses and Operating Assets relating
to such BTA.
28. EFFECT OF AN EVENT OF TERMINATION. The following phrase is added to the
end of the last sentence of Section 11.4(d): ", provided, however, that
Manager's advertising through mass media or bulk mailings will not be considered
a solicitation of Sprint PCS customers."
5
29. ENTIRE BUSINESS VALUE. Section 11.7.3(c) is amended to read as follows:
"The valuation will assume that the business is to continue to be conducted
under the Brands and the existing agreements between the parties and their
respective Related Parties." The following phrase is added at the beginning of
Section 11.7.3(d): "The valuation will assume that".
30. AUDIT. In the first sentence of the second paragraph of Section 12.1.2
the following phrase is inserted following the term "independent auditors" and
before the phrase "the accuracy": "conduct the review of Sprint PCS' records and
issue a report to Sprint PCS and Manager regarding".
31. INDEMNIFICATION BY SPRINT PCS. The following language is added between
the words "Related Parties" and the word "except" in Section 13.1: ", or the
actions or failure to act of any of Sprint PCS' contractors, subcontractors,
agents, directors, managers, officers, employees and representatives of any of
them in the performance of this agreement."
32. TOLLING OF THE CURE PERIOD. Section 14.4 is amended to read as follows:
"Any cure period under Section 11.3 that is 90 days or less will be tolled
during the pendency of the dispute resolution period. Any cure period under
Section 11.3 that is longer than 90 days will not be tolled during the pendency
of the dispute resolution process."
33. DUE INCORPORATION OR FORMATION. The word "Manager" is replaced with the
words "The party" in the second sentence of Section 15.1.
34. FCC COMPLIANCE. The following sentence replaces the last sentence of
Section 16.2(e): "Sprint PCS will bear the costs of preparation of the documents
and prosecution of the actions."
35. REGULATORY NOTICES. The following two sentences replace the last
sentence of Section 16.4: "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 acts or omissions that constitute negligence, willful misconduct, or
breach of any provision of this agreement, or (2) if Manager's response is not
requested by Sprint PCS."
36. SPRINT PCS LICENSES. A new Section 16.6, bearing the heading "SPRINT
PCS LICENSES.", is added to the agreement, and such Section 16.6 reads as
follows: "Sprint represents and warrants the following to Manager: Sprint PCS is
the holder of the full right, title and interest in and to the Licenses. Sprint
PCS complied with the FCC's rules and regulations before, during and after the
auction which awarded the Licenses, and has paid its full winning bid amount to
the FCC with respect to the purchase of the Licenses. The FCC order granting the
Licenses has become final. The Licenses are in full force and effect and are not
subject to any petition to deny or other legal challenge or claim. Except for an
6
investigation of the FCC's PCS broadband spectrum auctions by the Department of
Justice, and requests related to this investigation by the Department of Justice
pursuant to which Sprint PCS has provided certain documents and other
information, there is no pending or, to Sprint PCS' knowledge, threatened
action, lawsuit, proceeding or investigation which relates in any way to the
Licenses or which seeks the termination, modification or material impairment of
the Licenses.
37. NO ASSIGNMENT; EXCEPTIONS. Sprint PCS agrees that for purposes of
Section 17.15.2(e)(ii), 17.15.3(b)(ii), and 17.15.3(e)(ii), AllTel, which
currently owns 20% of Manager will not be considered a "significant competitor
of Sprint PCS or its Related Parties in the telecommunications business" unless
AllTel is merged into or becomes controlled by a significant competitor of
Sprint PCS or its Related Parties in the telecommunications business.
38. RIGHT OF FIRST REFUSAL. Section 17.15.4 is hereby deleted in its
entirety. Manager agrees to give Sprint PCS written notice in the event that
Manager has determined to seek to sell all or a substantial portion of the
Operating Assets. Manager acknowledges that it must comply with the other
subsections of Section 17.15.
39. TRANSFER OF SPRINT PCS NETWORK. The word "assumes" is replaced by the
words "simultaneously acquires" in Section 17.15.5.
40. TRANSFER OF SPRINT PCS NETWORK. Sprint PCS agrees to not transfer to
unrelated third parties the Licenses in one or a series of sand alone
transactions during the Term of the Management Agreement. This does not preclude
Sprint PCS from transferring Licenses as part of a larger transaction as
permitted in Section 17.15.5 (i.e., national or regional license transfer
transactions); provided, however, that Sprint PCS will not transfer any of the
Licenses as part of a national or regional license transfer unless the
transferee complies with the requirements of Section 17.15.5.
41. NUMBER PORTABILITY. The following sentence replaces the second sentence
of Section 17.17; "To the extent the relationship between NPA-NXX and the
Service Area changes, Sprint will develop a commercially reasonable alternative
system to attempt to assign customers who primarily live and work in the Service
Area to the Service Area, in a manner which preserves the economic benefits of
the agreement."
42. DEFINITION OF MANAGER'S PRODUCTS AND SERVICES. The definition of
"Manager's Products and Services" in the Schedule of Definitions is amended to
read as follows: "Manager's Products and Services means all types and categories
of wireless communications services and associated products that are offered by
Manager in the Service Area pursuant to Section 3.2 of the Management
Agreement."
43. DEFINITION OF "OPERATING ASSETS". The definition of "Operating Assets"
in the Schedule of Definitions is amended to remove the phrase "or its Related
Parties" as such phrase appears throughout said definition. The following
sentence is added after the second sentence in the definition of "Operating
Assets" in the Schedule of Definitions: "Operating Assets does include any
contracts or agreements between Manager and its Related Parties which are
necessary to operate the Service Area Network.
7
44. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The word "five" is replaced
by the word "three" in Section 1.9.11 to Exhibit 11.8. The parties acknowledge
that, if Sprint PCS is the seller of the Disaggregated License, Sprint PCS will
make customary representations regarding the License and that the License is
free and clear of all security interests, liens and other encumbrances of any
nature.
45. NONCOMPETE. Section 1.15 to Exhibit 11.8 is deleted.
46. BUILD-OUT PLAN EXPANSION. Manager agrees to complete its coverage from
Cambridge, Ohio north on Interstate 77 to the Cleveland MTA boundary and east on
Interstate 70 to the Pittsburgh MTA boundary within a reasonable time period of
when both parties decide it is commercially reasonable to connect networks.
47. SELECTED SERVICES. The parties agree that Manager's designation of
Selected Services, in accordance with Exhibit 2.1.2 to the Services Agreement,
will be determined by Manager after the effective date of the Services
Agreement, but such determination will in no case be made later than 45 days
prior to the expiration of the Transition Period, as described in this Addendum.
48. UNRESOLVED SERVICE AGREEMENT DISPUTE. The following phrase at the end
of Section 7.2of the Services Agreement is deleted: ", except neither party may
bring a suit for damages based on an event that occurs during the first two
years of this agreement."
49. RIGHT TO ASSIGN LICENSE AGREEMENTS. The following language is added at
the end of the sentence in Section 14.1 of both Trademark License Agreements: ",
unless such assignment is simultaneous to an assignment of the Management
Agreement that is permitted under the Management Agreement."
50. DEFINITION OF "RTFC". For purpose of this Addendum, "RTFC" means Rural
Telephone Finance Cooperative.
51. EXTEND TERM AS INTERIM TRUSTEE. Section 17.15.2 is modified to add the
following:
(a) If RTFC, during its 180-day term as interim trustee under Section
17.15.2(c), acts in accordance with the terms of the Management Agreement,
Services Agreement, Trademark License Agreements, and any related agreements,
and acts diligently and in good faith to find a successor to Manager acceptable
to Sprint PCS, then Sprint PCS will not unreasonably withhold a request by RTFC
to extend its term as interim trustee for up to an additional 180 days.
(b) If Sprint PCS rejects a proposed successor to Manager under
Section 17.15.2(e) within the last 90 days of the 180-day interim trustee period
under Section 17.15.2(c), RTFC may continue to serve as interim trustee until 90
days after Sprint PCS gives RTFC notice of such rejection. If Sprint PCS rejects
another proposed successor, RTFC may continue to serve as interim trustee for an
additional 90-day period beginning the date Sprint PCS gives RTFC notice of the
rejection.
8
52. RTFC DEBT. If Sprint PCS purchases the Operating Assets under Sections
11.2.1.1., 11.2.2.1, 11.5.1 or 11.6.1, Sprint PCS agrees either to (a) repay the
amount owed by Manager to RTFC directly attributable to the Service Area Network
and reflected on Manager's financial records, or (b) subject to a satisfactory
credit review by RTFC, assume the debt to RTFC described in (a) of this
paragraph.
53. NOTICE OF EVENT OF TERMINATION. Sprint PCS will give RTFC notice of an
Event of Termination via facsimile to the following address:
Rural Telephone Finance Cooperative
Woodland Park
2201 Cooperative Way
Herndon, Virginia 20171-3025
Attention: Chief Executive Officer
Facsimile: 703-709-6776
54. LOCK BOX ACCOUNTS.
(A) EVENT OF TERMINATION. If Manager purchases the Disaggregated
License from Sprint PCS under Sections 11.2.1.2, 11.2.2.2, 11.5.2 or 11.6.2, the
purchase agreement will set forth the procedure for the orderly transfer to
Manager effective the closing date of the lock box account or, if such transfer
is impractical for commercially reasonable reasons, the procedure for the daily
transfer to Manager of funds received in the lock box account to which Manager
is entitled. Such procedure will include a procedure for periodic true-ups to
provide Manager and Sprint PCS with the amounts to which each is entitled.
(B) SPRINT PCS BANKRUPTCY. Sprint PCS will in good faith investigate
the alternatives and consider RTFC's desire for Manager to obtain an interest in
the lock box account that will provide Manager with direct access to any funds
in such account to which Manager is entitled upon the occurrence of an Event of
Termination under Section 11.3.7 caused by the Voluntary Bankruptcy or
Involuntary Bankruptcy of Sprint PCS. If Sprint PCS determines in its sole
discretion that any such arrangement is commercially unreasonable or is
unacceptable to Sprint PCS' lenders, Sprint PCS is not required to alter such
accounts as requested by Manager.
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9
CONFIDENTIAL TREATMENT REQUESTED
Confidential Portions of This Agreement Which Have Been Redacted Are Marked
With Brackets ("[***]"). The Omitted Material Has Been Filed Separately With The
Securities and Exchange Commission.
ADDENDUM II
TO
SPRINT PCS MANAGEMENT AGREEMENT
MANAGER: Horizon Personal Communications, Inc.
SERVICE AREA: Athens, OH BTA
Charleston, WV BTA
Chillicothe, OH BTA
Huntington, WV - Ashland, KY BTA
Parkersburg, WV - Marietta, OH BTA
Portsmouth, OH BTA
Zanesville - Cambridge, OH BTA
Danville, VA BTA
Lynchburg, VA BTA
Martinsville, VA BTA
Roanoke, VA BTA
Staunton-Waynesboro, VA BTA
Bluefield, VA BTA
Beckley, WV BTA
Kingsport, Johnson City, Bristol, TN BTA
Williamson-Pikeville, WV BTA
Logan, WV BTA
Cumberland, MD BTA
Fairmont, WV BTA
Morgantown, WV BTA
Clarksburg, WV BTA
Cincinnati, OH BTA (counties of Adams, Brown, Highland, Mason)
Canton-New Philadelphia, OH BTA (Coshocton County only)
Charlottesville, VA BTA
This Addendum II (this "ADDENDUM"), dated as of August 12, 1999, contains
certain additional and supplemental terms and provisions to that certain Sprint
PCS Management Agreement entered into as of June 8, 1998, by the same parties as
this Addendum, which Management Agreement was further amended by that certain
Addendum I, entered into as of June 8, 1998 (the Management Agreement, as
amended by Addendum I, being the "MANAGEMENT Agreement"). The terms and
provisions of this Addendum control, supersede and amend any conflicting terms
and provisions contained in the Management Agreement. Except for express
modifications made in this Addendum, the Management Agreement continues in full
force and effect.
Capitalized terms used and not otherwise defined in this Addendum have the
meanings ascribed to them in the Management Agreement. Section and Exhibit
references are to Sections of, and Exhibits to, the Management Agreement, unless
otherwise noted.
The Management Agreement is modified as follows:
1. NETWORK SERVICES AGREEMENT.
(a) Sprint PCS has reviewed that certain Network Services Agreement (the
"NETWORK SERVICES AGREEMENT"), dated as of even date herewith, among
Manager, West Virginia PCS Alliance, L.C. and Virginia PCS Alliance,
L.C. (together with West Virginia PCS Alliance, L.C., the "ALLIANCES")
and upon the execution of all of the following agreements: this
Addendum; the Assignment, between Sprint PCS, Manage and the
Alliances; the Sprint PCS Build-Out Agreement, between Sprint PCS and
the Alliances (the "BUILD-OUT AGREEMENT"); and the Amendment to
Intercarrier Roamer Service Agreement, among WirelessCo, L.P. and
various other parties, including the Alliances), Sprint PCS consents
to the Manager's execution of, and performance under, the Network
Services Agreement.
(b) Manager agrees that it will not amend or modify the Network Services
Agreement or give any waivers for performance thereunder, in either
case in a manner that would materially impact Manager's ability to
comply with the terms and conditions of the Management Agreement,
without the prior written consent of Sprint PCS, which consent will
not be unreasonably withheld. Manager will provide Sprint PCS with 30
days prior written notice of any amendment, modification or waiver
under the Network Services Agreement, except that Sprint PCS will use
commercially reasonable efforts to respond within a shorter time
period than 30 days if requested by Manager.
2. MODIFICATIONS TO MANAGEMENT AGREEMENT RESULTING FROM NETWORK SERVICES
AGREEMENT. The following provisions in this Section 2 shall remain in
effect only during the term of the Network Services Agreement.
(a) BUILD-OUT OBLIGATIONS.
(i) So long as the Network Services Agreement is in effect and both
parties thereto are in material compliance with all terms of the
Network Services Agreement, Manager may rely on the Network
Services Agreement to meet Manager's build-out requirement for
the following BTAs:
Danville, VA BTA
Lynchburg, VA BTA
Martinsville, VA BTA
Roanoke, VA BTA
Staunton-Waynesboro, VA BTA
Bluefield, VA BTA
2
Beckley, WV BTA
Charleston, WV, BTA
Huntington, WV-Ashland, KY BTA
Williamson-Pikeville,
WV BTA Logan, WV BTA
Cumberland, MD BTA
Fairmont, WV BTA
Morgantown, WV BTA
Clarksburg, WV BTA
Charlottesville, VA
BTA (collectively,
the "ALLIANCES'
SERVICE AREA").
To the extent Manager builds out its Service Area Network in a
BTA in a manner that causes the termination of the Network
Services Agreement with respect to such BTA, instead of reselling
the Alliances' wireless service, such BTA will be deleted from
the definition of Alliances' Services Area.
(ii) Except as expressly provided herein, nothing in this Addendum
relieves Manager of its obligations to complete the build-out of
its Service Area Network in accordance with the Build-Out
Schedule attached to this Addendum as Exhibit 2.1. If, for any
reason, the Alliances decline or are unable to meet the build-out
schedule set forth in Exhibit 2.1 for the Alliances' Service
Area, Horizon agrees to build out Manager's Network in the
Alliances' Service Area in accordance with Exhibit 2.1, except as
set forth in this Section 2.
(iii)Manager represents and warrants that it has a commitment from the
Alliances that the Alliances will build-out a network in the
following markets (the "INITIAL MARKETS") on or before the date
set forth in Exhibit 2.1:
(A) Bluefield, VA BTA; and (B) Beckley, WV BTA.
(iv) Manager will require the Alliances, on or prior to February 1,
2001 to decide whether to build-out a network in the following
markets (the "SUBSEQUENT MARKETS"):
(A) Williamson-Pikeville, WV BTA;
(B) Logan, WV BTA; and
(C) Cumberland, MD BTA.
If the Alliances decline to build any Subsequent Markets, Manager
will complete the build-out of the Service Area Network in such
declined Subsequent Markets on or before February 1, 2002. If
Manager fails to complete such build-out prior to February 1,
2002, Sprint PCS may terminate the Management Agreement in
accordance with Section 11.3.3, except that Manager shall have no
cure period.
3
(v) If the Alliances commit to build-out any Initial Markets or
Subsequent Markets, but subsequently either (A) the Alliances
notify Manager that they no longer intend to build-out in any
such Markets or (B) Manager determines that it is unreasonable to
expect that the Alliances can complete the build-out of any such
Markets within the prescribed schedule, then:
(X) If the event described in (A) above occurs, Manager must
complete the build-out of such Markets by the later of the
date set forth in Exhibit 2.1 or the date that is 12 months
after the date Manager receives notice from the Alliances;
or
(Y) If the event described in (B) above occurs, Manager must
complete the build-out of such Markets by the later of the
date set forth in Exhibit 2.1 or the date that is 12 months
after the date Manager makes such determination (which
completion date can not be later than 6 months after the
date set forth in Exhibit 2.1).
If Manager fails to complete such build-out prior to the dates
set forth in (X) and (Y) above, Sprint PCS may terminate the
Management Agreement in accordance with Section 11.3.3, except
that Manager shall have no cure period.
(b) OBLIGATIONS NOT RELATED TO TIMING OF SERVICE AREA NETWORK BUILD-OUT.
(i) If the Network Services Agreement is terminated resulting from a
breach by the Alliances either (A) for all markets within the
Alliances' Service Area or (B) for less than all markets within
the Alliances' Service Area, then:
(X) If the event described in (A) above occurs, Manager will use
its best efforts to complete its build-out of all Markets by
the later of the date set forth in Exhibit 2.1 or the date
that is 18 months after the date the Network Services
Agreement is terminated; or
(Y) If the event described in (B) above occurs, Manager will use
its best efforts to complete its build-out of such
terminated Markets by the later of the date set forth in
Exhibit 2.1 or the date that is 12 months after the date the
Network Services Agreement is terminated with respect to any
Market.
4
If there is an existing breach of the Management Agreement and
Sprint PCS, in its sole discretion, determines that Manager may
not complete the cure of such breach during the time periods set
forth above, Sprint PCS may exercise its cure rights pursuant to
Section 11.6.3 of the Management Agreement with respect to one or
more Markets. Horizon will not be obligated to cure any breach
for which a cure is undertaken by Sprint PCS.
If, after using its best efforts, Manager fails to complete such
build-out on or before the dates set forth in (X) and (Y) above
and Sprint PCS does not exercises its cure rights pursuant to
Section 11.6.3 of the Management Agreement, Manager will be in
breach of the Management Agreement pursuant to Section 11.3.3 of
the Management Agreement and, in the event Sprint PCS delivers a
notice of termination, Manager shall have the cure rights set
forth in such Section.
(ii) If Manager breaches the Network Services Agreement and the
Alliances terminates such agreement, Sprint PCS may terminate the
Management Agreement in accordance with Section 11.3.3, except
that Manager shall have no cure period. Sprint PCS may not
terminate the Management Agreement for a breach by Manager if the
Alliances waive such breach.
(c) BUILD-OUT OF NEW COVERAGE AREAS.
(i) If, pursuant to Section 2.5 of the Management Agreement, Sprint
PCS requests that Manager build out a New Area within the
Alliances' Service Area, Manager will follow the procedures set
forth in Section 7.4.4 of the Network Services Agreement to seek
the Alliances' agreement to build out such New Area.
(ii) In the event that the Alliances fail or refuse, within 60 days of
notice by Manager, to deliver a written commitment to provide
such build-out, Manager shall have the right to build out such
New Area pursuant to Section 7.4.4 of the Network Services
Agreement.
(iii)In the event that Manager fails to declines either (A) to deliver
a written commitment to provide such build-out within 30 days of
notice by the Alliances or (B) to complete such build-out within
the timeframe set forth in Sprint PCS' original request, Sprint
PCS shall have the build-out right provided in the third
paragraph of Section 2.5 of the Management Agreement.
5
(d) EXTENT OF BUILD-OUT BY HORIZON. In any circumstance where Horizon is
required to build or overbuild a network in a market in its Service
Area, such build-out will be substantially the same as or exceed the
geographic coverage of the then-current network built out by the
Alliances.
(e) PRESERVATION OF SPRINT PCS LICENSES. If, as of June 30, 2001 (i)
Sprint PCS has not obtained from the FCC a modification or
clarification of what constitutes a "showing of substantial service"
for purposes of determining Sprint PCS' buildout requirements, as set
forth in 47 C.F.R. Section 24.203(b) (the "Buildout Requirements"),
which modification or clarification obviates the requirement for any
additional buildout of Sprint PCS' licenses in the "Alliances' Service
Area" (as defined below) or (ii) if additional buildout is required
and, in Sprint PCS' discretion, the Alliances are not reasonably
expected to complete the buildout of additional carrier necessary for
Sprint PCS to meet the Buildout Requirements in the Alliances' Service
Area by June 30, 2002, then Sprint PCS will notify Manager and
Manager, at its expense, will buildout such additional carriers as are
needed to meet Sprint PCS' Buildout Requirements by June 30, 2002;
provided, however, that Sprint PCS will use reasonable efforts to
ensure that the Alliances will complete the buildout as needed to meet
Sprint PCS' Buildout Requirements. If Manager fails to complete the
buildout of such additional carriers by such date, Sprint PCS may
terminate the Management Agreement in accordance with Section 11.3.3,
except that Manager shall have no cure period. Sprint PCS agrees to
use commercially reasonable efforts to obtain such clarification or
modification from the FCC.
(f) RIGHT OF LAST OFFER FOR BACKHAUL AND TRANSPORT SERVICES. Except to the
extent that Manager is constructing a Service Area Network in the
Alliances' Service Area, the provisions of Section 3.7 of the
Management Agreement shall only be applicable if Sprint PCS obtains
the consent of the Alliances, which consent may be withheld in the
Alliances' sole discretion.
(g) SPRINT PCS ROAMING AND INTER SERVICE AREA PROGRAM. Section 13 of
Addendum I is deleted in its entirety. However, to the extent that
Sprint PCS, using commercially reasonable efforts, has the technical
capability to implement the following provision, the following
sentence will be added at the end of Exhibit 4.3: "When (i) customers
with NPA-NXX's assigned to Richmond, VA and Washington,
D.C./Baltimore, MD markets travel within the Charlottesville, VA BTA;
(ii) customers with NPA-NXX's assigned to Charlottesville, VA BTA
travel onto the Sprint PCS network in the Richmond, VA and Washington,
D.C./Baltimore, MD markets; (iii) customers with NPA-NXX's assigned to
the Cincinnati and Columbus, OH BTAs travel within the Service Area
BTAs of Athens, OH; Chillicothe, OH; Parkersburg, WV; Portsmouth, OH
and Zanesville-Cambridge, OH; and (iv) customers with NPA-NXX's
6
[***] CONFIDENTIAL TREATMENT REQUESTED
assigned to the Service Area BTAs of Athens, OH; Chillicothe, OH;
Parkersburg, WV; Portsmouth, OH and Zanesville-Cambridge, OH travel
onto the Sprint PCS network in the Cincinnati and Columbus, OH BTAs,
the reciprocal fee permitted for Inter Service Area usage will be
[***], subject to adjustment by mutual agreement of the parties on an
annual basis beginning in February 2000."
(h) RIGHTS OF INSPECTION. Sprint PCS has the right to accompany Manager on
any inspections of the Alliances' facilities in the Alliances' Service
Area as permitted by Section 9.1 of the Network Services Agreement.
(i) FUTURE AMENDMENTS TO PROGRAM REQUIREMENTS. Except to the extent that
Manager is constructing a Service Area Network in the Alliances'
Service Area, upon receipt of notice from Sprint PCS of its decision
to amend any of the Program Requirements that relate to the network in
the Alliances' Service Area, Manager will follow the procedures set
forth in Section 7.4.1 of the Network Services Agreement.
(j) SPRINT PCS' RIGHT TO IMPLEMENT CHANGES. Except to the extent that
Manager is constructing a Service Area Network in the Alliances'
Service Area, the provisions of Section 9.4 of the Management
Agreement shall only apply if Sprint PCS obtains the consent of the
Alliances, which consent may be withheld in the Alliances' sole
discretion.
(k) LICENSE. Nothing in this Addendum or the Management Agreement is
intended, or shall be construed, to give Manager a right to acquire
any spectrum owned by Sprint PCS for any BTA within the Alliances'
Service Area (the "ALLIANCE'S SERVICE AREA LICENSES"); provided,
however, that upon completion by Manager of a Service Area Network in
a BTA within the Alliances' Service Area, Horizon may acquire the
License for such BTA as provided in Article 11 of the Management
Agreement.
(l) EBV DETERMINATION. For purposes of Section 11.7 of the Management
Agreement, if the Network Services Agreement is assigned to Sprint
PCS, the appraisers shall consider the value of the assignment of the
Network Services Agreement in determining the Entire Business Value if
the Network Services Agreement is assignable by Manager without the
Alliances' consent.
3. EXPANSION OF SERVICE AREA. The parties agree to expand the definition of
Service Area to include the Alliances Service Area; Adams, Coshocton, Green and
Highland Counties, Ohio; and Mason County, Kentucky.
4. REVISED BUILD-OUT PLAN. Exhibit 2.1 attached to this Addendum supersedes
and replaces in its entirety Exhibit 2.1 attached to the Management Agreement.
7
5. MICROWAVE RELOCATION. With respect to BTAs that were added to the scope
of the Management Agreement after the initial execution of such Agreement on
June 8, 1998, Manager agrees that, upon receipt of an invoice by Sprint PCS,
Manager will pay one-half of any expenses incurred by Sprint PCS after the date
of this Addendum, under either the Management Agreement or the Build-Out
Agreement, for the relocation of any microwave paths in such BTAs.
6. FINANCING. The work "and" is inserted between the words "thereto" and
"before" in the last sentence of Section 1.7.
7. LONG-DISTANCE PRICING.
(a) The first sentence of Section 3.4 is deleted in its entirety and
replaced by the following language:
Upon the earlier to occur of (i) the termination of Manager's
contract with Cincinnati Bell Long Distance and (ii) earliest
date that Manager's contract with Cincinnati Bell Long Distance
may expire, Manager must purchase long-distance telephony
services from Sprint through Sprint PCS both (i) to provide
long-distance telephony service to users of the Sprint PCS
Network and (ii) to connect the Service Area Network with the
national platforms used by Sprint PCS to provide services to
Manager under the agreement and/or the Services Agreement. Sprint
will bill Sprint PCS for such services rendered to Sprint PCS,
Manager and all Other Managers, and in turn, Sprint PCS will bill
Manager for the services used by Manager. Manager will be charged
the same price for such long-distance service as Sprint PCS is
charged by Sprint (excluding interservice area long distance
travel rates) plus an additional administrative fee to cover
Sprint PCS' processing costs.
(b) The following sentence is added as a second paragraph in Section
3.4:
Manager may not resell the long-distance telephony services
acquired from Sprint under this Section 3.4.
8. RIGHT OF LAST OFFER. Section 3.7 is modified by adding the following
language:
"(other than backhaul services relating to national platform and IT
application connections, which Manager must purchase from Sprint)"
both between (i) "Service Area Network" and "if Manager decides to
use" in the first sentence of the first paragraph and (ii) "for these
services" and "and the agreement was not made" in the first sentence
of the second paragraph.
9. NON-TERMINATION OF AGREEMENT. The following language is added to the end
of Section 11.5.3 and Section 11.6.4:
8
"but such action does not terminate this agreement."
10. ANNOUNCED TRANSACTIONS. Section 17.23 is deleted in its entirety.
11. FEDERAL CONTRACTOR COMPLIANCE. A new Section 17.26, the text of which
is attached as Exhibit A, is added and incorporated by this reference. When and
to the extent required by applicable law, Manager will comply with the
requirements of this Section 17.26.
12. PAYMENT OF FEES UNDER SERVICES AGREEMENT. The second sentence of
Section 3.1 of the Services Agreement is deleted in its entirety and replaced by
the following two sentences:
Except with respect to fees paid for billing-related services, the
monthly charge for any fees based on the number of subscribers of the
Service Area Network will be determined based on the number of
subscribers as of the 15th day of the month for which the charge is
being calculated. With respect to fees paid for billing-related
services, the monthly charge for any fees based on the number of
subscribers will be based on the number of gross activations in the
month for which the charge is being calculated plus the number of
subscribers of the Service Area Network on the last day of the prior
calendar month.
13. CHARLOTTESVILLE, VA BTA. After the second anniversary of the date of
this Agreement, Sprint PCS and Manager agree to discuss the future of the
Charlottesville, VA BTA. After such discussions, Sprint PCS shall have the
option of (a) permitting Manager to continue to cover such BTA under the Network
Services Agreement or (b) requiring the overbuild of such BTA in accordance with
the Network Services Agreement. Sprint PCS will exercise such option through a
written notice to Manager. If Sprint PCS elects the overbuild option, Manager
shall elect, by giving written notice to Sprint PCS within 60 days of receipt of
such notice, whether (a) to overbuild itself pursuant to the Network Services
Agreement or (b) to decline to overbuild. If Manager declines to overbuild,
Sprint PCS shall have the right to overbuild, and the BTA will be removed from
the Service Area no sooner than 12 months after receipt of notice from Manager.
At the time that the BTA is removed from the Service Area, Sprint PCS will
purchase Manager's subscriber base in the BTA, by paying Manager a purchase
price to be negotiated by Manager and Sprint PCS at that time. If the parties
are unable to agree on such purchase price within 60 days after the BTA is
removed from the Service Area, the parties will determine the purchase price
using the arbitration process set forth in Section 14.2 of the Management
Agreement. If Manager elects to overbuild, Manager and Sprint PCS will determine
a mutually acceptable build out schedule which will in no event be less than 12
months or more than 18 months after delivery of Manager's notice to Sprint PCS.
14. COUNTERPARTS. This Addendum may be executed in one or more
counterparts, each of which is an original and all of which together constitute
one and the same agreement.
[The remainder of this page was intentionally left blank.]
9
SIGNATURE PAGE TO ADDENDUM II
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representatives to execute this Addendum as of the date first above written.
SPRINTCOM, INC.
By:_______________________________________
Name:_______________________________
Title:______________________________
SPRINT SPECTRUM L.P.
By:_______________________________________
Name:_______________________________
Title:______________________________
HORIZON PERSONAL
COMMUNICATIONS, INC.
By:_______________________________________
Name:_______________________________
Title:______________________________
SPRINT COMMUNICATIONS
COMPANY, L.P.
By:_______________________________________
Name:_______________________________
Title:______________________________
10
EXHIBIT A
SECTION 17.26. FEDERAL CONTRACTOR COMPLIANCE. (1) The Manager will not
discriminate against any employee or applicant for employment because of race,
color, religion, sex, or national origin. The Manager will take affirmative
action to ensure that applicants are employed, and that employees are treated
during employment without regard to their race, color, religion, sex, or
national origin. Such action shall include, but not be limited to the following:
Employment, upgrading, demotion, or transfer; recruitment or recruitment
advertising; layoff or termination; rates of pay or other forms of compensation;
and selection for training, including apprenticeship. The Manager agrees to post
in conspicuous places, available to employees and applicants for employment,
notices to be provided setting forth the provisions of this nondiscrimination
clause.
(2) The Manager will, in all solicitations or advertisements for employees
placed by or on behalf of the Manager, state that all qualified applicants will
receive considerations for employment without regard to race, color, religion,
sex, or national origin.
(3) The Manager will send to each labor union or representative of workers
with which he has a collective bargaining agreement or other contract or
understanding, a notice to be provided advising the said labor union or workers'
representatives of the Manager's commitments under this section, and shall post
copies of the notice in conspicuous places available to employees and applicants
for employment.
(4) The Manager will comply with all provisions of Executive Order 11246 of
September 24, 1965, and of the rules, regulations, and relevant orders of the
Secretary of Labor.
(5) The Manager will furnish all information and reports required by
Executive Order 11246 of September 24, 1965, and by rules, regulations, and
orders of the Secretary of Labor, or pursuant thereto, and will permit access to
his books, records, and accounts by the administering agency and the Secretary
of Labor for purposes of investigation to ascertain compliance with such rules,
regulations, and orders.
(6) In the event of the Manager's noncompliance with the nondiscrimination
clauses of this contract or with any of the said rules, regulations, or orders,
this contract may be canceled, terminated, or suspended in whole or in part and
the Manager may be declared ineligible for further Government contracts or
federally assisted construction contracts in accordance with procedures
authorized in Executive Order 11246 of September 24, 1965, and such other
sanctions may be imposed and remedies invoked as provided in Executive Order
1246 of September 24, 1965, or by rule, regulation, or order of the Secretary of
Labor, or as otherwise provided by law.
(7) The Manager will include the portion of the sentence immediately
preceding paragraph (1) and the provisions of paragraphs (1) through (7) in
every subcontract or purchase order unless exempted by rules, regulations, or
orders of the Secretary of Labor issued pursuant to section 204 of Executive
11
Order 11246 of September 24, 1965, so that such provisions will be binding upon
each subcontractor or vendor. The Manager will take such action with respect to
any subcontract or purchase order as the administering agency may direct as a
means of enforcing such provisions, including sanctions for noncompliance.
Provided, however, that in the event a Manager becomes involved in, or is
threatened with, litigation with a subcontractor or vendor as a result of such
direction by the administering agency the Manager may request the United States
to enter into such litigation to protect the interests of the United States.
(8) In consideration of contracts with Sprint PCS, the Manager agrees to
execute the Certificate of Compliance attached hereto as Attachment I and
further agrees that this certification shall be part of each contract between
Sprint PCS and Manager. The Manager will include Attachment I in every
subcontract or purchase order, so that such provisions will be binding upon each
subcontractor.
12
Attachment I
CERTIFICATE OF COMPLIANCE WITH
FEDERAL REGULATIONS
In consideration of contracts with SPRINT SPECTRUM L.P., the undersigned
"contractor," "vendor" or "consultant" agrees to the following and further
agrees that this Certification shall be a part of each purchase order, supply
agreement, or contract between SPRINT SPECTRUM L.P. and the undersigned.
1. Equal Opportunity Executive Order 11246 is herein incorporated by
reference.
2. Affirmative Action Compliance If undersigned Contractor has 50 or more
employees and if this contract is for $50,000 or more, Contractor shall
develop a written Affirmative Action Compliance Program for each of its
establishments, as required by rules and regulations of the Secretary of
Labor (41 C.F.R. 60-1 and 60-2).
3. Affirmative Action for Special Disabled and Vietnam Era Veterans If this
contract exceeds $10,000, the undersigned Contractor certifies that the
Contractor does not discriminate against any employee or applicant because
the person is a Special Disabled or Vietnam Veteran and complies with the
rules, regulations and relevant orders of the Secretary of Labor issued
pursuant to the Vietnam Veterans Readjustment Assistance Act of 1972, as
amended.
Contractor hereby represents that it has developed and has on file, at each
establishment, affirmative action programs for Special Disabled and Vietnam
Era Veterans required by the rules and regulations of the Secretary of
Labor (41 CFA 60-250).
4. Affirmative Action for Handicapped Workers If this contract exceeds $2,500,
the undersigned Contractor certifies that the Contractor does not
discriminate against any employee or applicant because of physical or
mental handicap and complies with the rules, regulations and relevant
orders of the Secretary of Labor issued under the Rehabilitation Act of
1973, as amended.
Contractor hereby represents that it has developed and has on file, at each
establishment, affirmative action programs for Handicapped Workers required
by the rules and regulations of the Secretary of Labor (41 C.F.R. 60-741).
5. Employer Information Report (EEO-1 Standard Form 100) If undersigned
Contractor has 50 or more employees and if this contract is for $10,000 or
more, Contractor shall complete and file government Standard Form 100,
Equal Employment Opportunity Employer Information Report EEO-1, in
accordance with instructions contained therein.
13
6. Compliance Review The undersigned Contractor certifies that it has not been
subject to a Government equal opportunity compliance review. If the
Contractor has been reviewed, that review occurred on
________________________ (date).
7. Utilization of Small Businesses, Small Disadvantaged Businesses, and
Women-Owned Small Business It is the policy of SPRINT SPECTRUM L.P.,
consistent with Federal Acquisition Regulations (FAR 52.219-8 and FAR
52.219-13), that small business concerns, small business concerns owned and
controlled by socially and economically disadvantaged individuals, and
women-owned businesses shall have the maximum practicable opportunity to
participate in performing subcontracts under Government contracts for which
SPRINT SPECTRUM L.P. is the Government's Prime Contractor. SPRINT SPECTRUM
L.P. awards contracts to small business to the fullest extent consistent
with efficient prime contract performance. The Contractor agrees to use its
best efforts to carry out this policy in the award of its subcontract to
the fullest extent consistent with the efficient performance of this
contract.
Contractor hereby represents that it ____ is ____ is not a small business,
____ is ____ is not a small business owned and controlled by socially and
economically disadvantaged individuals, and ____ is ____ is not a small
business controlled and operated as a women-owned small business as defined
by the regulations implementing the Small Business Act.
If the answer to any of the above is in the affirmative, Contractor will
complete SPRINT SPECTRUM L.P. Small/Minority/Women-Owned Business Self
Certification Form. This form is available from Mr. Ron Gier, Sprint PCS,
4900 Main Street, Kansas City, Missouri 64112.
8. Certification of Nonsegregated Facilities If this contract is expected to
exceed $10,000, the undersigned Contractor certifies as follows:
The Contractor certifies that the Contractor does not or will not maintain
or provide for its employees any segregated facilities at any of its
establishments, and that it does not and will not permit its employees to
perform services at any location, under its control, where segregated
facilities are maintained. The Contractor agrees that a breach of this
Certification is a violation of the Equal Opportunity provision of this
contract. As used in this Certification, the term "segregated facilities"
means any waiting rooms, work areas, rest rooms and wash rooms, restaurants
and other eating areas, time clocks, locker rooms and other storage or
dressing areas, parking lots, drinking fountains, recreation or
14
entertainment areas, transportation, and housing facilities provided for
employees that are segregated by explicit directive or are in fact
segregated on the basis of race, color, religion, or national origin,
because of habit, local custom, or otherwise. Contractor further agrees
that (except where it has obtained identical certifications from proposed
subcontracts for specific time periods) it will obtain identical
certifications from proposed subcontractors prior to the award of
subcontracts exceeding $10,000 that are not exempt from the provisions of
the Equal Opportunity Clause; and that it will retain such certification in
its files.
9. Clean Air and Water The undersigned Contractor certifies that any facility
to be used in the performance of this contract ____ is ____ is not listed
on the Environmental Protection Agency List of Violating Facilities.
The undersigned Contractor agrees to immediately notify SPRINT SPECTRUM
L.P., immediately upon the receipt of any communication from the
Administrator or a designee of the Environmental Protection Agency
indicating that any facility that the Contractor proposes to use for the
performance of the contract is under consideration to be listed on the EPA
List of Violating Facilities. SPRINT SPECTRUM L.P. includes this
certification and agreement pursuant to FAR 52-223-1(c) which requires
including such paragraph (c) in every nonexempt subcontract.
Contractor:
____________________________________
Company Name
____________________________________
Address
____________________________________
City State Zip
By:_________________________________
Name:_________________________
Title:________________________
15
CONFIDENTIAL TREATMENT REQUESTED
Confidential Portions of This Agreement Which Have been Redacted are
Marketed with Brackets ("[***]"). The Omitted Material has been Filed Separately
with The Securities and Exchange Commission.
ADDENDUM III
TO
SPRINT PCS MANAGEMENT AGREEMENT
Manager: HORIZON PERSONAL COMMUNICATIONS, INC.
Service Area: Athens, OH BTA
Charleston, WV BTA
Chillicothe, OH BTA
Huntington, WV - Ashland, KY BTA
Parkersburg, WV - Marietta, OH BTA
Portsmouth, OH BTA
Zanesville - Cambridge, OH BTA
Danville, VA BTA
Lynchburg, VA BTA
Martinsville, VA BTA
Roanoke, VA BTA
Staunton-Waynesboro, VA BTA
Bluefield, VA BTA
Beckley, VA BTA
Kingsport, Johnson City, Bristol, TN BTA
Williamson-Pikeville, WV BTA
Logan, WV BTA
Cumberland, MD BTA
Fairmont, WV BTA
Morgantown, WV BTA
Clarksburg, WV BTA
Cincinnati, OH BTA (counties of Adams, Brown, Highland, Mason
only)
Canton-New Philadelphia, OH BTA (Coshocton County only)
Charlottesville, VA BTA
Ashtabula, OH BTA
Du Bois-Clearfield, PA BTA
Erie, PA BTA
Jamestown, NY BTA
Meadville, PA BTA
Oil City-Franklin, PA BTA
Olean, NY BTA
Pottsville, PA BTA
Sharon, PA BTA
Scranton-Wilkes Barre, PA BTA
State College, PA BTA
Stroudsburg, PA BTA
Sunbury-Shamokin, PA BTA
Williamsport, PA BTA
Allentown, PA BTA (Carbon County only)
New York, NY BTA (counties of Pike and Sussex only)
Knoxville, TN BTA (Hamblen County only)
This Addendum III (this "Addendum"), dated May 19, 2000, contains certain
additional and supplemental terms and provisions of that certain Sprint PCS
Management Agreement dated and effective as of June 8, 1998, by the same parties
as this Addendum, which Management Agreement was further amended by that certain
Addendum I dated and effective as of June 8, 1998 ("Addendum I"), and that
certain Addendum II dated as of August 12, 1999 ("Addendum II") (the Management
Agreement, as amended by Addendum I and Addendum II, being the "Management
Agreement"). The terms and provisions of this Addendum control, supersede and
amend any conflicting terms and provisions contained in the Management
Agreement. Except for express modifications made in this Addendum, the
Management Agreement continues in full force and effect.
Capitalized terms used and not otherwise defined in this Addendum have the
meanings ascribed to them in the Management Agreement. Section and Exhibit
references are to Sections and Exhibits of the Management Agreement unless
otherwise noted.
The Management Agreement is modified as follows:
1. Revised Financing Plan. Exhibit 1.7 attached to this Addendum supersedes
and replaces in its entirety Exhibit 1.7 attached to the Management Agreement,
as amended.
2. Revised Build-out Plan. Exhibit 2.1 attached to this Addendum supersedes
and replaces in its entirety Exhibit 2.1 attached to the Management Agreement,
as amended.
3. Expanded Service Area. The Service Area is expanded to include the
following BTAs (collectively, the "Expansion Area"). The Build-out obligations
respecting the Expansion Area are set forth below and in Exhibit 2.1.
Ashtabula, OH BTA
Du Bois-Clearfield, PA BTA
Erie, PA BTA
Jamestown, NY BTA
Meadville, PA BTA
Oil City-Franklin, PA BTA
Olean, NY BTA
Pottsville, PA BTA
Sharon, PA BTA
Scranton-Wilkes Barre, PA BTA
State College, PA BTA
Stroudsburg, PA BTA
Sunbury-Shamokin, PA BTA
Williamsport, PA BTA
Allentown, PA BTA (Carbon County only)
New York, NY BTA (counties of Pike and Sussex only)
Knoxville, TN BTA (Hamblen County only)
2
[***] - CONFIDENTIAL TREATMENT REQUESTED
4. Type II Build-out. Manager will build-out and launch the Expansion Area
as a "Type II" (i.e., where Manager designates Option #2 on Exhibit 2.1.2 to the
Services Agreement) and as required under Exhibit 2.1. If Manager builds out the
Service Area Network in the following BTAs in accordance with Section 2(a)(iv)
of Addendum II, Manager will build out and launch such BTAs as a "Type II":
Williamson-Pikeville, WV, Logan, WV and Cumberland, MD. The Kingsport, Johnson
City, Bristol, TN BTA will be launched as a Type II. Manager agrees to give
written notice of launch to Sprint PCS at least 60 days prior to launch in the
markets covered by this Section. If Sprint PCS is unable to support Manager as a
Type II as of the launch date for a particular market, Manager shall have the
right to launch that particular market initially as a Type III market.
5. Type II Conversions. Manager will convert the Service Area Network in
the following BTAs from "Type III" (i.e., where Manager designates Option #3 on
Exhibit 2.1.2 to the Services Agreement) to Type II no later than March 31,
2001; provided, that Sprint PCS establishes a "Type II Transition Team" that
will use good faith efforts to assist Horizon with its transition: Athens, OH,
Chillicothe, OH, Parkersburg, WV - Marietta, OH, Portsmouth, OH, Zanesville -
Cambridge, OH and any other markets Manager initially launches as a Type III.
[***]
6. Alliances Service Area Conversions. Manager will cause the Alliances to
convert the BTAs in the Alliances Service Area from Type III to Type II no later
than March 31, 2001. If such conversion and integration with Sprint PCS is not
accomplished in a manner acceptable to Sprint PCS by such date, Manager will
overbuild all of the Alliances Service Area as a Type II no later than December
31, 2003. Sprint PCS will use its good faith efforts to support Manager and the
Alliances in this conversion. [***]
7. Overlay in Converting Markets. Both parties will use good faith efforts
to establish, no later than September 30, 2000, a process whereby newly
activating customers in the Service Area can be added as though the Manager is a
Type II.
8. Bright PCS. Manager will use its best efforts to cause Bright Personal
Communications Services, LLC ("Bright PCS") to launch its Service Area Network
as a Type II in the time frames set forth in Exhibit 2.1 of the Bright PCS
Management Agreement with Sprint PCS. Manager agrees to give written notice of
launch to Sprint PCS at least 60 days prior to launch in the markets in the
Bright PCS Service Area. If Sprint PCS is unable to support Bright PCS as a Type
II as of the launch date for a particular market, Manager shall have the right
to launch that particular market initially as a Type III market. Manager will
use its best efforts to cause Bright PCS to convert any markets launched as a
Type III to Type II by March 31, 2001.
Upon the closing of the acquisition of Bright PCS by Manager and its
affiliates, Sprint PCS is authorized to settle all outstanding amounts between
Sprint PCS, Manager and Bright PCS by either paying any net amounts to, or
changing any net amounts against, Manager. Sprint PCS will only provide one
settlement to Manager, and Manager's management team will be required to settle
between Manager and Bright PCS using the detail provided in the settlement
files; provided, however, that the financial data provided by Sprint PCS will be
separately stated for Manager and Bright PCS.
3
[***] CONFIDENTIAL TREATMENT REQUESTED
9. Change to Service Fee Structure. Sprint PCS agrees to decrease the
aggregate fees charged to Manager under the Sprint PCS Services Agreement dated
as of June 8, 1998 (the "Services Agreement") for the aggregate costs associated
with the following services:
(i) customer care;
(ii) activations;
(iii) billing;
(iv) NOCC;
(v) voicemail; and
(vi) HLR.
Fees will be charged to Manager for actual services purchased under the
Services Agreement in the amounts set forth on the Amended Schedule 2.1.1 to the
Services Agreement (which amended schedule is attached hereto as Exhibit A),
less a price decrease from 1999 service prices for the services listed above
(substantially in the form and manner that such services are provided as of the
date of this Addendum III) as follows:
(a) [***] aggregate reduction for services provided in the period
between January 1, 2000, and December 31, 2000;
(b) [***] aggregate reduction for services provided in the period
between January 1, 2001, and December 31, 2001; and
(c) [***] aggregate reduction for services provided in the period
between January 1, 2002, and December 31, 2002;
provided, however, that at no time during the period from January 1, 2000
through December 31, 2002, will the price on the services described above
offered to Manager be less favorable than the price offered to any Other
Manager. Effective January 1, 2003 and thereafter for the term of this Agreement
and any extensions thereof, Manager will be charged pursuant to the fee
structure implemented by Sprint PCS for Other Managers.
10. Sale of Certain Manager Assets to Sprint PCS. In connection with
Manager's conversion from Type III to Type II, Manager anticipates it will no
longer need certain assets related to the Service Area Network. Sprint PCS
agrees to purchase from Manager [***] at a purchase price agreed to by Manager
and Sprint PCS. The parties agree that the maximum purchase price to be paid by
Sprint PCS for these assets is [***].
11. Customer Support Services and Personnel. Sprint PCS will provide
Manager read/write access to Sprint PCS' core application systems (e.g., Sprint
PCS' billing system) to enable Manager to provide customer support services for
the customers with NPA-NXXs in Manager's Service Area. Sprint PCS will use
commercially reasonable efforts to provide Manager such access at the same time
Sprint PCS provides access to Other Managers who currently have Type II
networks. Manager will pay its pro rata portion of the costs for the roll-out,
support, operation and maintenance of the core application systems based on the
cost to roll out, support, operate and maintain such applications to all
managers that need the applications.
4
[***] CONFIDENTIAL TREATMENT REQUESTED
12. Stock Warrants. As consideration for having its Service Area expanded,
Manager agrees that, at the earliest to occur of (i) the date on which the
Manager, or if the Manager is not the issuer, the Manager's parent company that
is the issuing public entity (either the Manager or such issuing entity being
referred to as the "Issuer"), closes its initial public offering ("IPO") or (ii)
July 31, 2003, the Issuer will grant to Sprint PCS or its affiliated designee
the right to acquire (i) in the case of an IPO 2,510,460 shares of the Issuer's
Class A Common Stock (which number of shares shall not be less than 3.0% or more
than 4.2% of the Issuer's total outstanding equity immediately after the closing
of the IPO) or (ii) if there has not been an IPO on or before July 31, 2003, the
number of shares of common stock that represent 3.0% of the "Private Valuation"
of the Issuer (as determined by the appraisal process set forth on Exhibit B
attached hereto), in either case pursuant to a warrant agreement in the form
attached hereto as Exhibit C and a registration rights agreement in the form
attached hereto as Exhibit D.
13. Interservice Area Fees. (a) Until such time as Sprint PCS and Manager
mutually agree to the contrary, Sprint PCS will pay Manager [***] per minute for
the time Sprint PCS customers with an NPA-NXX within the BTAs of Pittsburgh, PA,
Cleveland, OH, Youngstown, OH and Buffalo, NY (the "Sprint PCS Western BTAs")
use the Service Area Network in the BTAs of Ashtabula, OH, Erie, PA, Jamestown,
PA , Meadville, PA and Sharon, PA [***], and Manager will pay Sprint PCS $.10
per minute for the time the customers with an NPA-NXX within the Manager Western
BTAs use the Sprint PCS Network in the Sprint PCS Western BTAs.
(b) Until such time as Sprint PCS and Manager mutually agree to the
contrary, Sprint PCS will pay Manager [***] per minute for the time Sprint PCS
customers with an NPA-NXX within the BTAs of Philadelphia, PA, Lancaster, PA,
Reading,PA, New York, NY and Allentown-Bethlehem-Easton, PA (the "Sprint PCS
Eastern BTAs") use the Service Area Network in the BTAs of Stroudsburg, PA,
Allentown, PA (Carbon County only) and New York, NY (Sussex and Pike Counties
only) (the "Manager Eastern BTAs"), and Manager will pay Sprint PCS [***] per
minute for the time the customers with an NPA-NXX within the Manager Eastern
BTAs use the Sprint PCS Network in the Sprint PCS Eastern BTAs.
14. Purchase of Assets. The parties agree that Sprint PCS will continue to
develop and build cell sites in the Expansion Area to the agreed-upon stage of
development set forth on Exhibit A to the Asset Purchase Agreement
(collectively, the "Cell Sites").
Manager agrees to purchase from Sprint PCS and Sprint PCS agrees to sell,
under the terms of the Asset Purchase Agreement attached as Exhibit E the assets
listed on Exhibit A to such agreement. The parties agree that Sprint PCS will
retain the BU03XC072 cell site in the Olean, NY-Bradford, PA BTA. The final
closing (the "Final Closing") will occur on September 30, 2000; provided,
however, that, upon ten (10) days business days written notice, Manager will
have the right, from time to time, assuming the required landlord consents have
been obtained, to purchase clusters of assets prior to September 30, 2000, by
paying the full purchase price for such assets to Sprint PCS (an "Interim
Closing"). At the Final Closing and at each Interim Closing, if any, Sprint PCS
will deliver a Bill of Sale and Assignment, and Manager will assume the
build-out of the transferred Cell Sites. The parties acknowledge that Sprint PCS
may, in its sole discretion, retain towers owned by it, and Manager will locate
its equipment on such tower sites. If Manager chooses to deinstall any currently
5
installed Lucent base stations and replace them with other base stations,
Manager is responsible for all costs associated with such transition, including,
without limitation, any deinstallation costs, costs for cells on wheels and, if
Sprint PCS chooses to purchase any of such deinstalled base stations, the cost
for shipping such base stations to locations designated by Sprint PCS. Sprint
PCS, upon request by Manager, will assist Manager in selling such base stations.
If Manager breaches its obligation to pay the purchase price for the assets
on the date required by the Asset Purchase Agreement and fails to cure the
breach within five business days after receipt of written notice of breach from
Sprint PCS, Sprint PCS will have the option to exclude all or part of the
Expansion Area from the Service Area. Manager shall be responsible for obtaining
any required consents and releases of the various landlords for any leases
acquired or assumed by Manager in connection with the purchase of the Assets.
Sprint PCS will assist Manager in obtaining such consents and releases.
15. Correction to Addendum II. The parties agree that the Kingsport/Johnson
City/Bristol, TN BTA was intended, and hereby is, added to the definition of
"Service Area" as set forth in Section 3 to Addendum II, as of the effective
date of Addendum II.
16. Microwave Relocation. With respect to BTAs in the Expansion Area,
Manager agrees that, upon receipt of an invoice by Sprint PCS, Manager will pay
one-half of any expenses incurred by Sprint PCS for the relocation of any
microwave paths in such BTAs.
17. Term. Section 24 of Addendum I is hereby deleted and deemed to be of no
effect.
18. Reaffirmation of Sprint Agreements. Each of the undersigned reaffirms
in their entirety, together with their respective rights and obligations
thereunder, the Management Agreement, the Services Agreement and the Trademark
License Agreements.
19. Counterparts. This Addendum may be executed in two or more
counterparts, each of which will constitute an original but all of which when
taken together will constitute but one agreement.
[The remainder of this page is intentionally left blank.]
6
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed by their respective authorized officers as of the date and year first
above written.
SPRINT SPECTRUM L.P.
By: _______________________________________________
Bernard A. Bianchino
Senior Vice President and
Chief Business Development Officer - Sprint PCS
WIRELESSCO, L.P.
By: _______________________________________________
Bernard A. Bianchino
Senior Vice President and
Chief Business Development Officer - Sprint PCS
SPRINTCOM, INC.
By: _______________________________________________
Bernard A. Bianchino
Senior Vice President and
Chief Business Development Officer - Sprint PCS
PHILLIECO, L.P.
By: PhillieCo Sub, L.P.,
its General Partner
By: PhillieCo Partners I, L.P.
its General Partner
By: Sprint Enterprises, L.P.
its General Partner
By: US Telccom, Inc.
its General Partner
By: _______________________________________________
Don A. Jensen,
Vice President and Secretary
SPRINT COMMUNICATIONS COMPANY, L.P.
By: _______________________________________________
Don A. Jensen
Vice President - Law
7
HORIZON PERSONAL COMMUNICATIONS, INC.
By: _______________________________________________
Name:
Title:
8
[***] CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT 1.7
Build-out and Working Capital Financing
Horizon Personal Communications, Inc. (Horizon) plans to finance the build-out
of the Service Area Network and to provide the necessary working through equity
contributed from its parent, Horizon Telcom, Inc., senior debt financing from
the Rural Telephone Finance Cooperative (RTFC), an initial public offering (IPO)
of stock, and bridge financing from Motorola - Horizon's infrastructure
provider. In addition, SBA Inc. (tower vendor) will finance the construction of
build-to-suit towers. SBA will pay Horizon a build-to-suit incentive of [***]
depending on the site location. Horizon will lease tower space as the anchor
tenant from SBA.
Horizon estimates the proposed capital expenditures to fund its network
build-out will be $198 million through 2002 at which point Horizon expects the
network to be substantially complete. Horizon expects working capital
requirements to be $77 million through 2002. After 2002, Horizon expects to
generate positive cash flows.
Senior Debt Financing
Horizon has the following senior debt facilities with RTFC:
- ----------------- ----------------- --------------------------------------------
Description Amount Status
- ----------------- ----------------- --------------------------------------------
OH 803-A-01 $ 24 Million Completed August 29, 1997
- ----------------- ----------------- --------------------------------------------
OH 803-9901 $ 5 Million Completed March 29, 2000
- ----------------- ----------------- --------------------------------------------
OH 803-5102 $ 5 Million Expect document execution by April 28, 2000
- ----------------- ----------------- --------------------------------------------
OH 803-9002 $ 41 Million Expect document execution by May 8, 2000
- ----------------- ----------------- --------------------------------------------
Pending $130 Million Terms sheet expected by May 4, 2000
- ----------------- ----------------- --------------------------------------------
9
Bridge Facility
Horizon has a term sheet with Motorola to provide a Bridge Credit Facility
totaling $58 million. The facility will consist of two tranches (Tranche A and
Tranche B). Tranche A totals $18.5 million and will be available immediately
upon completion of final documents. Tranche B totals $39.5 million and would
become available upon the exhaustion of Tranche A and meeting certain business
plan milestones and additional equity being raised by Horizon.
The proceeds of Tranche A and B can be used to purchase equipment from Sprint,
purchase Motorola equipment, other capital expenditures, and working capital.
The bridge facility will be retired when Horizon successfully raises equity in
an initial public offering and all RTFC debt is in place.
Equity
Horizon Telcom has invested $20 million in Horizon Personal Communications.
Horizon Personal Communications is planning to file a registration statement
with the SEC on May 10th, 2000, and is targeting an IPO in July 2000.
With the IPO, Horizon expects to raise a minimum of $100 million.
10
Horizon Addendum III
Exhibit 2.1
Exhibit 2.1
Build-out Plan
- ----------------------------------------- -------------------------
Service Area Build-out Plan
BTA# BTA Name Approx # Total Covered % Covered Comple- Total Covered % Sprint Sprint BTA Li- License
(or County Cells 2000 2000 Pops 1999 Pops tion Date Sprint Sprint LTD Lines LTD cense Block
Name) BTA POPS LTD LTD Covered Priority Holder
Access Lines Level
Lines
- ----- ---------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
HORI- BUILT BTA'S
ZON
23 Athens, oh 8 131,262 58,711 45% May-98 0 0 0% No Sprint D
Com, Inc.
80 Chillicothe, OH 13 102,128 83,905 82% Sep-97 0 0 0% No Sprint D
Com, Inc.
342 Parkersburg, WV 11 183,473 111,144 61% Nov-98 0 0 0% No Sprint D
Com, Inc.
359 Portsmouth, OH 3 92,379 46,789 51% Nov-98 0 0 0% No Sprint D
Com, Inc.
487 Zanesville-, 18 186,071 105,451 57% Mar-98 0 0 0% No Sprint D
Cambridge, OH Com, Inc.
229 Kingsport/ 50 690,563 326,157 47% Oct-00 276,474 179,373 65% Yes Sprint D
Johnson City, TN Com, Inc.
81 Cincinnati, OH 127,426 0 0 0% No Sprint D
(Adams, Brown, Com, Inc.
Highland, Mason
Co.)
65 Canton-New 36,215 0 0 0% No Sprint D
Philadelphia, OH Com, Inc.
(Coshocton Co.)
197 Huntington, Sprint D & E
WV-Ashland KY Com, Inc.
(Greenup &
Gallis Co.)
474 Williamson, WV 6 186,257 32,421 17% Feb-02 0 0 0% No Sprint D
Com, Inc.
259 Logan WV 6 41,167 12,309 30% Feb-02 0 0 0% No Sprint D
Com, Inc.
100 Cumberland, MD 6 158,077 52,767 33% Feb-02 0 0 0% No American A
PCS, L.P.
215 Jamestown, 51 178,737 123,201 69% WIRELESS- A
Warren, Dunkirk, CO, L.P.
P
Phase I Jun-00
Phase III Oct-01
131 Erie, PA 47 278,611 250,293 90% Sprint D
Phase I Jun-00 Com, Inc.
Phase III Oct-01
21 Ashtabula, OH 22 100,166 79,750 80% 6,268 6,268 100% No Sprint D
Phase I Jun-00 Com, Inc.
267 Meadville, PA 15 89,569 41,852 47% Sprint D
Phase I Jun-00 Com, Inc.
328 Oil City, 26 103,580 41,582 40% 2,388 2,388 100% No WIRELESS- A
Franklin, PA CO, L.P.
Phase I Jun-00
Phase III Oct-01
330 Olean, Bradford, 57 242,822 81,259 33% WIRELESS- A
PA CO, L.P.
Phase I Jun-00
Phase III Oct-01
117 Du Bois, 30 128,642 76,026 59% WIRELESS- A
Clearfield, PA CO, L.P.
Phase III Oct-01
429 State College, 34 130,517 103,624 79% 2,128 1,064 50% No PHILLIE- B
PA CO, L.P.
Phase III Oct-01
475 Williamsport, PA 43 159,910 115,000 72% 3,571 3,571 100% No PHILLIE- B
Phase III Oct-01 CO, L.P.
437 Sunbury, 34 183,746 120,829 66% PHILLIE- B
Shamokin, PA CO, L.P.
Phase III Oct-01
416 Sharon, PA 27 121,556 95,679 79% 2,569 2,235 87% No Sprint D
Phase I Jun-00 Com, Inc.
Phase III Oct-01
412 Scranton, Wilkes 159 669,825 492,673 74% WIRELESS- B
Barre, PA CO, L.P.
Phase I Dec-00
Phase III Oct-01
360 Pottsville, PA 36 149,443 90,422 61% PHILLIE- B
Phase I Dec-00 CO, L.P.
Phase III Oct-01
435 Stroudeburg, PA 21 131,529 45,978 35% WIRELESS- B
Phase III Dec-00 CO, L.P.
10 Allentown Carbon 18 59,139 31,113 53% WIRELESS- B
County CO, L.P.
Phase I Dec-00
Phase III Oct-01
321 New York, NY 58 WIRELES- B
Sussex County 128,286 88,109 69% 46,518 32,057 69% Yes CO, L.P.
Pike County 42,790 12,908 30%
Phase I Dec-00
Phase III Oct-01
232 Knoxville, TN Sprint D
Hamblen Co. 53,510 17,762 33% Com, Inc.
Jefferson Co. 4,512 1,798 40%
(Partial)
Phase III Dec-00
Total Horizon Built
BTA's 799 4,891,907 2,739,512 56% 339,916 226,956 67%
Northern PA Markets 678 2,898,868 1,890,298 65%
104 Denville, VA 15 163,533 86,701 53% Oct-99 24,156 2,633 11% No Virginia B
PCS Alli-
ance, L.P.
266 Lynchburg, VA 25 157,324 128,990 82% Oct-99 6,808 0 0% No Virginia B
PCS Alli-
ance, L.P.
264 Martinsville, VA 10 88,038 56,241 64% Oct-99 44,538 27,467 62% No Virginia B
PCS Alli-
ance, L.P.
376 Roanoke, VA 55 626,125 373,899 60% Oct-99 68,767 13,808 20% No Virginia B
PCS Alli-
ance, L.P.
430 Staunton- 12 105,731 87,604 83% Oct-99 0 0 0% No Virginia B
Waynesboro, VA PCS Alli-
ance, L.P.
75 Charlottesville, 50 210,940 131,631 62% Oct-99 88,081 69,563 79% Yes Virginia B
VA PCS Alli-
ance, L.P.
73 Charleston, WV 45 490,210 224,470 46% Nov-98 18,518 0 0% No West Vir- B
ginia PCS
Alliance,
L.P.
48 Bluefield, WV 10 174,919 49,868 29% Feb-02 1,821 0 0% No West Vir- B
ginia PCS
Alliance,
L.P.
35 Beckley, WV 10 165,927 59,721 36% Oct-00 0 0 0% No West Vir- B
ginia PCS
Alliance,
L.P.
137 Fairmont, WV 6 57,477 45,973 80% Oct-99 0 0 0% No West Vir- B
ginia PCS
Alliance,
L.P.
306 Morgantown, WV 15 106,766 68,201 64% Oct-99 0 0 0% No West Vir- B
ginia PCS
Alliance,
L.P.
82 Clarksburg, WV 10 194,784 65,409 34% Oct-99 0 0 0% No West Vir- B
ginia PCS
Alliance,
L.P.
197 Huntington, 21 375,537 243,967 65% Nov-98 0 0 0% No West Vir- B
WV-Ashland, KY ginia PCS
Alliance,
L.P.
Total CFW Built BTA's 284 2,917,311 1,622,675 56% 252,689 113,471 45%
Grand Total 1083 7,809,218 4,362,187 56% 592,605 340,427 57%
Phase I consists of: BTA #021Ashtabula OH
BTA #131Erie PA
BTA #215Jamestown NY
BTA #287Meadville PA
BTA #330Olean NY
BTA #416Sharon PA
The I-90 corridor includes Sprint PCS Phase 3 coverage in BTA #021 -
Ashtabula OH, BTA #131 - Erie PA, and BTA #215 - Jamestown NY. The coverage area
for Horizon's I-90 corridor will extend from Sprint PCS's coverage near the
western boundary of the Ashtabula BTA on Interstate 90 northeast to Sprint PCS's
coverage near the northeastern boundary of the Jamestown BTA including the
cities of Ashtabula, OH and Erie, PA. Coverage will also extend along Ohio Route
11 from I-90 south to meet Sprint PCS's coverage near the southern boundary of
the Ashtabula BTA. Horizon will assume construction of this corridor immediately
upon the signing of Addendum III to the Management Agreement and an Asset
Purchase Agreement and will proceed at the fastest pace practical. Horizon
intends to provide roaming service as soon as a reasonable number of base
stations are on the air and Horizon intends for this market to be substantially
operational the later of June 30 or ten (10) business days after the assets in
the Phase I BTAs are transferred to Horizon pursuant to the Asset Purchase
Agreement, provided that Sprint PCS can launch these markets under a Type I
affiliation arrangement.
The I-79 corridor includes Sprint PCS Phase 3 coverage in BTA #287 -
Meadville PA and BTA #416 - Sharon PA. The coverage area for Horizon's I-79
corridor will extend along Interstate 79 from Erie to meet Sprint PCS coverage
near the southern boundary of the Sharon BTA including the city of Meadville,
PA. Coverage will also extend along Interstate 80 from Sprint PCS's coverage
near the western boundary of the Sharon BTA east to the I-79 interchange
including the city of Sharon, PA. Horizon will assume construction of this
corridor immediately upon the signing of Addendum III to the Management
Agreement and an Asset Purchase Agreement and will proceed at the fastest pace
practical. Horizon intends to provide roaming service as soon as a reasonable
number of base stations are on the air and Horizon intends for this market to be
substantially operational the later of June 30 or ten (10) business days after
the assets in the Phase I BTAs are transferred to Horizon pursuant to the Asset
Purchase Agreement, provided that Sprint PCS can launch these markets under a
Type I affiliation arrangement.
The US 219 corridor includes Sprint PCS Phase 3 coverage in BTA #330 -
Olean NY. The coverage area for Horizon's US 219 corridor will extend along US
219 from Sprint PCS's current coverage near the northern boundary of the Olean
BTA south to the village of Ellicotteville, NY. Horizon will assume construction
of this corridor immediately upon the signing of Addendum III to the Management
Agreement and an Asset Purchase Agreement and will proceed at the fastest pace
practical. Horizon intends to provide roaming service as soon as a reasonable
number of base stations are on the air and Horizon intends for this market to be
substantially operational the later of June 30 or ten (10) business days after
the assets in the Phase I BTAs are transferred to Horizon pursuant to the Asset
Purchase Agreement, provided that Sprint PCS can launch these markets under a
Type I affiliation arrangement.
Phase 2 consists of: BTA #360Pottsville PA
BTA #412Scranton PA
BTA #435Stroudsburg PA
BTA#010 Allentown PA
BTA #321New York NY
BTA #232Knoxville TN
The Northeastern Pennsylvania Cluster includes Sprint PCS Phase 3 coverage in
BTA #412 - Scranton PA, BTA #360 - Pottsville PA, BTA #435 - Stroudsburg PA, BTA
#010 - Allentown PA (Carbon County), and BTA #321 - New York NY (Pike & Sussex
County). The coverage area for Horizon's Northeastern Pennsylvania Cluster will
extend along Interstate 81 from the southern boundary of the Pottsville BTA
northeast to the northern boundary of Scranton BTA including the cities of
Pottsville, Scranton, Wilkes Barre, Hazelton and Carbondale. Coverage will also
extend along Interstate 80 from the I-81 interchange eastward to the
southeastern boundary of the Stroudsburg BTA including the city of Stroudsburg,
along Interstate 84 from the I-81 interchange eastward to the eastern boundary
of Pike County including portions of Sussex County, and along the entire length
of Interstate 380. Additional coverage will be provided along Pennsylvania Route
9 (Turnpike NE Extender) between I-81 and I-80 and in the eastern portion of
Carbon County. Horizon will assume construction of this corridor immediately
upon the signing of Addendum III to the Management Agreement and an Asset
Purchase Agreement and will proceed at the fastest pace practical. Horizon
intends to provide roaming service as soon as a reasonable number of base
stations are on the air and Horizon intends for this market to be substantially
operational no later than December 31, 2000.
The 1-40 Corridor includes BTA #232 - Knoxville TN. The I-40 corridor will
extend from Sprint PCS's coverage near the western boundary of Jefferson county
in the Knoxville BTA east on Interstates 40 and 81 to Horizon's coverage near
the eastern boundary of Knoxville BTA and will include the city of Morristown,
TN. Coverage also includes I-40 South to the North Cocke County Line to Meet
Airgate Coverage. Construction of this cluster will commence immediately upon
the signing of Addendum III to the Management Agreement and will proceed at the
fastest pace practical. Horizon intends for this market to be fully operational
no later than December 31, 2000. To the extent possible, Horizon intends to
launch this cluster in concert with the launch of its Tri-Cities market.
Phase 3 consists of: BTA #117 Du Bois-Clearfield PA
BTA #215 Jamestown NY
BTA #328 Oil City-Franklin PA
BTA #330 Olean NY
BTA #360 Pottsville PA
BTA #416 Sharon PA
BTA #429 State College PA
BTA #437 Sunbury-Shamokin PA
BTA #475 Williamsport PA
BTA #412 Scranton, Wilkes-Barre, PA
BTA #360 Pottsville, PA
BTA #10 Allentown, PA
BTA #321 New York, NY
The I-80 corridor includes BTA #117 - Du Bois-Clearfield PA, BTA #328 - Oil
City-Franklin PA, BTA #416 - Sharon PA, BTA #429 - State College PA, BTA #437 -
Sunbury-Shamokin PA, and BTA #475 - Williamsport PA. The coverage area for
Horizon's I-80 corridor will extend from the I-79 interchange in the Sharon BTA
along Interstate 80 east to I-81 interchange in the Pottsville BTA including the
cities of Du Bois, Clearfield, State College, Williamsport, Shamokin, Sunbury
and nearby smaller communities and the primary highways (including I-180) that
connect them to I-80. This corridor is scheduled to be substantially operational
by October 31, 2001.
The I-86 corridor includes BTA #215 - Jamestown NY and BTA #330 - Olean NY. The
coverage area for Horizon's I-86 corridor will extend along I-86 (State Route
17) from Interstate 90 east to eastern boundary of the Olean BTA including the
cities of Jamestown, Salamanca and Olean. Coverage will also extend along US 62
from Jamestown south to Warren, PA; along US 6 from I-79 east to Warren, PA and
along US 219 from Ellicotteville south to Bradford, PA. This market is scheduled
to be substantially operational by October 31, 2001.
The coverage area for Horizon's Northeastern Pennsylvania Cluster and I-79
corridor will be enhanced to extend coverage to neighboring smaller communities
and connecting highways as depicted in the Exhibit 2.1 Map. Enhancements to
these markets will be substantially operational no later than October 31, 2001.
[GRAPHIC]
[GRAPHIC]
[GRAPHIC]
[***] CONFIDENTIAL TREATMENT REQUESTED
Horizon Addendum III
Exhibit A
2000 Affiliate Services Pricing
Exhibit 2.1.1
Available Services and Fees Schedule
Revision Date: June 30, 1999
Effective
'98/'99 2000 Settlement
Available Services Affiliate Price Price Driver Date*
- --------------------------- --------------- ------------- ------------ -------------------------------------------- --------------
Activation Type 1 & 2 $ [***] $ [***] Per gross activation 08-Jun-98
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
Billing Type 1 & 2 $ [***] $ [***] Per subscriber per month 08-Jun-98
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
Customer Care Type 1 & 2 $ [***] $ [***] Per subscriber per month 08-Jun-98
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
Directory Assistance Type 1 & 2 $ [***] $ [***] Per call completion 08-Jun-98
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
E-Commerce Type 1 & 2 $ - $ [***] Per E-Commerce gross activation 01-Jan-00
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
Enhanced Voicemail Type 1 & 2 $ [***] $ [***] Per enhanced voicemail subscriber per month 01-Oct-99
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
Handset Logistics All $ [***] $ [***] Per handset shipped 08-Jun-98
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
Hal Riney Advertising All $ [***] $ [***] Per covered pop per month 01-Aug-99
(Variable
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
Hal Riney Advertising All $ [***] $ [***] Per affiliate per month 01-Aug-99
(Fixed)
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
Inter Service Area Fees All $ [***] $ [***] Per MOU (Rate may vary based on the 08-Jun-98
(Travel) Management Agreement)
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
Interconnect Fees All - Note 1 $ [***] $ [***] Per MOU (if Sprint PCS provides switching) 08-Jun-98
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
Intra-Service Area Travel All $ [***] $ [***] Per non-local calling area Long Distance 08-Jun-98
Long Distance MOU
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
National Platform ($1.00)
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
HLR Type 1 & 2 $ [***] $ [***] Per subscriber per month (subject to meeting 08-Jun-98
technical standards)
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
Voicemail Type 1 & 2 $ [***] $ [***] Per subscriber per month 08-Jun-98
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
NOCC (OSSN) All $ [***] $ [***] Per subscriber per month (subject to meeting 08-Jun-98
technical standards)
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
Polling Data Unit(PDU) Type 1 & 2 $ [***] $ [***] Per subscriber per month 01-Aug-99
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
OTAF Type 1 & 2 $ [***] $ [***] Per subscriber per month 01-Jan-00
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
OAM&P Type 1 & 2 $ [***] $ [***] Per subscriber per month 01-Jan-00
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
Operator Services** Type 1 & 2 $ [***] $ [***] Per subscriber per month 01-Jan-00
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
Prepaid Services Type 1 & 2 $ [***] $ [***] Per prepaid subscriber per month 08-Jun-98
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
Loyalty Welcome Type 1 & 2 $ [***] $ [***] Per gross activation 01-Aug-99
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
Loyalty Retention Type 1 & 2 $ [***] $ [***] Per subscriber per month 01-Aug-99
- --------------------------- --------------- ---- -------- --- ---------- -------------------------------------------- --------------
Roadside Rescue Type 1 & 2 $ [***] $ [***] Per Roadside Rescue subscriber per month 01-Jan-00
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
Retail Store and Local t Type 1 & 2 $ [***] $ [***] Per Retail Store/Local Indirect Activation 01-Jan-00
Indirec Channel Costs
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
Pro Messaging Plan Type 1 & 2 $ [***] $ [***] Per SMS subscriber per month for up to 200 01-Oct-99
messages ($0.10 for additional messages)
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
Text Messaging Plan Type 1 & 2 $ [***] $ [***] Per SMS subscriber per month for up to 30 01-Oct-99
messages ($0.25 for additional messages)
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
Telesales (1-800-480-4PCS) Type 1 & 2 $ [***] $ [***] Per gross telesales activation 01-Aug-99
(Inbound)
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
Network Certification All Price depends on size and complexity 08-Jun-98
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
Roaming Fees All Price per MOU (Market Specific) 08-June-98
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
LD Verification Type 1 & 2 Monthly Charge (Market Specific) 01-Jan-00
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
Type 1 Affiliate Long Type 1 Per subscriber per month (Market Specific) 01-Jan-00
Distance
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
Remote Switching Type 1 Monthly Charge (Market Specific) 08-Jun-98
- --------------------------- --------------- ------------- -------------- -------------------------------------------- --------------
* Note: The effective date for all 2000 pricing is January 1, 2000 (however, the
settlement will not occur until an effective settlement date is identified) **
Note: The driver for Operator Services changed for 2000 pricing (formally per
call attempt)
Note 1 Unless Manager arranges directly per section 1.4.
[***]-CONFIDENTIAL TREATMENT REQUESTED
05-19-00
Horizon - Exhibit A
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
Asset Search Ring Search Ring
Cascade ID Transfer Stage Purchase Site Type Tower Height Latitude Longitude SPCS Owned Site Tax Due
Price
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC026 Constructed n/a Lattice-Self 195 [***] [***] Y
less BTS Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC027 Pre-Lease $0 Lattice-Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC028 Pre-Lease $0 Lattice-Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC029 Constructed n/a Lattice-Guyed 150 [***] [***] Y
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC030 lease $41,475 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC045 lease $41,475 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC046 Constructed n/a Lattice-Self 195 [***] [***] Y
less BTS Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC055 On Air $355,194 Colo-Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC056 Pre-Lease $0 [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC057 Lease $41,475 Rooftop [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC058 Lease $41,475 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC148 Lease $41,475 Trans Tower` [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC150 Pre-Lease $0 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC151 lease $41,475 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC152 lease $41,475 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC156 lease $41,475 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NX33XC157 On Air $355,194 Colocation [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC162 Constructed $211,813 Colocation [***] [***]
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC164 Pre-Lease $0 Lattice-Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC165 Constructed $211,813 Colocation [***] [***]
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC166 Constructed $211,813 Colocation [***] [***]
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC167 Constructed n/a Lattice-Self 250 [***] [***] Y
less BTS Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC168 Pre-Lease $0 Lattice-Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC193 Constructed n/a Lattice-Self 192.5 [***] [***] Y
less BTS Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC194 Constructed $211,813 Colocation [***] [***]
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC195 Constructed $211,813 Colocation [***] [***]
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC196 Pre-Lease $0 Lattice-Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC197 lease $41,475 Lattice-Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC198 Constructed $211,813 Colocation [***] [***]
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC199 Constructed $211,813 Colocation [***] [***]
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC200 Pre-Lease $0 Lattice-Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC201 Constructed $211,813 Colocation [***] [***]
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC202 lease $41,475 Lattice-Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC203 Constructed n/a Monopole 150 [***] [***] Y
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC204 lease $41,475 Lattice-Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC205 Pre-Lease $0 Lattice Guyed [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC206 lease $41,475 Stealth Tower [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC208 lease $41,475 Lattice-Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC210 lease $41,475 Lattice-Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC225 Pre-Lease $0 Lattice-Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC228 Constructed $211,813 Colocation [***] [***]
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC229 lease $41,475 Lattice-Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC230 lease $41,475 Lattice-Self [***] [***]
Support
[***]-CONFIDENTIAL TREATMENT REQUESTED
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC264 Pre-Lease $0 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC265 Constructed $211,813 Colocation [***] [***]
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC278 Constructed $211,813 Colocation [***] [***]
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC279 Constructed $211,813 Colocation [***] [***]
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC280 Constructed $211,813 Colocation [***] [***]
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC812 Constructed n/a Lattice-Self 250 [***] [***] Y
less BTS Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC820 lease $41,475 Lattice-Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC830 Constructed n/a Lattice-Self 195 [***] [***] Y
less BTS Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC834 Lease $41,475 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC842 lease $41,475 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC862 Pre-Leased $0 Lattice-Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC900 Pre-Lease $0 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC901 Lease $41,475 Trans Tower [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC902 Constructed $233,520 Rooftop [***] [***]
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC903 Lease $41,475 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC904 Pre-Lease $0 Lattice-Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC905 Constructed $211,813 Colocation [***] [***]
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC906 lease $41,475 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC907 lease $41,475 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC908 Pre-Lease $0 Trans tower [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC909 Constructed n/a Monopole 145 [***] [***] Y
less TBS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC910 Constructed n/a Monopole 140 [***] [***] Y
less TBS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC911 lease $41,475 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC912 Lease $41,475 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC913 Constructed $233,520 Rooftop [***] [***]
less TBS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC914 Constructed $233,520 Rooftop [***] [***]
less TBS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC915 Constructed n/a Monopole 150 [***] [***] Y
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC916 Constructed n/a Monopole 150 [***] [***] Y
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC917 Constructed $211,813 Colocation [***] [***]
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC918 Constructed $211,813 Colocation [***] [***]
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC919 Lease $41,475 Trans Tower [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC920 Constructed $233,520 Rooftop [***] [***]
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC921 Constructed $211,813 Colocation [***] [***]
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC922 lease $41,475 Lattice Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC923 lease $41,475 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC924 Pre-Lease $0 Rooftop [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC925 lease $41,475 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC926 Constructed n/a Monopole 150 [***] [***] Y
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC927 Constructed n/a Monopole 180 [***] [***] Y
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC928 Pre-Lease $0 Lattice-Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC929 lease $41,475 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC930 Pre-Lease $0 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC931 Constructed $211,813 Colocation [***] [***]
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC932 Constructed n/a Monopole 150 [***] [***] Y
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC933 Constructed n/a Monopole 100 [***] [***] Y
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC934 Constructed $233,520 Rooftop [***] [***]
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC935 Constructed n/a Monopole 130 [***] [***] Y
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC936 Constructed n/a Monopole 200 [***] [***] Y
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
[***]-CONFIDENTIAL TREATMENT REQUESTED
NY33XC937 lease $41,475 Rooftop [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC938 Constructed $233,520 Rooftop [***] [***]
less BTS
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC939 lease $41,475 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC940 lease $41,475 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC941 lease $41,475 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC942 lease $41,475 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC943 Pre-Lease $0 Trans Tower [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC944 Constructed n/a Lattice-Self 250 [***] [***] Y
less BTS Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC945 lease $41,475 Lattice-Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC946 Pre-Lease $0 Trans Tower [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC947 Pre-Lease $0 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC957 lease $41,475 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC958 Pre-Lease $0 Lattice-Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC960 lease $41,475 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC961 lease $41,475 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC962 lease $41,475 Lattice-Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC963 Pre-Lease $0 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC966 lease $41,475 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC978 Pre-Lease $0 Trans Tower [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC992 lease $41,475 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC994 Pre-Lease $0 [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC995 lease $41,475 Lattice-Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC160 lease $41,475 Lattice-Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
NY33XC161 NTP $100,725 Colocation [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
Total NY =
115
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
PL33XC919 Lease $41,475 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
PL33XC920 Pre-Lease $0 Monopole [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
PL33XC921 Pre-Lease $0 Lattice-Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
PL33XC922 lease $41.475 Lattice Guyed [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
PL33XC923 Pre-Lease $0 Water Tank [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
PL33XC924 Pre-Lease $0 Lattice Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
PL33XC925 Pre-Lease $0 Lattice Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
PL33XC926 Pre-Lease $0 Smoke Stack [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
PL33XC927 Pre-Lease $0 Lattice Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
PL33XC928 Pre-Lease $0 Lattice Guyed [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
PL33XC929 lease $41,475 Lattice Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
Total PL =
11
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
BU33XC051 On Air $355,194 Colocation 281 [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
BU33XC052 On Air $355,194 Colocation 240 [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
BU33XC053 On Air $355,194 Colocation 284 [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
BU33XC054 On Air $355,194 Colocation 195 [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
BU33XC055 On Air $157,859 SPCS Tower 250 [***] [***] Y
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
BU33XC056 On Air $157,859 SPCS Tower 350 Y
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
Total BU = 5
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
CL33XC013 lease $41,475 Lattice Self [***] [***]
Support
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
CL33XC032 On Air $157,859 SPCS Tower 250 [***] [***] Y
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
CL33XC070 On Air $157,859 SPCS Tower 250 [***] [***] Y
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
[***]-CONFIDENTIAL TREATMENT REQUESTED
CL33XC072 On Air $157,859 SPCS Tower 250 [***] [***] Y
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
CL33XC080 On Air $157,859 SPCS Tower 250 [***] [***] Y
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
CL33XC081 On Air $157,859 SPCS Tower 250 [***] [***] Y
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
CL33XC088 On Air $157,859 SPCS Tower 250 [***] [***] Y
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
Total CL = 7
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
CL33XC058 On Air $157,859 SPCS Tower 250 [***] [***] Y
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
CL33XC060 On Air $157,859 SPCS Tower 250 [***] [***] Y
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
CL33XC061 On Air $157,859 SPCS Tower 250 [***] [***] Y
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
CL33XC062 On Air $157,859 SPCS Tower 250 [***] [***] Y
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
CL03XC227 On Air $148,368 SPCS Tower 190 [***] [***] Y
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
Total CL = 5
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
CL33XC016 On Air $148,368 SPCS Tower 190 [***] [***] Y
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
CL33XC039 On Air $267,218 Roof Top [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
CL33XC043 On Air $256.191 Colocation [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
CL33XC044 On Air $148,368 SPCS Tower 120 [***] [***] Y
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
CL33XC053 On Air $157,859 SPCS Tower 250 [***] [***] Y
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
CL33XC064 On Air $157,859 SPCS Tower 250 [***] [***] Y
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
CL33XC068 On Air $157,859 SPCS Tower 250 [***] [***] Y
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
Total CL = 7 [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
CL33XC063 On Air $157,859 SPCS Tower 250 [***] [***] Y
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
CL33XC066 On Air $157,859 SPCS Tower 250 [***] [***] Y
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
CL33XC067 On Air $157,859 SPCS Tower 250 [***] [***] Y
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
CL33XC073 NTP $100,725 Colocation [***] [***]
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
Total CL = 4
- ------------ ---------------- ------------- ---------------- ------------- -------------- --------------- ---------------- ---------
Total sites 154 Total Price [***]
Western Subtotal [***]
Total Price with Tax TBD
Exhibit B
to Addendum III
Method for Determining Private Valuation of Issuer
(i) Each party engages an nationally recognized investment bank to provide
a valuation of the Issuer's fair market value.
(ii) If the higher valuation is equal to or less than 110% of the lower
valuation, the mean of the two valuations is used.
(iii) If the higher valuation is greater than 110% of the lower valuation,
and the selling party's valuation is the lower valuation, the mean of
the two valuations is used.
(iv) If the higher valuation is greater than 110% of the lower valuation,
and the acquiring party's valuation is the lower valuation, the
respective investment banks engaged by the parties' will agree upon a
third independent investment bank to provide a third valuation.
(v) If the third valuation falls outside of the two initial valuations,
the initial valuation closest to the third valuation is used.
(vi) If the third valuation falls within the initial valuation range and is
within 5% of the mean of the initial valuations, the third valuation
is used.
(vii) If the third valuation falls within the initial valuation range, but
is not within 5% of the mean of the initial valuations, the mean of
the third valuation and the nearest initial valuation is taken.
EXHIBIT C
TO ADDENDUM III
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER THE SECURITIES LAWS OF ANY OTHER JURISDICTION, IN RELIANCE
UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS. THIS WARRANT
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED, NOR WILL AN ASSIGNEE OR ENDORSEE
HEREOF BE RECOGNIZED AS AN OWNER OF THIS WARRANT BY THE ISSUER, UNLESS (1) A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 AND OTHER APPLICABLE
SECURITIES LAWS WITH RESPECT TO THE SHARES AND THE TRANSFER SHALL THEN BE IN
EFFECT, OR (2) IN THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER, THE SHARES
ARE TRANSFERRED IN A TRANSACTION WHICH IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF SUCH LAWS.
IN ADDITION TO AND NOT IN LIMITATION OF THE FOREGOING, THIS WARRANT MAY NOT BE
TRANSFERRED EXCEPT AS PROVIDED IN SECTION 10(b) HEREOF. THE SHARES OF COMMON
STOCK ISSUED OR ISSUABLE UPON EXERCISE OF THIS WARRANT ARE SUBJECT TO THE
RESTRICTIONS ON TRANSFER SET FORTH IN SECTION 6 OF THIS WARRANT.
WARRANT FOR THE PURCHASE OF
SHARES OF COMMON STOCK
OF
Horizon PCS, Inc.
(A Delaware Corporation)
DATED AS OF ________________, 200_
VOID AFTER 5:00 P.M., CENTRAL STANDARD TIME, ON _________________, 200__
Horizon PCS, Inc., a Delaware corporation (the "Company"), hereby
certifies that Sprint Spectrum L.P., a Delaware limited partnership ("Sprint
PCS"), is entitled, subject to the terms set forth below, to purchase from the
Company, at the time, in the amounts and during the period described in Section
3 below, that number of shares of Common Stock of the Company determined
pursuant to the provisions of Section 2 below, at the Purchase Price (as defined
below) then in effect.
1. Definitions.
"Affiliate" any entity that, directly or indirectly through one or
more intermediaries, controls, is controlled by, or is under common control
with, Sprint PCS.
"Common Stock" means the Company's $0.__ par value per share Class A
common stock and stock of any other class of the equity of the Company into
which such shares may hereafter have been changed.
"Conversion Price" means the price per share for which Common Stock is
issuable upon the conversion or exchange of Convertible Securities, determined
by dividing (i) the total amount, if any, received or receivable by the Company
as consideration for the issuance of such Convertible Securities, plus the
minimum aggregate amount of additional consideration payable to the Company upon
the conversion or exchange of such Convertible Securities, by (ii) the total
maximum number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities.
"Convertible Securities" means any securities issued by the Company or
an Affiliate of the Company which are convertible into or exchangeable for,
directly or indirectly, shares of Common Stock.
"Exercise Term" means (i) if this Warrant is issued at the time of
closing of the IPO, any time between January 1, 2003 and the date ten years
after the Grant Date or (ii) if no IPO has been completed by the Company as of
July 31, 2003, any time between July 31, 2003 and the date seven years after the
Grant Date.
"Grant Date" shall mean the date of the closing of the IPO, if this
Warrant is issued at the time of closing of the IPO, or July 31, 2003, if no IPO
has been completed by the Company as of July 31, 2003.
"IPO" shall have the meaning set forth in Section 2(a) hereof.
"Market Price" of a share of Common Stock on any day means (i) the
average closing price of a share of Common Stock for the twenty (20) consecutive
trading days preceding such day on the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading, or (ii) if
not listed or admitted to trading on any national securities exchange, the
average of the last reported sales price for the twenty (20) consecutive trading
days preceding such day on the Nasdaq National Market, or (iii) if not traded on
the Nasdaq National Market, the average of the highest reported bid and the
lowest reported asked prices on each of the twenty (20) consecutive trading days
preceding such day in the over-the-counter market as furnished by the National
Association of Securities Dealers automated quotation system, or (iv) if such
firm is not then engaged in the business of reporting such prices, as furnished
by any similar firm then engaged in such business selected by the Company or, if
there is no such firm, as furnished by any member of the National Association of
Securities Dealers, Inc. selected by the Company.
"Purchase Price" shall have the meaning set forth in Section 3(c)
hereof.
"Qualifying Private Placement" shall mean a private placement of equity
securities of the Company for cash, excluding the issuance of stock upon the
exercise of options issued by the Company to employees, officers or directors or
pursuant to any stock plan approved by the Board of Directors of the Company or
2
the exercise of warrants issued by the Company in connection with bona fide
vendor, leasing or lending transactions.
"Registered Holder" means Sprint PCS, together with its successors and
permitted assigns.
"Strike Price" means the price per share for which Common Stock is
issuable upon the exercise of any rights, options or warrants for the purchase
of Common Stock, determined by dividing (i) the total amount, if any, received
or receivable by the Company as consideration for the grant of such rights,
options or warrants, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of such rights, options
or warrants, by (ii) the total maximum number of shares of Common Stock issuable
upon the exercise of such rights, options or warrants.
"Warrant Stock" means the shares of Common Stock or New Securities
acquired or acquirable upon exercise of this Warrant, any shares of Common Stock
or New Securities issued as (or issuable upon the conversion or exercise of any
warrant, right or other security that is issued as) a dividend or other
distribution with respect to, or in exchange for, or in replacement of, such
shares of Common Stock, or any other interest in the Company that has been or
may be acquired upon exercise of this Warrant.
2. Shares to be Issued Upon Exercise.
(a) If the Company is issuing this Warrant at the time of closing its
initial public offering of shares of capital stock for cash (the "IPO"), the
Registered Holder shall be entitled to purchase from the Company 2,510,460
shares of Common Stock or New Securities, as the case may be, which number of
shares shall not be less than 3% or more than 4.2% of the total equity of the
Company, on a fully-diluted basis, outstanding immediately after the closing of
the IPO (including, if applicable, shares issued upon exercise of the
underwriters over-allotment options).
(b) If the Company is issuing this Warrant after July 31, 2003 and the
Company has not completed an IPO by such date, the Registered Holder shall be
entitled to purchase from the Company, at any time during the Exercise Term, the
number of shares of Common Stock equal to 3.0% of the outstanding equity of the
Company, on a fully-diluted basis, on July 31, 2003.
3. Exercise of Warrant.
(a) This Warrant may be exercised at any time during the Exercise Term
by the Registered Holder in whole or in part, and from time to time, by
surrendering this Warrant, with the purchase form appended hereto as Annex B
duly executed by such Registered Holder, at the principal office of the Company,
or at such other office or agency as the Company may designate, accompanied by
payment in full of the Purchase Price payable in respect of the number of shares
of Warrant Stock purchased upon such exercise.
(b) The Purchase Price may be paid by a check drawn on the bank
account of the Registered Holder or by the surrender of shares of Warrant Stock
or Common Stock having either (i) a Market Price, as of the date of the
3
surrender, equal to the Purchase Price, or (ii) if the Company has not completed
an IPO, a Privately Held Share Price (as defined below), as of the date of the
surrender, equal to the Purchase Price.
(c) As used herein, the term "Purchase Price," with respect to a share
of Warrant Stock, shall mean (i) the initial price per share to the public if
the Company is issuing this Warrant at the time of closing its IPO, or (ii) if
the Company is issuing this Warrant after July 31, 2003 and the Company has not
completed an IPO by such date, the lower of (X) the Private Valuation amount as
of July 31, 2003, as determined in accordance with Annex C attached hereto,
divided by the total number of outstanding shares of the Company, on a
fully-diluted basis, as of such date or (Y) the most recent arms' length
negotiated per share price in a Qualifying Private Placement; if such Qualifying
Private Placement occurred within one year prior to the Grant Date of the
Warrant (the lower of (X) or (Y) being referred to as the "Privately Held Share
Price"); provided, however, that, with respect to (A), if the Company issues or
sells any shares of Common Stock after the Grant Date at an issuance or sale
price (the "Issuance Price") less than the Purchase Price, or if the Company
issues or sells any Convertible Securities after the Grant Date at a Conversion
Price less than the Purchase Price or if the Company issues, grants or sells
options, warrants or similar rights to subscribe for or to purchase shares of
Common Stock or Convertible Securities after the Grant Date, whether or not such
options, warrants or rights are immediately exercisable, and the Strike Price is
less than the Purchase Price, then, in each such case, without any action on the
part of the Company or the Registered Holder, the Purchase Price shall be
decreased as follows: upon such issue, grant or sale, the Purchase Price for the
Warrant Stock whose Purchase Price is higher than the said per share
consideration shall be reduced to the price (calculated to the nearest tenth of
a cent) determined by dividing (i) an amount equal to the sum of (a) the number
of shares of Common Stock outstanding immediately prior to such issue or sale
(including as outstanding all shares of Common Stock issuable which are not
outstanding but subject to outstanding warrants, options and similar purchase
rights) multiplied by the then existing Variable Purchase Price, and (b) the
consideration, if any, received, or deemed to have been received by the Company
pursuant to such issue, grant or sale by (ii) the total number of shares of
Common Stock outstanding immediately after such issue, grant or sale (including
as outstanding all shares of Common Stock issuable which are not outstanding but
subject to outstanding warrants, options and similar purchase rights); provided,
further, that upon each adjustment of the Purchase Price for any share of
Warrant Stock issuable hereunder at the Purchase Price as provided above, the
Registered Holder of this Warrant shall thereafter be entitled to purchase, at
the Purchase Price resulting from such adjustment, the number of shares
(calculated to the nearest tenth of a share) obtained by multiplying the
Purchase Price in effect immediately prior to such adjustment by the number of
shares purchasable pursuant hereto immediately prior to such adjustment and
dividing the product thereof by the Purchase Price after such adjustment. To the
extent that an adjustment is made hereunder upon the issuance or sale of a
Convertible Security or an option, warrant or similar right, no further
adjustment shall be made when the Convertible Security is converted or the
option, warrant or similar right is exercised. To the extent any option, warrant
or similar right expires without exercise, the Purchase Price shall be adjusted
upward to reflect that no issuance was made. No adjustment shall be made with
respect to the Warrant Stock issued hereby with respect to the issuance of
Common Stock upon the exercise of options, warrants, or similar rights existing
as of the Grant Date.
4
(d) Each exercise of this Warrant shall be deemed to have been
effected immediately prior to the close of business on the day on which this
Warrant shall have been surrendered to the Company as provided in subsection
3(a) above. At such time, the person(s) or entity(ies) in whose name or names
any certificates for Warrant Stock shall be issuable upon such exercise as
provided in subsection 3(e) below shall be deemed to have become the holder or
holders of record of the Warrant Stock represented by such certificates.
(e) As soon as practicable after each exercise of this Warrant in
whole or in part, and in any event within ten (10) days thereafter, the Company
at its expense will cause to be issued in the name of, and delivered to, the
Registered Holder, or, subject to the terms and conditions hereof, as the
Registered Holder (upon payment by the Registered Holder of any applicable
transfer taxes) may direct:
(i) a certificate or certificates for the number of full shares
of Warrant Stock to which such Registered Holder shall be entitled upon such
exercise plus, in lieu of any fractional share to which such Registered Holder
would otherwise be entitled, cash in an amount determined pursuant to Section 5
hereof; and
(ii) in case such exercise is in part only, a new warrant or
warrants (dated the date hereof) of like tenor, with a new Section 2 reflecting
the number of shares of Warrant Stock then purchasable under Section 2 on the
date of such exercise minus the number of such shares purchased by the
Registered Holder upon such exercise as provided in subsection 3(a) above.
4. Adjustments.
(a) Adjustment of Purchase Price Amount Upon Stock Splits, Dividends,
Distributions and Combinations. In case the Company shall, after the Grant Date,
subdivide its outstanding shares of Common Stock into a greater number of shares
or issue a stock dividend or make a distribution with respect to outstanding
shares of Common Stock or Convertible Securities payable in Common Stock or in
Convertible Securities which are convertible with no additional consideration
into shares of Common Stock, the Purchase Price for all Warrant Stock issuable
at the Purchase Price at the time of such subdivision or stock dividend or
distribution shall be proportionately reduced (treating for such purpose any
such shares of Convertible Securities outstanding as being the number of shares
of Common Stock issuable upon their conversion); and conversely, in case the
shares of Common Stock of the Company shall be combined into a smaller number of
shares after the Grant Date, the Purchase Price for all Warrant Stock issuable
at the Purchase Price at the time of such combination shall be proportionately
increased.
(b) Reorganization or Reclassification. In case of any capital
reorganization, or of any reclassification of the capital stock, of the Company
(other than a change in par value or from par value to no par value or from no
par value to par value), or any consolidation or merger of the Company with
another corporation or other entity, or the sale of all or substantially all of
the assets of the Company which shall be effected in a manner by which the
holders of Common Stock shall be entitled (either directly or upon subsequent
liquidation) to equity securities with respect to or in exchange for Common
Stock, then this Warrant shall, after such capital reorganization,
5
reclassification of capital stock, merger or sale of assets, entitle the
Registered Holder hereof to purchase the kind and number of shares of stock or
other securities of the Company, or of the entity resulting from such
consolidation (the "Surviving Entity") to which the Registered Holder hereof
would have been entitled if it had held the Common Stock issuable upon the
exercise hereof immediately prior to such capital reorganization,
reclassification of capital stock, consolidation, merger or sale of assets.
(c) Change in Strike Price, Conversion Price or Conversion Rate. If
(A) the Strike Price for any right, option or warrant for the purchase of Common
Stock, (B) the Conversion Price of any Convertible Security or (C) the rate at
which any Convertible Securities are convertible into or exchangeable for Common
Stock changes after the Grant Date (other than by reason of provisions designed
to protect against dilution), the Purchase Price for all shares of Warrant Stock
issuable immediately prior to the time such event occurs at the Purchase Price
shall be readjusted to the Purchase Price which would have been in effect at
such time had such rights, options, warrants or Convertible Securities still
outstanding provided for such changed Strike Price, Conversion Price or
conversion rate, as the case may be, at the time such rights, options or
warrants were initially granted or such Convertible Securities were initially
issued.
(d) Consideration for Stock. In case any shares of Common Stock or
Convertible Securities or any rights, options or warrants to purchase Common
Stock or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received by the
Company therefor, without deducting any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Company in connection
therewith. In case any shares of Common Stock or Convertible Securities or any
rights, options or warrants to purchase Common Stock or Convertible Securities
shall be issued or sold in whole or in part for consideration other than cash,
the amount of such consideration shall be deemed to be the fair value thereof as
determined by the Board of Directors of the Company, without deducting any
expenses incurred or any underwriting commissions or concessions paid or allowed
by the Company in connection therewith.
(e) Computation of Adjustments. Upon each computation of an adjustment
in the Purchase Price for any share of Warrant Stock issuable hereunder at the
Purchase Price, the Purchase Price for all such shares of Warrant Stock shall be
computed to the nearest cent (i.e., fractions of .5 of a cent, or greater, shall
be rounded to the highest cent) and the shares which may be purchased upon
exercise of this Warrant shall be calculated to the nearest whole share (i.e.,
fractions of one half of a share, or greater, shall be treated as being a whole
share). No such adjustment shall be made, however, if the change in the Purchase
Price for any such share of Warrant Stock would be less than $.01 per share, but
any such lesser adjustment shall be made at the time and together with the next
subsequent adjustment which, together with any adjustments carried forward,
shall amount to $.01 per share or more.
(f) Certain Prohibited Adjustments. Notwithstanding anything herein to
the contrary, the Company agrees not to enter into any transaction which would
cause an adjustment of the Purchase Price to less than the par value of the
Common Stock.
(g) Notice of Adjustment of Purchase Price. Upon any adjustment of the
Purchase Price for any share of Warrant Stock issuable hereunder or in the
occurrence of any event which should result in an adjustment to the Purchase
6
Price for any share of Warrant Stock issuable hereunder, the Company shall
promptly give written notice thereof to the Registered Holder of this Warrant,
which notice shall state the Purchase Price resulting from such adjustment and
the increase or decrease, if any, in the number of shares purchasable at such
price upon the exercise of this Warrant.
5. Fractional Shares.
The Company shall not be required to issue fractional shares upon the
exercise of this Warrant. If the Registered Holder would be entitled upon the
exercise of any rights evidenced hereby to receive a fractional interest in a
share of Common Stock, the Company shall, upon such exercise, pay in lieu of
such fractional interest an amount in cash equal to the value of such fractional
interest, calculated based upon the Market Price as of the date this Warrant is
exercised.
6. Limitation on Sales.
(a) The Registered Holder, and each subsequent holder of this Warrant,
if any, acknowledges that this Warrant and the Warrant Stock have not been
registered under the Securities Act of 1933, as now in force or hereafter
amended, or any successor legislation (the "Act"), or under any applicable state
securities laws and agrees not to sell, pledge, distribute, offer for sale,
transfer or otherwise dispose of this Warrant or any Warrant Stock issued upon
its exercise in the absence of (i) an effective registration statement under the
Act as to this Warrant or such Warrant Stock and registration or qualification
of this Warrant or such Warrant Stock under any applicable Blue Sky or state
securities law then in effect, or (ii) an opinion of counsel, reasonably
satisfactory to the Company and the Registered Holder, that such registration
and qualification are not required. Without limiting the generality of the
foregoing, unless the offering and sale of the Warrant Stock to be issued upon
the particular exercise of this Warrant shall have been effectively registered
under the Act and under any applicable state securities laws, the Company shall
be under no obligation to issue the shares covered by such exercise unless and
until the Registered Holder shall have executed an investment letter in form and
substance satisfactory to the Company, including a warranty at the time of such
exercise that it is acquiring such shares for its own account, for investment
and not with a view to, or for sale in connection with, the distribution of any
such shares, in which event the Registered Holder shall be bound by the
provisions of a legend to such effect on the certificate(s) representing the
Warrant Stock. In addition, without limiting the generality of the foregoing,
the Company may delay issuance of the Warrant Stock until completion of any
action or obtaining of any consent, which the Company deems necessary under any
applicable law (including without limitation state securities or "blue sky"
laws).
This Warrant and all Warrant Stock issued upon exercise of this
Warrant (unless registered under the Act and any applicable state securities
laws) shall be stamped or imprinted with a legend in substantially the following
form:
"THE SECURITES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (i) AN
7
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AS TO THE
SECURITIES EVIDENCED HEREBY AND REGISTRATION OR QUALIFICATION OF THE
SECURITIES EVIDENCED HEREBY UNDER ANY APPLICABLE BLUE SKY OR STATE
SECURITIES LAWS THEN IN EFFECT OR (ii) AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY AND THE HOLDER OF THE WARRANT UNDER WHICH
THESE SECURITIES WERE ISSUED THAT SUCH REGISTRATION AND QUALIFICATION
ARE NOT REQUIRED AND (iii) OTHERWISE COMPLYING WITH THE PROVISIONS OF
THE WARRANT UNDER WHICH THESE SECURITIES WERE ISSUED, DIRECTLY OR
INDIRECTLY."
Said legend shall be removed by the Company, upon the request of a holder, at
such time as the restrictions on the transfer of the applicable security shall
have been terminated. In addition, in connection with the issuance of this
Warrant, the Registered Holder specifically represents to the Company by
acceptance of this Warrant as follows:
(1) The Registered Holder is aware of the Company's business
affairs and financial condition, and has acquired information about the Company
sufficient to reach an informed and knowledgeable decision to acquire this
Warrant. The holder is acquiring this Warrant for its own account for investment
purposes only and not with a view to, or for the resale in connection with, any
"distribution" thereof in violation of the Act.
(2) The Registered Holder understands that this Warrant has not
been registered under the Act in reliance upon a specific exemption therefrom,
which exemption depends upon, among other things, the bona fide nature of the
holder's investment intent as expressed herein.
(3) The Registered Holder further understands that (A) this
Warrant must be held indefinitely and may not be transferred except in
compliance with Section 10(b) hereof and (B) the Warrant Stock must be held
indefinitely unless subsequently registered under the Act and qualified under
any applicable state securities laws, or unless exemptions from registration and
qualification are otherwise available. The Registered Holder is aware of the
provisions of Rule 144, promulgated under the Act.
(4) The Registered Holder represents that it is an "accredited
investor" as defined in Rule 501(a) under the Act.
(b) Disposition of Warrant or Warrant Stock. With respect to any
permissible offer, sale or other disposition of this Warrant or any Warrant
Stock acquired pursuant to the exercise of this Warrant prior to registration,
if any, of such Warrant or Warrant Stock, the Registered Holder hereof agrees to
give written notice to the Company prior thereto, describing briefly the manner
thereof, together with a written opinion of such holder's counsel to the effect
that such offer, sale or other disposition may be effected without registration
or qualification (under the Act as then in effect or any federal or state
securities law then in effect) of this Warrant or such Warrant Stock and
indicating whether or not under the Act certificates for this Warrant or such
Warrant Stock to be sold or otherwise disposed of require any restrictive legend
as to applicable restrictions on transferability in order to ensure compliance
with such law. Promptly upon receiving such written notice and reasonably
8
satisfactory opinion, the Company, as promptly as practicable shall notify such
Registered Holder that such holder may sell or otherwise dispose of this Warrant
or such Warrant Stock, all in accordance with the terms of the notice delivered
to the Company. If a determination has been made pursuant to this Section 6(b)
that the opinion of counsel for the Registered Holder is not reasonably
satisfactory to the Company, the Company shall so notify the Registered Holder
promptly with details thereof after such determination has been made. Each
certificate representing this Warrant or the Warrant Stock thus transferred
shall bear a legend as to the applicable restrictions on transferability in
order to ensure compliance with such laws, unless in the aforesaid opinion of
counsel for the Registered Holder, such legend is not required in order to
ensure compliance with such laws. The Company may issue stop transfer
instructions to its transfer agent in connection with such restrictions.
(c) The Registered Holder agrees, if requested by the Company or the
representative of the underwriters underwriting an offering of Common Stock (or
other securities of the Company) from time to time, not to sell or otherwise
transfer or dispose of any Warrant Stock then held by the Registered Holder 15
days prior to effectiveness of any registration statement covering shares of
Common Stock and for up to 180 days (or such shorter period as may be required
of a majority of the executive officers of the Company) following the effective
date of any registration statement of the Company filed under the Act (other
than registrations filed pursuant to the Registration Rights Agreement dated
__________________ between the Company and Sprint PCS). Such agreement shall be
in writing in a form satisfactory to the Company and such representative. The
Company may impose stop-transfer instructions with respect to the Warrant Stock
subject to the foregoing restriction until the end of such period.
7. Notices of Record Date, Etc.
In the event that:
(a) the Company shall set a record date for the purpose of entitling
or enabling the holders of its Common Stock (or other stock or securities at the
time deliverable upon the exercise of this Warrant) to receive any dividend or
other distribution, or to receive any right to subscribe for or purchase any
shares of stock of any class or any other securities, or to receive any other
right, or
(b) there shall occur any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation, or any transfer of all
or substantially all of the assets of the Company, or
(c) there shall occur any voluntary or involuntary dissolution,
liquidation or winding-up of the Company,
then, and in each such case, the Company will mail or cause to be mailed to the
Registered Holder a notice specifying, as the case may be, (i) the record date
for the purpose of such dividend, distribution or right, and stating the amount
and character of such dividend, distribution or right, (ii) the effective date
of such reorganization, reclassification, consolidation, merger or transfer or
(iii) the date of such dissolution, liquidation or winding-up is to take place,
and also specifying, if applicable, the date and time as of which the holders of
9
record of Common Stock (or such other stock or securities at the time
deliverable upon the exercise of this Warrant) shall be entitled to exchange
their shares of Common Stock (or such other stock or securities) for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, transfer, dissolution, liquidation or winding-up. Such
notice shall be mailed at least ten (10) days prior to the record date or
effective date for the event specified in such notice.
8. Reservation of Stock.
The Company will at all times reserve and keep available, solely for
issuance and delivery upon the exercise of this Warrant, such shares of Warrant
Stock and other stock, securities and property, as from time to time shall be
issuable upon the exercise of this Warrant.
9. Replacement of Warrants.
Upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant and (in the case of loss,
theft or destruction) upon delivery of an indemnity agreement (with surety if
reasonably required) in an amount reasonably satisfactory to the Company, or (in
the case of mutilation) upon surrender and cancellation of this Warrant, the
Company will issue, in lieu thereof, a new Warrant of like tenor.
10. Transfers, Etc.
(a) The Company will maintain a register containing the names and
addresses of the Registered Holders of this Warrant. The Registered Holder may
change its, his or her address as shown on the warrant register by written
notice to the Company requesting such change.
(b) This Warrant shall not be transferable by the Registered Holder
and shall be exercisable only by the Registered Holder; provided that this
Warrant may be transferred to, and may be exercisable by, any company that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with Sprint PCS, provided (i) written
notice of such transfer is given to the Company, and (ii) such transfer is made
in compliance with all laws, including securities laws, and the transferor
provides to the Company an opinion with respect thereto from counsel reasonably
acceptable to the Company.
(c) Until any transfer of this Warrant is made in the warrant
register, the Company may treat the Registered Holder of this Warrant as the
absolute owner hereof for all purposes; provided, however, that if and when this
Warrant is properly assigned in blank, the Company may (but shall not be
obligated to) treat the bearer hereof as the absolute owner hereof for all
purposes, notwithstanding any notice to the contrary.
10
11. Mailing of Notices, Etc.
All notices and other communications from the Company to the
Registered Holder of this Warrant shall be sent by (a) U.S. mail by first-class
certified or registered mail, postage prepaid, or (b) express courier such as
Federal Express or similar reputable delivery service, to the address furnished
to the Company in writing by the last Registered Holder of this Warrant who
shall have furnished an address to the Company in writing. All notices and other
communications from the Registered Holder of this Warrant or in connection
herewith to the Company shall be mailed by first-class certified or registered
mail, postage prepaid, to the Company at its offices at _____________
___________________________________________, or such other address as the
Company shall so notify the Registered Holder.
12. No Rights as Stockholder.
Until the exercise of this Warrant, the Registered Holder of this
Warrant shall not have or exercise any rights by virtue hereof as a stockholder
of the Company.
13. Change or Waiver.
Any term of this Warrant may be changed or waived only by an
instrument in writing signed by the party against which enforcement of the
change or waiver is sought.
14. Headings.
The headings in this Warrant are for purposes of reference only and
shall not limit or otherwise affect the meaning of any provision of this
Warrant.
15. Governing Law.
This Warrant shall be governed by and construed in accordance with the
laws of the State of Delaware.
16. Preemptive Rights of Registered Holder.
If and when the Registered Holder exercises its right to acquire
capital stock of the Company by exercising all or a portion of its Warrant, the
Registered Holder shall have the right to maintain its Pro Rata Share (as
defined below) of the Company by purchasing shares of capital stock of the
Company in accordance with the following:
(a) The Company agrees that it shall not sell or issue for cash any
shares of capital stock of the Company, or other securities convertible into or
exchangeable for capital stock of the Company, or options, warrants or rights
carrying any rights to purchase capital stock of the Company unless the Company
first submits a written offer to the Registered Holder, identifying the terms of
the proposed sale (including cash price, number or aggregate principal amount of
securities and all other material terms).
11
(b) Pursuant to such notice, the Company shall offer to the Registered
Holder the opportunity to purchase its Pro Rata Share of the securities proposed
to be sold by the Company on terms and conditions, including price, not less
favorable to the Registered Holder than those on which the Company proposes to
sell such securities to a third party. "Pro Rata Share" shall mean that portion
of the total number of securities proposed to be sold or otherwise issued by the
Company determined by a fraction (i) the numerator of which is the aggregate
number of shares of Common Stock owned by the Registered Holder immediately
prior to any proposed sale or other issuance of securities (assuming the full
conversion of any shares of the capital stock of the Company held by the
Registered Holder that are convertible into shares of Common Stock and exercise
of the right to purchase Common Stock under this Warrant that have not been
exercised by the Registered Holder); and (ii) the denominator of which is the
total number of shares of Common Stock owned by all such parties owning Common
Stock, assuming the exercise of all outstanding options, warrants, and other
rights to acquire Common Stock (or securities convertible into Common Stock) and
the full conversion of any shares of the capital stock of the Company
convertible into shares of Common Stock.
The Company's offer to the Registered Holder shall remain open and
irrevocable for a period of fifteen (15) days. Any securities so offered which
are not purchased pursuant to such offer may be sold by the Company, at any time
within one hundred twenty (120) days following the termination of the above
referenced 15-day period, but such securities may not be sold on terms and
conditions, including price, that are more favorable to the purchaser than those
set forth in the written offer submitted to the Registered Holder. No securities
may be sold by the Company after such 120-day period without renewed compliance
with this Section 16.
Notwithstanding the foregoing, the Company may (i) issue options,
warrants or rights to subscribe for shares of its Common Stock (as appropriately
adjusted for stock splits, stock dividends and the like) to officers, employees
and directors of the Company pursuant to the terms of any stock option plan
approved by the Board of Directors of the Company and may issue shares of its
Common Stock upon the exercise of any such stock options, or upon exercise of
warrants outstanding as of the date of this Agreement, (ii) issue shares of its
capital stock in connection with the acquisition of another company or the
business or assets of another company; (iii) issue warrants, options or other
rights to acquire capital stock (or the issuance of capital stock upon the
exercise of such rights) in connection with a bona fide vendor, leasing or
lending transaction or a high yield notes or debentures offering, in each such
case without compliance with this Section 16.
Horizon PCS, Inc.
By:_________________________________
Name:_______________________________
Title:______________________________
Dated:______________________, 200_
12
ANNEX A
WARRANT SCHEDULE
`
Number of Shares of Warrant Stock
Date Issuable Pursuant to Warrant Purchase Price
13
ANNEX B
PURCHASE FORM
To: __________________
__________________
__________________
The undersigned pursuant to the provisions set forth in the attached
Warrant, hereby irrevocably elects to purchase ___________ shares of the Common
Stock (the "Common Stock") covered by such Warrant and herewith makes payment of
$_______, representing the full purchase price for such shares at the price per
share provided for in such Warrant.
The undersigned understands and acknowledges the terms and
restrictions on the right to transfer or dispose of the Common Stock set forth
in Section 6 of the attached Warrant, which the undersigned has carefully
reviewed. The undersigned consents to the placing of a legend on its certificate
for the Common Stock referring to such restrictions and the placing of stop
transfer orders until the Common Stock may be transferred in accordance with the
terms of such restrictions.
By:_________________________________
Name:_______________________________
Title:______________________________
Date:_______________________________
14
ANNEX C
METHOD FOR DETERMINING PRIVATE VALUATION OF ISSUER
(i) Each party engages an nationally recognized investment bank to provide
a valuation of the Issuer's fair market value at the Grant Date.
(ii) If the higher valuation is equal to or less than 110% of the lower
valuation, the mean of the two valuations is used.
(iii) If the higher valuation is greater than 110% of the lower valuation,
and the selling party's valuation is the lower valuation, the mean of
the two valuations is used.
(iv) If the higher valuation is greater than 110% of the lower valuation,
and the acquiring party's valuation is the lower valuation, the
respective investment banks engaged by the parties' will agree upon a
third independent investment bank to provide a third valuation.
(v) If the third valuation falls outside of the two initial valuations,
the initial valuation closest to the third valuation is used.
(vi) If the third valuation falls within the initial valuation range and is
within 5% of the mean of the initial valuations, the third valuation
is used.
(vii) If the third valuation falls within the initial valuation range, but
is not within 5% of the mean of the initial valuations, the mean of
the third valuation and the nearest initial valuation is taken.
15
EXHIBIT D
TO ADDENDUM III
Registration Rights Agreement
This Registration Rights Agreement (the "Agreement") dated as of
________________, 2000____, is entered into by and among Horizon PCS, Inc., a
Delaware corporation (the "Company"), and Sprint Spectrum L.P., a Delaware
limited partnership ("Sprint PCS").
R E C I T A L S
A. Sprint PCS and the Company are parties to an Addendum III to the
Sprint PCS Management Agreement and an Asset Purchase Agreement each dated as of
May __, 2000 (the "Sprint Agreements"). In connection with the Sprint
Agreements, the Company issued Sprint PCS a warrant (the "Warrant"), to purchase
a number of shares of Common Stock (as defined below) as set forth in the
Warrant (the "Warrant Shares").
B. The execution of this Agreement is a condition precedent to the
closing of the transactions contemplated by the Sprint Agreements and the
Warrant.
C. Sprint PCS and the Company desire that the transactions
contemplated by the Sprint Agreements and the Warrant be consummated.
NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the common stock of the Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Holder" shall mean any holder, or an assignee under Section 12
hereof, of outstanding Registrable Securities.
"Initiating Holders" shall mean any Holders who in the aggregate
are Holders of twenty percent (20%) or more of the outstanding Registrable
Securities.
The terms "register", "registered" and "registration" shall refer
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act and the declaration or ordering of the
effectiveness of such registration statement.
"Registrable Securities" shall mean shares of Common Stock (i)
held by Sprint PCS or any permitted assignee thereof, (ii) issued or issuable
pursuant to the exercise of the Warrant, and (iii) issued in respect of
securities issued pursuant to exercise of the Warrant in any stock split, stock
dividend, recapitalization, substitution, or similar event; provided, however,
that Registrable Securities shall not include any (a) shares of Common Stock
which have previously been registered, (b) shares of Common Stock which have
previously been sold to the public, or (c) shares of Common Stock that may be
sold pursuant to Rule 144 under the Securities Act during any given three month
period in compliance with applicable volume limitations.
"Registration Expenses" shall mean all expenses (excluding
underwriting discounts, selling commissions or fees) incurred in connection with
a registration under Sections 2, 3 and 5 hereof, including all registration and
filing fees, printing expenses, fees and disbursements of counsel for the
Company, blue sky fees and expenses and the reasonable fees and expenses (not to
exceed $25,000) of one counsel for the selling Holders (but excluding the
compensation of regular employees of the Company, which shall be paid in any
event by the Company).
"Restricted Securities" shall mean the securities of the Company
not issued or sold pursuant to a registered public offering.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and fees applicable to the sale of Registrable Securities and all
other expenses which are not Registration Expenses.
"Shares" shall mean shares of the Company's Common Stock.
2. Requested Registration.
(a) Request for Registration. If the Company shall receive from
Initiating Holders a written request that the Company effect any registration
with respect to at least that number of Registrable Securities which would
result in an aggregate offering of at least $2,000,000, the Company will:
(i) promptly give written notice of the proposed
registration to all other Holders; and
(ii) as soon as practicable, use its diligent best efforts
to effect such registration (including, without limitation, the
execution of an undertaking to file post effective amendments,
appropriate qualification under applicable blue sky or other state
securities laws and appropriate compliance with applicable regulations
issued under the Securities Act) as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion
of such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any
Holder or Holders joining in such request as are specified in a
written request delivered to the Company within fifteen (15) business
2
days after receipt of such written notice from the Company; provided
that the Company shall not be obligated to effect, or to take any
action to effect, any such registration pursuant to this Section 2:
(A) In any particular jurisdiction in which the
Company would be required to qualify to transact business or
to execute a general consent to service of process in
effecting such registration, qualification or compliance,
unless the Company is already so qualified or subject to
service in such jurisdiction and except as may be required
by the Securities Act; or
(B) Prior to such time as the Company qualifies to
effect such registration on Form S-3.
Subject to the foregoing clauses (A) and (B), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable, after receipt of the request or requests of
the Initiating Holders; provided, however, that if the Company shall furnish to
such Holders a certificate signed by the President of the Company stating that
in the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and the Holders for such registration
statement to be filed on or before the time filing would be required and it is
therefore essential to defer the filing of such registration statement, the
Company shall have the right to defer such filing (but not more than once during
any twelve (12) month period) for a period of not more than ninety (90) days
after receipt of the request of the Initiating Holders.
The registration statement filed pursuant to the request of the
Initiating Holders, may, subject to the provisions of Section 2(b) below,
include other securities of the Company which are held by officers or directors
of the Company or which are held by persons who, by virtue of agreements with
the Company, are entitled to include their securities in any such registration,
but the Company shall have no right to include any of its securities in any such
registration except as provided in Section 2(b) below.
(b) Underwriting. If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
Section 2, and the Company shall include such information in the written notice
referred to in Section 2(a)(i) above. The right of any Holder to registration
pursuant to Section 2 shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of such Holder's Registrable Securities in
the underwriting to the extent provided herein. A Holder may elect to include in
such underwriting all or a part of the Registrable Securities it holds.
If officers or directors of the Company shall request inclusion of
securities of the Company other than Registrable Securities in any registration
pursuant to Section 2, or if holders of securities of the Company who are
entitled by contract with the Company to have securities included in such a
registration (such officers, directors, and other investors being collectively
referred to as the "Other Stockholders") request such inclusion, the Initiating
Holders shall, on behalf of all Holders, offer to include the securities of such
Other Stockholders in the underwriting and may condition such offer on their
acceptance of the terms of the underwriting. The Company shall (together with
all Holders and Other Stockholders proposing to distribute their securities
3
through such underwriting) enter into an underwriting agreement in customary
form with the representative of the underwriter or underwriters (the
"Underwriter") selected for such underwriting by the Company and reasonably
acceptable to the Initiating Holders. Notwithstanding any other provision of
this Section 2, if the Underwriter determines that marketing factors require a
limitation on the number of shares to be underwritten, the Company shall so
advise all holders of securities requesting registration, and the number of
shares of securities that are entitled to be included in the registration and
underwriting shall be allocated in the following priority: first, among all
Holders of Registrable Securities (and pro rata among such holders on the basis
of all Registrable Securities then held by such holders) and second, among all
Other Stockholders in proportion, as nearly as practicable, to the amounts of
securities which they had requested to be included in such registration at the
time of filing the registration statement. If any Holder or Other Stockholder
disapproves of the terms of any such underwriting, such holder may elect to
withdraw therefrom by written notice to the Company and the Underwriter. Any
Registrable Securities excluded or withdrawn from such underwriting shall be
withdrawn from such registration. If the Underwriter has not limited the number
of Registrable Securities or other securities to be underwritten, the Company
may include its securities for its own account in such registration if the
underwriter so agrees and if the number of Registrable Securities and other
securities which would otherwise have been included in such registration and
underwriting will not thereby be limited.
(c) The Holders may request an unlimited number of registrations
hereunder, provided that:
(i) The Company shall not be obligated to cause a
registration to become effective prior to one hundred eighty (180)
days following the effective date of a Company-initiated registration
(other than a registration effected solely to qualify an employee
benefit plan or to effect a business combination pursuant to Rule
145), provided that the Company shall use its best efforts to achieve
such effectiveness promptly following such one hundred eighty (180)
day period;
(ii) The Company shall not be obligated to cause a
registration to become effective prior to expiration of one hundred
eighty (180) days following the effective date of the most recent
registration pursuant to a request by Initiating Holders under this
Agreement or pursuant to a request by a holder of registration rights
under any other agreement of the Company granting demand registration
rights; provided, however, that the Company shall use its best efforts
to achieve such effectiveness promptly following such one hundred
eighty (180) day period; and
(iii) The Company shall not be required to maintain and keep
any such registration on Form S-3 effective for a period exceeding one
hundred eighty (180) days from the effective date thereof. The Company
shall give notice to all Holders and all holders of registration
rights under any other agreement of the Company granting similar
demand registration rights of the receipt of a request for
registration pursuant to this Section 2 and shall provide a reasonable
opportunity for all such other holders to participate in the
registration. Subject to the foregoing, the Company will use its best
efforts to effect promptly the registration of all shares of
Registrable Securities to the extent requested by the Holder or
Holders thereof for purposes of disposition. In the event the
Underwriter determines that market factors require a limitation on the
number of shares to be underwritten, then shares shall be excluded
4
from such registration and underwriting pursuant to the method
described in Section 2(b).
3. Company Registration.
(a) If the Company shall determine to register any of its securities
either for its own account or for the account of a security holder or holders
exercising their respective demand registration rights, other than a
registration relating solely to employee benefit plans or a registration on any
registration form which does not permit secondary sales or does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of Registrable Securities, the Company
will:
(i) promptly give to each Holder written notice thereof; and
(ii) include in such registration, and in any underwriting
involved therein, all of the Registrable Securities specified in a
written request or requests made by any Holder within fifteen (15)
business days after receipt of the written notice from the Company
described in clause (i) above, except as set forth in Section 3(b)
below. Such written request may specify all or a part of a Holder's
Registrable Securities.
(b) Underwriting. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 3(a)(i). In such event, the right of any Holder to
registration pursuant to Section 3 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company and the Other Stockholders distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the Underwriter selected for underwriting by the Company.
Notwithstanding any other provision of this Section 3, if the Underwriter
determines that marketing factors require a limitation on the number of shares
to be underwritten, the Company shall so advise all holders of securities
requesting registration, and the number of shares of securities that are
entitled to be included in the registration and underwriting shall be allocated,
first to the Company, second to any security holder exercising a demand
registration right and third to all other security holders, including Holders in
the registration, on a pro rata basis based on the number of securities
requested to be included in the registration. If any Holder or Other Stockholder
disapproves of the terms of any such underwriting, he may elect to withdraw
therefrom by written notice to the Company and the Underwriter. Any Registrable
Securities or other securities excluded or withdrawn from such underwriting
shall be withdrawn from such registration.
4. Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to this
Agreement shall be borne by the Company, and all Selling Expenses shall be borne
by the holders of the securities so registered pro rata on the basis of the
number of their shares so registered, provided, however, that the Company shall
not be required to pay any Registration Expenses if, as a result of the
withdrawal of a request for registration by Initiating Holders, the registration
statement does not become effective, unless such withdrawal is caused by a
material adverse change in the business or operations of the Company, after such
request for registration, or unless the Initiating Holders agree to have such
5
registration considered a registration pursuant to Section 2(a). If the Company
is not required to pay any Registration Expenses, then the Holders and Other
Stockholders requesting registration shall bear such Registration Expenses pro
rata on the basis of the number of their shares so included in the registration
request, and such registration shall not be considered a registration for
purposes of Section 2(a).
5. Registration Procedures. In the case of each registration effected
by the Company pursuant to this Agreement, the Company will keep each Holder
advised as to the initiation of such registration and as to the completion
thereof. At its expense, the Company will:
(a) Keep such registration effective for a period of one hundred
eighty (180) days or until the Holder or Holders have completed the distribution
described in the registration statement relating thereto, whichever first
occurs;
(b) Furnish such number of prospectuses and other documents incident
thereto as a Holder from time to time may reasonably request; and
(c) In connection with any underwritten offering pursuant to a
registration statement filed pursuant to Section 2 hereof, the Company will
enter into any underwriting agreement reasonably necessary to effect the offer
and sale of Common Stock, provided such underwriting agreement contains
customary underwriting provisions.
6. Indemnification.
(a) The Company will indemnify each Holder, each of its officers,
directors and partners, and each person controlling such Holder, if Registrable
Securities held by such Holder are included in the securities with respect to
which registration, qualification or compliance has been effected pursuant to
this Agreement, and each underwriter, if any, and each person who controls any
underwriter, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, offering
circular or other document (including any related registration statement)
incident to any such registration, qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, or any violation by the
Company of the Securities Act including any rule or regulation thereunder
applicable to the Company relating to action or inaction required of the Company
in connection with any such registration, qualification or compliance, and will
reimburse each such Holder, each of its officers, directors and partners, and
each person controlling such Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating and defending any such claim, loss,
damage, liability or action; provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement (or alleged untrue statement)
or omission (or alleged omission) based upon information furnished to the
Company by such Holder or underwriter and stated to be specifically for use
therein; and provided further, that the Company shall not be liable to any
Holder with respect to any preliminary prospectus to the extent that any such
6
claims, losses, damages and liabilities of such Holder (or actions in respect
thereof) result from the fact that such Holder sold Registrable Securities to a
person to whom there was not sent or given, at or before the written
confirmation of such sale, a copy of the final prospectus (excluding documents
incorporated by reference) or of the final prospectus as then amended or
supplemented (excluding documents incorporated by reference) if the Company has
previously furnished copies thereof to such Holder in compliance with this
Agreement and the claims, losses, damages and liabilities of such Holder (or
actions in respect thereof) result from an untrue statement or omission of a
material fact contained in such preliminary prospectus which was corrected in
the final prospectus (or the final prospectus as then amended or supplemented).
(b) Each Holder and Other Stockholder will, if Registrable Securities
or other securities held by such Holder are included in the securities as to
which such registration, qualification or compliance is being effected,
indemnify the Company, each of its directors, officers and agents and each
underwriter, if any, of the Company's securities covered by such a registration
statement, each person who controls the Company or such underwriter within the
meaning of the Securities Act and the rules and regulations thereunder, each
other such Holder and Other Stockholder and each of their officers, directors
and partners, and each person controlling such Holder or Other Stockholder,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, and any violation of the Securities Act by any
such person, including any rule or regulation thereunder applicable to such
person relating to action or inaction required by such person in connection with
such registration, qualification of compliance and will reimburse the Company
and such Holders, Other Stockholders, directors, officers, agents, partners,
persons, underwriters or control persons for any legal or any other expenses
reasonably incurred in connection with investigating of defending any such
claim, loss, damage, liability or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with information furnished to the Company by such Holder or Other
Stockholder and stated to be specifically for use therein; provided, that in no
event shall any indemnity by any Holder or Other Stockholder under this
Subsection 7(b) exceed net proceeds received by such Holder or Other Stockholder
from the offering out of which such claims, losses, damages or liabilities (or
actions in respect thereof) arise.
(c) Each party entitled to indemnification under this Section 7 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement except to the extent
the Indemnifying Party is prejudiced thereby. No Indemnifying Party in the
defense of any such claim or litigation shall, except with the consent of each
7
Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation. Each Indemnified Party shall furnish
such information regarding itself or the claim in question as all Indemnifying
Party may reasonably request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting therefrom.
7. Covenants of Holders.
(a) If any Registrable Securities are included in a registration
statement pursuant to the terms of this Agreement, each Holder will not (until
further notice) effect sales thereof after receipt of written notice from the
Company of the occurrence of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing, in order to permit the Company to correct or
update the registration statement or prospectus, provided that the obligations
of the Company with respect to maintaining any registration statement current
and effective shall be extended by a period of days equal to the period said
suspension is in effect.
(b) If any Registrable Securities are being registered in any
registration pursuant to this Agreement, each Holder will comply with all
anti-stabilization, manipulation and similar provisions of Section 10 of the
Exchange Act, and any rules promulgated thereunder by the SEC and, at the
request of the Company, will execute and deliver to the Company an appropriate
agreement to such effect.
(c) At the end of the period during which the Company is obligated to
keep a registration statement current and effective as described herein, each
Holder shall discontinue sales pursuant to such registration statement, unless
the Holder has received written notice from the Company of its intention to
continue the effectiveness of such registration statement with respect to any
securities which remain unsold.
(d) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Agreement with respect to the
Registrable Securities that any Holder requesting registration shall furnish to
the Company such information regarding itself, the Registrable Securities held
by it, and the intended method of disposition of such securities as shall be
required to effect the registration of such Registrable Securities or as shall
otherwise reasonably be requested by the Company.
8. Limitations on Subsequent Registration Rights. The Company
represents and warrants that it has not granted registration rights, and agrees
that, from and after the date of this Agreement, it shall not, without the prior
written consent of the Holders of at least a majority of the then outstanding
Registrable Securities, enter into any agreement (or any amendment or waiver of
the provisions of any agreement) with any holder or prospective holder of any
securities of the Company giving such holder or prospective holder any
registration rights, the terms of which in terms of inclusion priority are more
favorable than the registration rights granted to Holders hereunder.
8
9. Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may permit the sale of the
Registrable Securities to the public without registration, and in order to make
available Form S-3 for the registered resale of Registrable Securities in
accordance with this Agreement (which availability of Form S-3 the parties
hereto acknowledge is not expected to begin prior to one year after the
effective date of the Company's initial public offering of securities), the
Company agrees to:
(a) Make and keep "public information" available as that term is
understood and defined in Rule 144 under the Securities Act, at all times from
and after ninety (90) days following the effective date of the first
registration under the Securities Act filed by the Company for an offering of
its securities to the general public;
(b) Use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act at any time after it has become subject to
such reporting requirements;
(c) So long as Sprint PCS owns any Registrable Securities, furnish to
Sprint PCS forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 (at any time from and
after ninety (90) days following the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements).
10. Aggregation of Stock. All shares of Common Stock held or acquired
by entities, partnerships, former partnerships or persons affiliated with a
Holder or family members of such Holder, or trusts, the beneficiaries of which
are affiliated entities or persons and/or family members of such Holder, shall
be aggregated together for the purpose of determining the availability or
discharge of any rights of such Holder under this Agreement. Any such affiliated
group shall be entitled to designate one person as a representative of such
group for the purpose of exercising any right or undertaking any obligation of
such group hereunder, and the Company shall be entitled to rely on the
representative for such purposes.
11. Transfer or Assignment of Registration Rights. The rights to cause
the Company to register Sprint PCS's securities granted to Sprint PCS by the
Company under Sections 2, 3 and 5 hereof may be transferred or assigned by
Sprint PCS to a transferee or assignee of at least 20% of the Registrable
Securities, provided that the transferee or assignee of such rights assumes the
obligations of Sprint PCS under this Agreement.
12. Termination of Rights. The provisions of this Agreement shall
terminate upon the fifth (5th) anniversary of this Agreement.
13. Governing Law. This Agreement and the legal relations between the
parties arising hereunder shall be governed by and interpreted in accordance
with the laws of the State of Delaware. The parties hereto agree to submit to
the jurisdiction of the federal and state courts of the State of Delaware with
respect to the breach or interpretation of this Agreement or the enforcement of
any and all rights, duties, liabilities, obligations, powers, and other
relations between the parties arising under this Agreement.
9
14. Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement among the parties regarding rights to registration.
Except as otherwise expressly provided herein, the provisions hereof shall inure
to the benefit of, and be binding upon, the successors, assigns, heirs,
executors and administrators of the parties hereof.
15. Notices, Etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by first-class mail,
postage prepaid, or otherwise delivered by hand or by messenger or by facsimile
or overnight courier service, addressed (a) if to Sprint PCS, at the address set
forth on the signature page of this Agreement, or at such other address as
Sprint PCS shall have furnished to the other parties hereto in writing, or (b)
if to any other Holder of any securities, at such address as such Holder shall
have furnished the other parties hereto in writing, or, until any such Holder so
furnishes an address to the Company, then to and at the address of the last
Holder of such Shares who has so furnished an address to the Company, or (c) if
to the Company, at the address of its principal offices set forth on the
signature page of this Agreement, or at such other address as the Company shall
have furnished to the other parties hereto in writing.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
17. Amendments. Any provision of this Agreement may be amended, waived
or modified upon the written consent of the Company and Sprint PCS (or its
assignees to whom Sprint PCS has expressly assigned its rights in compliance
with Section 12 hereof) who then hold at least a majority of the Registrable
Securities then held by persons entitled to registration rights hereunder,
provided further, any such amendment, waiver or modification applies by its
terms to Sprint PCS and each such assignee and, provided further, that Sprint
PCS or such assignees hereunder may waive any Holder's rights or the Company's
obligations hereunder without obtaining the consent of any additional Holders.
[Remainder of page intentionally left blank.]
10
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first above written.
HORIZON PCS, INC.
____________________________
____________________________
By:____________________________
Name:__________________________
Title:_________________________
SPRINT SPECTRUM L.P.
4900 Main, 12th Floor
Kansas City, Missouri 64112
By:____________________________
Name:__________________________
Title:_________________________
11
EXHIBIT E
TO ADDENDUM III
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is made and entered
into as of May__, 2000, by SPRINT SPECTRUM L.P., SPRINT SPECTRUM REALTY COMPANY,
L.P., SPRINT SPECTRUM EQUIPMENT COMPANY, L.P., PHILLIECO, L.P., all of which are
Delaware limited partnerships, SPRINTCOM, INC., a Kansas corporation, and
SPRINTCOM EQUIPMENT COMPANY, L.P., a Delaware limited partnership (collectively,
"Seller"), and Horizon Personal Communication, Inc., an Ohio corporation
("Buyer").
Recitals
A. Seller owns or leases those cell sites identified on the attached
Exhibit A (the "Cell Sites").
B. Buyer desires to acquire the Cell Sites and certain other assets of
Seller with respect to the Cell Sites, and assume the Assumed Liabilities (as
defined in Section 4 below), and Seller desires to sell such Cell Sites and
assets and have Buyer assume the Assumed Liabilities, upon the terms and
conditions set forth in this Agreement.
Agreements
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement the parties hereto agree as follows:
1. Transfer of Assets. Subject to the terms and conditions of this
Agreement, Seller agrees to sell, convey and assign to Buyer, and
Buyer agrees to purchase from Seller, all of Seller's right,
title and interest in the Cell Sites, and all contractual rights
and remedies of Seller (if any and to the extent transferable by
Seller) against service providers who have provided services for
which they have been compensated with respect to the Cell Sites
(collectively, the "Assets"), free and clear from all liens
created by Seller other than the Assumed Liabilities. The final
closing will occur on September 30, 2000; provided, however,
that, upon ten (10) business days prior written notice, Buyer
will have the right, from time to time, assuming the required
landlord consents have been obtained, to purchase clusters of
assets prior to September 30, 2000, by paying the full Purchase
Price for such assets to Seller (each closing being referred to
as the "Closing").
2. Purchase Price. The purchase price for the Assets (the "Purchase
Price") will equal the sum of:
(i) $41,475 per Cell Site through lease execution;
(ii) $100,725 per Cell Site through notice to proceed (i.e., Cell
Site is construction-ready);
(iii)per Cell Site constructed (without optimization) as follows:
(a) $412,722 per Cell Site tower less than 100 feet tall,
(b) $471,177 per Cell Site tower between 100-200 feet tall,
(c) $461,366 per Cell Site tower greater than 200 feet
tall,
(d) $346,306 per Cell Site co-locate,
(e) $368,012 per rooftop Cell Site, or
(f) $230,483 per build-to-suit Cell Site;
(iv) per Cell Site constructed (with optimization) as follows:
(a) $421,610 per Cell Site tower less than 100 feet tall,
(b) $480,064 per Cell Site tower between 100-200 feet tall,
(c) $470,224 per Cell Site tower greater than 200 feet
tall,
(d) $355,194 per Cell Site co-locate,
(e) $376,900 per rooftop Cell Site, or
(f) $239,370 per build-to-suit Cell Site;
(v) per cell Site constructed (excluding any base transmission
station) as follows:
(a) $249,500 per Cell Site tower less than 100 feet tall,
(b) $295,361 per Cell Site tower between 100-200 feet tall,
(c) $274,273 per Cell Site tower greater than 200 feet
tall,
(d) $211,813 per Cell Site co-locate,
(e) $233,520 per rooftop Cell Site, or (f) $233,520 per
rooftop Cell Site; and
(vi) per Cell Site located on a tower retained by Seller as
follows:
(a) $137,952 per Cell Site tower less than 100 feet tall,
(b) $148,368 per Cell Site tower between 100-200 feet tall,
or
(c) $157,859 per Cell Site tower greater than 200 feet
tall.
Each Cell Site will be allocated to only one stage of development
completion, as described above. Cell Sites in a state of partial
stage completion will be brought to full completion of such stage
by Seller prior to Closing and will be priced accordingly.
The parties acknowledge that Seller may, in its sole discretion,
retain towers owned by it, and Buyer will locate its equipment on
such tower sites.
The parties agree that, on or before the Closing Date, they shall
determine an allocation of the Purchase Price among the Assets,
which allocation will be the result of arm's-length negotiations
between the parties as to the price of each item or category of
items of the Assets, and neither party will make any claim or
13
treat any item on its tax returns in a manner that is
inconsistent with such allocation.
3. Review Period. For a period of 30 days commencing on the date
this Agreement is executed by both parties (the "Review Period"),
Buyer and its representatives may review such documents and make,
or cause to be made by agents or contractors of Buyer's choosing,
any and all physical, mechanical, environmental, structural or
other inspections of the Assets as Buyer deems appropriate and as
maintained in the ordinary course by Seller. For purposes of such
review and inspection, Seller will make available to Buyer and
Buyer's representatives, all documents and records relating to
the Assets and the Assumed Liabilities, and shall afford Buyer
and Buyer's representatives reasonable access to the Assets and
Assumed Liabilities, all during normal business hours.
(b) If, in Buyer's reasonable discretion, based upon the results of
Buyer's review and inspection of the Assets, Buyer determines
that up to, but no more than, three individual Cell Sites are
unsatisfactory to Buyer, Buyer may by written notice delivered to
Seller within the Review Period, which notice contains a specific
description of the unsatisfactory condition, request that such
unsatisfactory condition as to such Cell Site(s) be rectified by
Seller. Seller will, within 30 days after receiving Buyer's
written notice described above, at Seller's election as to each
unsatisfactory Cell Site individually, either (i) correct the
unsatisfactory condition, (ii) renegotiate with Buyer the
Purchase Price only as attributable to such unsatisfactory Cell
Site, or (iii) remove the unsatisfactory Cell Site from the
Assets, with a corresponding reduction in the Purchase Price in
proportion to the amount thereof attributable to the
unsatisfactory Cell Site. If Buyer does not provide the above
described notice to Seller within the Review Period, Buyer will
be deemed to have waived its rights under this Paragraph 3. In no
event will Buyer be relieved of its obligations under this
Agreement, with regard to more than three Cell Sites.
4. Assumption of Liabilities. Buyer agrees to assume all
liabilities, debts, expenses and obligations arising after the
Closing Date in, to, under or pursuant to the Assets as of the
Closing Date (the "Assumed Liabilities") and to pay and perform
the Assumed Liabilities when due. Nothing in this Agreement
prevents Buyer from contesting in good faith any of the Assumed
Liabilities.
5. Representations and Warranties. The Seller entities, jointly
and severally, represent and warrant to Buyer as follows (which
representations and warranties shall survive the Closing):
(a) Organization. SprintCom, Inc. is a corporation duly
organized, validly existing and in good standing under the
laws of the state of Kansas. Each other Seller entity is a
14
limited partnership duly organized, validly existing and in
good standing under the laws of the state of Delaware. Each
Seller entity is qualified to conduct business in all states
where such respective entity conducts business through the
use of the Assets. (b) Authorization. Each Seller entity has
the full power and authority (i) to own and operate the
Assets to enter into and perform their obligations under
this Agreement and the documents, instruments and
certificates to be executed and delivered by such entities
pursuant to this Agreement. The execution, delivery and
performance of this Agreement by each Seller entity and all
documents, instruments and certificates made or delivered by
each such entity pursuant to this Agreement, and the
transactions contemplated hereby, have been duly authorized
by all requisite action on the part of each respective
Seller entity. (c) Enforceability. The terms and provisions
of this Agreement and all documents, instruments and
certificates made or delivered by the Seller entities
hereunder constitute valid and legally binding obligations
of the respective Seller entities, enforceable against the
respective Seller entities in accordance with the terms
hereof and thereof, except as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting generally the enforcement of
creditors' rights and by general principles of equity.
6. Condition of Assets. It is understood and agreed that, except as
provided in this Agreement, Seller is not making and specifically
disclaims any warranties or representations of any kind or
character, express or implied, with respect to the Assets,
including, but not limited to, warranties or representations as
to matters of title (except that Seller represents and warrants
that Seller has not previously conveyed or assigned any of the
Assets to any other party), zoning, tax consequences, physical or
environmental conditions, availability of access, operating
history or projections, valuation, governmental approvals,
governmental regulations or any other matter or thing relating to
or affecting the Assets including, without limitation: (i) the
value, condition, merchantability, marketability, profitability,
suitability or fitness for a particular use or purpose of the
Assets; (ii) the manner or quality of the construction or
materials incorporated into any of the Assets and (iii) the
manner, quality, state of repair or lack of repair of the Assets.
Buyer agrees that with respect to the Assets, Buyer has not
relied upon and will not rely upon, either directly or
indirectly, any representation or warranty of Seller or any agent
of Seller other than as specifically set forth in this Agreement.
Buyer represents that it is a knowledgeable purchaser and that it
is relying solely on its own expertise and that of Buyer's
consultants, and that Buyer will conduct such inspections and
investigations of the Assets, including, but not limited to, the
physical and environmental conditions thereof, and shall rely
upon same, and, upon closing, shall assume the risk that adverse
matters, including, but not limited to, adverse physical and
environmental conditions, may not have been revealed by Buyer's
inspections and investigations. Buyer acknowledges and agrees
that upon closing, Seller shall sell and convey to Buyer and
Buyer shall accept the Assets "as is, where is" with all faults,
and Buyer further acknowledges and agrees that there are no oral
15
agreements, warranties or representations, collateral to or
affecting the Assets by Seller, any agent of Seller or any third
party. The terms and conditions of this paragraph shall expressly
survive the Closing.
7. Damage or Destruction. If prior to the Closing Date, any of the
Assets are destroyed or substantially damaged by fire, lightning
or any other cause, or all or any part of the Assets is taken by
eminent domain (or is the subject of a pending or contemplated
taking which has not been consummated), Seller will immediately
deliver to Buyer written notice of such event or condition, and
Buyer will have the option of (a) enforcing this Agreement and
retaining any insurance proceeds or proceeds of the taking by
eminent domain, or (b) terminating this Agreement with respect to
the Assets that were destroyed or substantially changed by
written notice within twenty (20) days after receiving written
notice from Seller of such destruction, damage or claim. If this
Agreement is terminated with respect to any Asset destroyed or
substantially damaged, neither party will have any further
obligation under this Agreement with respect to such Asset. The
risk of loss will be borne by Seller until the Closing Date.
8. Closing. If Buyer does not terminate the Agreement pursuant to
Paragraph 7 of this Agreement, on the Closing Date:
(a) Seller and Buyer shall execute and deliver to each other an
Assignment of Leases and Bill of Sale;
(b) Buyer shall pay the Purchase Price to Seller in immediately
available funds; and
(c) Seller shall provide copies of all necessary consents, if
any, for the conveyance or assignment of the Assets. Seller
will assist Buyer in obtaining consents and releases from
landlords.
Buyer is responsible for paying or causing to be paid all
transfer, stamp, recording, sales, use, excise or similar taxes,
fees or duties payable in connection with the sale, assignment or
conveyance of Seller's interest in and to the Assets or the
assumption of the Assumed Liabilities.
Buyer is also responsible for reporting all taxable property to
the appropriate taxing authority for ad valorem tax purposes.
Buyer will pay as and when due all taxes, assessments, liens,
encumbrances, levies and other charges against the real estate,
personal property and intangible property that is sold,
transferred, assigned or otherwise conveyer to Buyer pursuant to
this agreement.
16
9. Further Assurances. Seller will from time to time at the request
of Buyer, do, make, execute, acknowledge and deliver all such
other instruments of conveyance, assignment, and transfer, in
form and substance satisfactory to Seller, as Buyer may
reasonably require for the more effective conveyance and transfer
of any of the Assets.
10. Indemnification. Breaches of this Agreement by either Buyer or
Seller will be a breach for which the non-breaching party is
entitled to indemnification in accordance with the terms and
conditions and utilizing the procedures set forth in the
Management Agreement.
11. Entire Agreement and Binding Effect. This Agreement and the
exhibits and schedules attached to this Agreement (which are
incorporated by this reference) and the Management Agreement,
including all addenda thereto, contain the entire agreement
between the parties hereto with respect to the acquisition of the
Assets and the other transactions contemplated herein, and
supersedes all prior agreements or understandings between the
parties hereto relating to the subject matter hereof. All
exhibits attached hereto are incorporated herein by this
reference.
12. Severability. In the event any one or more of the provisions
contained in this Agreement or any application thereof is
invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions of this
Agreement and any other application thereof will not in any way
be affected or impaired thereby. Paragraph headings herein or in
any exhibit hereto have no legal significance and are used solely
for convenience of reference.
13. No Other Representations and Warranties. Seller makes no
representation or warranty to Buyer with respect to the Assets,
except as expressly set forth in this Agreement.
14. Waivers and Notices. Any term or condition of this Agreement may
be waived at any time by the party entitled to the benefit
thereof by a written instrument. No delay or failure on the part
of any party in exercising any rights hereunder, and no partial
or single exercise thereof, will constitute a waiver of such
rights or of any other rights hereunder. All notices, consents,
requests, instructions, approvals and other communications
provided for herein will be validly given, made or served if
given, made or served in accordance with the Management
Agreement.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which will constitute an original but all
of such counterparts taken together will constitute only one
Agreement.
17
16. Governing Law. The internal laws of the State of Missouri
(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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
SELLER: SPRINT SPECTRUM L.P.
By:_____________________________________
Bernard A. Bianchino,
Senior Vice President and Chief Business
Development Officer - Sprint PCS
SPRINT SPECTRUM REALTY COMPANY, L.P.
By:_____________________________________
Bernard A. Bianchino,
Senior Vice President and Chief Business
Development Officer - Sprint PCS
SPRINT SPECTRUM EQUIPMENT COMPANY, L.P.
By:_____________________________________
Bernard A. Bianchino,
Senior Vice President and Chief Business
Development Officer - Sprint PCS
PHILLIECO, L.P.
By: PhillieCo Sub, L.P.,
its General Partner
By: PhillieCo Partners I, L.P.,
its General Partner
By: Sprint Enterprises, L.P.,
its General Partner
By: US Telecom, Inc.
its General Partner
By:_____________________________________
Don A. Jensen,
Vice President and Secretary
18
SPRINTCOM, INC.
By:_____________________________________
Bernard A. Bianchino,
Senior Vice President and Chief Business
Development Officer - Sprint PCS
SPRINTCOM EQUIPMENT COMPANY, L.P.
By:_____________________________________
Bernard A. Bianchino,
Senior Vice President and Chief Business
Development Officer - Sprint PCS
BUYER: HORIZON PERSONAL COMMUNICATIONS, INC.
By:_____________________________________
Name:______________________________
Title:_____________________________
19
EXHIBIT B
ASSIGNMENT OF LEASES AND BILL OF SALE
THIS ASSIGNMENT OF LEASES AND BILL OF SALE ("Assignment") is made and
entered into as of the ____ day of __________, 2000 by and between
___________________, a ____________________("Assignor"), and
__________________________________________________________, a
____________________ ("Assignee").
1. For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Assignor does hereby sell, assign, transfer and
set over unto Assignee all of Assignor's right, title and interest in and to
those certain leases (collectively the "Leases") described in Exhibit A attached
hereto and made a part hereof.
2. In addition to the Assignment described above, and for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Assignee hereby agrees to assume all obligations and liabilities
of Assignor arising under or pursuant to the Leases from and after the date
hereof, and Assignee further agrees to perform and abide by each and every term,
provision, covenant and condition contained in the Leases to be observed or
performed on or after the date hereof. Assignor will not be responsible to the
lessors under each of the Leases for the discharge or performance of any duties
or obligations to be performed or discharged by the lessee thereunder after the
date hereof.
3. Assignee hereby agrees to indemnify and hold harmless Assignor from
and against any and all loss, cost or expense (including, without limitation,
reasonable attorney's fees) resulting by reason of Assignee's failure to perform
any of the obligations of the lessee under the Leases after the assignment
thereof to Assignee. Assignor hereby agrees to indemnify and hold harmless
Assignee from and against any and all loss, cost or expense (including, without
limitation, reasonable attorney's fees) resulting by reason of the failure of
Assignor to perform any of the obligations of the lessee under the Leases which
arise prior to the assignment thereof to Assignee.
4. Assignor does hereby assign, sell, convey and deliver to Assignee,
its successors and assigns, all of Assignor's right, title and interest in and
to the fixtures, equipment, machinery and other personal property owned by
Assignor (the "Personal Property") placed or installed on or about the real
property described in the leases (other than tower sites retained by Assignor
and subleased to Assignee by Assignor pursuant to the Master Sublease Agreement
dated __________________, 200__ between Assignor and Assignee.
5. ASSIGNEE TAKES THE PROPERTY DESCRIBED IN THIS ASSIGNMENT "AS
IS-WHERE IS" AND "WITH ALL FAULTS." ASSIGNOR HAS NOT MADE AND DOES NOT MAKE ANY
REPRESENTATIONS AS TO THE PHYSICAL CONDITION, OPERATION OR ANY OTHER MATTER
AFFECTING OR RELATED TO THE SUCH PROPERTY, EXCEPT AS HEREIN SPECIFICALLY SET
FORTH OR REFERRED TO, AND ASSIGNEE HEREBY EXPRESSLY ACKNOWLEDGES THAT NO SUCH
REPRESENTATIONS HAVE BEEN MADE. ASSIGNOR EXPRESSLY DISCLAIMS AND ASSIGNEE
ACKNOWLEDGES AND ACCEPTS THAT ASSIGNOR HAS DISCLAIMED TO THE MAXIMUM EXTENT
PERMITTED BY LAW, ANY AND ALL REPRESENTATIONS, WARRANTIES OR GUARANTIES OF ANY
KIND, ORAL OR WRITTEN, EXPRESS OR IMPLIED, CONCERNING THE PROPERTY, INCLUDING,
WITHOUT LIMITATION, (i) THE VALUE, CONDITION, MERCHANTABILITY, MARKETABILITY,
PROFITABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE OF THE
PROPERTY, (ii) THE MANNER OR QUALITY OF THE CONSTRUCTION OF THE MATERIALS, IF
ANY, INCORPORATED INTO ANY OF THE PROPERTY AND (iii) THE MANNER, QUALITY, STATE
OF REPAIR OR LACK OF REPAIR OF THE PROPERTY. ASSIGNOR IS NOT LIABLE OR BOUND IN
ANY MANNER BY ANY VERBAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR INFORMATION
PERTAINING TO THE PROPERTY FURNISHED BY ANY REAL ESTATE BROKER, AGENT, EMPLOYEE,
SERVANT OR OTHER PERSON, UNLESS THE SAME ARE SPECIFICALLY SET FORTH OR REFERRED
TO HEREIN.
6. Assignor hereby covenants and agrees that Assignor will execute and
deliver to Assignee upon demand, from time to time, any further instrument or
instruments which are reasonably necessary to reaffirm, correct and/or perfect
this Assignment and the transfer to Assignee of the items described in this
Assignment.
7. This Assignment inures to the benefit of and is binding upon the
successors and assigns of the parties hereto.
8. This Assignment may be executed in a number of identical
counterparts which, taken together, constitute collectively one agreement.
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment
as of the day and year first written above.
ASSIGNOR:
_____________________________________, a
_____________________________________
By:___________________________________
Name:_________________________________
Title:________________________________
ASSIGNEE:
_____________________________________, a
_____________________________________
By:___________________________________
Name:_________________________________
Title:________________________________
EXHIBIT C
CONSENT AND RELEASE
THIS CONSENT AND RELEASE (this "Consent") is made and delivered as of
the ______ day of ___________, 199_, by _________________________, a
_________________________________ ("Lessor"), to and for the benefit of
__________________________, a ___________________________ ("Lessee").
Recitals
A. Lessor and Lessee entered into that certain lease dated
_________________ (the "Lease"), pursuant to which Lessee leased from Lessor
certain premises located at
_______________________________________________________________ (the
"Premises").
B. Lessee and ____________, a ____________ ("Assignee"), have entered
into a Purchase and Sale agreement whereby Lessee may sell to Assignee certain
assets of Lessee ("Assets"), including, without limitation, the Lease. If the
sale of the Assets is completed, Lessee will assign to Assignee all of Lessee's
right, title and interest, as lessee, in, under and to the Lease, and Assignee
will assume all of the duties, obligations and liabilities of Lessee under the
Lease which arise from and after the assignment of the Lease from Lessee to
Assignee.
C. Lessee has requested that Lessor grant its consent to the
assignment of the Lease and that Lessor release Lessee from all duties,
obligations and liabilities arising under the Lease from and after the
assignment of the Lease from Lessee to Assignee.
D. Lessor has agreed to give such consent and release in accordance
with the terms, and conditions of this Consent.
Terms and Conditions
Based upon the foregoing Recitals, for good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and
intending to be legally bound hereby, Lessor hereby agrees as follows:
1. Lessor's Consent to Assignment. If Lessee completes the sale of the
Assets to Assignee, Lessor hereby consents to the assignment of the Lease by
Lessee to Assignee upon the terms and conditions set forth in the Assignment.
2. Release of Lessee. If Lessee completes the sale of the Assets to
Assignee, Lessor hereby releases Lessee from all duties, obligations and
liabilities under the Lease which arise from and after the effective date of the
Assignment and agrees to recognize Assignee as the lessee under the Lease for
all purposes with respect to the performance of all duties, obligations and
liabilities of the lessee which arise under the Lease from and after the
effective date of the Assignment. By executing this Consent, Lessor hereby
acknowledges, agrees to and reaffirms its continuing rights, powers, duties,
obligations and liabilities under the Lease.
Lessor agrees that it will provide Lessee with written notice of any
default by Assignee under the Lease at the time that any such notice is provided
to Assignee in accordance with the notice provisions of the Lease. Lessor agrees
to reserve to Lessee the right, concurrent with Assignee, to cure any such
within the cure period provided under the default provisions of the Lease. For
purposes of Lessee's cure right, the cure period under the default provisions
shall commence on the date notice is received by Lessee. Such right, if
exercised, shall act as a reassignment of the Lease from Assignee to Lessee and
Lessor hereby consents to a reassignment of the Lease from Assignee to Lessee.
Assignee agrees to reassign the Lease from Assignee to Lessee, effective
immediately upon expiration of the cure period as provided for in the default
provisions of the Lease if the Lessee has cured, and the Assignee has not cured,
in accordance with the default provisions of the Lease. In the event of such
reassignment Lessee shall perform all duties and assume all obligations and
liabilities arising under the Lease.
3. Consent to Assignment and Reassignment Only. The consent of Lessor
which is given hereby extends only to the assignment of the Lease to Assignee
and the reassignment of the Leases from Assignee to Lessee, and shall not apply
to any further assignment of the Lease. Any future assignment of the Lease or
subletting of the Premises, either in whole or in part, is subject to the
consent requirements of the Lease.
4. Status of Lease. The Lease is in full force and effect and there
are no defaults under the Lease as of the date of this Consent.
5. Governing Law. This Consent is to be governed by, and construed and
enforced in accordance with, the laws of the State of Missouri.
IN WITNESS WHEREOF, Lessor has executed this Consent for delivery as
of the date first above written.
LESSOR:
_____________________________________,
a ___________________________________
By:___________________________________
Name:_________________________________
Title:________________________________