ADDENDUM V
TO
SPRINT PCS MANAGEMENT AGREEMENT AND
SPRINT PCS SERVICES AGREEMENT
AMENDING THESE AGREEMENTS FURTHER AND RESTATING CERTAIN
PARAGRAPHS IN ADDENDA I THROUGH IV
DATED AS OF SEPTEMBER 12, 2003
MANAGER: SOUTHWEST PCS, L.P.
SERVICE AREA BTAS:
OKLAHOMA OKLAHOMA CITY BTA NO. 329
(SERVICE AREA IS LIMITED)
TULSA BTA NO. 448
(SERVICE AREA IS LIMITED)
LAWTON-DUNCAN BTA NO. 248
MUSKOGEE BTA NO. 311
ENID BTA NO. 130
ARDMORE BTA NO. 019
STILLWATER BTA NO. 433
ADA BTA NO. 004
MCALESTER BTA NO. 267
PONCA CITY BTA NO. 354
BARTLESVILLE BTA NO. 031
KANSAS SALINA BTA NO. 396
HUTCHINSON BTA NO. 200
(SERVICE AREA IS LIMITED)
MANHATTAN BTA NO. 275
EMPORIA BTA NO. 129
ARKANSAS FORT SMITH BTA NO. 153
FAYETTEVILLE BTA NO. 140
LITTLE ROCK BTA NO. 257
(SERVICE AREA IS LIMITED)
RUSSELLVILLE BTA NO. 387
TEXAS WICHITA FALLS BTA NO. 473
This Addendum V (this "ADDENDUM") contains amendments to the terms of
the Sprint PCS Management Agreement and the Sprint PCS Services Agreement, both
of which were entered into on July 10, 1998 by the same parties to this
Addendum. The Management Agreement and Services Agreement were amended by:
(1) Addendum I dated as of July 10, 1998,
(2) Addendum II dated as of April 30, 1999,
(3) Addendum III dated as of March 7, 2001, and
(4) Addendum IV dated as of March 30, 2001.
The purposes of this Addendum are to (1) amend the Management
Agreement, the Services Agreement, the Trademark License Agreements and the
Schedule of Definitions and restate those paragraphs in the addenda executed
previously that amend the Management Agreement, the Services Agreement, the
Trademark License Agreements and the Schedule of Definitions (see Section A
below), and (2) provide cross-references to those paragraphs in addenda executed
previously that are not restated in this Addendum (see Section B below).
The terms and provisions of this Addendum control over any conflicting
terms and provisions contained in the Management Agreement, the Services
Agreement, the Trademark License Agreements and the Schedule of Definitions. The
Management Agreement, the Services Agreement, the Trademark License Agreements,
the Schedule of Definitions and all prior addenda continue in full force and
effect, except for express modifications made in this Addendum. This Addendum
does not change the effective date of any prior amendment made to the Management
Agreement, the Services Agreement, the Trademark License Agreements and the
Schedule of Definitions through previously executed addenda.
Capitalized terms used and not otherwise defined in this Addendum have
the meaning ascribed to them in the Schedule of Definitions, as amended, and
additional terms defined in prior addenda. Section and Exhibit references are to
sections and Exhibits of the Management Agreement unless otherwise noted.
The parties are executing this Addendum as of the date noted above, but
the terms of this Addendum do not become effective until the first calendar day
of the first calendar month after all of the following conditions are satisfied
or waived by Sprint PCS in writing:
(1) The Settlement Agreement and Mutual Release between Sprint Spectrum
L.P., SprintCom, Inc., Sprint Communications Company L.P., WirelessCo, L.P.,
Alamosa Holdings, Inc., Alamosa (Delaware), Inc., Alamosa Holdings, LLC, Alamosa
Missouri, LLC (f/k/a Roberts Wireless Communications, LLC), Southwest PCS, L.P.,
Washington Oregon Wireless LLC, Alamosa Wisconsin Limited Partnership and Texas
Telecommunications, LP is executed and delivered, and the payment required under
that agreement is paid and received.
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(2) The following addenda, each dated September 12, 2003, are executed
and delivered to Sprint PCS and the appropriate Alamosa Managers:
o Alamosa Missouri, LLC Addendum X,
o Alamosa Wisconsin Limited Partnership Addendum IX,
o Southwest PCS, L.P. Addendum V,
o Texas Telecommunications, LP Addendum X, and
o Washington Oregon Wireless LLC Addendum VI.
(3) Alamosa Holdings, Inc. and Alamosa (Delaware), Inc. consummate the
Exchange Offer, the Proposed Amendments and the amendment of the terms of the
Senior Secured Credit Facility, all as described in the Offer to Exchange of
Alamosa Holdings, Inc. and Alamosa (Delaware), Inc.
A. NEW AMENDMENTS AND RESTATEMENT OF PREVIOUS AMENDMENTS TO SPRINT PCS
AGREEMENTS.
MANAGEMENT AGREEMENT
1. VENDOR PURCHASE AGREEMENTS - SOFTWARE FEES [NEW]. Section 1.3 is
amended to read as follows:
INSERT: "1.3.1 DISCOUNTED VOLUME-BASED PRICING." BEFORE THE FIRST
PARAGRAPH.
INSERT: "1.3.2 SUBSCRIBER AND INFRASTRUCTURE EQUIPMENT." BEFORE
THE SECOND PARAGRAPH.
INSERT: "1.3.3 EXCLUSIVE USE." BEFORE THE THIRD PARAGRAPH.
ADD A NEW SECTION 1.3.4 AS FOLLOWS:
1.3.4 SOFTWARE FEES.
(a) MANAGER ACKNOWLEDGES THAT (i) IT CURRENTLY HAS AN
INDEPENDENT LICENSING ARRANGEMENT FOR SOFTWARE IN EFFECT ON THE
DATE OF THIS ADDENDUM THAT CONTINUES SO LONG AS MANAGER IS AN
AFFILIATE OF SPRINT PCS, (ii) SUCH INDEPENDENT LICENSING
ARRANGEMENT DOES NOT NECESSARILY EXTEND TO FUTURE IMPROVEMENTS
UPON OR EXPANSIONS OF SUCH SOFTWARE, OR INCLUDE ANY NEW SOFTWARE
DEVELOPED BY OR FOR SPRINT PCS IN CONNECTION WITH
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PROGRAM REQUIREMENTS AND (iii) SPRINT PCS ADMINISTERS THE TESTING
AND IMPLEMENTATION OF THE SOFTWARE INTO THE SERVICE AREA NETWORK.
(b) SPRINT PCS WILL USE COMMERCIALLY REASONABLE EFFORTS TO
OBTAIN A LICENSE PROVIDING FOR THE RIGHT OF MANAGER TO USE THE
SOFTWARE (CURRENTLY EXISTING OR DEVELOPED IN THE FUTURE) OR TO USE
THE IMPROVEMENTS UPON OR EXPANSIONS OF THE EXISTING OR NEWLY
DEVELOPED SOFTWARE FROM VENDORS IN CONNECTION WITH A
TELECOMMUNICATIONS EQUIPMENT PURCHASE AGREEMENT THAT IS NOT
COVERED BY MANAGER'S EXISTING LICENSES (COLLECTIVELY FOR PURPOSES
OF THIS SECTION 1.3.4, THE "VENDOR SOFTWARE").
(c) MANAGER WILL ARRANGE INDEPENDENTLY WITH THE VENDOR TO
OBTAIN A LICENSE IF SPRINT PCS CANNOT REASONABLY OBTAIN A LICENSE
FOR MANAGER. ANY LICENSE OBTAINED BY MANAGER FROM A VENDOR MUST
REQUIRE THE VENDOR SOFTWARE TO BE TESTED IN SPRINT PCS TEST BEDS
BY SPRINT PCS AND REQUIRE SPRINT PCS TO PUSH THE SOFTWARE TO THE
SERVICE AREA NETWORK, NOT THE VENDOR OR MANAGER, UNLESS OTHERWISE
CONSENTED TO IN ADVANCE BY SPRINT PCS IN WRITING.
(d) SPRINT PCS WILL PAY ALL SOFTWARE FEES TO THE VENDOR IF
SPRINT PCS OBTAINS A LICENSE FROM THE VENDOR THAT PROVIDES MANAGER
THE RIGHT TO USE THE VENDOR SOFTWARE AND SPRINT PCS REASONABLY
EXPECTS MANAGER TO PAY ITS ALLOCABLE SOFTWARE FEE.
(e) SPRINT PCS WILL NOTIFY MANAGER IN WRITING AT LEAST 60
DAYS BEFORE (i) THE DATE OF AN AUTOMATIC RENEWAL OF OR UNILATERAL
ACT OF SPRINT PCS TO RENEW OR EXTEND AN AGREEMENT THAT PROVIDES
SPRINT PCS THE RIGHT TO USE THE VENDOR SOFTWARE OR (ii) SPRINT PCS
INTENDS TO START NEGOTIATIONS WITH A VENDOR REGARDING PRICING OR
OTHER MATERIAL TERMS RELATING TO MANAGER'S RIGHT TO USE THE VENDOR
SOFTWARE (WHETHER FOR NEW SOFTWARE OR RENEWAL OF AN EXISTING
LICENSE). MANAGER MUST NOTIFY SPRINT PCS IN WRITING WITHIN 30 DAYS
AFTER RECEIVING THE NOTICE DESCRIBED IN THE PRECEDING SENTENCE IF
MANAGER WANTS SPRINT PCS TO ATTEMPT TO OBTAIN A RIGHT FOR MANAGER
TO USE THE VENDOR SOFTWARE. SPRINT PCS WILL RENEW OR NEGOTIATE THE
AGREEMENT AS IF MANAGER WILL NOT BE A USER OF THE VENDOR SOFTWARE
IF MANAGER DOES NOT PROVIDE NOTICE TO SPRINT PCS WITHIN THE 30-DAY
PERIOD. HOWEVER, SPRINT PCS MAY OBTAIN PRICING FROM THE VENDOR FOR
THE VENDOR SOFTWARE THAT INCLUDES MANAGER AS A USER
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AS LONG AS OBTAINING THE PRICING DOES NOT OBLIGATE MANAGER TO BE A
USER.
SPRINT PCS WILL ADVISE MANAGER FROM TIME TO TIME OF THE
STATUS OF THE SOFTWARE NEGOTIATIONS IF MANAGER REQUESTED SPRINT
PCS TO OBTAIN OR CONTINUE THE RIGHT FOR MANAGER TO USE THE VENDOR
SOFTWARE UNDER SPRINT PCS' AGREEMENT WITH THE VENDOR. SPRINT PCS
WILL GIVE MANAGER NOTICE OF THE FINAL PRICING FOR THE RIGHT TO USE
THE VENDOR SOFTWARE A REASONABLE TIME BEFORE THE EXPECTED
EXECUTION OR RENEWAL OF THE AGREEMENT. MANAGER MAY GIVE SPRINT PCS
NOTICE BY THE TIME SET FORTH IN SPRINT PCS' NOTICE TO MANAGER
(WHICH TIME WILL NOT BE LESS THAN 10 BUSINESS DAYS) THAT MANAGER
DOES NOT INTEND TO USE THE VENDOR SOFTWARE THROUGH THE AGREEMENT
BETWEEN SPRINT PCS AND THE VENDOR. IF MANAGER DOES NOT GIVE THIS
FINAL NOTICE TO SPRINT PCS, MANAGER WILL BE DEEMED TO AGREE TO BE
A USER OF THE VENDOR SOFTWARE THROUGH THE AGREEMENT BETWEEN SPRINT
PCS AND THE VENDOR AND WILL PAY THE ALLOCABLE SOFTWARE FEE.
(f) MANAGER WILL PAY SPRINT PCS A FEE FOR SPRINT PCS'
ADMINISTRATION AND IMPLEMENTATION OF THE VENDOR SOFTWARE AND
MANAGER'S RIGHT TO USE THE VENDOR SOFTWARE ("ALLOCABLE SOFTWARE
FEE") WITHIN 30 DAYS AFTER RECEIPT OF AN INVOICE IF MANAGER HAS
NOT TAKEN THE ACTION DESCRIBED IN THE PREVIOUS PARAGRAPHS AND
SPRINT PCS OBTAINS A LICENSE PROVIDING FOR THE RIGHT OF MANAGER TO
USE THE VENDOR SOFTWARE. SPRINT PCS WILL BILL THE MANAGER ONLY
AFTER SPRINT PCS PAYS THE UNDERLYING SOFTWARE FEE TO THE VENDOR.
SPRINT PCS WILL CALCULATE THE ALLOCABLE SOFTWARE FEE AS FOLLOWS:
FOR EACH SOFTWARE VENDOR, MULTIPLY (i) THE SOFTWARE FEES
ATTRIBUTABLE TO THE VENDOR SOFTWARE AND FOR WHICH SPRINT
PCS HAS OBTAINED FOR ITSELF, MANAGER AND OTHER MANAGERS
A LICENSE OR OTHER RIGHT TO USE BY (ii) THE QUOTIENT OF
(A) THE NUMBER OF CUSTOMERS AND SPRINT PCS RESELLER
CUSTOMERS WITH AN NPA-NXX ASSIGNED TO THE SERVICE AREA
THAT ARE ASSIGNED TO A SYSTEM USING THE VENDOR SOFTWARE,
AS REPORTED IN THE MOST RECENT MONTHLY REPORT ISSUED BY
SPRINT PCS BEFORE THE DATE THAT SPRINT PCS PREPARES AN
ALLOCABLE SOFTWARE FEE INVOICE, DIVIDED BY (B) THE
NUMBER OF CUSTOMERS AND SPRINT PCS RESELLER CUSTOMERS
THAT ARE ASSIGNED TO A SYSTEM USING THE VENDOR SOFTWARE,
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AS REPORTED IN THE MOST RECENT MONTHLY REPORT ISSUED BY
SPRINT PCS BEFORE THE DATE THAT SPRINT PCS PREPARES AN
ALLOCABLE SOFTWARE FEE INVOICE.
(g) SPRINT PCS WILL INCLUDE WITH THE INVOICE FOR THE
ALLOCABLE SOFTWARE FEE A LIST OF THE COMPONENT CHARGES, IF
DETERMINABLE. THE SOFTWARE FEES PAID BY SPRINT PCS TO THE VENDOR
WILL REFLECT COMMERCIAL RATES NEGOTIATED AT ARMS' LENGTH. FOR
PURPOSES OF CLARIFICATION, THE PARTIES ACKNOWLEDGE THE VENDOR MAY
INSIST ON A COMPREHENSIVE FEE WITHOUT LISTING EACH COMPONENT, BUT
RATHER ASSERT THE FEE COVERS ALL SOFTWARE NECESSARY TO OPERATE THE
EQUIPMENT.
(h) MANAGER WILL NOT BE CHARGED THE ALLOCABLE SOFTWARE FEE
FOR THAT VENDOR SOFTWARE IF MANAGER (i) NOTIFIES SPRINT PCS IN
WRITING WITHIN THE PERIOD ALLOWED THAT MANAGER DECLINES TO HAVE
SPRINT PCS OBTAIN A RIGHT FOR MANAGER TO USE THE VENDOR SOFTWARE
OR GIVES FINAL NOTICE TO SPRINT PCS THAT IT DOES NOT INTEND TO USE
THE VENDOR SOFTWARE, (ii) OBTAINS ITS OWN LICENSE PROVIDING FOR
MANAGER'S RIGHT TO USE THE VENDOR SOFTWARE, AND (iii) COMPLIES
WITH THE REQUIREMENTS OF SECTION 1.3.4(i).
(i) MANAGER WILL OBTAIN ITS OWN LICENSE PROVIDING FOR
MANAGER'S RIGHT TO USE THE VENDOR SOFTWARE FROM THE VENDOR IF
MANAGER ELECTS NOT TO HAVE SPRINT PCS ATTEMPT TO OBTAIN A RIGHT
FOR MANAGER TO USE THE VENDOR SOFTWARE UNDER SECTION 1.3.4(e).
MANAGER WILL NOTIFY SPRINT PCS IN WRITING AND DELIVER TO SPRINT
PCS WITHIN 10 DAYS AFTER MANAGER'S EXECUTION OF MANAGER'S SEPARATE
LICENSE, A SIGNED DOCUMENT FROM THE VENDOR CONFIRMING THAT (A) THE
VENDOR HAS PROVIDED MANAGER A SEPARATE LICENSE FOR THE VENDOR
SOFTWARE AND THE TERM OF THAT LICENSE, WHICH TERM WITH APPROPRIATE
RENEWAL RIGHTS, MUST BE AT LEAST AS LONG AS THE LICENSE SPRINT PCS
HAS FROM THE VENDOR, (B) THE FEES PAID BY MANAGER TO THE VENDOR
REFLECT COMMERCIAL RATES NEGOTIATED AT ARMS' LENGTH, (C) THE
VENDOR SOFTWARE COVERED BY MANAGER'S LICENSE PROVIDES THE SAME
USAGE AND FUNCTIONALITY FOR ALL OF THE SAME NETWORK ELEMENTS AS
SPRINT PCS' LICENSE, AND (D) THE VENDOR SOFTWARE MAY BE TESTED IN
SPRINT PCS TEST BEDS BY SPRINT PCS AND WILL BE PUSHED TO THE
SERVICE AREA NETWORK BY SPRINT PCS, NOT THE VENDOR OR MANAGER,
UNLESS OTHERWISE CONSENTED TO IN ADVANCE IN WRITING BY SPRINT PCS.
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2. INTERCONNECTION [NEW]. SECTION 1.4 IS AMENDED TO READ AS FOLLOWS:
IF MANAGER DESIRES TO INTERCONNECT A PORTION OF THE SERVICE AREA
NETWORK WITH ANOTHER CARRIER AND SPRINT PCS CAN INTERCONNECT WITH THAT
CARRIER AT A LOWER RATE, THEN TO THE EXTENT PERMITTED BY APPLICABLE
LAWS, TARIFFS AND AGREEMENTS, SPRINT PCS WILL ARRANGE FOR THE
INTERCONNECTION UNDER ITS AGREEMENTS WITH THE CARRIER AND IF IT DOES
SO, SPRINT PCS WILL BILL THE INTERCONNECTION FEES TO MANAGER AT ACTUAL
COST.
3. FORECASTING [NEW]. Section 1.6 is amended to read as follows:
1.6 FORECASTING. Manager and Sprint PCS will work cooperatively to
generate mutually acceptable forecasts of important business metrics
agreed upon by Manager and Sprint PCS. The forecasts are for planning
purposes only and do not constitute either party's obligation to meet
the quantities forecast.
4. FINANCING [ADDM IV,(SECTION)5 AND NEW]. (a) Section 1.7 is amended
to read as follows:
1.7 FINANCING. The construction and operation of the Service Area
Network requires a substantial financial commitment by Manager. The
manner in which Manager will finance the build-out of the Service Area
Network and provide the necessary working capital to operate the
business is described in detail on Exhibit 1.7. Manager will allow
Sprint PCS an opportunity to review before filing any registration
statement or prospectus or any amendment or supplement thereto and
before distributing any offering memorandum or amendment or supplement
thereto, and agrees not to file or distribute any such document if
Sprint PCS reasonably objects in writing on a timely basis to any
portion of the document that refers to Sprint PCS, its Related Parties,
their respective businesses, this agreement or the Services Agreement.
(b) Exhibit 1.7 attached to this Addendum V supersedes and replaces
Exhibit 1.7 attached to Addendum IV to the Management Agreement.
5. INFORMATION [NEW]. A new section 1.9 is added to the Management
Agreement.
1.9 ACCESS TO INFORMATION.
1.9.1 MANAGER EQUIPMENT. Manager and Sprint PCS will have
unfettered access to, and may monitor, record, or otherwise receive,
information processed through equipment, including switches, in the
Service Area Network, if the access, monitoring, recording or receipt
of the information is accomplished in a manner that:
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(i) Does not unreasonably impede Manager or Sprint PCS from
accessing, monitoring, recording or receiving the information;
(ii) Does not unreasonably encumber Manager's or Sprint PCS'
operations;
(iii) Does not unreasonably threaten the security of the
Sprint PCS Network;
(iv) Does not violate any law regarding the information;
(v) Complies with technical requirements applicable to the
Service Area Network;
(vi) Does not adversely affect any warranty benefiting
Manager or Sprint PCS (e.g., software warranties); and
(vii) With respect to the information processed through
Manager's equipment, including its switches, does not result in a
material breach of any agreement regarding the information (e.g.,
national security agreements).
Sprint PCS and Manager will immediately notify the other
party and cooperate to establish new procedures for allowing both
Manager and Sprint PCS to access, monitor, record and receive the
information in a manner that meets the criteria in (i) through (vii) if
either Manager or Sprint PCS reasonably determines that either Manager
or Sprint PCS is accessing, monitoring, recording or receiving the
information described in this section 1.9.1 in a manner that does not
meet the criteria in (i) through (vii). Manager owns the information
regarding the performance of its equipment. Each of Manager and Sprint
PCS may use the information obtained under this section 1.9.1 for any
reasonable business purpose, during and after termination of this
agreement, the Services Agreement and the Trademark License Agreements
provided the use would be in accordance with those agreements if those
agreements were still in effect.
1.9.2 SPRINT PCS INFORMATION. Manager will be entitled to
receive information Sprint PCS accesses, monitors, records or receives
concerning the Service Area Network or the Sprint PCS customers with
NPA-NXXs assigned to Manager's Service Area, subject to Manager's
compliance with CPNI requirements and any other legal requirements
applicable to the confidentiality and safeguarding of such information.
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Sprint PCS will use commercially reasonable efforts to
provide the information in the format requested by Manager at no
additional charge to Manager within 5 Business Days after receipt of a
written request from Manager if the information requested by Manager is
accessed, monitored, recorded, received, or reported by Sprint PCS
specific to Manager for Sprint PCS' own use in the same manner and
format as that requested by Manager.
Sprint PCS will use commercially reasonable efforts to
provide the information in the format requested by Manager within 15
Business Days after receipt of a written request from Manager if the
information requested by Manager is accessed, monitored, recorded,
received, or reported by Sprint PCS for its own use, but not in the
same manner or format requested by Manager and if Manager agrees to pay
or reimburse Sprint PCS for the costs Sprint PCS reasonably incurs.
Sprint PCS will use commercially reasonable efforts to provide the
requested information as raw data (subject to the conditions in this
section 1.9.2 and section 1.9.3) within 15 Business Days after receipt
of a written request from Manager if the information requested by
Manager is accessed, monitored, recorded, received, or reported by
Sprint PCS for its own use, but not in the same manner or format
requested by Manager, and if Sprint PCS cannot provide the information
as described in the preceding sentence.
Sprint PCS has no obligation to access, monitor, record,
receive, or report the information requested by Manager if the
information is not accessed, monitored, recorded, received, or reported
by Sprint PCS for its own use.
Sprint PCS owns the information regarding the Customers. Each
of Manager and Sprint PCS may use the information obtained under this
section 1.9.2 during and after termination of this agreement, the
Services Agreement and the Trademark License Agreements provided the
use would be in accordance with those agreements if those agreements
were still in effect.
1.9.3 LIMITATIONS AND Obligations. Sprint PCS does not have
to provide any information requested by Manager that: (i) Manager can
obtain itself in accordance with section 1.9.1 (unless Sprint PCS
already has such information in its possession and has not previously
delivered it to Manager); (ii) is no longer maintained by Sprint PCS;
or (iii) Manager has already received from Sprint PCS or its Related
Parties. Sprint PCS will provide Manager a copy of the then-current
Sprint PCS document retention policy from time to time.
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1.9.4 CONTRACTS. Sprint PCS will disclose to Manager the
relevant terms and conditions of any agreement between Sprint PCS and
any third party (i) with which Manager is required to comply, directly
or indirectly, pursuant to the Management Agreement, the Services
Agreement or any Program Requirement or (ii) from which Manager is
entitled to any benefit; in each case in sufficient detail to enable
Manager to determine the obligations or benefits with which Manager is
required to comply or benefit. Sprint PCS will provide a copy of such
agreement to Manager to the extent permissible by the terms of the
agreement. Sprint PCS will allow Manager or its representatives to
review a copy of the agreement to the extent permissible by the
agreement if the agreement prohibits Sprint PCS from providing Manager
a copy. Sprint PCS will satisfy the requirements of this section 1.9.4
if it chooses to provide a copy of the agreement in electronic form on
a server designated by Sprint PCS.
6. MOST FAVORED NATION [NEW]. A new section 1.10 is added to the
Management Agreement:
1.10 SUBSEQUENT AMENDMENTS TO OTHER MANAGERS' MANAGEMENT
AGREEMENTS AND SERVICES AGREEMENTS. Manager has the right to amend the
terms in its Management Agreement and Services Agreement as described
in this section 1.10 if during the period beginning on the date of this
Addendum and ending December 31, 2006, any of the terms of a Similarly
Situated Manager's Management Agreement or Services Agreement are
amended to be more favorable to such Similarly Situated Manager than
the terms of Manager's Management Agreement or Services Agreement are
to Manager, subject to the following:
(a) All Alamosa Managers must elect to accept all, but
not less than all, of the terms of the Similarly Situated
Manager's Management Agreement and Services Agreement
(including accepting existing terms that relate to the
changes or terms that were previously changed and not
previously accepted by Manager but which remain a part of the
latest version of the Similarly Situated Manager's agreement)
(collectively, "OVERALL CHANGES"); and
(b) No changes will be made that are made for a
Similarly Situated Manager if such changes are either (i)
made solely because the Similarly Situated Manager owns the
spectrum on which its network operates, unless the Similarly
Situated Manager acquired such spectrum from Sprint PCS or
its Related Parties after September 1, 2003, (ii) compelled
by a law, rule or regulation that applies to the Similarly
Situated Manager, but not to Manager, or (iii) build-out plan
changes.
Sprint PCS will prepare and deliver to Manager either a
redacted addendum containing the cumulative changes made to the
Similarly Situated Manager's agreements in all of its addenda or
redacted copies of
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the Similarly Situated Manager's amended and restated Management
Agreement, Services Agreement and Trademark License Agreements within
10 business days after the effective date of the amendment or other
instrument containing such changes. Manager then has 30 days to notify
Sprint PCS that Manager wants the Overall Changes.
No changes will be made in the agreements between Manager and
Sprint PCS if Manager does not notify Sprint PCS in the time specified
and Manager will be deemed to have waived its rights under this section
1.10 with respect to the changes contained in the addendum or the
agreements presented.
Sprint PCS will prepare, execute and deliver to all Alamosa
Managers addenda reflecting the Overall Changes in the redacted
addendum or agreements if Manager notifies Sprint PCS within the time
specified. The new addenda will have the same effective date as the
addendum or the restated Management Agreement, Services Agreement and
Trademark License Agreements between Sprint PCS and the Similarly
Situated Manager that gave rise to the new addendum.
No changes will be made in the agreements between the Alamosa
Managers and Sprint PCS if any Alamosa Manager does not execute and
return the signed addendum within 30 days after receipt of the signed
addendum and Manager will be deemed to have waived its rights under
this section 1.10 with respect to the changes contained in the addendum
presented; except that if Manager and Sprint PCS disagree as to whether
the terms of the signed addendum accurately reflect the Overall
Changes, then the parties will submit the issue to binding arbitration
in accordance with section 14.2, excluding the escalation process set
forth in section 14.2. If the arbiter rules in favor of Manager, then
Sprint PCS will make changes to the signed addendum as are necessary to
reflect the arbiter's ruling and submit the revised signed addendum to
Manager within 10 days after receipt of the arbiter's ruling. If the
arbiter rules in favor of Sprint PCS, then Manager will execute the
signed addendum as proffered to Manager within 10 days after Manager's
receipt of the arbiter's ruling.
The parties acknowledge that Sprint PCS can disclose to
Manager who the Similarly Situated Manager is that gave rise to the
proposed addendum only if the Similarly Situated Manager agrees to the
disclosure.
7. EXPANSION OF SERVICE AREA [ADDM IV, (SECTION)3]. The parties agree
to expand the definition of Service Area into the Little Rock, Arkansas (BTA
257) and Russellville, Arkansas (BTA 387) as described in the revised Exhibit
2.1 Build-out Plan attached to Addendum IV.
8. REVISED BUILD-OUT PLAN [ADDM IV,(SECTION)22]. Section 2.1 is
supplemented with the following language:
(A) OPERATIONAL AND NETWORK READINESS.
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Manager will achieve "Operational and Network Readiness," as
defined below, for the remaining build out of the Service Areas in the
Little Rock and Russellville BTAs according to the build-out schedule
below. Specifically, coverage along Interstate 40 extending East on
Interstate 40 from Wiederkehr Village through Clarksville, Lamar,
Knoxville, London, Russellville, Pottsville, and Atkins in the
Russellville, Arkansas BTA 387 to a meet point with Sprint PCS within
the Little Rock, Arkansas BTA 257. The build-out in Little Rock BTA 257
is limited to coverage along Interstate 40 in Conway County through
Morrilton up to Sprint PCS meet point at Plumerville. This schedule,
together with the revised Exhibit 2.1 attached to Addendum IV, replaces
Exhibit 2.1 of the "Management Agreement."
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-----------------------------------------
Cascade Number COMPLETION
DATE
-----------------------------------------
LR03SW251 12/01/01
-----------------------------------------
LR03SW252 12/01/01
-----------------------------------------
LR03SW253 12/01/01
-----------------------------------------
LR03SW254 12/01/01
-----------------------------------------
LR03SW255 12/01/01
-----------------------------------------
LR03SW256 12/01/01
-----------------------------------------
LR03SW257 12/01/01
-----------------------------------------
LR03SW261 12/01/01
-----------------------------------------
LR03SW262 12/01/01
-----------------------------------------
LR03SW263 12/01/01
-----------------------------------------
LR03SW258 12/01/01
-----------------------------------------
"OPERATIONAL AND NETWORK READINESS" and "OPERATIONAL AND NETWORK
READY" mean that the Manager has (i) met all Program Requirements
(which includes, but is not limited to, completion of test plans,
coverage definition, assessment of site readiness, network optimization
and operational and systems readiness) and (ii) received Sprint PCS's
approval to launch each of the cell sites with Cascade Numbers
LR03SW251, LR03SW252, LR03SW253, LR03SW254, LR03SW255, LR03SW256,
LR03SW257, LR03SW261, LR03SW262, LR03SW263, LR03SW258 (individually a
"CELL SITE" and collectively the "CELL SITES").
(B) PENALTY.
The Manager will pay a penalty for each Cell Site that is not
Operational and Network Ready on or before December 1, 2001 (the
"COMPLETION DATE"). Cell sites must be Operational and Network Ready in
a sequential manner to ensure contiguous coverage with existing markets
and to prevent the creation of service gaps in the Service Area.
The penalty amount equals the amount set forth on the following
Penalty Table opposite the appropriate range of number of days from and
including the Completion Date to and including the date of Operational
and Network Readiness for any Cell Site that was not Operational and
Network Ready on or before its respective Completion Date (the "PENALTY
AMOUNT").
PENALTY TABLE
-------------------------------------------------------
Penalty Period Penalty Amount Per Cell Site
-------------------------------------------------------
6-60 days past the $15,676.23
Completion Date
-------------------------------------------------------
61-90 days past the Additional $10,450.82
-------------------------------------------------------
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-------------------------------------------------------
Completion Date
-------------------------------------------------------
91-120 days past the Additional $5,225.40
Completion Date
-------------------------------------------------------
121-150 days past the Additional $15,676.23
Completion Date
-------------------------------------------------------
151-180 days past the Additional $15,676.23
Completion Date
-------------------------------------------------------
The parties may agree to adjust the Penalty Amount if (i) the
Manager has completed less than all of the Cell Sites described in
section 22(a) of Addendum IV; (ii) Sprint PCS determines that the
Manager has met the coverage requirements, as detailed in the revised
Exhibit 2.1 Build-out Plan attached to Addendum IV; and (iii) Sprint
PCS determines that the Manager has met the current Sprint PCS RF
Standards for coverage, as defined in Exhibit 7.2 Sprint PCS Technical
Program Requirements (the "RF STANDARDS"). The Parties agree that to
the extent additional sites are necessary to meet the Exhibit 2.1
Build-out Plan and those cites are not Operational and Network Ready by
the Completion Date, the penalties set forth in the Penalty Table above
will be assessed to the Manager based on the incremental number of
sites needed to meet the Build-out Plan.
(C) PAYMENT OF PENALTY AMOUNTS.
(i) Manager will pay the Penalty Amount for each Cell Site
on or before the first day of each penalty period, as
set forth in the Penalty Table above in section 1(b)
of Addendum IV, for any Cell Site that is not
Operational and Network Ready on or before its
respective Completion Date (the "ASSESSMENT DATE").
(ii) Manager will also owe Additional Interest on any
Penalty Amount not paid on or before the Assessment
Date, which Additional Interest is payable on the next
Assessment Date for that Cell Site in the same manner
as the Penalty Amounts (e.g., timing). If there is no
additional Assessment Date with respect to a Cell
Site, the Additional Interest will be payable at the
time the Penalty Amount for that Cell Site is paid.
(iii) Manager will pay the Penalty Amounts in cash. Payments
of cash will be made via wire transfer instructions
provided to Manager by Sprint PCS. Sprint PCS's setoff
right set forth in section 10.6 of the Management
Agreement applies to these Penalty Amounts and
Additional Interest.
(D) EVENT OF TERMINATION; WAIVER OF CURE RIGHTS.
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(i) If Manager does not achieve Operational and Network
Readiness for a Cell Site by midnight on the 90-Day
Threshold, Manager will be in breach of a material
term of the Management Agreement. Accordingly, Sprint
PCS may declare an Event of Termination under the
Management Agreement, and Manager waives any right to
a cure period set forth in section 11.3.3.
(ii) If Sprint PCS does not declare in writing an Event of
Termination within ten Business Days after the 90-Day
Threshold, Sprint PCS waives its right to declare an
Event of Termination based on Manager's failure to
achieve Operational and Network Readiness for that
Cell Site until the 180-Day Threshold. If Manager does
not achieve Operational and Network Readiness for a
Cell Site by the 180-Day Threshold, Manager will be in
breach of a material term of the Management Agreement.
Accordingly, Sprint PCS may declare an Event of
Termination under the Management Agreement, and
Manager waives any right to a cure period set forth in
section 11.3.3.
(E) DEFINITIONS.
"90-DAY THRESHOLD" means the date 90 calendar days after the
respective Cell Site Completion Date.
"180-DAY THRESHOLD" means the date 180 calendar days after
the respective Cell Site Completion Date.
"ADDITIONAL INTEREST" means the sum of the products of (A)
each Penalty Amount, multiplied by (B) Prime Rate (adjusted as and
when changes in the Prime Rate occur) plus five percent (5%),
multiplied by (C) the number of calendar days from and including
the respective Assessment Date to and including the date paid,
divided by 365.
"CHANGE OF CONTROL TRANSACTION" means a transaction that
results in a Change of Control, as defined in the Management
Agreement.
9. EXCLUSIVITY OF SERVICE AREA [ADDM IV,(SECTION)7]. In section 2.3 and
the Schedule of Definitions, the phrase "wireless mobility communications
network" is replaced by the phrase "Wireless Mobility Communications Network".
10. COVERAGE ENHANCEMENT [ADDM IV,(SECTION)8; REVISED BY THIS
ADDENDUM]. Section 2.5 is replaced by the following language:
15
2.5 MANAGER'S RIGHT OF FIRST REFUSAL FOR NEW COVERAGE BUILD-OUT.
Sprint PCS grants to Manager the right of first refusal to build-out
New Coverage. Sprint PCS will give to Manager a written notice of a New
Coverage within the Service Area that Sprint PCS decides should be
built-out. Manager must communicate to Sprint PCS within 90 days after
receipt of the notice whether it will build-out the New Coverage.
If Manager decides to build-out the New Coverage then Manager and
Sprint PCS will diligently negotiate and execute an amendment to the
Build-out Plan and proceed as set forth in sections 2.1 and 2.2. The
amendment Build-out Plan will contain critical milestones that provide
Manager a commercially reasonable period in which to implement coverage
in the New Coverage. In determining what constitutes a "commercially
reasonable period" as used in this paragraph, the parties will consider
several factors, including local zoning processes and other legal
requirements, weather conditions, equipment delivery schedules, the
need to arrange additional financing, and other construction already in
progress by Manager. Manager will construct and operate the network in
the New Coverage in accordance with the terms of this agreement.
If Manager (i) does not communicate to Sprint PCS within such
90-day period that it will build out the New Coverage, (ii) fails to
agree with Sprint PCS upon the amended Build-Out Plan, or (iii) fails
to build-out the New Coverage in accordance with the amended Build-Out
Plan, then Sprint PCS shall be entitled to (A) build-out the New
Coverage itself or allow a Sprint PCS Related Party to do so, or (B)
offer third parties (including Other Managers) the right to build-out
the New Coverage on terms and conditions that are no more favorable
than those that were offered to and rejected by Manager. If (x) neither
Sprint PCS, a Sprint PCS Related Party, nor any third party (with
respect to such third party, on terms and conditions that are no more
favorable than those that were offered to and rejected by Manager)
commits to build-out such New Coverage within 150 days of the original
communication to Manager with respect thereto, or (y) more favorable
terms and conditions than those that were offered to and rejected by
Manager are offered to any third party to build-out the New Coverage,
then any build-out of such New Coverage shall again be subject to
Manager's right of first refusal (and, if applicable, on such more
favorable terms and conditions).
Sprint PCS has the right, in a New Coverage that it constructs or
that is constructed by a third party, to manage the network, allow a
Sprint PCS Related Party to manage the network, or hire a manager to
operate the network in the New Coverage. Any New Coverage that Sprint
PCS or a third party builds out is deemed removed from the Service Area
and the 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
16
respect to a New Coverage, Manager's right of first refusal does not
terminate with respect to the remainder of the Service Area.
11. IXC RATES [NEW]. Section 9 of Addendum IV is deleted. Additionally,
section 3.4 of the Management Agreement is amended to read as follows:
3.4 IXC SERVICES.
3.4.1. CUSTOMER LONG DISTANCE. Sprint PCS and Manager will
from time to time mutually define local calling areas in the Service
Areas of Manager to be used by Sprint PCS and Manager in determining
when a customer will be billed for a "long distance call" under the
applicable rate plan of the Customer. The parties acknowledge that
these local calling areas (i) may change in geographic scope in
response to competitive pressures or perceived market opportunities,
and (ii) may not be able to be changed because of regulatory, industry,
or system limitations. The local calling areas will not be used by the
parties to determine "long distance telephony services" under section
3.4.2. If the parties cannot agree on the extent of the local calling
area they will resolve the matter through the dispute resolution
process in section 14.
3.4.2. LONG DISTANCE SERVICES
(a) Required purchase. Manager must obtain (i) long-distance
telephony services through Sprint PCS or its Related Parties to provide
long-distance service to users of the Sprint PCS Network and (ii)
telephony services through Sprint PCS or its Related Parties to connect
the Service Area Network with the national platforms used by Sprint PCS
to provide services to Manager under this agreement or the Services
Agreement. The term "long distance telephony service" means any
inter-LATA call for purposes of this section 3.4.2 as it relates to
long-distance telephony services provided to users of the Sprint PCS
Network.
(b) Pricing and procedure. Sprint PCS will purchase
long-distance telephony services used in the Sprint PCS Network from
Sprint Communications Company L.P. or its Related Parties ("SCCLP") for
Sprint PCS, Manager and Other Managers. Sprint PCS will purchase the
long-distance telephony services at a price at least as favorable to
Sprint PCS, Manager, and the Other Managers (considering Sprint PCS,
Manager and the Other Managers as a single purchaser) as the best
prices offered by SCCLP to any wholesale customer of SCCLP in similar
situations when taking into account all relevant factors (e.g., volume,
peak/off-peak usage, length of commitment). Sprint PCS will pay the
invoice from SCCLP, except for items directly billed by SCCLP under
section 3.4.2(c). Sprint PCS will bill to Manager as an activity
settled separately under the
17
Services Agreement the portion of the fees billed to Sprint PCS that
relate to Manager's operations and the activity of all Customers and
Sprint PCS Reseller Customers in the Service Area, except for items
directly billed by SCCLP under section 3.4.2(c). Sprint PCS and SCCLP
will clarify pricing if the PCS Group is no longer a separately tracked
group covered by a tracking stock of Sprint Corporation.
(c) Call routing. Manager, or the Alamosa Managers acting as a
single purchaser, may purchase private line capacity (or other forms of
capacity) from SCCLP for inter-LATA calls to the extent that such
capacity can be obtained on terms more favorable to Manager (or the
Alamosa Managers as a single purchaser). SCCLP will sell that capacity
to Manager at the best price offered by SCCLP to third parties in
similar situations when taking into account all relevant factors. SCCLP
will directly bill Manager for any purchase of capacity under this
section 3.4.2(c). The terms of section 1.3 do not apply to purchases of
capacity in this section 3.4.2(c).
(d) Pre-existing agreement. If before the date Addendum V to
this agreement is signed, Manager is bound by an agreement for long
distance services or an agreement for private line service and the
agreement was not made in anticipation of this agreement or Addendum V,
then the requirements of this section 3.4.2 do not apply during the
term of the other agreement. If the other agreement terminates for any
reason, then the requirements of this section 3.4.2 do apply.
(e) Resale. Manager may not resell the long-distance telephony
services acquired under this section 3.4.2. For purposes of
clarification, resale under this section 3.4.2(e) includes Manager
selling minutes to carriers for ultimate resale to end users under a
brand other than "Sprint" or selling minutes to end users under a brand
other than "Sprint". Manager may engage in the following activities
(i.e., these activities are not treated as resale of long-distance
telephony services):
(1) the transport of long-distance calls for Customers under
section 3.4.2(a),
(2) the transport of long-distance calls for resellers under
section 3.5, and
(3) the transport of long-distance calls for roaming under
section 4.3.
(f) Sprint Rural Alliance Program. The rights and obligations of
Manager, if any, for the provision of long-distance telephony services
for
18
Sprint Rural Alliance program participants will be set forth in a
separate agreement.
12. VOLUNTARY RESALE OF PRODUCTS AND SERVICES [ADDM IV, (SECTION)10].
The second sentence of the second paragraph of section 3.5.2 is amended to read
as follows: "If Manager wants handsets of subscribers of resellers with NPA-NXXs
of Manager to be activated, Manager must agree to comply with the terms of the
program, including its pricing provisions."
13. INTRA-LATA CALLS AND BACKHAUL SERVICES [NEW]. Section 3.7 is
amended to read as follows:
3.7 INTRA-LATA CALLS AND BACKHAUL SERVICES. Manager, or the
Alamosa Managers acting as a single purchaser, may purchase capacity
(including private line capacity) from SCCLP for intra-LATA calls and
backhaul services. SCCLP will sell that capacity to Manager at the best
price offered by SCCLP to third parties in similar situations when
taking into account all relevant factors.
Manager will offer to Sprint PCS or one of its Related Parties the
right to make to Manager the last offer to provide capacity for
intra-LATA calls and backhaul services for the Service Area Network if
(i) Manager decides to use third parties for intra-LATA calls and
backhaul services rather than self-provisioning the capacity or
purchasing the capacity from Related Parties of Manager and (ii) Sprint
PCS or one of its Related Parties has provided evidence to Manager that
SCCLP or one of its Related Parties has facilities to provide the
capacity requested. Manager will deliver to Sprint PCS the terms under
which the third party will provide the capacity. Sprint PCS or one of
its Related Parties will have a reasonable time to respond to Manager's
request for last offer to provide pricing for capacity for intra-LATA
calls and backhaul, which will be no greater than 5 Business Days after
receipt of the request for the pricing and the third party's terms from
Manager. Manager will acquire capacity for intra-LATA calls and
backhaul services from Sprint PCS or one of its Related Parties if
Sprint PCS or one of its Related Parties offers Manager pricing for
intra-LATA calls and backhaul services for the Service Area Network
that matches or is lower than the pricing offered by the third party.
For purposes of this section 3.7, the term "backhaul" means the
provision of services from a cell site of Manager to the corresponding
switch associated with the cell site.
If Manager has an agreement for these services in effect as of the
date Addendum V is signed and the agreement was not made in
anticipation of this agreement or Addendum V, then the requirements of
this section 3.7 do not apply during the term of the other agreement.
If the
19
other agreement terminates for any reason, then the requirements of
this section 3.7 do apply.
14. SPRINT PCS ROAMING AND INTER SERVICE AREA PROGRAM REQUIREMENTS
[NEW]. The second paragraph of section 4.3 is amended to read as follows:
Section 10.4.1 sets forth the settlement process that distributes
between the members making up the Sprint PCS Network (i.e., Sprint PCS,
Manager and all Other Managers) a fee for use of the Sprint PCS Network
and the Service Area Network (the "INTER SERVICE AREA FEE").
15. CHANGES TO PROGRAM REQUIREMENTS [NEW].
(a) The first sentence of section 9.2(e) is amended to read as follows:
Manager must implement any changes in the Program Requirements
within a commercially reasonable period of time unless otherwise
consented to by Sprint PCS, subject to the terms of section 9.3.
(b) Section 9.3 is amended to read as follows:
9.3 MANAGER'S RIGHTS REGARDING CHANGES TO PROGRAM REQUIREMENTS.
9.3.1 PARAMETERS FOR REQUIRED PROGRAM REQUIREMENT IMPLEMENTATION.
Manager has the right to decline to implement any new Program
Requirement or any change to any existing Program Requirement (a
"PROGRAM REQUIREMENT CHANGE") if Manager determines that any such
Program Requirement Change, other than a change involving Sprint PCS
National or Regional Distribution Program Requirements, will have an
adverse impact on Manager that meets or exceeds the parameters set
forth below in subparagraphs (a) through (d). For purposes of this
section 9.3 a Program Requirement Change will include any change in any
"guidelines," "policies," "standards" or "specifications" proposed by
Sprint PCS under this agreement, the Services Agreement or either of
the Trademark License Agreements, and the exercise by Sprint PCS of any
unilateral right under those agreements, except changes to the
Trademark Usage Guidelines, the Marketing Communications Guidelines, or
the definition of Sprint PCS Products and Services (other than the
pricing of those products and services, i.e. pricing is a Program
Requirement Change). If Manager determines to decline to
20
implement any Program Requirement Change, other than a change involving
a national distribution program, then Manager must, within 10 days
after Sprint PCS provides Manager with notice of the Program
Requirement Change, give Sprint PCS (i) a written assessment of the
impact of the Program Requirement Change on Manager using the
parameters set forth in subparagraphs (a) through (d) below, and (ii)
written notice that Manager declines to implement the Program
Requirement Change. Manager may, without being deemed in default of
this agreement, decline to implement any Program Requirement Change
that will:
(a) individually cause the combined peak negative cash flow of the
Alamosa Managers to be an amount greater than 3% of Alamosa Holdings,
Inc.'s Enterprise Value; or
(b) when combined with the original assessments made in accordance
with section 9.3.1(a) of all other Program Requirement changes that
Sprint PCS announced and the Alamosa Managers agreed to implement, both
within the preceding 12 calendar months, cause the combined cumulative
peak negative cash flow of the Alamosa Managers to be an amount greater
than 5% of Alamosa Holdings, Inc.'s Enterprise Value; or
(c) individually cause a decrease in the forecasted 5-year
discounted cash flow of the Alamosa Managers (at the Alamosa Managers'
appropriate discount rate) of more than 3% on a combined net present
value basis; or
(d) when combined with the original assessments made in accordance
with section 9.3.1(c) of all other Program Requirement changes that
Sprint PCS announced and Manager agreed to implement, both within the
preceding 12 calendar months, cause a decrease in the forecasted 5-year
discounted cash flow of the Alamosa Managers (at the Alamosa Managers'
appropriate discount rate) of more than 5% on a combined net present
value basis.
Manager may discuss with Sprint PCS in the manner described in
section 9.7(c) any change that does not meet or exceed the parameters
set forth in this section 9.3.1, except any change involving Sprint PCS
National or Regional Distribution Program Requirements.
9.3.2. DISAGREEMENT WITH ASSUMPTIONS OR METHODOLOGY. Sprint PCS
must notify Manager of any disagreement with Manager's assumptions or
methodology within 10 days after its receipt of Manager's assessment
under section 9.3.1. Manager will not be required to implement the
Program Requirement Change if Sprint PCS fails to notify Manager of any
disagreement within such 10-day period unless Sprint PCS elects to
require such compliance under section 9.3.3 below. Either party may
escalate the review of the assumptions and methodology underlying the
assessment to the parties' respective Chief Financial Officers if
Sprint PCS disagrees with Manager's assessment and the parties are
unable to agree on the assumptions and methodology within 20 days after
Sprint PCS notifies Manager of the disagreement.
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The parties will mutually select an independent investment banker
in the wireless telecommunications industry ("INVESTMENT BANKER") to
determine whether the implementation of the Program Requirement Change
will exceed one of the parameters if Sprint PCS and Manager are unable
to agree on the assumptions and methodology to perform the calculations
within 30 days after Sprint PCS notifies Manager of the disagreement.
The American Arbitration Association will select the Investment Banker
if the parties do not select the Investment Banker within 50 days after
Sprint PCS notifies Manager of the disagreement. Sprint PCS and Manager
will cooperate fully and provide all information reasonably requested
by the Investment Banker; except that any Investment Banker selected by
the American Arbitration Association, and its investment bank, must
have no current engagement with either Manager or Sprint PCS and must
not have been engaged by either such party within the 12 calendar
months preceding the engagement under this section. A business
relationship between Manager or Sprint PCS and a commercial bank or
other organization affiliated with an investment bank will not
disqualify the investment bank. Sprint PCS and Manager will cooperate
fully and provide all information reasonably requested by the
Investment Banker. The Investment Banker will have 20 days from the
date of engagement to make its decision.
Manager will pay any Investment Banker's fees and implement the
Program Requirement Change if the parties agree or the Investment
Banker determines that implementing the Program Requirement Change will
not exceed any of the parameters described in section 9.3.1.
9.3.3 ONE OR MORE PARAMETERS EXCEEDED. Sprint PCS will pay the
Investment Banker's fees if the parties agree or the Investment Banker
determines that implementing the Program Requirement Change will exceed
at least one of the parameters described in section 9.3.1. Sprint PCS
may require Manager to implement the Program Requirement Change whether
the parties agree or disagree or the Investment Banker determines that
implementing the Program Requirement Change will exceed at least one of
the parameters described in section 9.3.1, if Sprint PCS agrees to
compensate Manager the amount necessary to prevent Manager from
exceeding the parameters set forth in section 9.3.1.
9.3.4 CHANGES WITH RESPECT TO PRICING PLANS AND ROAMING PROGRAM
REQUIREMENTS. Manager will implement a Program Requirement Change in
the manner requested by Sprint PCS that
(i) relates to a pricing plan under section 4.4 or roaming
program and
22
(ii) Sprint PCS reasonably determines must be implemented on
an immediate or expedited basis to respond to competitive market
forces,
notwithstanding Manager's determination that implementation of the
Program Requirement Change will have an adverse impact on Manager that
meets or exceeds the parameters set forth in section 9.3.1. Manager's
implementation of the Program Requirement Change will not adversely
affect Manager's right to object to the implementation of the Program
Requirement Change. Manager will continue to comply with the Program
Requirement Change if the parties agree or the Investment Banker
determines that implementing the Program Requirement Change will not
exceed any of the parameters described in section 9.3.1. If Sprint PCS
does not successfully challenge Manager's assessment of the adverse
impact of the Program Requirement Change on Manager in accordance with
section 9.3.2, Sprint PCS can require Manager either to (i) continue to
comply with the Program Requirement Change and compensate Manager in
the amount necessary to reimburse Manager for any reasonable costs,
expenses or losses that Manager incurred as a result of its
implementation of the Program Requirement Change net of any benefit
received by Manager, to the extent the costs, expenses and losses net
of the benefits exceed the parameters set forth in section 9.3.1 or
(ii) terminate its continued compliance with the Program Requirement
Change and compensate Manager in the amount necessary to reimburse
Manager for any reasonable costs, expenses or losses that Manager
incurred as a result of its implementation of the Program Requirement
Change net of any benefit received by Manager. Manager cannot terminate
its continued compliance if Sprint PCS elects to require Manager's
continued compliance with the Program Requirement Change under section
9.3.3 above.
(c) A new section 9.7 is added to the Management Agreement:
9.7 MANDATORY REQUIREMENTS; UNILATERAL CHANGES.
(a) Any "guidelines," "policies," "standards" or "specifications"
previously issued by Sprint PCS are mandatory requirements with which
Manager, the Other Managers and Sprint PCS must comply (subject to
Sprint PCS' right to grant waivers as provided in Article 9 of this
agreement), unless otherwise identified by Sprint PCS within 120 days
after the date of this Addendum.
(b) Any changes to or new "guidelines," "policies," "standards" or
"specifications" proposed by Sprint PCS under this agreement, the
Services Agreement or either of the Trademark License Agreements are
mandatory requirements with which Manager, the Other Managers and
23
Sprint PCS must comply (subject to Sprint PCS' right to grant waivers
as provided in Article 9 of this agreement). Sprint PCS will when
issuing them reference the applicable section of this agreement, the
Services Agreement, the Trademark License Agreements and if applicable,
the Program Requirement to which they relate.
(c) Sprint PCS and Manager will in good faith attempt to mutually
agree on how to mitigate the adverse economic impact on Manager of the
exercise of any unilateral right of Sprint PCS under this agreement,
the Services Agreement and either Trademark License Agreement to the
extent Manager believes such change will have a significant adverse
economic impact on Manager's operations, except with respect to changes
involving Sprint PCS National or Regional Distribution Program
Requirements. For purposes of clarification, the parties intend the
preceding sentence to obligate them to a robust discussion and open
dialogue but understand the discussion and dialogue may not lead to any
particular solution of the issues raised by Manager or Sprint PCS. By
way of illustration, under the second preceding sentence if Manager
believed that the exercise of the unilateral right to change the
Trademark Usage Guidelines or the designation of Sprint PCS Products
and Services had an adverse economic impact on Manager, then Manager
and Sprint PCS will in good faith attempt to mutually agree on how to
mitigate the adverse impact on Manager.
(d) A new section 9.8 is added to the Management Agreement.
9.8 BREACH FOR FAILURE TO IMPLEMENT PROGRAM REQUIREMENT.
Manager will be in material breach of a material term and Sprint
PCS may exercise its rights under section 11 if Manager declines to
implement a Program Requirement when required to do so under this
agreement.
16. FEES [NEW]. (a) Article 10 of the Management Agreement is
amended to read as follows:
10. FEES
10.1 GENERAL. Sprint PCS and Manager will pay to each other the
fees and apply the credits in the manner described in this section 10. Many of
the definitions for the fees in section 10.2 are found in section 10.3.
24
10.2 FEES.
10.2.1 FEE BASED ON BILLED REVENUE. Sprint PCS will pay to
Manager the Fee Based on Billed Revenue as determined in this section
10.2.1.
"BILLED REVENUE" is all customer account activity (e.g., all
activity billed, attributed or otherwise reflected in the customer
account but not including Customer Credits or similar adjustments)
during the calendar month for which the fees and payments are being
calculated (the "BILLED MONTH") for Sprint PCS Products and Services
related to all Sprint PCS customer accounts within a customer service
area ("CSA") assigned to the Service Area, except Outbound Roaming
Fees, amounts handled separately in this section 10 (including the
amounts in sections 10.2.3 through 10.2.5, 10.4 and 10.8) and amounts
collected from customers and paid to governmental or regulatory
authorities (e.g., Customer Taxes, USF Charges) (these Sprint PCS
customer accounts being "MANAGER ACCOUNTS"). For purposes of
clarification, the parties have in place procedures to assign customers
to CSAs. Billed Revenue does not include new activity billed to the
Customer solely to recover costs incurred by Sprint PCS, Manager or
both; Manager and Sprint PCS will share such revenue in proportion to
the costs they incur.
Sprint PCS will determine the amount of credits applied to
Manager Accounts during the Billed Month ("CUSTOMER CREDITS").
"NET BILLED REVENUE" for a Billed Month is the amount of the
Billed Revenue less the Customer Credits.
The "FEE BASED ON BILLED REVENUE" for a Billed Month is equal
to 92% of (a) Net Billed Revenue, less (b) the Allocated Write-offs for
Net Billed Revenue.
10.2.2 OUTBOUND ROAMING FEES. Sprint PCS will pay to Manager
a fee equal to the amount of Outbound Roaming Fees that Sprint PCS or
its Related Parties bills to Manager Accounts, less the Allocated
Write-offs for Outbound Roaming Fees. For purposes of clarification,
Sprint PCS will settle separately with Manager the direct cost of
providing the capability for the Outbound Roaming, including any
amounts payable to the carrier that handled the roaming call and the
clearinghouse operator.
10.2.3 PHASE II E911 Surcharges. Sprint PCS will pay to
Manager a fee equal to a portion of the E911 Surcharges (attributable
to incremental costs for Phase II E911, including but not limited to
related handset costs, routing costs, implementation costs, trunks and
testing costs, and anticipated write-offs for bad debt) billed during
the Billed Month to Customers with an NPA-NXX assigned to the Service
Area, less the Allocated Write-offs for that portion of E911 Surcharges
in the Billed Month. The portion of the billed
25
amount attributed to Manager will be based on Manager's proportional
cost (as compared to Sprint PCS' proportional cost) to comply with
Phase II of the E911 requirements. The rate billed to Customers related
to Phase II E911 and the portion payable to Manager will be determined
from time to time by Sprint PCS.
10.2.4 CUSTOMER EQUIPMENT Credits. Sprint PCS will apply as a
credit to any other fees under this section 10.2 owing by Sprint PCS to
Manager an amount equal to the amount of the Customer Equipment Credits
less the Allocated Write-offs for Customer Equipment Credits.
10.2.5 WRITE-OFFS FOR CUSTOMER EQUIPMENT CHARGES. Sprint PCS
will apply as a credit to any other fees under this section 10.2 owing
by Sprint PCS to Manager an amount equal to the amount of the Allocated
Write-offs for Customer Equipment Charges.
10.3 DEFINITIONS USED IN FEE CALCULATIONS
10.3.1 WRITE-OFFS. Sprint PCS will determine the amounts
written off (the "WRITE-OFFS") in the Sprint PCS billing system during
the Billed Month relating to Manager Accounts.
10.3.2 BILLED COMPONENTS. Each of the following eight amounts
is referred to as a "BILLED COMPONENT" and collectively they are
referred to as the "BILLED COMPONENTS".
10.3.2.1 Net Billed Revenue. The amount determined as
described in section 10.2.1.
10.3.2.2 Customer Equipment Credits. The reductions of
amounts billed to Manager Accounts related to the sale of handsets and
handset accessories from Sprint PCS inventory are referred to as
"CUSTOMER EQUIPMENT CREDITS". This is a negative amount that reduces
the Amount Billed (Net of Credits).
10.3.2.3 Outbound Roaming Fees. The amounts that Sprint
PCS or its Related Parties bills to Manager Accounts for calls placed
on a non-Sprint PCS Network are referred to as "OUTBOUND ROAMING FEES".
10.3.2.4 Customer TAXES. The amounts that Sprint PCS
bills to Manager Accounts for taxes, including, without limitation,
federal, state, and local sales, use, gross and excise tax
(collectively, "CUSTOMER Taxes").
10.3.2.5 Equipment Replacement Program Fees. The amounts
that Sprint PCS bills to Manager Accounts for participating in an
equipment replacement program are referred to as "EQUIPMENT REPLACEMENT
PROGRAM FEES".
26
10.3.2.6 Customer Equipment Charges. The amounts that
Sprint PCS bills to Manager Accounts for subscriber equipment and
accessories sold or leased are referred to as "CUSTOMER EQUIPMENT
CHARGES".
10.3.2.7 E911 SURCHARGES. The amounts that Sprint PCS
bills to Manager Accounts to recover all costs related to Phase II E911
functionality are referred to as "E911 SURCHARGES".
10.3.2.8 USF Charges. The amounts that Sprint PCS bills
to Manager Accounts relating to Universal Service Funds are referred to
as "USF CHARGES".
10.3.3 AMOUNT BILLED (NET OF CUSTOMER CREDITS). The "AMOUNT
BILLED (NET OF CUSTOMER CREDITS)" for a Billed Month is equal to the
sum of the Billed Components.
10.3.4 THE ALLOCATED Write-offs. The "ALLOCATED WRITE-OFFS"
for all or a portion of a Billed Component in a Billed Month is the
Write-offs for the Billed Month times the amount of the Billed
Component (or portion thereof) divided by the Amount Billed (Net of
Customer Credits).
10.4 OTHER FEES AND PAYMENTS. Sprint PCS and Manager will pay to
each other the fees and payments described below:
10.4.1 INTER SERVICE AREA FEES.
10.4.1.1 Inter Service Area Fee Paid. Manager will pay
to Sprint PCS an Inter Service Area Fee as set out in this section
10.4.1 for each billed minute of use that a subscriber with an NPA-NXX
assigned to the Service Area uses a portion of the Sprint PCS Network
other than the Service Area Network. Sprint PCS will pay to Manager an
Inter Service Area Fee for each billed minute of use that a Sprint PCS
customer whose NPA-NXX is not assigned to the Service Area Network uses
the Service Area Network.
Sprint PCS will not be obligated to pay Manager those
Inter Service Area Fees not received by Sprint PCS from an Other
Manager who is a debtor in a bankruptcy proceeding with respect to
Inter Service Area Fees that Sprint PCS owes Manager because of CSAs
assigned to such Other Manager's Service Area traveling in the Service
Area. For clarification purposes, Sprint PCS does not have to advance
the Inter Service Area Fees for the Other Manager who is involved in
the bankruptcy proceeding to Manager, even if the Other Manager is late
or never pays the Inter Service Area Fees. Manager bears the risk of
loss of the Other Manager who is involved in the bankruptcy proceeding
not paying the Inter Service Area Fees to Sprint PCS. Manager
acknowledges that if the manner in
27
which the CSAs are assigned changes because of changes in the manner in
which the NPA-NXX is utilized, the manner in which the Inter Service
Area Fees, if any, will be calculated might be changed.
10.4.1.2 Voice and 2G Data Rate. The amount of the Inter
Service Area Voice and 2G Data Fee will be as follows:
(a) From September 1, 2003 to December 31, 2005, the
Inter Service Area Voice and 2G Data Fee for each billed minute of
use that a Customer or Sprint PCS Reseller Customer uses an Away
Network will be $0.058.
(b) From January 1, 2006 until the end of the Term of
the agreement, the Inter Service Area Voice and 2G Data Fee for
each billed minute of use that a Customer or Sprint PCS Reseller
Customer uses an Away Network will be an amount equal to 90% of
retail yield for Voice and 2G Data Usage.
10.4.1.3 3G Data Rate. The amount of the Inter Service
Area 3G Data Fee will be as follows:
(a) From September 1, 2003 to December 31, 2005, the
Inter Service Area 3G Data Fee for each kilobit of use that a
Customer or Sprint PCS Reseller Customer uses an Away Network will
be $0.0014 ("INITIAL 3G DATA FEE PERIOD").
(b) The parties will engage in the following pricing
process to set the Inter Service Area 3G Data Fee for each kilobit
of use that a Customer or Sprint PCS Reseller Customer uses an
Away Network after the Initial 3G Data Fee Period ends. The Inter
Service Area 3G Data Fee will be based on an appropriate discount
from the retail yield for 3G Data Usage to be negotiated before
December 31, 2005. Each subsequent fee period will last three
years with the second pricing period beginning on January 1, 2006
and ending on December 31, 2008.
(i) Sprint PCS will give Manager an Inter Service
Area 3G Data Fee proposal by March 31 of the final year of the
then current pricing period. Manager's representative and the
Sprint PCS representative will begin discussions regarding the
proposed schedule of fees within 20 days after Manager receives
the proposed schedule of fees from Sprint Spectrum.
(ii) Manager may escalate the discussion to the
Chief Financial Officer of Sprint PCS or Sprint PCS may escalate
the discussion to Manager's Chief Executive Officer or Chief
Financial Officer if the parties do not agree on a new schedule of
fees within 30 days after the discussions begin.
28
(iii) If the parties cannot agree on a new schedule
of fees within 20 days after a party escalates the discussion,
then Manager may either agree to the fees set forth in the Inter
Service Area 3G Data Fee proposal or submit the determination of
the Inter Service Area 3G Data Fee to binding arbitration in
accordance with section 14.2, excluding the escalation process set
forth in section 14.2.
(iv) If Manager submits the matter to arbitration
the fees proposed by Sprint PCS will apply starting after December
31 of the first year of the appropriate period as described in
section 10.4.1.4 and will continue in effect unless modified by
the final decision of the arbitrator. If the arbitrator imposes a
fee different than the ones in effect the new fees will be applied
as if in effect after December 31 of the first year of the
appropriate period as described in section 10.4.1.4 and if on
application of the new fees one party owes the other party any
amount after taking into account payments already made by the
parties then the owing party will pay the other party within 30
days of the date of the final arbitration order.
10.4.1.4 Rate Changes - Effective Date. All rate changes
related to Inter Service Area Fees will be applied to all activity in a
bill cycle regardless of when the activity occurred, if the bill cycle
ends after the effective date of the rate change.
10.4.1.5 Long Distance. The long distance rates
associated with the Inter Service Area usage will be equal to the
actual wholesale transport and terminating costs associated with the
originating and terminating locations. The rates are then applied to
cumulative usage at a BID level for settlement purposes.
10.4.2 INTERCONNECT FEES. Manager will pay to Sprint PCS
(or to other carriers as appropriate) monthly the interconnect fees, if
any, as provided under section 1.4.
10.4.3 TERMINATING AND ORIGINATING ACCESS FEE. If Sprint
PCS collects from an IXC terminating or originating access fees that
are not subject to refund or dispute, then Sprint PCS will pay Manager
92% of the amount collected (but it will not be Billed Revenue).
Manager will refund to Sprint PCS any amounts Sprint PCS pays or has
paid to Manager for access fees if Sprint PCS is required to refund
that access fee to an IXC (including a Sprint Corporation Related
Party). For purposes of clarification, Sprint Corporation's Related
Parties are obligated to pay terminating access to Sprint PCS only if
Sprint Corporation's major competitors have to pay terminating or
originating access to Sprint PCS. At the present time, none of the
major competitors pay terminating access to Sprint PCS. The ability of
wireless carriers to collect access
29
fees is currently subject to legal challenge. The parties acknowledge
that Sprint PCS has limited ability to require IXCs to pay access fees.
10.4.4 REIMBURSEMENTS FOR MISTAKEN PAYMENTS. If one
party mistakenly pays an amount that the other party is obligated to
pay then the other party will reimburse the paying party.
10.5 TAXES AND PAYMENTS TO THE GOVERNMENT. Manager will pay or
reimburse Sprint PCS for any sales, use, gross receipts or similar tax,
administrative fee, telecommunications fee or surcharge for taxes or fees levied
by a governmental authority on the fees and charges payable by Sprint PCS to
Manager.
Manager will report all taxable property to the appropriate taxing
authority for ad valorem tax purposes. Manager will pay as and when due all
taxes, assessments, liens, encumbrances, levies, and other charges against the
real estate and personal property owned by Manager or used by Manager in
fulfilling its obligations under this agreement.
Manager is responsible for paying all sales, use, or similar taxes
on the purchase and use of its equipment, advertising, and other goods or
services in connection with this agreement.
Sprint PCS will be solely responsible for remitting to government
agencies and/or their designees any and all fees or other amounts owed as a
result of the services provided to the Customers under the Management Agreement.
As a consequence of this responsibility, Sprint PCS is entitled to 100% of any
amounts received by Manager, Sprint PCS or their Related Parties from Customers
(including Sprint PCS customers whose NPA-NXX is assigned to the Service Area)
relating to such fees.
10.6 UNIVERSAL SERVICE FUNDS.
10.6.1 PAID BY GOVERNMENT. Manager is entitled to 92% of any
federal and state subsidy funds (the "SUBSIDY FUNDS") (and Sprint PCS
is entitled to the remainder of the Subsidy Funds), including Universal
Service Funds, received by Manager or Sprint PCS from government
disbursements based on customers with mailing addresses located in the
Service Area and with NPA-NXXs assigned to the Service Area, or such
other method then in effect under the rules of the FCC, USAC or other
federal or state administrator. For purposes of clarity, Universal
Service Funds provide support payments to Eligible Telecommunications
Carriers ("ETC") serving in high cost areas and providing services to
low income individuals. Sprint PCS, as the Common Carrier of record, on
behalf of itself or Manager (with respect to the Service Area), might
qualify as an ETC. All Subsidy Funds received must be used to support
the provision, maintenance and upgrading of facilities and services for
which the funds are intended.
30
10.6.2 PAID BY CUSTOMERS. Sprint PCS will be solely
responsible for remitting to government agencies and/or their
designees, including but not limited to the Universal Service
Administrative Company, any and all universal service fees. As a
consequence of this responsibility, Sprint PCS is entitled to 100% of
any amounts received by Manager, Sprint PCS or their Related Parties
from Customers (including Sprint PCS customers whose NPA-NXX is
assigned to the Service Area) relating to the Universal Service Funds.
10.7 EQUIPMENT REPLACEMENT PROGRAM. Sprint PCS is entitled to 100%
of the amounts paid by Customers for participating in any equipment
replacement program billed on their Sprint PCS bills. Manager will not
be responsible for or in any way billed for any costs or expenses
incurred by Sprint PCS or any Sprint PCS Related Party in connection
with any such equipment replacement program.
10.8 CUSTOMER EQUIPMENT. Sprint PCS is entitled to 100% of the
amounts paid by Customers for subscriber equipment and accessories sold
or leased by Sprint PCS, and Manager is entitled to 100% of the amounts
paid by Customers for subscriber equipment and accessories sold or
leased by Manager, subject to the equipment settlement process in
section 4.1.2.
10.9 PHASE I E911. Sprint PCS is entitled to 100% of amounts paid
by Customers related to Phase I E911 (e.g., for equipment other than
handsets, such as platforms and networks). Sprint PCS will attempt to
recover from the appropriate governmental authority Phase I E911
reimbursements and will remit the appropriate amounts to Manager.
10.10 MANAGER DEPOSITS INTO SPRINT PCS ACCOUNTS. Each Business
Day, Manager will deposit into bank accounts in the name of Sprint PCS
or a Related Party designated by Sprint PCS, the amounts collected from
Customers on behalf of Sprint PCS and its Related Parties for Sprint
PCS Products and Services. Manager will allow the funds deposited in
the bank accounts to be transferred daily to other accounts designated
by Sprint PCS. Manager will also provide the daily reports of the
amounts collected required by Sprint PCS. Manager will not make any
changes to the authorized signatories on the bank accounts without the
prior written consent of Sprint PCS.
10.11 MONTHLY STATEMENTS.
10.11.1 SECTION 10.2 STATEMENT. Each month Sprint PCS will
determine the amount payable to Manager for a Billed Month under
section 10.2. Sprint PCS will deliver a monthly statement to Manager
that reports the amount due to Manager, the manner in which the amount
was calculated, the amount due to Sprint PCS and its Related Parties
under this agreement, the Services Agreement and the Trademark License
Agreements, and the net amount payable to Manager.
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10.11.2 OTHER STATEMENTS. Sprint PCS will deliver a monthly
statement to Manager that reports amounts due to Manager or from
Manager, other than amounts described in section 10.12.1, the manner in
which the amounts were calculated, the amount due to Manager or to
Sprint PCS and its Related Parties under this agreement, the Services
Agreement and the Trademark License Agreements, and the net amount
payable to Manager.
10.11.3 THIRD PARTY CHARGES. Sprint PCS will include any
third party charges on Manager's statements within three calendar
months after the end of the calendar month during which Sprint PCS
receives the third party charge.
10.12 PAYMENTS.
10.12.1 WEEKLY PAYMENTS. Sprint PCS will pay the amount
payable to Manager for a Billed Month under section 10.2 in equal
weekly payments on consecutive Thursdays beginning the second Thursday
of the calendar month following the Billed Month and ending on the
first Thursday of the second calendar month after the Billed Month. If
Sprint PCS is unable to determine the amount due to Manager in time to
make the weekly payment on the second Thursday of a calendar month,
then Sprint PCS will pay Manager for that week the same weekly amount
it paid Manager for the previous week. Sprint PCS will true-up any
difference between the actual amount due for the first weekly payment
of the Billed Month and amounts paid for any estimated weekly payments
after Sprint PCS determines what the weekly payment is for that month.
10.12.2 MONTHLY PAYMENTS. The amounts payable to Manager
and Sprint PCS and its Related Parties under this agreement, the
Services Agreement and the Trademark License Agreements, other than the
payments described in section 10.12.1, will be determined, billed and
paid monthly in accordance with section 10.12.3.
10.12.3 NET PAYMENTS. The amount of each payment to
Manager will be the net amount due to Manager, if any, after reducing
the amount payable to Manager by any amounts due to Sprint PCS and its
Related Parties under this agreement, the Services Agreement and the
Trademark License Agreements. If the amount due to Sprint PCS exceeds
the amount due to Manager, Sprint PCS will bill Manager or reduce the
next weekly or monthly payment to Manager (and will reduce subsequent
weekly and monthly payments if necessary) by the amount of the excess.
10.12.4 TRANSITION OF PAYMENT METHODS. (a) Sprint PCS
and Manager wish to conduct an orderly transition from making weekly
payments to Manager based on Collected Revenues to weekly payments
based on Billed Revenue. The method of calculating the weekly payments
will change on the first
32
day of the calendar month after the Alamosa Holdings, Inc, Alamosa
(Delaware), Inc. and the Alamosa Managers complete their restructuring
(the "TRANSITION DATE"). The weekly amounts paid to Manager during the
calendar month before the Transition Date and on the first Thursday
after the Transition Date will be based on the Collected Revenues
method. The weekly amounts paid to Manager beginning on the second
Thursday of the second calendar month after the Transition Date will be
based on the Billed Revenue method described in this Section 10. To
effect an orderly transition, Sprint PCS will pay Manager for the
period beginning on the second Thursday after the Transition Date and
ending on the first Thursday of the calendar month after the Transition
Date an amount calculated as described below in Section 10.12.4(b).
(b) Sprint PCS will apply the estimated collection
percentages used by Sprint PCS before the Transition Date to the gross
accounts receivable aging categories for Customers with an NPA-NXX
assigned to the Service Area as of the close of business on the day
before the Transition Date to calculate the amount Sprint PCS
anticipates collecting on those accounts receivable. Sprint PCS will
pay Manager the amount estimated to be collected in equal weekly
payments on consecutive Thursdays beginning the second Thursday after
the Transition Date and ending the first Thursday of the calendar month
after the Transition Date. Sprint PCS will also pay to Manager no later
than the second Thursday after the Transition Date any Collected
Revenues received after the Saturday before the Transition Date and
before the Transition Date.
(c) Sprint PCS will recalculate the estimated collection
percentages and apply the recalculated estimated collection percentages
to the gross accounts receivable aging categories described in the
first sentence of section 10.12.4(b) when all applicable data is
available. Sprint PCS will increase or decrease a weekly payment by the
amount of the difference between the amount paid to Manager based on
the initial estimated collection percentages and the amount that would
have been paid to Manager using the newer estimated collection
percentages.
10.13 DISPUTE OR CORRECTION OF STATEMENT AMOUNT. A party can
only dispute or correct an amount on a statement in good faith. If a
party disputes or corrects an amount on a statement, the disputing or
correcting party must give the other party written notice of the
specific item disputed or corrected, the disputed or corrected amount
with respect to that item and the reason for the dispute or correction
within three calendar months after the end of the calendar month during
which the disputed or erroneous statement was delivered.
Any dispute regarding a statement will be resolved through
the dispute resolution process in section 14. The parties must continue
to pay to the other party all amounts, including disputed amounts, owed
under this agreement, the Services Agreement and the Trademark License
Agreements during the dispute resolution process.
33
The dispute of an item in a statement does not stay or
diminish a party's other rights and remedies under this agreement,
except that a party must complete the dispute resolution process in
section 14 before taking any legal or equitable action against the
other party.
10.14 DISPUTE OR CORRECTION OF A THIRD PARTY INVOICE AMOUNT.
Sprint PCS will include the applicable portion of any amount based on a
third party invoice in a statement to Manager within three months of
Sprint PCS' receipt of the third party invoice.
A party can only dispute or correct an amount based on a
third party invoice in good faith. Modified invoices received by Sprint
PCS from a third party vendor and then sent by Sprint PCS to Manager
will be treated as a new statement for purposes of this section.
If a party disputes or corrects an amount on a third party
invoice or the amount Sprint PCS attributed to Manager, the disputing
party must give the other party written notice of the specific item
disputed or corrected, the disputed or corrected amount with respect to
that item and the reason for the dispute or correction within three
calendar months after the end of the calendar month during which the
disputed or erroneous statement was delivered. Sprint PCS and Manager
will cooperate with each other to obtain the information needed to
determine if the amounts billed by the third party and allocated to
Manager were correct.
Any dispute regarding the amount of the third party invoice
Sprint PCS attributed to Manager will be resolved through the dispute
resolution process in section 14. Manager must continue to pay to
Sprint PCS all amounts, including disputed amounts, owed under this
agreement, the Services Agreement and the Trademark License Agreements
during the information gathering and dispute resolution process;
provided, however, that to the extent any such monies are found to be
owing to Manager, Manager shall be entitled to interest thereon at the
Default Rate from the date of payment by Manager to Sprint PCS until
the date such refund is actually received by Manager.
The dispute of an item in a statement does not stay or
diminish a party's other rights and remedies under this agreement,
except that the parties must complete the dispute resolution process in
section 14 before taking any legal or equitable action against each
other.
10.15 LATE PAYMENTS. Any amount due under this agreement, the
Services Agreement and the Trademark License Agreements without a
specified due date will be due 20 days after Manager receives an
invoice. Any amount due under this agreement, the Services Agreement
and the Trademark License Agreements (including without limitation any
amounts disputed under those
34
agreements that are ultimately determined to be due), that is not paid
by one party to the other party in accordance with the terms of the
applicable agreement will bear interest at the Default Rate beginning
(and including) the 3rd day after the invoice or settlement due date
until (and including) the date paid.
10.16 SETOFF RIGHT IF FAILURE TO PAY AMOUNTS DUE. If Manager
fails to pay any amount due Sprint PCS or a Related Party of Sprint PCS
under this agreement, or any amount under the Services Agreement or any
other agreement with Sprint PCS or a Related Party of Sprint PCS, then
Sprint PCS may setoff against its payments to Manager under this
section 10, any such amount that Manager owes to Sprint PCS or a
Related Party of Sprint PCS.
This right of setoff is in addition to any other right that
Sprint PCS may have under this agreement.
17. TERMINATION RIGHTS [NEW]. Section 11.3.7 is deleted, and all
references in the agreement to section 11.3.7 are also deleted.
18. NON-TERMINATION OF AGREEMENT [ADDM IV, (Section)13]. Sections
11.5.3 and 11.6.4 are replaced with the following paragraphs:
11.5.3 MANAGER'S ACTION FOR DAMAGES OR OTHER RELIEF.
Manager, in accordance with the dispute resolution process in section
14, may seek damages or other appropriate relief, but such action does
not terminate this agreement.
11.6.4 SPRINT PCS' ACTION FOR DAMAGES OR OTHER RELIEF.
Sprint PCS, in accordance with the dispute resolution process in
section 14, may seek damages or other appropriate relief, but such
action does not terminate this agreement.
19. BUSINESS VALUATION [ADDM IV,(SECTION)21]. A new subsection
11.7.4(f) is added:
(f) In the event the Entire Business Value of the Manager is being
determined, the entire value of any Operating Asset may be allocated
among the Manager and one or more of the Other Affiliates, where
appropriate, but the sum of the values attributed to that Operating
Asset in determining the Entire Business Value of the Manager and the
Other Affiliates shall not exceed the value of that Operating Asset if
it were used to calculate only the Manager's Entire Business Value
(i.e. "double counting" is prohibited).
20. AUDIT [NEW]. Section 12.1.2 is amended to read as follows:
12.1.2 Audits. On reasonable advance notice, each party must
provide access to appropriate records to the independent auditors
selected by the other
35
party for purposes of auditing the amount of fees, costs, expenses or
other charges payable in connection with the Selected Services 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
Manager determines Sprint PCS was overpaid. The auditing party will pay
all costs and expenses related to the audit unless the amount owed to
the audited party is reduced by more than 10% or the amount owed by the
audited party is increased by more than 10%, in which case the costs
and expenses related to the audit will be paid by the audited party.
Notwithstanding the above provisions of this section 12.1.2 and
subject to section 1.9, rather than allow Manager's independent
auditors access to Sprint PCS' records, Sprint PCS may provide a report
issued in conformity with Statement of Auditing Standard No. 70
"Reports on the Processing of Transactions by Service Organizations"
("TYPE II REPORT" or "MANAGER MANAGEMENT REPORT"); except that, if
Manager, on the advice of its independent auditors or its legal
counsel, determines additional assurances beyond SAS 70 are required by
statute, regulation, rule, judicial decision or interpretation, or
audit or accounting rule, policy or literature published by the
accounting or auditing profession or other authoritative rule making
body (such as the SEC, the PCAOB or the FASB), then Sprint PCS will
cooperate with Manager to provide such additional assurances. Any Type
II Report or Manager Management Report provided pursuant to this
section 12.1.2 will be prepared by Sprint PCS' independent auditors and
will provide an opinion on the controls placed in operation and tests
of operating effectiveness of those controls in effect at Sprint PCS
over Manager Management Processes. "Manager Management Processes"
include those services generally provided within this agreement,
primarily billing and collection of revenues.
21. SHARING CONFIDENTIAL INFORMATION WITH LENDERS [ADDM
IV,(SECTION)14]. Section 12.2(b)(vii) of the Management Agreement is replaced
with the following paragraph:
(vii) is disclosed by the receiving party to a financial
institution or accredited investor (as that term is defined in Rule
501(a) under the Securities Act of 1933) that is considering providing
or has provided financing to the receiving party and which financial
institution or accredited investor has agreed to keep the Confidential
Information confidential in accordance with an agreement at least as
restrictive as this section 12.2.
36
22. EMAILING NOTICES [NEW AND ADDM IV,(SECTION)25]. (a) Section 17.1 is
amended to read as follows:
17.1 NOTICES. Any notice, payment, invoice, demand, or
communication required or permitted to be given by any provision of
this agreement must be in writing and mailed (certified or registered
mail, postage prepaid, return receipt requested), sent by hand or
overnight courier, or sent by facsimile or email (in either instance
with acknowledgment or read receipt received), charges prepaid and
addressed as described below, or to any other address or number as the
person or entity may from time to time specify by written notice to the
other parties. Sprint PCS may give notice of changes to a Program
Requirement by sending an email that directs Manager to the changed
Program Requirement on the affiliate intranet website.
The subject line of any email notice that purports to amend any
Program Requirement must read "Program Requirement Change" and the
first paragraph must indicate (i) which Program Requirement is being
modified, (ii) what is being modified in the Program Requirement, and
(iii) when the Program Requirement will take effect. The email must
also include either a detailed summary of the Program Requirement
change or a redline comparison between the old Program Requirement and
the new Program Requirement.
Any notice, demand or communication intended to be notice of a
breach of an agreement or notice of an Event of Termination, must
clearly indicate that intent, state the section(s) of the agreements
allegedly breached, and be mailed or sent by overnight courier in the
manner described in the first paragraph in this section 17.1.
2. Manager agrees to promptly give Sprint PCS a copy of any notice
Manager receives from the Administrative Agent or any Lender (as those
terms are defined in the Consent and Agreement), and a copy of any
notice Manager gives to the Administrative Agent or any Lender. Sprint
PCS agrees to promptly give Manager a copy of any notice Sprint PCS
receives from the Administrative Agent or any Lender, and a copy of any
notice that Sprint PCS gives to the Administrative Agent or any Lender.
All notices and other communications given to a party in
accordance with the provisions of this agreement will be deemed to have
been given when received.
(b) The parties' notice addresses are as follows:
For all entities comprising Sprint PCS:
37
Sprint PCS
KSOPHJ0212-2A101
6130 Sprint Parkway
Overland Park, KS 66251
Telephone: 913-762-7929
Telecopier: 913-523-0539
Email: tmatee01@sprintspectrum.com
Attention: Vice President - Affiliations, PLS & ICS
with a copy to:
Sprint Law Department
KSOPHT0101-Z2020
6391 Sprint Parkway
Overland Park, KS 66251
Telephone: 913-315-9315
Telecopier: 913-523-9823
Email: john.w.chapman@mail.sprint.com
Attention: John Chapman
For Manager:
Texas Telecommunications, LP
5225 S. Loop 289
Suite 120
Lubbock, TX 79424
Telephone: 806-722-1100
Telecopier: 806-722-1127
Email: dsharbutt@alamosapcs.com
Attention: David Sharbutt, President
with a copy to:
Crenshaw, Dupree & Milam, L.L.P.
Wells Fargo Center
1500 Broadway, 8th Floor
Lubbock, Texas 79401
Telephone: 806-762-5281
Telecopier: 806-762-3510
Email: JMcCutchin@cdmlaw.com
Attention: Jack McCutchin, Jr.
and with copies to the following individuals' email addresses
if a notice of a Program Requirement Change is sent by email:
38
Kendall W. Cowan, Chief Financial
Officer
Email: kcowan@alamosapcs.com
Stephen A. Richardson, Chief
Operating Officer
Email: srichardson@alamosapcs.com
Loyd I. Rinehart, Senior Vice
President of Corporate Finance
Email: lrinehart@alamosapcs.com
23. FORCE MAJEURE [NEW]. The second paragraph of section 17.9.3 is
amended to read as follows:
NEITHER MANAGER NOR SPRINT PCS, AS THE CASE MAY BE, IS IN BREACH
OF ANY COVENANT IN THIS AGREEMENT, AND NO EVENT OF TERMINATION WILL
OCCUR AS A RESULT OF THE FAILURE OF SUCH PARTY TO COMPLY WITH SUCH
COVENANT, 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 ABILITY TO COMPLY WITH THE
COVENANT;
(ii) THE FAILURE OF ANY GOVERNMENTAL AUTHORITY TO GRANT ANY
CONSENT, APPROVAL, WAIVER, OR AUTHORIZATION OR ANY DELAY ON THE
PART OF ANY GOVERNMENTAL AUTHORITY IN GRANTING ANY CONSENT,
APPROVAL, WAIVER OR AUTHORIZATION;
(iii) THE FAILURE OF ANY VENDOR TO DELIVER IN A TIMELY MANNER
ANY EQUIPMENT OR SERVICE; OR
(iv) ANY ACT OF GOD, ACT OF WAR OR INSURRECTION, RIOT, FIRE,
ACCIDENT, EXPLOSION, LABOR UNREST, STRIKE, CIVIL UNREST, WORK
STOPPAGE, CONDEMNATION OR ANY SIMILAR CAUSE OR EVENT NOT
REASONABLY WITHIN THE CONTROL OF SUCH PARTY;
except that, to the extent a party's obligation to perform any covenant
under this agreement is suspended by reason of an event specified in
subsection 17.9.3(i), (ii), (iii) or (iv) above, then any obligation of
the other party to make a payment in respect of or relating to such
covenant shall be suspended until performance of such covenant is
reinstated, and in no event shall any amounts accrue or otherwise be
due and owing in respect of or relating to such covenant for the period
during which performance of such covenant was suspended by this
section.
24. GOVERNING LAW, JURISDICTION AND CONSENT TO SERVICE OF PROCESS
[NEW]. Section 17.12 of the Management Agreement is replaced with the following
language:
39
17.12 GOVERNING LAW, JURISDICTION AND CONSENT TO SERVICE OF
PROCESS.
17.12.1 GOVERNING LAW. The internal laws of the State of
Kansas (without regard to principles of conflicts of law) govern the
validity of this agreement, the construction of its terms, and the
interpretation of the rights and duties of the parties.
17.12.2 JURISDICTION; CONSENT TO SERVICE OF PROCESS.
(a) Each party hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive
jurisdiction of any Kansas State court sitting in the County of
Johnson or any Federal court of the United States of America
sitting in the District of Kansas, and any appellate court from
any such court, in any suit action or proceeding arising out of or
relating to this agreement, or for recognition or enforcement of
any judgment, and each party hereby irrevocably and
unconditionally agrees that all claims in respect of any such
suit, action or proceeding may be heard and determined in such
Kansas State Court or, to the extent permitted by law, in such
Federal court.
(b) Each party hereby irrevocably and unconditionally waives,
to the fullest extent it may legally do so, any objection which it
may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this agreement
in Kansas State court sitting in the County of Johnson or any
Federal court sitting in the District of Kansas. Each party hereby
irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such suit,
action or proceeding in any such court and further waives the
right to object, with respect to such suit, action or proceeding,
that such court does not have jurisdiction over such party.
(c) Each party irrevocably consents to service of process in
the manner provided for the giving of notices pursuant to this
agreement, provided that such service shall be deemed to have been
given only when actually received by such party. Nothing in this
agreement shall affect the right of a party to serve process in
another manner permitted by law.
25. TRANSFER OF SPRINT PCS NETWORK [ADDM IV,(SECTION)15]. The first
sentence of section 17.15.5 is replaced with the following sentence:
In conjunction with the sale of the Sprint PCS Network, Sprint PCS
may sell, transfer or assign the Sprint PCS Network and any of the
Licenses, including its rights and obligations under this agreement,
the Services Agreement and any related agreements, to a third party
without Manager's consent so long as the third party assumes the rights
and obligations under this agreement and the Services Agreement.
40
26. ANNOUNCED TRANSACTIONS [ADDM IV, (SECTION)16]. Section 17.24 is
deleted.
27. ADDITIONAL TERMS AND PROVISIONS [ADDM IV, (SECTION)17; REVISED BY
THIS ADDENDUM]. Section 17.25 is replaced with the following paragraph:
17.25 ADDITIONAL TERMS AND PROVISIONS. Certain additional and
supplemental terms and provisions of this agreement, if any, are set
forth in addenda to Sprint PCS Management Agreement attached hereto and
incorporated herein by this reference. Manager represents and warrants
that all existing contracts and arrangements (written or verbal) that
relate to or affect the rights of Sprint PCS or any of its Related
Parties under this agreement (e.g., agreements relating to long
distance telephone services (section 3.4)) are described on Exhibit
17.25, and photocopies of any such written agreements have been
delivered to Sprint PCS
28. FEDERAL CONTRACTOR COMPLIANCE [ADDM IV, (Section)18]. A new section
17.28, the text of which is attached as Exhibit A to Addendum IV, is added and
incorporated by this reference. When and to the extent required by applicable
law, Manager will comply with the requirement of section 17.28.
29. CROSS-DEFAULT [ADDM IV,(SECTION)19]. A new section 17.29 is added:
17.29 CROSS-DEFAULT. A breach or Event of Termination under any of
the Sprint Agreements (as that term is defined in the Consent and
Agreement) by Texas Telecommunications, L.P., a Texas limited
partnership, Alamosa Wisconsin Limited Partnership, a Wisconsin limited
partnership, Washington Oregon Wireless LLC, a Delaware limited
liability company, or Alamosa Missouri, LLC, a Missouri limited
liability company, or their respective successors or assigns
(collectively the "OTHER AFFILIATES") also constitutes a breach or
Event of Termination, as the case may be, by the Manager of the same
provision of the applicable Sprint Agreement to which the Manager is a
party, and the Sprint Parties (as that term is defined in the Consent
and Agreement) shall have the same rights under the Sprint Agreements
and the Consent and Agreement to which the Manager is a party as if the
same breach or Event of Termination had occurred under such Sprint
Agreement. The Manager has no right to cure any breach or Event of
Termination with respect to an Other Affiliate. Such breach or Event of
Termination by an Other Affiliate shall not qualify as a force majeure
under the Sprint Agreements or the Consent and Agreement.
41
30. PERFORMANCE/PAYMENT OF OTHER AFFILIATES' OBLIGATIONS [ADDM
IV,(SECTION)20]. A new section 17.30 is added:
17.30 PERFORMANCE/PAYMENT OF OTHER AFFILIATES' OBLIGATIONS. To
induce the Sprint Parties to enter into the Consent and Agreement with
Citicorp, Manager absolutely and unconditionally guarantees the prompt
and punctual performance and payment of the Obligations (as that term
is defined in the Consent and Agreement) of the Other Affiliates and
their respective successors or assigns when due and payable pursuant to
the terms of the Other Affiliates' Sprint Agreements as they may be
amended and modified. Manager agrees that the Sprint Parties shall not
be required first to collect from any other guarantor of any such
obligation or to proceed against or exhaust any collateral or security
for any obligation before requiring Manager to perform or pay the
obligation guaranteed under this section. Any Sprint Party may bring
suit against Manager without joining the Other Affiliates or any other
guarantor. Manager agrees that notice given by a Sprint Party to any
Other Affiliate under such Other Affiliate's Sprint Agreements or the
Consent and Agreement constitutes notice to the Manager.
31. FINANCIAL INFORMATION [NEW]. A new section 17.32 is added to the
Management Agreement:
17.32 COPIES OF FINANCIAL INFORMATION. Manager agrees to give
Sprint PCS a copy of all financial information it gives the
Administrative Agent or any Lender (as such parties are defined in the
Consent and Agreement).
SERVICES AGREEMENT
32. SERVICES AGREEMENT [NEW]. Article 2 of the Services Agreement is
amended to read as follows:
2. SERVICES
2.1 SERVICES.
2.1.1 SERVICES. Subject to the terms of this agreement,
through December 31, 2006, Manager will obtain the Services set forth
on Schedule 2.1.1 attached to this agreement from Sprint Spectrum in
accordance with the provisions of this section 2.1. Sprint Spectrum
will provide all or none of (i) the grouping of services listed under
Section A of Exhibit 2.1.1 ("CCPU SERVICES"), and (ii) the grouping of
services listed under Section B of Exhibit 2.1.1 ("CPGA SERVICES" and
together with CCPU Services, "SERVICES"). Sprint Spectrum will not
provide individual CCPU Services or CPGA Services. The fees charged for
42
the Services are set forth in section 3.2. Sprint Spectrum may
designate Additional Services as Available Services and Selected
Services; except that, without Manager's prior written consent, neither
Sprint Spectrum nor any of its Related Parties will require Manager to
pay for (i) any such additional Available Services or Selected Services
to the extent that such services are the same as or functionally
equivalent to any service or benefit that Manager currently receives
from Sprint Spectrum or its Related Parties or Sprint PCS or its
Related Parties but for which Manager does not pay a separate fee
immediately after the effective date of this Addendum or (ii) any other
additional Available Services or Selected Services through December 31,
2006.
2.1.2 DISCONTINUANCE OF Services. If Sprint Spectrum
determines to no longer offer a Service itself, then Sprint Spectrum
must give Manager written notice at least 9 months before its
discontinuance of that Service that Sprint Spectrum will no longer
offer that Service. If Manager determines within 30 days after receipt
of notice of discontinuance that it wants to continue to receive the
Service, Sprint Spectrum will use commercially reasonable efforts to
(a) help Manager provide the Service itself or find another vendor to
provide the Service and (b) facilitate Manager's transition to the new
Service provider. If Sprint Spectrum procures such Service from a
vendor or a new Service provider and bills those items as
Settled-Separately Manager Expenses (as defined in subsection 3.2.5 of
this agreement) or Manager procures such Services from a vendor or a
new Service provider, then the fees charged by Sprint Spectrum for the
Services will be reduced by any fees payable by the Manager to such
vendor or new Service provider in respect of such discontinued
Services. If Sprint Spectrum discontinues a Service and neither Sprint
nor Manager procure such Service from a vendor or a new Service
provider, then no adjustment to the fees will be made.
2.1.3 PERFORMANCE OF SERVICES. Sprint Spectrum may select the
method, location and means of providing the Services. If Sprint
Spectrum wishes to use Manager's facilities to provide the Services,
Sprint Spectrum must obtain Manager's prior written consent.
2.2 THIRD PARTY VENDORS. Some of the Services might be
provided by third party vendors under arrangements between Sprint
Spectrum and the third party vendors. In some instances, Manager may
receive Services from a third party vendor under the same terms and
conditions that Sprint Spectrum receives those services. In other
instances, Manager may receive Services under the terms and conditions
set forth in an agreement between Manager and the third party vendor.
43
33. CHANGES TO ARTICLE 3 [NEW]. (a) Article 3 of the Services Agreement
is amended to read as follows:
3. FEES FOR SERVICES
3.1 SERVICES. Manager will pay Sprint Spectrum a fee for the
Services provided by or on behalf of Sprint Spectrum now or in the
future. Manager will not be permitted to obtain the Services from other
sources, except as provided in this agreement.
If changes to Sprint PCS' accounting reclassifications for
the Sprint PCS CCPU Services or Sprint PCS CPGA Services materially
impact the calculations of the Sprint PCS CCPU Services and Sprint PCS
CCPU Services, then the rates outlined in section 3 of the Services
Agreement will be adjusted accordingly.
3.2 FEES FOR SERVICES.
3.2.1 INITIAL PRICING PERIOD. The fee Manager will pay Sprint
Spectrum for the Services provided to Manager by or on behalf of Sprint
Spectrum each month until December 31, 2006 ("INITIAL PRICING PERIOD"),
will equal the sum of: (a) $7.70 per subscriber multiplied by the
Number of Customers in Manager's Service Area for the CCPU Services,
plus (b) 5% of the Sprint PCS CPGA multiplied by Gross Customer
Additions in Manager's Service Area for the CPGA Services. The fee will
be paid as set forth in section 10 of the Management Agreement.
3.2.2 PRICING PROCESS. After the Initial Pricing Period, the
$7.70 fee in 3.2.1(a) will become a percentage of Sprint PCS CCPU and
the fee in section 3.2.1(b) will be adjusted to a new percentage of
Sprint PCS CPGA. The parties will engage in the following pricing
process to set the CCPU and CPGA percentages to be applied in each
pricing period after the Initial Pricing Period ends. Each subsequent
pricing period will last three years (if Manager continues to use
Sprint Spectrum to provide the Services) with the second pricing period
beginning on January 1, 2007 and ending on December 31, 2009.
(a) Sprint Spectrum will give Manager proposed CCPU and CPGA
percentages by March 31 of the final year of the then current pricing
period. The proposed percentages will be based on a reasonable amount
to recover Sprint PCS' costs for providing the CCPU Services and CPGA
Services to Manager and the Other Managers. Manager's representative
and the Sprint PCS representative will begin discussions regarding the
proposed CCPU and CPGA percentages within 20 days after Manager
receives the proposed CCPU and CPGA percentages from Sprint Spectrum.
(b) The fee Manager will pay Sprint Spectrum for the CCPU
44
Services provided to Manager by or on behalf of Sprint Spectrum each
month beginning on January 1, 2007 until December 31, 2008 under the
pricing process described in this section 3.2.2 will not exceed $8.50
per subscriber multiplied by the Number of Customers in Manager's
Service Area.
(c) If the parties do not agree on new CCPU and CPGA
percentages within 30 days after the discussions begin, then Manager
may escalate the discussion to the Sprint PCS Chief Financial Officer
or Sprint Spectrum may escalate the discussion to Manager's Chief
Executive Officer or Chief Financial Officer.
(d) If the parties cannot agree on the new CCPU and CPGA
percentages through the escalation process within 20 days after the
escalation process begins, then Manager may either
(i) submit the determination of the CCPU and CPGA
percentages to binding arbitration in accordance with section 14.2
of the agreement, excluding the escalation process set forth in
section 14.2, and continue obtaining the Services from Sprint
Spectrum at the CCPU and CPGA percentages determined by the
arbitrator,
(ii) self-provide the Services, or
(iii) procure the Services from third-party vendors,
subject to Sprint Spectrum's first right of refusal described in
section 3.2.3.
Manager will begin paying Sprint Spectrum under the CCPU and CPGA
percentages presented for discussion by Sprint Spectrum at the
beginning of the new pricing period until the date on which the parties
agree on or the arbitrator determines the new CCPU and CPGA
percentages, whichever occurs first. Fees paid before the new CCPU and
CPGA percentages are established will be retroactively adjusted from
the beginning of the new pricing period when the parties agree on or
the arbitrator determines the new CCPU and CPGA percentages.
3.2.3 SPRINT SPECTRUM FIRST RIGHT OF REFUSAL. Manager must
give Sprint Spectrum written notice of Manager's decision to procure
the CCPU Services and CPGA Services from a third party vendor at least
120 days before the end of the Initial Pricing Period or any subsequent
three-year pricing period and provide the third party vendor terms to
Sprint Spectrum. Sprint Spectrum will have 30 days from the date it
receives the third party vendor's terms to decide if it will provide
those Services to Manager under those terms.
Manager must agree to receive the Services from Sprint
Spectrum if Sprint Spectrum gives notice to Manager that it will
provide the Services to Manager on the third party vendor terms. If
Sprint Spectrum does not exercise its
45
first right of refusal, Manager must sign the agreement with the third
party vendor on the same terms and conditions as presented to Sprint
Spectrum within 10 business days after Sprint Spectrum notifies Manager
of its decision not to exercise the first right of refusal or the
expiration of the 30-day period, whichever occurs first. The procedure
set forth in this section 3.2.3 will begin again if Manager does not
sign the agreement with the third party vendor as required in the
preceding sentence.
3.2.4 TRANSITION COSTS. Manager will pay for all reasonable
out-of-pocket costs and reasonable out-of-pocket expenses actually
incurred by Sprint Spectrum and its Related Parties to transfer Manager
to a third party vendor's services or for Manager to self-provide the
Services or to enable Manager to self-provide Services.
3.2.5 SETTLED-SEPARATELY MANAGER EXPENSES. Manager will pay
to or reimburse Sprint Spectrum for any amounts that Sprint Spectrum or
its Related Parties pays for Settled-Separately Manager Expenses.
"SETTLED-SEPARATELY MANAGER EXPENSES" means (i) any amounts that Sprint
Spectrum or its Related Parties pays to third parties for usage of the
products and services used in providing Sprint PCS Products and
Services relating to revenue generating activities, and (ii) those
items the parties choose to settle separately between themselves (e.g.
accessory margins, reciprocal retail store cost recovery) including
those items listed in sections C and D of Exhibit 2.1.1. Sprint
Spectrum will give notice to Manager of any additional services added
to section C and D of Exhibit 2.1.1; except that no such additional
service may be added to the extent such additional service is the same
as, or functionally equivalent to, either (a) any service that Sprint
Spectrum or any of its Related Parties currently provides to Manager
hereunder (unless the fees payable by Manager to Sprint Spectrum
hereunder are correspondingly reduced) or (b) any service or benefit
that Manager currently receives from Sprint Spectrum or its Related
Parties but for which Manager does not pay a separate fee before the
effective date of this Addendum. For each Settled-Separately Manager
Expense, Sprint Spectrum will provide sufficient detail to enable
Manager to determine how the expense was calculated, including the unit
of measurement (e.g., per subscriber per month or per call) and the
record of the occurrences generating the expense (e.g., the number of
calls attributable to the expense). If an expense is not reasonably
subject to occurrence level detail, Sprint Spectrum will provide
reasonable detail on the process used to calculate the fee and the
process must be reasonable. A detail or process is reasonable if it is
substantially in the form as is customarily used in the wireless
industry. The Settled-Separately Manager Expenses will be paid as set
forth in section 10 of the Management Agreement. Sprint Spectrum and
its Related Parties may at any time arrange for Manager to pay any of
the Settled-Separately Manager Expenses directly to the vendor.
Unless Manager specifically agrees otherwise, any
Settled-Separately Manager Expense that Sprint Spectrum or any of its
Related Parties is
46
entitled to charge or pass through to Manager pursuant to any term or
provision of this agreement or the Management Agreement will reflect
solely out-of-pocket costs and out-of-pocket expenses actually incurred
by Sprint Spectrum or its Related Parties, and will in no way reflect
any allocation of internal costs or expenses (including but not limited
to allocations of general and administrative expenses or allocations of
employee compensation or related expenses).
3.3 LATE PAYMENTS. Any payment due under this section 3 that is
not paid by Manager to Sprint Spectrum 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 stated on the invoice until (and including) the date
on which the payment is made.
3.4 TAXES. Manager will pay or reimburse Sprint Spectrum for any
sales, use, gross receipts or similar tax, administrative fee,
telecommunications fee or surcharge for taxes or fees levied by a governmental
authority on the fees and charges payable to Sprint Spectrum or a Related Party
by Manager.
34. AUDIT [NEW]. Section 5.1.2 of the Services Agreement is amended to
read as follows:
5.1.2 AUDITS. 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
Selected Services with respect to the period audited. The auditing
party will conduct the audit no more frequently than annually. If the
audit shows that Sprint Spectrum was underpaid then, unless the amount
is contested, Manager will pay to Sprint Spectrum the amount of the
underpayment within 10 Business Days after Sprint Spectrum gives
Manager written notice of the determination of the underpayment. If the
audit determines that Sprint Spectrum was overpaid then, unless the
amount is contested, Sprint Spectrum will pay to Manager the amount of
the overpayment within 10 Business Days after Manager determines Sprint
Spectrum was overpaid. The auditing party will pay all costs and
expenses related to the audit unless the amount owed to the audited
party is reduced by more than 10% or the amount owed by the audited
party is increased by more than 10%, in which case the costs and
expenses related to the audit will be paid by the audited party.
Notwithstanding the above provisions of this section 5.1.2 and
subject to section 1.9 of the Management Agreement, rather than allow
Manager's independent auditors access to Sprint PCS' records, Sprint
PCS may provide a Type II Report; except that, if Manager, on the
advice of its independent auditors or its legal counsel, determines
additional assurances beyond SAS 70 are required by statute,
regulation, rule, judicial decision or interpretation, or audit or
accounting rule, policy or literature published by the accounting or
auditing profession or other authoritative rule making body (such as
the SEC, the PCAOB or the FASB), then Sprint Spectrum will cooperate
with Manager to provide such
47
additional assurances. Any Type II Report or Manager Management Report
provided pursuant to this section 5.1.2 will be prepared by Sprint
Spectrum's independent auditors and will provide an opinion on the
controls placed in operation and tests of operating effectiveness of
those controls in effect at Sprint PCS over Manager Management
Processes. "Manager Management Processes" include those services
generally provided within the Management Agreement, primarily billing
and collection of revenues.
35. EMAILING NOTICES [NEW]. Section 9.1 of the Services Agreement is
amended to read as follows:
9.1 NOTICES. Any notice, payment, invoice, demand, or
communication required or permitted to be given by any provision of
this agreement must be in writing and mailed (certified or registered
mail, postage prepaid, return receipt requested), sent by hand or
overnight courier, or sent by facsimile or email (in either instance
with acknowledgment or read receipt received), charges prepaid and
addressed as described in subparagraph b of paragraph 22 of Addendum V,
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.
The subject line of any email notice that purports to amend any
Program Requirement must read "Program Requirement Change" and the
first paragraph must indicate (i) which Program Requirement is being
modified, (ii) what is being modified in the Program Requirement, and
(iii) when the Program Requirement will take effect. The email must
also include either a detailed summary of the Program Requirement
change or a redline comparison between the old Program Requirement and
the new Program Requirement.
The subject line of any email notice that purports to add any
additional service to section C or D of Exhibit 2.1.1 must read
"Additional Service to section C/D of Exhibit 2.1.1". The new Exhibit
2.1.1 must also be attached to the email.
Any notice, demand or communication intended to be notice of a
breach of an agreement or notice of an Event of Termination must
clearly indicate that intent, state the section(s) of the agreements
allegedly breached, and be mailed or sent by overnight courier in the
manner described in the preceding paragraph.
Manager agrees to promptly give Sprint Spectrum a copy of any
notice Manager receives from the Administrative Agent or any Lender (as
those terms are defined in the Consent and Agreement), and a copy of
any notice Manager gives to the Administrative Agent or any Lender.
Sprint Spectrum agrees to promptly give Manager a copy of any notice
Sprint Spectrum receives from the
48
Administrative Agent or any Lender, and a copy of any notice that
Sprint Spectrum gives to the Administrative Agent or any Lender.
All notices and other communications given to a party in
accordance with the provisions of this agreement will be deemed to have
been given when received.
36. FORCE MAJEURE. [NEW]. The second paragraph of section 9.8 of the
Services Agreement is amended to read as follows:
NEITHER MANAGER NOR SPRINT SPECTRUM, AS THE CASE MAY BE, IS IN
BREACH OF ANY COVENANT IN THIS AGREEMENT AND NO EVENT OF TERMINATION
WILL OCCUR AS A RESULT OF THE FAILURE OF SUCH PARTY TO COMPLY WITH SUCH
COVENANT, 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 ABILITY TO COMPLY WITH THE
COVENANT;
(ii) THE FAILURE OF ANY GOVERNMENTAL AUTHORITY TO GRANT ANY
CONSENT, APPROVAL, WAIVER, OR AUTHORIZATION OR ANY DELAY ON THE
PART OF ANY GOVERNMENTAL AUTHORITY IN GRANTING ANY CONSENT,
APPROVAL, WAIVER OR AUTHORIZATION;
(iii) THE FAILURE OF ANY VENDOR TO DELIVER IN A TIMELY MANNER
ANY EQUIPMENT OR SERVICE; OR
(iv) ANY ACT OF GOD, ACT OF WAR OR INSURRECTION, RIOT, FIRE,
ACCIDENT, EXPLOSION, LABOR UNREST, STRIKE, CIVIL UNREST, WORK
STOPPAGE, CONDEMNATION OR ANY SIMILAR CAUSE OR EVENT NOT
REASONABLY WITHIN THE CONTROL OF SUCH PARTY;
except that, to the extent a party's obligation to perform any covenant
under this agreement is suspended by reason of an event specified in
subsection 9.8(i), (ii), (iii) or (iv) above, then any obligation of
the other party to make a payment in respect of or relating to such
covenant shall be suspended until performance of such covenant is
reinstated, and in no event shall any amounts accrue or otherwise be
due and owing in respect of or relating to such covenant for the period
during which performance of such covenant was suspended by this
section.
37. GOVERNING LAW, JURISDICTION AND CONSENT TO SERVICE OF PROCESS.
[NEW]. Section 9.11 of the Services Agreement is replaced with the following
language:
9.11 GOVERNING LAW, JURISDICTION AND SERVICE OF PROCESS.
49
9.11.1 GOVERNING LAW. The internal laws of the State of Kansas
(without regard to principles of conflicts of law) govern the validity
of this agreement, the construction of its terms, and the
interpretation of the rights and duties of the parties.
9.11.2 JURISDICTION; CONSENT TO SERVICE OF PROCESS.
(a) Each party hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any Kansas
State court sitting in the County of Johnson or any Federal court of
the United States of America sitting in the District of Kansas, and any
appellate court from any such court, in any suit action or proceeding
arising out of or relating to this agreement, or for recognition or
enforcement of any judgment, and each party hereby irrevocably and
unconditionally agrees that all claims in respect of any such suit,
action or proceeding may be heard and determined in such Kansas State
Court or, to the extent permitted by law, in such Federal court.
(b) Each party hereby irrevocably and unconditionally waives, to
the fullest extent it may legally do so, any objection which it may now
or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this agreement in Kansas State
court sitting in the County of Johnson or any Federal court sitting in
the District of Kansas. Each party hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum
to the maintenance of such suit, action or proceeding in any such court
and further waives the right to object, with respect to such suit,
action or proceeding, that such court does not have jurisdiction over
such party.
(c) Each party irrevocably consents to service of process in the
manner provided for the giving of notices pursuant to this agreement,
provided that such service shall be deemed to have been given only when
actually received by such party. Nothing in this agreement shall affect
the right of a party to serve process in another manner permitted by
law.
TRADEMARK LICENSE AGREEMENTS
38. NOTICES [NEW]. Section 15.1 of each of the Trademark License
Agreements is amended to read as follows:
Section 15.1. Notices. Any notice, payment, invoice, demand, or
communication required or permitted to be given by any provision of
this agreement must be in writing and mailed (certified or registered
mail, postage prepaid, return receipt requested), sent by hand or
overnight
50
courier, or sent by facsimile(with acknowledgment received), charges
prepaid and addressed as described in subparagraph (b) of paragraph 22
of Addendum V, or to any other address or number as the person or
entity may from time to time specify by written notice to the other
parties.
Any notice, demand or communication intended to be notice of a
breach of an agreement or notice of an Event of Termination must
clearly indicate that intent, state the section(s) of the agreements
allegedly breached, and be mailed or sent by overnight courier in the
manner described in the preceding paragraph.
Manager agrees to promptly give Sprint PCS a copy of any notice
Manager receives from the Administrative Agent or any Lender (as those
terms are defined in the Consent and Agreement), and a copy of any
notice Manager gives to the Administrative Agent or any Lender. Sprint
PCS agrees to promptly give Manager a copy of any notice Sprint PCS
receives from the Administrative Agent or any Lender, and a copy of any
notice that Sprint PCS gives to the Administrative Agent or any Lender.
All notices and other communications given to a party in
accordance with the provisions of this agreement will be deemed to have
been given when received.
39. GOVERNING LAW [NEW]. Section 15.8 of each of the Trademark License
Agreements is replaced by the following language:
15.8 Governing Law. The internal laws of the State of Kansas
(without regard to principles of conflicts of law) govern the validity
of this agreement, the construction of its terms, and the
interpretation of the rights and duties of the parties.
40. JURISDICTION [NEW]. Section 15.13 of each of the Trademark License
Agreements is replaced by the following language:
15.13 Jurisdiction; Consent to Service of Process.
(a) Each party hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction
of any Kansas State court sitting in the County of Johnson or any
Federal court of the United States of America sitting in the District
of Kansas, and any appellate court from any such court, in any suit
action or proceeding arising out of or relating to this agreement, or
for recognition or enforcement of any judgment, and each party hereby
irrevocably and unconditionally agrees that all claims in respect of
any such suit, action or proceeding may be heard and determined in such
Kansas State Court or, to the extent permitted by law, in such Federal
court.
51
(b) Each party hereby irrevocably and unconditionally waives,
to the fullest extent it may legally do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this agreement in Kansas State
court sitting in the County of Johnson or any Federal court sitting in
the District of Kansas. Each party hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum
to the maintenance of such suit, action or proceeding in any such court
and further waives the right to object, with respect to such suit,
action or proceeding, that such court does not have jurisdiction over
such party.
(c) Each party irrevocably consents to service of process in
the manner provided for the giving of notices pursuant to this
agreement, provided that such service shall be deemed to have been
given only when actually received by such party. Nothing in this
agreement shall affect the right of a party to serve process in another
manner permitted by law.
SCHEDULE OF DEFINITIONS
41. ADDITIONAL, AMENDED OR SUPPLEMENTED DEFINITIONS [NEW]. The
following definitions are new or amended, unless otherwise indicated:
"ADDITIONAL INTEREST" [ADDM IV, (SECTION)22] has the meaning set
forth in section 2.1 of the Management Agreement.
"ALAMOSA MANAGERS" means Manager and the Other Managers controlled
by Alamosa Holdings, Inc.
"ALLOCABLE SOFTWARE FEE" has the meaning set forth in section
1.3.4(f) of the Management Agreement.
"ALLOCATED WRITE-OFFS" has the meaning set forth in section 10.3.4
of the Management Agreement.
"AMOUNT BILLED (NET OF CUSTOMER CREDITS)" has the meaning set
forth in section 10.3.3 of the Management Agreement.
"ASSESSMENT DATE" [ADDM IV, (SECTION)22] has the meaning set forth
in section 2.1 of the Management Agreement.
"AWAY NETWORK" means: (i) in the case of Customers (as defined
below) with an NPA-NXX of Manager (or any other such designation in
accordance with section 17.17 of the Management Agreement), any portion
of the Sprint PCS Network other than Manager's Service Area Network,
and (ii) in the case of Customers with an NPA-NXX of Sprint PCS or
Other Managers (or any other
52
such designation in accordance with section 17.17 of the Management
Agreement), Manager's Service Area Network.
"BILLED COMPONENT(S)" has the meaning set forth in section 10.3.2
of the Management Agreement.
"BILLED MONTH" has the meaning set forth in section 10.2.1 of the
Management Agreement.
"BILLED REVENUE" has the meaning set forth in section 10.2.1 of
the Management Agreement.
"CCPU SERVICES" has the meaning set forth in section 2.1.1 of the
Services Agreement.
"CELL SITE(S)" [ADDM IV, (SECTION)22] has the meaning set forth in
section 2.1 of the Management Agreement.
"CHANGE OF CONTROL TRANSACTION" [ADDM IV, (SECTION)22] has the
meaning set forth in section 2.1 of the Management Agreement.
"CHIEF FINANCIAL OFFICER OF SPRINT PCS", "SPRINT PCS CHIEF
FINANCIAL OFFICER" and other references to the Chief Financial Officer
of Sprint PCS mean the Senior Vice President - Finance of Sprint
Corporation designated to serve as the chief financial officer of
Sprint PCS or if none, the individual serving in that capacity.
"COMPLETION DATE" [ADDM IV, (SECTION)22] has the meaning set forth
in section 2.1 of the Management Agreement.
"CPGA SERVICES" has the meaning set forth in section 2.1.1 of the
Services Agreement.
"CSA" has the meaning set forth in section 10.2.1 of the
Management Agreement.
"CUSTOMER" means any customer, except Sprint PCS Reseller
Customers or customers of third parties for which Manager provides
solely switching services, who purchases Sprint PCS Products and
Services, regardless of where their NPA-NXX is assigned.
"CUSTOMER CREDITS" has the meaning set forth in section 10.2.1 of
the Management Agreement.
"CUSTOMER EQUIPMENT CHARGES" has the meaning set forth in section
10.3.2.6 of the Management Agreement.
53
"CUSTOMER EQUIPMENT CREDITS" has the meaning set forth in section
10.3.2.2 of the Management Agreement.
"CUSTOMER TAXES" has the meaning set forth in section 10.3.2.4 of
the Management Agreement.
"ENTERPRISE VALUE" means the combined book value of an entity's
outstanding debt and preferred stock less cash plus the fair market
value of each class of its publicly-traded equity other than any
publicly-traded preferred stock. For the purposes of this definition of
Enterprise Value, the fair market value of a class of an entity's
publicly-traded equity (other than publicly-traded preferred stock)
shall be equal to the product of (i) the number of issued and
outstanding shares of such class of publicly-traded equity as of the
date of determination, times (ii) the applicable average closing price
(or average closing bid, if traded on the over-the-counter market) per
share of such class of publicly-traded equity over the 21 consecutive
trading days immediately preceding the date of determination.
"EQUIPMENT REPLACEMENT PROGRAM FEES" has the meaning set forth in
section 10.3.2.5 of the Management Agreement.
"ETC" has the meaning set forth in section 10.6.1 of the
Management Agreement.
"E911 SURCHARGES" has the meaning set forth in section 10.3.2.7 of
the Management Agreement.
"FEE BASED ON BILLED REVENUE" has the meaning set forth in section
10.2.1 of the Management Agreement.
"GROSS CUSTOMER ADDITIONS IN MANAGER'S SERVICE AREA" means the
average number of Sprint PCS customers activated (without taking into
consideration the number of Sprint PCS customers lost) during the
previous month with an NPA-NXX assigned to the Service Area as reported
in Sprint PCS' most recent monthly KPI report.
"INITIAL 3G DATA FEE PERIOD" has the meaning set forth in section
10.4.1.3(a) of the Management Agreement.
"INITIAL PRICING PERIOD" has the meaning set forth in section
3.2.1 of the Services Agreement.
"INTER SERVICE AREA FEE" has the meaning set forth in section 4.3
of the Management Agreement.
"INVESTMENT BANKER" has the meaning set forth in section 9.3.1 of
the Management Agreement.
54
"MANAGER ACCOUNTS" has the meaning set forth in section 10.2.1 of
the Management Agreement.
"MANAGER MANAGEMENT REPORT" has the meaning set forth in section
12.1.2 of the Management Agreement.
"NET BILLED REVENUE" has the meaning set forth in section 10.2.1
of the Management Agreement.
"NPA-NXX" means NPA-NXX or an equivalent identifier, such as a
network access identifier (NAI).
"NUMBER OF CUSTOMERS IN MANAGER'S SERVICE AREA" means the average
number of Sprint PCS customers with NPA-NXXs assigned to the Service
Area reported in Sprint PCS' most recent monthly KPI report.
"OPERATIONAL AND NETWORK READY" and "OPERATIONAL AND NETWORK
READINESS" [ADDM IV, (SECTION)22] have the meaning set forth in section
2.1 of the Management Agreement.
"OTHER AFFILIATES" [ADDM IV, (SECTION)19] has the meaning set
forth in section 17.29 of the Management Agreement.
"OUTBOUND ROAMING FEES" has the meaning set forth in section
10.3.2.3 of the Management Agreement.
"OVERALL CHANGES" has the meaning set forth in section
1.10(a)(ii).
"PENALTY AMOUNT" [ADDM IV, (SECTION)22] has the meaning set forth
in section 2.1 of the Management Agreement.
"PROGRAM REQUIREMENT CHANGE" has the meaning set forth in section
9.3.1.
"RF STANDARDS" [ADDM IV, (SECTION)22] has the meaning set forth in
section 2.1 of the Management Agreement.
"SCCLP" has the meaning set forth in section 3.4.2 of the
Management Agreement.
"SERVICE AREA NETWORK" means the network that is directly required
for the provision of telecommunications services to Customers and is
managed by Manager under the Management Agreement in the Service Area
under the License.
"SERVICES" has the meaning set forth in section 2.1.1 of the
Services Agreement.
55
"SETTLED-SEPARATELY MANAGER EXPENSES" has the meaning set forth in
section 3.2.5 of the Services Agreement.
"SIMILARLY SITUATED MANAGER" means any Other Manager whose
ultimate parent entity (as defined by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976) controls entities with 3 million or more
covered pops.
"SOFTWARE FEES" means costs associated (including applicable
license fees) with procuring software, software maintenance, software
upgrades and other software costs needed to provide uniform and
consistent operation of the wireless systems within the Sprint PCS
Network.
"SPRINT PCS" means any or all of the following Related Parties who
are License holders or signatories to the Management Agreement: Sprint
Spectrum L.P., a Delaware limited partnership, WirelessCo, L.P., a
Delaware limited partnership, SprintCom, Inc., a Kansas corporation,
PhillieCo Partners I, L.P., a Delaware limited partnership, PhillieCo,
L.P., a Delaware limited partnership, Sprint Telephony PCS, L.P., a
Delaware limited partnership, Sprint PCS License, L.L.C., a Delaware
limited liability company, American PCS Communications, LLC, a Delaware
limited liability company, and APC PCS, LLC, a Delaware limited
liability company. Any reference in the Management Agreement or
Services Agreement to Cox Communications PCS, L.P., a Delaware limited
partnership, or Cox PCS License, L.L.C., a Delaware limited liability
company, is changed to Sprint Telephony PCS, L.P., a Delaware limited
partnership, or Sprint PCS License, L.L.C., a Delaware limited
liability company, respectively, to reflect name changes filed with the
Delaware Secretary of State in 2002.
"SPRINT PCS CCPU" means the cash cost per user for the
most-recently publicly announced quarter by Sprint PCS or its Related
Parties. Sprint PCS CCPU is generally calculated by dividing costs of
wireless service revenues, service delivery and other general and
administrative costs by weighted average monthly wireless subscribers.
CCPU is a measure analysts use to evaluate the cash costs to operate
the business on a per user basis.
"SPRINT PCS CPGA" means the cost per gross addition for the
most-recently publicly announced quarter by Sprint PCS or its Related
Parties. Sprint PCS CPGA is calculated by dividing the aggregate costs
of acquiring new wireless subscribers, including equipment subsidies,
marketing costs and selling expenses, by gross additional subscribers.
Analysts use this measure in conjunction with the other measures to
evaluate the profitability of the operation.
"SPRINT PCS RESELLER CUSTOMER" means customers of companies or
organizations with a Private Label PCS Services or similar resale
agreement with Sprint PCS.
"SUBSIDY FUNDS" has the meaning set forth in section 10.6.1 of the
Management Agreement.
56
"TRANSITION DATE" has the meaning set forth in section 10.12.4 of
the Management Agreement.
"TYPE II REPORT" has the meaning set forth in section 12.1.2 of
the Management Agreement.
"USF CHARGES" has the meaning set forth in section 10.3.2.8 of the
Management Agreement.
"VENDOR SOFTWARE" has the meaning set forth in section 1.3.4(b).
"WRITE-OFFS" has the meaning set forth in section 10.3.1 of the
Management Agreement.
"90-DAY THRESHOLD" [ADDM IV, (SECTION)22] has the meaning set
forth in section 2.1 of the Management Agreement.
"180-DAY THRESHOLD" [ADDM IV, (SECTION)22] has the meaning set
forth in section 2.1 of the Management Agreement.
B. CROSS-REFERENCES TO OTHER PARAGRAPHS IN PREVIOUS ADDENDA.
Listed below are those paragraphs in the previous addenda that are
interpretations or applications of the Management Agreement and the Services
Agreement and that are not listed above. These serve as cross-references to
facilitate finding provisions in the previous addenda. The number shown at the
beginning of each item is the paragraph reference in the designated Addendum.
Addendum I - superseded by Addendum IV
Addendum II - superseded by Addendum IV
Addendum III - superseded by Addendum IV
Addendum IV
1. Restatement of Management Agreement
2. Restatement of Schedule of Definitions
4. Use of Loan Proceeds
6. Financing Plan
12. Expiration of Limited Remedies Period
23. Enforceability
24. Consent and Agreement ("C&A") Not Assignable
26. Reaffirmation of Sprint Agreements
27. Counterparts
C. OTHER PROVISIONS.
57
1. MANAGER AND SPRINT PCS' REPRESENTATIONS. Manager and Sprint PCS each
represents and warrants that its respective execution, delivery and performance
of its obligations described in this Addendum have been duly authorized by
proper action of its governing body and do not and will not violate any material
agreements to which it is a party. Each of Manager and Sprint PCS also
represents and warrants that there are no legal or other claims, actions,
counterclaims, proceedings or suits, at law or in arbitration or equity, pending
or, to its knowledge, threatened against it, its Related Parties, officers or
directors that question or may affect the validity of this Addendum, the
execution and performance of the transactions contemplated by this Addendum or
that party's right or obligation to consummate the transactions contemplated by
this Addendum.
2. REAFFIRMATION OF SPRINT AGREEMENTS. Each of the undersigned
reaffirms in their entirety the Management Agreement, the Services Agreement and
the Trademark License Agreements, together with their respective rights and
obligations under those agreements.
3. COUNTERPARTS. This Addendum may be executed in one or more
counterparts, including facsimile counterparts, and each counterpart will have
the same force and effect as an original instrument as if the parties to the
aggregate counterparts had signed the same instrument.
[THE REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY.]
58
The parties have caused this Addendum V to be executed as of the date
first above written.
SPRINT SPECTRUM L.P.
By: /s/ Thomas E. Mateer
--------------------------------
Name: Thomas E. Mateer
Title: Vice President - Affiliations, PLS & ICS
SPRINTCOM, INC.
By: /s/ Thomas E. Mateer
--------------------------------
Name: Thomas E. Mateer
Title: Vice President - Affiliations, PLS & ICS
WIRELESSCO, L.P.
By: /s/ Thomas E. Mateer
--------------------------------
Name: Thomas E. Mateer
Title: Vice President - Affiliations, PLS & ICS
SPRINT COMMUNICATIONS COMPANY L.P.
By: /s/ William K. White
--------------------------------
Name: William K. White
Title: Senior Vice President - Communication
& Brand Management
59
SOUTHWEST PCS, L.P.
an Oklahoma limited partnership
By: SWGP, L.L.C.
an Oklahoma limited liability company,
as its general partner
By: /s/ David E. Sharbutt
--------------------------------
David E. Sharbutt,
Manager
60
EXHIBIT 1
ILLUSTRATIVE CALCULATION FOR CASH SETTLEMENT
ILLUSTRATIVE ONLY
- -----------------------------------------------------------------------------------------------------------
MONTH 1
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
Write-offs ((Section)10.3.1) $ 1,235
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
Billed Revenue ((Section)10.2.1) $ 10,350
- -----------------------------------------------------------------------------------------------------------
Customer Credits ((Section)10.2.1) (970)
- -----------------------------------------------------------------------------------------------------------
Net Billed Revenue ((Sections)10.2.1 and 10.3.2.1) 9,380 82.5%
- -----------------------------------------------------------------------------------------------------------
Customer Equipment Credits ((Sections)10.2.4 & 10.3.2.2) (66) -0.6%
- -----------------------------------------------------------------------------------------------------------
Outbound Roaming Fees ((Sections)10.2.2 & 10.3.2.3) 235 2.1%
- -----------------------------------------------------------------------------------------------------------
Customer Taxes ((Section)10.3.2.4) 1,323 11.6%
- -----------------------------------------------------------------------------------------------------------
Equipment Replacement Program Fees ((Section)10.3.2.5) 156 1.4%
- -----------------------------------------------------------------------------------------------------------
Customer Equipment Charges ((Section)10.3.2.6) 175 1.5%
- -----------------------------------------------------------------------------------------------------------
E911 Surcharges((Section)10.3.2.7) 91 0.8%
- -----------------------------------------------------------------------------------------------------------
USF Charges ((Section)10.3.2.8) 74 0.7%
- -----------------------------------------------------------------------------------------------------------
Amount Billed (Net of Customer Credits) ((Section)10.3.3) $ 11,368 100.0%
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
FEE CALCULATION
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
Net Billed Revenue ((Sections)10.2.1 and 10.3.2.1) $ 9,380
- -----------------------------------------------------------------------------------------------------------
Allocated Write-off ((Section)10.3.4) (1,019)
- -----------------------------------------------------------------------------------------------------------
$ 8,361
- -----------------------------------------------------------------------------------------------------------
92%
- -----------------------------------------------------------------------------------------------------------
Fee Based on Billed Revenue ((Section)10.2.1) $ 7,692
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
Outbound Roaming Fees ((Section)10.2.2) $ 235
- -----------------------------------------------------------------------------------------------------------
Allocated Write-off (26)
- -----------------------------------------------------------------------------------------------------------
E911 Surcharges - Handsets ((Section)10.2.3) 85
- -----------------------------------------------------------------------------------------------------------
Allocated Write-off (9)
- -----------------------------------------------------------------------------------------------------------
Customer Equipment Credits ((Section)10.2.4) (66)
- -----------------------------------------------------------------------------------------------------------
Allocated Write-off 7
- -----------------------------------------------------------------------------------------------------------
Write-off for Customer Equipment Charges ((Section)10.2.5) (19)
- -----------------------------------------------------------------------------------------------------------
$ 208
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
Total $ 7,900
- -----------------------------------------------------------------------------------------------------------
EXHIBIT 1.7
BUILD-OUT AND WORKING CAPITAL FINANCING
o Alamosa Holdings, Inc. and its direct and indirect subsidiaries, have
received equity contributions and debt financing that exceed in the aggregate
$947 million. Alamosa Holdings, Inc. is the ultimate parent of Texas
Telecommunications, LP, Alamosa Wisconsin Limited Partnership, Alamosa Missouri,
LLC, Washington Oregon Wireless LLC and Southwest PCS, LP (each a "Manager"
under a separate Management Agreement with Sprint PCS, and collectively the
"Managers"). This capital has been and will be made available to the Managers
when needed to fund the build-out (requirements to date are substantially
complete) and operations of their PCS systems and to perform their obligations
under their respective Sprint Agreements. The following summarizes the sources
of funds:
- ---------------------------------------------------------------------------
(dollars in thousands) CONTRIBUTED
AMOUNTS AND
NET PROCEEDS
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
EQUITY $ 283,061
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
SENIOR SECURED DEBT 225,000
(includes $25 million in undrawn revolver)
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
SENIOR NOTES:
- ---------------------------------------------------------------------------
12.875% SENIOR DISCOUNT NOTES 180,515
- ---------------------------------------------------------------------------
12.50% SENIOR NOTES 182,807
- ---------------------------------------------------------------------------
13.625% SENIOR NOTES 101,306
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
TOTAL $ 972,689
- --------------------------------------------------------===================
Alamosa Holdings, Inc. and its direct and indirect subsidiaries, have undertaken
a restructuring to adjust the capital structure. The restructuring includes an
exchange of existing bonds for: a) new notes representing 65% of accreted value;
b) preferred stock with a liquidation value of 25% of accreted value,
convertible into 35% of the common equity of Alamosa Holdings, Inc.; and c)
extinguishment of 10% of the accreted value. The following summarizes the effect
on existing Senior Note categories, new Senior Note categories and new Preferred
Stock:
- --------------------------------------------------------------------------------
(dollars in thousands) PRE- POST-
RESTRUCTURE RESTRUCTURE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SENIOR NOTES*
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
12.875% SENIOR DISCOUNT NOTES $ 298,443 $ -
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
12.50% SENIOR NOTES 250,000 -
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
13.625% SENIOR NOTES 150,000 -
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NEW 12% SENIOR DISCOUNT NOTES - 193,988
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NEW 11% SENIOR NOTES - 260,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL 698,443 453,988
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PREFERRED STOCK - 174,600
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL $ 698,443 $ 628,588
- ---------------------------------------------===================================
- ---------------------------------------------===================================
- --------------------------------------------------------------------------------
* Assumes 100% of the noteholders agree to exchange for new notes. In the event
that less than 100% agree to exchange, some of the existing notes would
remain outstanding and the new notes would be decreased. Preferred Stock
would also be adjusted to reflect a lower exchange ratio.
- --------------------------------------------------------------------------------
o The funds from contributed capital and net proceeds from borrowings, in
conjunction with capital restructuring, are sufficient to meet all build-out and
working capital requirements.
SCHEDULE 2.1.1
-SECTION A-
PRESENTLY OFFERED CCPU SERVICES - Activity Applied as % to
Sprint PCS reported CCPU
3G Fees
A/P Backhaul/Facility Disputes
Affiliate Utilities
ATM Soft Hand Off
Bank Fees
BI Performance Services - Initiation
BI Performance Services - Maintenance
Bid Cost
Billing
Check Free
Clarify Maintenance Fee
CO Usage
Collection Agency Fees
Conferences
Costs associated with rollout of new products and services
Credit Card Processing/Fees
Customer Care
Customer Solutions - Mature Life
Directory Assistance
DS3
E - Commerce PT
Enhanced Voicemail
Entrance Facility Expenses (Includes Terminating/Trunking Charge)
Ford Revenue
Ford Telematics
Gift Card Payable
Gift Card Receivable
Hal Riney Ad Kit
High Speed Remote Access Server
ICS Clearing House Costs (Includes Illuminet, Roaming Clearing House, and TSI)
IMT Charges
Interconnection
Inter-Machine Trunk
IT (Includes E-Commerce)
LD Verification
LIDB / CNAM
Local Loop, COC, ACF, IXC, etc. (National Platform Expense - Local Loop Cost,
Central Office Connection (COC), access Coordination Fee (ACF),
Co-Location Charges, and Inter Exchange Carrier (IXC) Charges)
Lockbox 261
MCI Disconnect Adjusted
National Platform - COA
National Platform Disputes
National Platform (2G) (Includes Voice Activated Dialing)
Northwest Frequent Flyer
Premium Vision Services
PreNet
Pricing
Pro Text Messaging Plan
Ringers & More (Includes SBF and PT fees)
Roadside Rescue
Sprint Synch Services
Telecheck Charge
Telematics
Text Messaging Plan
TSC Usage
Type 1 Affiliate Long Distance
Voice Command Web
Wireless Web
-SECTION B-
PRESENTLY OFFERED CPGA SERVICES - Activity Applied as % to
Sprint PCS reported CPGA
500 Minute Promotion Credit
Activations - Customer Solutions
Activations - E-Commerce (Includes On Line (Web) Activations)
Activations - Telesales
Commission Credit
Credit Check Fee
Customer Solutions - Early Life
Demo Phones
EarthLink
Hal Riney Service
Handset Logistics
Local/Indirect Commission
NAM/CAM
One Sprint Telesales
PGA Expenses
PLS Commission
SmartWorks Printing
-SECTION C-
PRESENTLY OFFERED CCPU SERVICES - Activity Settled Separately
Affiliate Project Authorizations
Long Distance
Microwave Clearing
Roaming
Software Fees
Sprint Local Telephone Usage
Taxes Paid on Behalf of Type III Affiliates
Tower Lease
Travel Revenue and Expense
Upgrade Commission - 2 Step Channel
Vendor Usage-Based Charges on New Products
Wholesale Revenue and Expense
-SECTION D-
PRESENTLY OFFERED CPGA SERVICES -Activity Settled Separately
3G Device Logistics Fee
3rd Party Spiffs
Accessory Margin
Commissions - National 3rd Party
Commissions - Other 3rd Party
Coop Advertising - Local 3rd Party
Coop Advertising - National 3rd Party
Handset returns
Handset subsidies
Handsets
Marketing Collateral
Meeting Competition Fund
RadioShack Promos (Includes RadioShack Golden Quarter,
Jumpstart, Relaunch, Sprint to Vegas, and Break the Bank)
Rebate Administrative Expense
Rebates
Reciprocal Retail Store Cost Recovery
Sprint LDD Commission
Third Party Promotions
Upgrade Commission - RadioShack