EXHIBIT 10.7.1
ADDENDUM IV
TO
SPRINT PCS MANAGEMENT AGREEMENT AND
SPRINT PCS SERVICES AGREEMENT
AMENDING THESE AGREEMENTS FURTHER AND RESTATING CERTAIN SECTIONS AND PARAGRAPHS
IN
ADDENDA I THROUGH III
Dated as of March 16, 2005
MANAGER: BRIGHT PERSONAL COMMUNICATIONS SERVICES LLC
SERVICE AREA BTAs: Battle Creek, MI #33
Benton Harbor, MI #39
Dayton-Springfield, OH #106
Elkhart, IN #126
Findlay-Tiffin, OH #143
Fort Wayne, IN #155
Kalamazoo, MI #223
Kokomo-Logansport, IN #233
Lima, OH #255
Marion, IN #280
Michigan City-La Porte, IN #294
South Bend-Mishawaka, IN #424
Toledo, OH #444
This Addendum IV (this "ADDENDUM") contains amendments to the Sprint
PCS Management Agreement, the Sprint PCS Services Agreement, the Sprint
Trademark and Service Mark License Agreement and the Sprint Spectrum Trademark
and Service Mark License Agreement, each of which was entered into on October
13, 1999 by the same parties to this Addendum. The Management Agreement,
Services Agreement and Trademark License Agreements were amended by:
(1) Addendum I dated as of October 13, 1999,
(2) Addendum II dated as of April 28, 2000, and
(3) Addendum III dated as of September 26, 2000.
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 sections and 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 sections and paragraphs in
addenda executed previously that are not restated in this Addendum (see section
B below).
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The terms and provisions of this Addendum control over any
conflicting terms and provisions contained in the Management Agreement, the
Services Agreement, the Trademark License Agreements and the Schedule of
Definitions. The Management Agreement, the Services Agreement, the Trademark
Licenses Agreements, the Schedule of Definitions and all prior addenda continue
in full force and effect, except for express modifications made in this
Addendum. This Addendum does not change the effective date of any prior
amendment made to the Management Agreement, the Services Agreement, the
Trademark License Agreements or the Schedule of Definitions through previously
executed addenda.
Capitalized terms used and not otherwise defined in this Addendum
have the meaning ascribed to them in the Schedule of Definitions or in prior
addenda. Section and Exhibit references are to sections and Exhibits of the
Management Agreement unless otherwise noted.
The parties are executing this Addendum as of the date noted above,
but the terms of this Addendum are effective as of January 1, 2005 (the
"EFFECTIVE DATE").
On the Effective Date the Management Agreement, the Services
Agreement, the Trademark License Agreements and the Schedule of Definitions are
amended and restated as follows:
A. NEW AMENDMENTS AND RESTATEMENT OF PREVIOUS AMENDMENTS TO SPRINT PCS
AGREEMENTS.
MANAGEMENT AGREEMENT
1. PROGRAM REQUIREMENTS [ADDM I, SECTION 1]. Section 1.2 is amended to
read as follows:
1.2 PROGRAM REQUIREMENTS. Subject to section 9.2 of this Agreement,
manager must adhere to the Program Requirements established by Sprint PCS
and as modified from time to time, to ensure uniform and consistent
operation of all wireless systems within the Sprint PCS Network and to
present the Sprint PCS Products and Services to customers in a uniform and
consistent manner under the Brands.
2. 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.
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Insert: "1.3.3 EXCLUSIVE USE." before the third paragraph.
Add a new section 1.3.4 as follows:
1.3.4 SOFTWARE FEES.
(a) Manager acknowledges that Sprint PCS administers the testing and
implementation of the Software (i.e., pushing of the Software) into the Service
Area Network.
(b) Sprint PCS, when obtaining software for its own use that is identical
to the Software, will use commercially reasonable efforts to obtain a license
from vendors (each, a "VENDOR" and collectively, "VENDORS") providing for the
right of Manager to use the Software in connection with telecommunications
equipment manufactured by a Vendor (collectively the software obtained by Sprint
PCS for its own use and the Software that operates on telecommunications
equipment manufactured by a Vendor are for purposes of this section 1.3.4, the
"VENDOR SOFTWARE"; when the term "Vendor Software" is used with respect to
Manager, it means only the Software, and not the software used only by Sprint
PCS).
(c) Manager will arrange independently with a Vendor to obtain a license
if Sprint PCS cannot reasonably obtain a license for Manager. Any license that
Manager obtains from the Vendor must require the Vendor Software to be tested in
Sprint PCS test beds by Sprint PCS and require Sprint PCS, not a Vendor or
Manager, to push the Vendor Software to the Service Area Network unless Sprint
PCS otherwise consents in advance in writing, in each case, at no cost to
Manager. Sprint PCS agrees to test the Vendor Software in Sprint PCS test beds
within a reasonable period after Manager reasonably requests the tests in
writing.
(d) Sprint PCS will:
(i) notify Manager in writing at least 60 days before the date
of an automatic renewal of, or Sprint PCS' unilateral act to renew
or extend, an agreement that provides Sprint PCS the right to use
the Vendor Software, and
(ii) use reasonable efforts to notify Manager in writing
before the date Sprint PCS intends to start negotiations with a
Vendor regarding extension, renewal, pricing or other material terms
relating to Sprint PCS' and Manager's right to use the Vendor
Software (whether for new Software or renewal of an existing
license), and at least 60 days before the date Sprint PCS executes
an agreement, extension or renewal.
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The notice by Sprint PCS will include the material terms and conditions of
any such agreement or negotiations to the extent known at the time of the
notice, including the network elements to be covered by the right to use the
Vendor Software. Manager must notify Sprint PCS in writing within 30 days after
receiving the notice described in the first sentence of this section 1.3.4(d) if
Manager wants Sprint PCS to attempt to obtain or continue the right for Manager
to use the Vendor Software. Sprint PCS will renew or negotiate the agreement as
if Manager will not be a user of the Vendor Software if Manager does not provide
notice to Sprint PCS within the 30-day period. However, Sprint PCS may obtain
pricing from a Vendor for the Vendor Software that includes Manager as a user if
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 a
Vendor. Sprint PCS will use reasonable efforts to give Manager notice of the
final pricing for the right to use the Vendor Software no less than 20 days
before the expected execution or renewal of the agreement; provided that, in any
event, Sprint PCS will give Manager notice of the final pricing no less than 5
Business Days before the expected execution or renewal of the agreement. If
necessary, Manager agrees to use commercially reasonable efforts to enter into a
nondisclosure agreement with a Vendor to facilitate providing such final pricing
to Manager.
Manager may give Sprint PCS notice by the time set forth in Sprint PCS'
notice to Manager (which time will not be less than 10 Business Days) that
Manager does not intend to use the Vendor Software through the agreement between
Sprint PCS and a Vendor. If Manager does not give this final notice to Sprint
PCS, Manager is deemed to agree to be a user of the Vendor Software through the
agreement between Sprint PCS and a Vendor and will pay the Allocable Software
Fee (as defined below). Within 15 Business Days prior to execution of an
agreement between Sprint PCS and a Vendor, Sprint PCS will provide to Manager a
forecast of Manager's estimated Allocable Software Fee, the estimated payment
due dates relating to the Allocable Software Fee, and the proportion of
Manager's Allocable Software Fee forecast to be due on each payment due date,
all based on the then-current status of negotiations between Sprint PCS and the
Vendor.
Sprint PCS does not have to obtain a license for Vendor Software for
Manager, even if Manager requests Sprint PCS to obtain such license, if at any
time before execution of the agreements granting the license Sprint PCS
reasonably believes that Manager is more likely than not to unreasonably refuse
to pay the Allocable Software Fee or Sprint PCS reasonably believes that the
Manager is in such financial condition that Manager is more likely than not to
be unable to pay the Allocable Software Fee.
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If Manager accepts the Vendor Software, Sprint will (i) give Manager
Manager's proportional share of any cash benefits relating specifically to the
Vendor Software that Sprint PCS obtains from a Vendor, and (ii) to the extent
the other benefits are available practically to be divided, Sprint PCS will use
commercially reasonable efforts to provide Manager with its proportional share
of the other benefits, including training, relating specifically to the Vendor
Software.
(e) Sprint PCS will pay all Software Fees relating to the Vendor Software
to a Vendor if Sprint PCS obtains a license from a Vendor that provides Manager
the right to use the Vendor Software and Manager agrees to pay any applicable
Allocable Software Fee in accordance with this section 1.3.4(e). Manager will be
deemed to agree to pay any applicable Allocable Software Fee if both:
(i) Manager has not taken the action described in paragraph
(d) above to decline obtaining the right to use the Vendor Software
through the agreement between Sprint PCS and a Vendor, and
(ii) Sprint PCS obtains a license providing for the right of
Manager to use the Vendor Software.
Otherwise, Manager will not be charged the Allocable Software Fee.
Manager will pay Sprint PCS the Allocable Software Fee within 30 days
after receipt of an invoice in the event that clauses (i) and (ii) of section
1.3.4(e) above are satisfied. Sprint PCS will invoice Manager only after Sprint
PCS pays the underlying Software Fee to a Vendor. The Allocable Software Fee
will not include any amount for Software that is the same as or functionally
equivalent to any Software (y) that is a component of any service for which a
fee is charged under the Services Agreement or (z) for which Sprint PCS
otherwise charges Manager under this agreement.
Sprint PCS will calculate the "ALLOCABLE SOFTWARE FEE" as follows:
For each Vendor, multiply:
(i) the Total Software Cost of the Software Fees attributable
to the Vendor Software for which Sprint PCS has obtained for itself,
Manager and Other Managers a license or other right to use, by
(ii) the quotient of:
(A) the number of Customers and Reseller Customers with
an NPA-NXX assigned to the Service Area that are assigned to a
system using the Vendor Software, as reported in the most
recent
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monthly report that Sprint PCS issues before the date
that Sprint PCS prepares an Allocable Software Fee
invoice, divided by:
(B) the number of Customers and Reseller Customers
that are assigned to all systems using the Vendor
Software, as reported in the most recent monthly report
that Sprint PCS issues before the date that Sprint PCS
prepares an Allocable Software Fee invoice.
(f) Sprint PCS will include with the invoice for the Allocable
Software Fee a list of the component charges, if available from a Vendor.
The Software Fees that Sprint PCS pays to a Vendor will reflect rates no
greater than commercial rates negotiated at arms' length. For purposes of
clarification, the parties acknowledge a Vendor may insist on a
comprehensive fee without listing each component, but rather asserting
that the fee covers all software necessary to operate the equipment. But
Sprint PCS will provide to Manager a description of all the features and
functionality in reasonable detail for all Software for which Manager is
to pay an Allocable Software Fee.
(g) Manager will not be charged the Allocable Software Fee for the
Vendor Software after Manager:
(i) notifies Sprint PCS in writing within the periods
allowed in section 1.3.4(d) that Manager declines to have
Sprint PCS obtain a right for Manager to use the Vendor
Software or that it does not intend to use the Vendor
Software,
(ii) obtains its own license providing for Manager's
right to use the Vendor Software, and
(iii) complies with the requirements of section
1.3.4(h).
(h) Manager will obtain its own license providing for Manager's
right to use the Vendor Software from a Vendor if Manager elects not to
have Sprint PCS attempt to obtain a right for Manager to use the Vendor
Software under section 1.3.4(d). Manager will notify Sprint PCS in writing
and deliver to Sprint PCS within 10 Business Days after Manager's
execution of Manager's separate license, a signed document from the vendor
confirming that:
(i) a Vendor has provided Manager a separate license for
the necessary software and the term of that license, which
term with appropriate renewal rights, must be at least as long
as the license Sprint PCS has from a Vendor,
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(ii) the fees paid by Manager to a Vendor reflect commercial
rates negotiated at arms' length,
(iii) the Vendor Software covered by Manager's license
provides the usage and functionality necessary for Manager to
operate the Service Area Network in compliance with the Sprint PCS
Technical Program Requirements, and
(iv) the Vendor Software may be tested in Sprint PCS test beds
by Sprint PCS and will be pushed to the Service Area Network by
Sprint PCS, not a Vendor or Manager, unless Sprint PCS otherwise
consents in advance in writing, in each case, at no cost to Manager.
Sprint PCS agrees to test the Vendor Software in Sprint PCS test
beds within a reasonable period after Manager reasonably requests in
writing.
(i) Notwithstanding any provision in this section 1.3.4 to the
contrary, Sprint PCS shall not charge or allocate to Manager, directly or
indirectly, any Allocable Software Fee or any other fee with respect to
the software which Manager has obtained, or will obtain, from Nortel
Networks, Inc., pursuant to the Purchase and License Agreement, between
Manager and Nortel, dated January 11, 2005, with respect to 2005 and 2006.
3. INTERCONNECTION [NEW]. Section 1.4 is amended and restated in its
entirety to read as follows:
If Manager desires to interconnect a portion of the Service Area
Network with another carrier and Sprint PCS can interconnect with that
carrier at a lower rate, then to the extent that applicable laws, tariffs
and agreements permit, Sprint PCS will use commercially reasonable efforts
to arrange for the interconnection under its agreements with the carrier
within a commercially reasonable period. Sprint PCS will bill the
interconnection fees to Manager at actual cost.
4. FORECASTING [NEW]. Section 1.6 is amended and restated in its entirety
to read as follows:
1.6 FORECASTING. Manager and Sprint PCS will work cooperatively to
generate mutually acceptable forecasts of important business metrics that
they agree upon. The forecasts are for planning purposes only and do not
constitute either party's obligation to meet the quantities forecast.
5. FINANCING [ADDM I, SECTION 2, ADDM II, SECTION 4 AND ADDM III SECTION
4]. Section 1.7 is amended and restated in its entirety 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
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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 will not 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.
Sprint PCS agrees to propose modifications to the Management
Agreement, and perhaps to the Schedule of Definitions, the Services
Agreement, the Sprint Trademark and Service Mark License Agreement, and
the Sprint Spectrum Trademark and Service Mark License Agreement, that
will enhance Manager's ability to obtain financing for the Service Area
Network. Sprint PCS will not be required to offer Manager subsequent
modifications offered or agreed to with Other Managers subsequent to the
initial set of modifications.
Manager agrees to give Sprint PCS a copy of all financial
information it gives the Administrative Agent or any Lender.
6. FINANCING PLAN [NEW]. Exhibit 1.7 attached to this Addendum replaces
Exhibit 1.7 attached to Addendum II.
7. INFORMATION [NEW]. A new section 1.9 is added to the Management
Agreement:
1.9 ACCESS TO INFORMATION.
1.9.1 NETWORK OPERATIONS. Manager and Sprint PCS will have
access to, and may monitor, record or otherwise receive, information
processed through equipment, including switches, packet data switching
nodes and cell site equipment, that relates to the provision of Sprint PCS
Products and Services or to the provision of telecommunications services
to Reseller Customers in the Service Area Network, if the access,
monitoring, recording or receipt of the information is accomplished in a
manner that:
(i) Does not unreasonably impede Manager or Sprint PCS
from accessing, monitoring, recording or receiving the
information,
(ii) Does not unreasonably encumber Manager's or Sprint
PCS' operations (including, without limitation, Sprint PCS'
real-time monitoring of the Sprint PCS Network status,
including the Service Area Network),
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(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) Does not result in a material breach of any
agreement regarding the information (e.g., national security
agreements).
Sprint PCS and Manager will immediately notify the other party
and reasonably cooperate to establish new procedures for allowing both
Manager and Sprint PCS to access, monitor, record and receive the
information in a manner that meets the criteria in clauses (i) through
(vii) above if either Manager or Sprint PCS reasonably determines that the
other party is accessing, monitoring, recording or receiving the
information described in this section 1.9.1 in a manner that does not meet
the criteria in clauses (i) through (vii) above.
Manager owns the information regarding the performance of its
equipment. Each of Manager and Sprint PCS may use the information obtained
under this section 1.9.1 for any reasonable internal business purpose,
during the term of and after termination of this agreement, the Services
Agreement and the Trademark License Agreements, so long as the use would
be in accordance with those agreements if those agreements were still in
effect.
1.9.2 CUSTOMER INFORMATION. Manager is entitled to receive
information Sprint PCS accesses, monitors, compiles, records or receives
concerning the Service Area Network or the Customers with NPA-NXXs
assigned to Manager's Service Area, subject to the terms of this section
1.9.2 and section 1.9.3 and Manager's compliance with CPNI requirements
and any other legal requirements applicable to the information.
Sprint PCS will provide the information in the format that
Manager requests at no additional charge to Manager if Sprint PCS
accesses, monitors, compiles, records, receives or reports for its own use
the information that Manager requests in the same or substantially the
same format as Manager requests. Sprint PCS will use commercially
reasonable efforts to provide the information within 5 Business Days.
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If Sprint PCS accesses, monitors, compiles, records, receives
or reports for its own use the information that Manager requests, but not
in the same or substantially the same format that Manager requests, then
Sprint PCS may provide the information in the format that Manager requests
or substantially the same format as Manager requests if Manager agrees to
pay or reimburse Sprint PCS for the costs Sprint PCS reasonably incurs.
Sprint PCS will use commercially reasonable efforts to provide the
requested information within 15 Business Days.
If Sprint PCS accesses, monitors, compiles, records or
receives the information requested by Manager, but not in the same or
substantially the same format that Manager requests, then Sprint PCS will
provide the requested information as raw data, if:
(i) Sprint PCS chooses not to provide the information as
described in the preceding paragraph, and
(ii) Manager agrees to pay or reimburse Sprint PCS for the
costs Sprint PCS reasonably incurs.
Sprint PCS will use commercially reasonable efforts to provide the raw
data within 15 Business Days.
Sprint PCS owns the information regarding the Customers. Each
of Manager and Sprint PCS may use the information obtained under this
section 1.9.2 during the term of and after termination of this agreement,
the Services Agreement and the Trademark License Agreements so long as the
use would be in accordance with those agreements if those agreements were
still in effect.
1.9.3 LIMITATIONS AND OBLIGATIONS. Sprint PCS does not have to
provide any information that Manager reasonably requests under this
agreement or the Services Agreement that:
(i) Manager can obtain itself in accordance with section
1.9.1 on a commercially reasonable basis (if Sprint PCS has
provided Manager with any necessary specifications requested
by Manager as to how to obtain the information), unless Sprint
PCS already has the information in its possession and has not
previously delivered it to Manager,
(ii) Sprint PCS no longer maintains, consistent with
Sprint PCS' document retention policy,
(iii) Manager has already received from Sprint PCS or
its Related Parties,
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(iv) Sprint PCS does not access, monitor, compile,
record, receive or report, or
(v) Sprint PCS must make system modifications to provide
the raw data, including without limitation modifying or adding
data fields or modifying code.
Sprint PCS will provide Manager a copy of the then-current Sprint
PCS document retention policy from time to time.
1.9.4 CONTRACTS. Sprint PCS will disclose to Manager the relevant
terms and conditions of any agreement and amendment between Sprint PCS and
any third party, including National Third Party Retail Agreements and
handset vendor agreements, and any agreement and amendment between Sprint
PCS and its Related Parties:
(i) with which Manager must comply, directly or
indirectly, under the Management Agreement, the Services
Agreement or any Program Requirement,
(ii) from which Manager is entitled to any benefit, or
(iii) that relate to or generate any pass-through
amounts that Sprint PCS charges Manager under this agreement
or Settled-Separately Manager Expenses under the Services
Agreement.
In each case Sprint PCS' disclosure will be in sufficient detail to enable
Manager to determine the obligations or benefits with which Manager must
comply or benefit or the charges or expenses to be paid by Manager. Sprint
PCS may provide to Manager copies of the agreements or the relevant terms
and conditions of such agreements in electronic format upon notice to
Manager, including by posting the copies or relevant terms and conditions
to a secure website to which Manager has access. Once each calendar year
and from time to time when a change is effected to any relevant term or
condition, Manager may request copies of the agreements that are not
posted to the secure website or whose relevant terms and conditions are
not posted to the secure website.
Sprint PCS will provide a copy of the agreement to Manager to the
extent permissible by the terms of the agreement within 30 days after
execution of the agreement. Sprint PCS will allow Manager or its
representatives to review a copy of the agreement to the extent
permissible by the agreement if the agreement prohibits Sprint PCS from
providing Manager a copy. Sprint PCS will satisfy the requirements of this
section 1.9.4 if it chooses to provide a copy of the agreement in
electronic form on a server that Sprint PCS designates. Sprint PCS will
use commercially
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reasonable efforts to obtain the right from the third party, if required,
to provide a complete copy to Manager of any agreement between Sprint PCS
and any third party of the type described in this section 1.9.4.
8. 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 Addendum IV and ending
December 31, 2006, any of the terms of a 3M-pops Manager's Management
Agreement or Services Agreement are amended in any manner for any reason
to be more favorable to the 3M-pops Manager than the terms of Manager's
Management Agreement or Services Agreement are to Manager, subject to the
following:
(a) Manager must elect to accept all, but not less than all,
of the terms of the 3M-pops Manager's Management Agreement and
Services Agreement agreed to since the Effective Date (collectively,
but excluding the changes described in paragraphs (b) and (c) below,
the "OVERALL CHANGES"),
(b) Manager will not be required to accept any changes
involving payment of specific disputed amounts arising under the
Management Agreement or Services Agreement of the 3M-pops Manager,
and
(c) No amendments in Manager's Management Agreement and
Services Agreement will be made to reflect changes made in a 3M-pops
Manager's Management Agreement and Services Agreement if such
changes:
(i) are made solely because the 3M-pops Manager owns
spectrum on which all or a portion of its network operates,
unless the 3M-pops Manager acquired this spectrum from Sprint
PCS or its Related Parties after the Effective Date, or
(ii) are compelled by a law, rule or regulation that
applies to the 3M-pops Manager, but not to Manager,
(iii) relate to unique terms or conditions, or
(iv) are made solely to modify the build-out plan.
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Sprint PCS will prepare and deliver to Manager either an addendum
containing the Overall Changes that have been made to the 3M-pops
Manager's agreements in all of its addenda or copies of the 3M-pops
Manager's amended and restated Management Agreement, Services Agreement
and Trademark License Agreements (in each case redacted to protect the
identity of the 3M-pops Manager) within 10 Business Days after the later
of the effective date expressly stated in the addendum or other instrument
containing these changes and the date of the addendum or other instrument.
Manager then has 30 days to notify Sprint PCS that Manager wants the
Overall Changes. If Sprint PCS provides Manager with redacted copies of
the documents as permitted in the first sentence of this paragraph, then
upon Manager's request made within 10 days after Sprint PCS delivers the
documents, Sprint PCS will prepare and deliver an addendum containing the
Overall Changes within 10 days after Manager's request, and Manager then
has 10 days to notify Sprint PCS that Manager wants the Overall Changes.
For purposes of clarification, if the amendment or other instrument
between Sprint PCS and the 3M-pops Manager provides or defines a specific
date that is the effective date of that amendment or other instrument then
the 10 Business Day period will begin on that specific date.
If Manager does not notify Sprint PCS in this 30-day time period in
writing that it wants the Overall Changes, no changes will be made in the
agreements between Manager and Sprint PCS and Manager will be deemed to
have waived its rights under this section 1.10 with respect to the Overall
Changes.
If Manager notifies Sprint PCS within the 30-day period in writing
that it wants the Overall Changes, Sprint PCS will prepare, execute and
deliver to Manager an addendum reflecting the Overall Changes. The new
addendum will have the same effective date as the addendum or the restated
Management Agreement, Services Agreement and Trademark License Agreements
between Sprint PCS and the 3M-pops Manager that gave rise to the new
addendum. For purposes of clarification, if the addendum or other
instrument between Sprint PCS and the 3M-pops Manager provides or defines
a specific date that is the effective date of that addendum or other
instrument then the effective date of the new addendum will be the same as
that specific date. Manager will have 15 days to review the new addendum
and notify Sprint PCS if Manager determines any inaccuracies are reflected
in the new addendum. Sprint will correct those inaccuracies and provide a
corrected new addendum to Manager within 10 Business Days after Manager's
notification.
No changes will be made in the agreements between Manager and Sprint
PCS if Manager does not execute and return the signed addendum within 30
days after receipt of the signed addendum (or the corrected
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signed addendum, if applicable, pursuant to the previous paragraph), in
which case Manager will be deemed to have waived its rights under this
section 1.10 with respect to the Overall Changes contained in the addendum
presented.
If Manager and Sprint PCS disagree as to whether the terms of the
signed addendum accurately reflect the Overall Changes, then the parties
will submit to binding arbitration in accordance with section 14.2,
excluding the escalation process set forth in section 14.1. If the arbiter
rules in favor of Manager, then Sprint PCS will make changes to the signed
addendum that are necessary to reflect the arbiter's ruling and submit the
revised signed addendum to Manager within 10 days after receipt of the
arbiter's ruling. If the arbiter rules in favor of Sprint PCS, then
Manager will have 10 Business Days to either: (i) execute the signed
addendum as proffered to Manager or (ii) decline to accept the addendum
and pay all of Sprint PCS' expenses and reasonable attorneys' fees related
to the arbitration.
The parties acknowledge that Sprint PCS can disclose to Manager who
the 3M-pops Manager is that gave rise to the proposed addendum only if the
3M-pops Manager agrees to the disclosure.
Sprint PCS represents and warrants that the draft of Addendum IV
presented to Horizon Personal Communications, Inc. on March 1, 2005 was
the then-current version of a pricing simplification addendum entered into
by Sprint PCS with any other 3M-pops Manager and that there have been no
subsequent agreements between Sprint PCS and 3M-pops Managers relative to
their price simplification addenda. In some instances, Sprint PCS has
given Manager the option to choose between different approaches taken by
3M-pops Managers in their price simplification addenda.
9. REVISED BUILD-OUT PLAN [ADDM II, SECTION 8; REVISED BY THIS ADDENDUM].
Exhibit 2.1 attached to Addendum II supersedes and replaces Exhibit 2.1 to the
Management Agreement. Sprint PCS hereby acknowledges and agrees that Manager has
satisfied all of its required network build-out requirements under Exhibit 2.1
of the Management Agreement, as modified by Addendum II.
10. DISTRIBUTION OF FIXED WIRELESS LOCAL LOOP [ADDM I, SECTION 3; REVISED
BY THIS ADDENDUM]. Section 2.4 is supplemented with the following language:
In any geographic area within the Service Area in which a member of
Manager operated as an incumbent local exchange carrier as of October 13,
1999, Manager may designate such member as the exclusive distributor of
the fixed wireless local loop product in the territory served by such
local exchange carrier.
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11. COVERAGE ENHANCEMENT [NEW]. Section 2.5 is amended and restated in its
entirety to read as follows:
2.5 MANAGER'S RIGHT OF FIRST REFUSAL FOR NEW COVERAGE BUILD-OUT. If
Sprint PCS desires New Coverage to be built out, then Sprint PCS will
grant to Manager the right of first refusal to build-out that 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,
otherwise Manager's right of first refusal terminates with regard to the
New Coverage described in the notice.
Manager may build out additional coverage in the Service Area that
is not required under the Build-out Plan by giving Sprint PCS notice of
such election, except that Manager may not build out coverage for which
its right of first refusal has terminated pursuant to this section 2.5.
If Manager decides to build-out the New Coverage or exercises its
right of first refusal, then Manager and Sprint PCS will diligently
negotiate and execute an amendment to the Build-out Plan and proceed as
set forth in sections 2.1 and 2.2. The amended Build-out Plan will contain
critical milestones that provide Manager a commercially reasonable period
in which to implement coverage in the New Coverage. In determining what
constitutes a "commercially reasonable period" as used in this paragraph,
the parties will consider several factors, including local zoning
processes and other legal requirements, weather conditions, equipment
delivery schedules, the need to arrange additional financing, and other
construction already in progress by Manager. Manager will construct and
operate the network in the New Coverage in accordance with the terms of
this agreement.
If Manager declines to exercise its right of first refusal or
Manager fails to build out the New Coverage in accordance with the amended
Build-out Plan, then Sprint PCS may construct the New Coverage itself or
allow a Sprint PCS Related Party, an Other Manager or another third party
to construct 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, any Other Manager or any
other third party (with respect to such Other Manager or 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 the New Coverage
within 150 days after 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 Other Manager or
other third party to build-out the New Coverage, then any build-out of the
New Coverage will again be subject to Manager's right of
15
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 Sprint PCS Related Party, an Other Manager or
another third party, to manage the network, allow a Sprint PCS Related
Party to manage the network, or hire an Other Manager or other third party
to operate the network in the New Coverage. Any New Coverage that Sprint
PCS, a Sprint PCS Related Party, an Other Manager or another third party
builds out is deemed removed from the Service Area and the Service Area
Exhibit is deemed amended to reflect the change in the Service Area.
If Manager does not exercise its right of first refusal with respect
to a New Coverage, Manager's right of first refusal does not terminate
with respect to the remainder of the Service Area.
At Manager's request, Sprint PCS and Manager will discuss Manager's
interest in expanding its Service Area and its build-out plans with
respect to the expanded area.
12. SPRINT PCS PRODUCTS AND SERVICES [NEW].
(a) The following paragraph is added at the end of section 3.1 of the
Management Agreement:
To facilitate Manager's performance of its obligations under this
agreement, Sprint PCS will use commercially reasonable efforts to
provide adequate quantities of any equipment necessary for Manager
to offer for sale, promote and support the Sprint PCS Products and
Services.
(b) Section 3.2 (Other Products and Services) is amended and restated in
its entirety as follows:
3.2 OTHER PRODUCTS AND SERVICES. (a) Manager may offer
wireless products and services that are not Sprint PCS Products and
Services on terms Manager determines if such additional products and
services:
(i) do not violate the obligations of Manager under this
agreement;
(ii) do not cause distribution channel conflict with or
consumer confusion regarding Sprint PCS' regional and national
offerings of Sprint PCS Products and Services;
(iii) comply with the Trademark License Agreements; and
16
(iv) do not materially impede the development of the Sprint
PCS Network.
Manager will not offer any products or services under this
section 3.2 that: (i) are confusingly similar to Sprint PCS Products and
Services or (ii) Sprint PCS plans to introduce as Sprint PCS Products and
Services within 6 months following the date of Manager's notice described
in section 3.2(b) below and that are confusingly similar to Sprint PCS
Products and Services.
(b) Manager must provide Sprint PCS notice that it intends to
offer a product or service and request that Sprint PCS determine whether
Sprint PCS considers the new product or service to be confusingly similar
to any Sprint PCS Products and Services and whether Sprint PCS plans to
introduce the same or a confusingly similar product or service within 6
months after the date of Manager's notice.
(c) If Sprint PCS fails to respond to Manager within 30 days
after receiving Manager's notice, then the new product or service is
deemed to create confusion with the Sprint PCS Products and Services or
Sprint PCS intends to introduce the same or a confusingly similar product
or service within 6 months after the date of Manager's notice; and
therefore, Manager's request is denied. If Sprint PCS rejects Manager's
request, Sprint PCS must provide the reasons for the rejection. If the
rejection is based on Sprint PCS' failure to respond within 30 days and
Manager requests an explanation for the deemed rejection, then Sprint PCS
must provide within 30 days the reasons for the rejection. If Manager
disagrees with Sprint PCS' reasons for the rejection, the parties will
resolve the matter through the dispute resolution process in section 14.
(d) If Sprint PCS responds that such product or service is not
confusingly similar to any Sprint PCS Product or Service and that it does
not intend to introduce the same or a confusingly similar product or
service within 6 months after the date of Manager's notice, then Manager
may introduce its new product or service, and Manager will have no
obligation to refrain from selling such product or service if Sprint PCS
begins to sell the same or a confusingly similar product or service. In
addition, if Sprint PCS notifies Manager that it plans to introduce the
same or a confusingly similar product or service within 6 months after the
date of Manager's notice and fails to introduce such same or confusingly
similar product or service within such 6-month period, then Manager may
introduce such product or service, and Manager will have no obligation to
refrain from selling such product or service if Sprint PCS begins to sell
the same or a confusingly similar product or service.
13. LONG-DISTANCE PRICING [NEW]. Section 5 of Addendum I is deleted.
Additionally, section 3.4 of the Management Agreement is amended and restated in
its entirety to read as follows:
17
3.4 IXC SERVICES.
3.4.1. CUSTOMER LONG DISTANCE. Sprint PCS and Manager will from time
to time mutually define local calling areas in the Service Areas of
Manager that Sprint PCS and Manager will use to determine when a customer
will be billed for a "long distance call" under the applicable rate plan
of the Customer. The parties acknowledge that these local calling areas
(i) may change in geographic scope in response to competitive pressures or
perceived market opportunities, and (ii) may not be able to be changed
because of regulatory, industry, or system limitations. The parties will
not use local calling areas to determine "long distance telephony
services" under section 3.4.2. If the parties cannot agree on the extent
of the local calling area they will resolve the matter through the dispute
resolution process in section 14.
3.4.2. LONG DISTANCE SERVICES
(a) Required purchase. Manager must obtain (i) long-distance
telephony services through Sprint PCS or its Related Parties to provide
long-distance service to users of the Sprint PCS Network and (ii)
telephony services through Sprint PCS or its Related Parties to connect
the Service Area Network with the national platforms that Sprint PCS uses
to provide services to Manager under this agreement or the Services
Agreement. The term "long distance telephony service" means any inter-LATA
call for purposes of this section 3.4.2 as it relates to long-distance
telephony services provided to users of the Sprint PCS Network.
(b) Pricing and procedure. Sprint PCS will purchase for Sprint PCS,
Manager and Other Managers long-distance telephony services used in the
Sprint PCS Network from Sprint Communications Company L.P. or its Related
Parties ("SCCLP"). Sprint PCS will purchase these long-distance telephony
services at a price and terms at least as favorable to Sprint PCS, Manager
and the Other Managers (considering Sprint PCS, Manager and the Other
Managers as a single purchaser) as the best prices and terms SCCLP offers
to any wholesale customer of SCCLP in similar situations when taking into
account all relevant factors (e.g., volume, peak/off-peak usage, length of
commitment). Sprint PCS will pay the invoice from SCCLP, except for items
that SCCLP directly bills under section 3.4.2(c). Sprint PCS will bill to
Manager as an activity settled separately under the Services Agreement the
portion of the fees billed to Sprint PCS that relate to Manager's
operations and the activity of all Customers and Reseller Customers in the
Service Area, except for items SCCLP directly bills under section
3.4.2(c).
Because Sprint Corporation no longer has its "PCS" tracking stock,
Sprint PCS will include the volume of long-distance telephony services of
18
Manager and Other Managers with the volume of Sprint PCS when negotiating
the Sprint PCS rate with the long distance division of Sprint Corporation
(currently SCCLP). The long distance division will continue to provide
long-distance telephony services to Sprint PCS for a price and upon terms
based on the same relevant factors described in the preceding paragraph
and in the same manner that it has under the present tracking stock
policy.
(c) Call routing. Manager, acting as a single purchaser, may
purchase private line capacity (or other forms of capacity) from SCCLP for
inter-LATA calls to the extent that this capacity can be obtained on terms
more favorable to Manager (acting as a single purchaser). SCCLP will sell
that capacity to Manager at the best price that SCCLP offers to third
parties in similar situations when taking into account all relevant
factors. SCCLP will directly bill Manager for any purchase of capacity
under this section 3.4.2(c). The terms of section 1.3 do not apply to
purchases of capacity in this section 3.4.2(c).
(d) Pre-existing agreement. If before the date Addendum IV 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 IV, 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 from and after the
termination.
(e) Resale. Manager may not resell the long-distance telephony
services acquired under this section 3.4.2. For purposes of clarification,
resale under this section 3.4.2(e) includes Manager selling minutes to
carriers for ultimate resale to end users under a brand other than
"Sprint" or selling minutes to end users under a brand other than
"Sprint". Manager may engage in the following activities (i.e., these
activities are not treated as resale of long-distance telephony services):
(1) the transport of long-distance calls for Customers under
section 3.4.2(a),
(2) the transport of long-distance calls for resellers under
section 3.5, and
(3) the transport of long-distance calls for roaming under
section 4.3.
(f) Sprint Rural Alliance Program. The rights and obligations of
Manager, if any, for the provision of long distance telephony services for
19
Sprint Rural Alliance program participants will be set forth in a separate
agreement.
14. VOLUNTARY RESALE OF PRODUCTS AND SERVICES [NEW] Section 6 of Addendum
I is deleted. Schedule 1 attached to this Addendum replaces and supersedes the
heading, preamble, general terms and all attachments to the Program Requirement
3.5.2 dated August 13, 2002, which is labeled "Exhibit 3.5.2 Program Requirement
for Voluntary Resale of Products and Services By Voluntary Resellers Under the
Private Label Solutions Program". Program Requirement 3.5.2 - VMU which is
labeled "Exhibit 3.5.2 - VMU Program Requirements for Voluntary Resale of
Products and Services by Virgin Mobile USA, LLC (version 7/07/02)" is superseded
by "Program Requirement 3.5.2 - Program Requirements for Resale of Products and
Services By Virgin Mobile USA, LLC (Date Published 9/30/04)".
Section 3.5.2 to the Management Agreement is amended and restated in its
entirety to read as follows:
3.5.2 RESALE OF PRODUCTS AND SERVICES. Sprint PCS may choose to
offer a resale product under which resellers will resell Sprint PCS
Products and Services under brand names other than the Brands (such
arrangement, a "RESALE ARRANGEMENT"), except Sprint PCS may permit the
resellers to use the Brands for limited purposes related to the resale of
Sprint PCS Products and Services (e.g., to notify people that the handsets
of the resellers will operate on the Sprint PCS Network). The resellers
may also provide their own support services (e.g., customer care and
billing) or may purchase the support services from Sprint PCS. Other terms
of the resale program are governed by Program Requirement 3.5.2.
(a) Existing Resale Arrangements. Manager will participate in all
Resale Arrangements that were entered into by Sprint PCS prior to April 1,
2004, including Previously Declined Resale Arrangements (as defined below)
(collectively, the "EXISTING RESALE ARRANGEMENTS"), and the Existing
Resale Arrangements will be governed by Program Requirement 3.5.2 as
amended by this Addendum IV. Compensation for Manager's participation in
the Existing Resale Arrangements will be paid to Manager in accordance
with section 10.4.1.1(a)(i) of this agreement, unless compensation was
otherwise negotiated between Manager and Sprint PCS (e.g., Virgin Mobile
USA). "PREVIOUSLY DECLINED RESALE ARRANGEMENTS" means Resale Arrangements
between Sprint PCS and the following resellers: Vartec Telecom, Inc.,
ZefCom, L.L.C., Working Assets Funding Service, Inc., Wherify Wireless,
Inc., QUALCOMM Incorporated, Star Number, Inc., Telco Group, Inc.,
TRANZACT, Hal Inc., Wireless Retail Inc., Phonetec, L.P., Qwest Wireless,
LLC, and TracFone Wireless, Inc.
(b) Required Resale Arrangements. Subject to the limitations set
forth in clause (c) below and in section 10.4.1.1(b) of this agreement,
Manager will
20
participate in (i) all new Resale Arrangements entered into by Sprint PCS
during the Required Resale Participation Period (collectively, the "NEW
RESALE ARRANGEMENTS") and (ii) all Existing Resale Arrangements and New
Resale Arrangements that are renewed or extended during the Required
Resale Participation Period (collectively, the "RENEWED RESALE
ARRANGEMENTS", and together with the New Resale Arrangements, the
"REQUIRED RESALE ARRANGEMENTS"), in all cases with compensation being paid
to Manager as set forth in section 10.4.1.1(a)(iii) or (iv), whichever is
applicable. Sprint PCS agrees that the compensation, payment and other
terms and conditions under each Resale Arrangement entered into, renewed
or extended during the Required Resale Participation Period will be the
same as the compensation, payment and other terms and conditions
applicable to Sprint PCS and each Other Manager with respect to such
reseller. Manager will have access to the relevant terms of any Resale
Arrangement as provided in section 1.9.4 of this agreement. For purposes
of determining renewals and extensions of Resale Arrangements under this
Agreement, including without limitation for purposes of section
10.4.1.1(c)(iii), if a Resale Arrangement does not expressly state an
initial term, then the arrangement shall be deemed to have a five-year
initial term, and if a Resale Arrangement states an initial term in excess
of ten years, then the arrangement shall be deemed to have a ten-year
initial term, in each case, after which term such arrangement will be
deemed to be up for renewal or extension.
(c) Limitations. Manager may decline to participate in any Required
Resale Arrangement (including any renewal periods or extensions of
Existing Resale Arrangements or New Resale Arrangements) unless the
material terms and conditions of the Resale Arrangement, including the per
minute Reseller Customer Fees and the per kilobyte Reseller Customer Fees
to be paid to Manager, at all times are at least as favorable to Manager
as the material terms and conditions of that certain MVNO Support
Agreement, dated as of May 12, 2004 (the "AT&T ARRANGEMENT"), by and
between Sprint Spectrum L.P. and AT&T Corp., giving effect to any changes
to such terms and conditions that occur by virtue of the terms and
conditions of the AT&T Arrangement. The parties acknowledge that the AT&T
Arrangement has been terminated, but its material terms and conditions
remain as the floor threshold for purposes of determining Manager's right
to decline to participate in a Required Resale Arrangement pursuant to
this section 3.5.2(c). Sprint PCS will give Manager written notice of any
changes to the floor threshold that occur by virtue of the terms and
conditions of the AT&T Arrangement.
Except as set forth in section 10.4.1.1(c) below, Manager will have
no obligation to participate in any Required Resale Arrangement after the
Required Resale Participation Period.
The Resale Arrangement between Sprint PCS and Virgin Mobile USA will
be treated as a New Resale Arrangement and subject to the compensation set
forth in section 10.4.1.1(a)(iii) or (iv), whichever is applicable, if
continued after the expiration of the initial term of the arrangement.
21
Additionally, Manager may decline to continue to participate in any
Resale Arrangement after the initial term of that arrangement if such
arrangement is renewed or extended prior to its contractual renewal date
and before December 31, 2006.
Except as required under the regulations and rules concerning
mandatory resale, Manager may not sell Sprint PCS Products and Services
for resale unless Sprint PCS consents to such sales in advance in writing.
15. INTRA-LATA CALLS AND BACKHAUL SERVICES [NEW]. Section 7 of Addendum I
is deleted. Additionally, section 3.7 is amended and restated in its entirety to
read as follows:
3.7 INTRA-LATA CALLS AND BACKHAUL SERVICES. Manager, acting as a
single purchaser, may purchase capacity (including private line capacity)
from SCCLP for intra-LATA calls and backhaul services. SCCLP will sell
that capacity to Manager at the best price that SCCLP offers to third
parties in similar situations when taking into account all relevant
factors.
Manager will offer to Sprint PCS or one of its Related Parties the
right to make to Manager the last offer to provide capacity for intra-LATA
calls and backhaul services for the Service Area Network if:
(i) Manager decides to use third parties for intra-LATA
calls and backhaul services rather than self-provisioning the
capacity or purchasing the capacity from Related Parties of
Manager, and
(ii) Sprint PCS or one of its Related Parties has
provided evidence to Manager that SCCLP or one of its Related
Parties has facilities to provide the capacity requested.
Manager will deliver to Sprint PCS the terms under which the third
party will provide the capacity. Sprint PCS or one of its Related Parties
will have a reasonable time to respond to Manager's request for last offer
to provide pricing for capacity for intra-LATA calls and backhaul, which
will be no greater than 5 Business Days after receipt of the request for
the pricing and the third party's terms from Manager. Manager will acquire
capacity for intra-LATA calls and backhaul services from Sprint PCS or one
of its Related Parties if Sprint PCS or one of its Related Parties offers
Manager pricing and other terms for intra-LATA calls and backhaul services
for the Service Area Network that matches the terms, including pricing, or
is better than the terms and lower than the pricing offered by the third
party. For purposes of this section 3.7, the term "backhaul"
22
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 that is in effect as
of the date Addendum IV is signed and the agreement was not made in
anticipation of this agreement or Addendum IV, then the requirements of
this section 3.7 do not apply during the term of the other agreement. If
the other agreement terminates for any reason, then the requirements of
this section 3.7 do apply from and after the termination.
16. 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").
17. IMPLEMENTATION OF PRICING PLANS [ADDM I, SECTION 10]. The last
paragraph of section 4.4 is amended to read as follows:
At the time Sprint PCS approves a pricing proposal submitted by
Manager, Sprint PCS will provide Manager an estimate of the costs and
expenses and applicable time frames required for Sprint PCS to implement
the proposed pricing plan. Manager shall have five (5) Business Days after
the receipt of the Sprint PCS estimate to notify Sprint PCS of its desire
to have such proposed pricing plan implemented. If Manager fails to notify
Sprint PCS within five (5) Business Days of such desire to implement,
Manager agrees to promptly reimburse Sprint PCS for any cost or expense
incurred by Sprint PCS to implement such a pricing plan, which will not
exceed the amount estimated by Sprint PCS if Manager waited for Sprint
PCS' response to Manager's proposal.
18. REQUIRED ADVERTISING EXPENDITURES [ADDM I, SECTION 11]. The last
paragraph of section 6.2 is amended to read as follows:
Sprint PCS will make available to Manager the promotion or
advertising materials developed by Sprint PCS from time to time with
respect to Sprint PCS Products and Services in current use by Sprint PCS
(e.g., radio ads, television ads, design of print ads, design of point of
sale materials, retail store concepts and designs, design of collateral).
Manager will bear the cost of using such materials (e.g., cost of local
radio and television ad placements, cost of printing collateral in
quantity, and building out and finishing retail stores). Any advertising
required of Manager will be commercially reasonable.
19. CHANGES TO PROGRAM REQUIREMENTS [NEW].
23
(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 Sprint PCS
otherwise consents, subject to section 9.3.
(b) Section 9.3 is amended in its entirety to read as follows:
9.3 MANAGER'S RIGHTS REGARDING CHANGES TO PROGRAM REQUIREMENTS.
9.3.1 PARAMETERS FOR REQUIRED PROGRAM REQUIREMENT IMPLEMENTATION.
(a) Manager may, without being in default of this Agreement, decline to
implement a Non-Capital Program Requirement Change if Manager determines
that the Non-Capital Program Requirement Change will satisfy any of the
following tests:
(A) individually cause the combined peak negative cash
flow of Manager to be an amount greater than 3% of Manager's
Ultimate Parent's Enterprise Value, or
(B) when combined with original assessments made under
clause (A) above of all other Program Requirement Changes that
Sprint PCS announced and Manager agreed to implement or
Manager otherwise was required to implement in accordance with
section 9.3.4, both within the preceding 12 calendar months,
cause the combined cumulative peak negative cash flow of
Manager to be an amount greater than 5% of Manager's Ultimate
Parent's Enterprise Value, or
(C) individually cause a decrease in the forecasted
5-year discounted cash flow of Manager's Ultimate Parent (at
Manager's Ultimate Parent's appropriate discount rate) of more
than 3% on a combined net present value basis, or
(D) when combined with original assessments made under
clause (C) above of all other Program Requirement Changes that
Sprint PCS announced and Manager agreed to implement or
Manager otherwise was required to implement in accordance with
section 9.3.4, both within the preceding 12 calendar months,
cause a decrease in the forecasted 5-year discounted cash flow
of Manager's Ultimate Parent (at Manager's Ultimate Parent's
24
appropriate discount rate) of more than 5% on a combined net
present value basis.
The term "NON-CAPITAL PROGRAM REQUIREMENT CHANGE" means a Program
Requirement Change that does not require Manager to make any capital
expenditures in excess of 5% of Manager's capital budget as approved by
the Manager's board of directors for the fiscal year in which the Program
Requirement Change is requested, but does not include changes to the
Trademark Usage Guidelines, the Marketing Communications Guidelines, and
the Sprint PCS National or Regional Distribution Program Requirements.
If Manager declines to implement any Non-Capital Program Requirement
Change, Manager must give Sprint PCS within 10 Business Days after Sprint
PCS provides Manager with notice of the Program Requirement Change:
(i) written notice that Manager declines to implement
the Non-Capital Program Requirement Change, and
(ii) a written assessment of the impact of the
Non-Capital Program Requirement Change on Manager using the
parameters set forth in subparagraphs (A) through (D) above.
(b) Manager may, without being in default of this agreement, decline
to implement any Capital Program Requirement Change if Manager determines
that the Capital Program Requirement Change will satisfy any of the
following tests:
(A) have a negative net present value applying a 5-year
discounted cash flow model, or
(B) individually cause the combined peak negative cash
flow of Manager to be an amount greater than 3% of Manager's
Ultimate Parent's Enterprise Value, or
(C) when combined with original assessments made under
clause (B) above of all other Program Requirement Changes that
Sprint PCS announced and Manager agreed to implement or
Manager otherwise was required to implement in accordance with
sections 9.3.1(c), 9.3.3 and 9.3.4, both within the preceding
12 calendar months, cause the combined cumulative peak
negative cash
25
flow of Manager to be an amount greater than 5% of Manager's
Ultimate Parent's Enterprise Value.
The term "CAPITAL PROGRAM REQUIREMENT CHANGE" means any Program
Requirement Change that requires an expenditure of capital by Manager that
is greater than 5% of Manager's capital budget as approved by the
Manager's board of directors for the fiscal year in which the Program
Requirement Change is requested, but does not include changes to the
Trademark Usage Guidelines, the Marketing Communications Guidelines, and
the Sprint PCS National or Regional Distribution Program Requirements.
If Manager declines to implement any Capital Program Requirement
Change, Manager must give Sprint PCS within 10 Business Days after Sprint
PCS provides Manager with notice of the Program Requirement Change:
(i) written notice that Manager declines to implement
the Capital Program Requirement Change, and
(ii) a written assessment of the impact of the Capital
Program Requirement Change on Manager using the parameter set
forth above.
Manager must implement a Capital Program Requirement Change if:
(i) the capital requirement associated with such Program
Requirement Change is for a network capacity expansion due to
a change in a service plan, provided that implementing the
Program Requirement Change will not exceed any of the
parameters described in section 9.3.1(a), or
(ii) the capital requirement associated with such
Program Requirement Change is necessary to comply with network
performance standards required under this agreement.
If Manager has the right to decline a Program Requirement Change,
Sprint PCS may modify the scope of the Program Requirement Change in all
or certain of Manager's markets to create a positive net present value for
the entire Program Requirement Change, and Manager will implement the
modified Program Requirement Change. Section 9.3.2 governs any
disagreement between the parties regarding the determination of the net
present value of a Program Requirement Change.
26
Upon giving Manager notice of a Program Requirement Change, Sprint
PCS will provide Manager with Sprint PCS's business analysis setting forth
the reasons for such change, key assumptions used by Sprint PCS, and any
other information reasonably requested by Manager.
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 this 10-day period unless Sprint PCS requires such
compliance under section 9.3.3 below. Either party may escalate the review
of the assumptions and methodology underlying the assessment to the
parties' respective Chief Financial Officers if Sprint PCS disagrees with
Manager's assessment and the parties are unable to agree on the
assumptions and methodology within 20 days after Sprint PCS notifies
Manager of the disagreement.
The parties will mutually select an independent investment banker in
the wireless telecommunications industry ("INVESTMENT BANKER") to
determine whether the implementation of the Program Requirement Change
will exceed one of the parameters if Sprint PCS and Manager are unable to
agree on the assumptions and methodology to perform the calculations
within 30 days after Sprint PCS notifies Manager of the disagreement. The
American Arbitration Association will select the Investment Banker if the
parties do not select the Investment Banker within 50 days after Sprint
PCS notifies Manager of the disagreement. Sprint PCS and Manager will
cooperate fully and provide all information that the Investment Banker
reasonably requests. But any Investment Banker that the American
Arbitration Association selects, 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. 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
27
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 change with respect to the
following in the manner requested by Sprint PCS, even if Manager
determines that implementing the change will have an adverse impact on
Manager that meets or exceeds the tests set forth in section 9.3.1(a) or
section 9.3.1(b):
(i) relates to a pricing plan under section 4.4 or a
roaming program, and
(ii) Sprint PCS reasonably determines must be
implemented on an immediate or expedited basis to respond to
specific, identifiable developments in the competitive market
forces.
Manager's implementation of the change will not adversely affect
Manager's right to object to the implementation of the change. Manager
will continue to comply with the change if the parties agree or the
Investment Banker determines (using the procedure described in section
9.3.2) that implementing the change will not exceed any of the parameters
described in section 9.3.1(a) or section 9.3.1(b). If Sprint PCS does not
successfully challenge Manager's assessment of the adverse impact of the
change on Manager in accordance with section 9.3.2, Sprint PCS can require
Manager either to:
(i) continue to comply with the change and compensate
Manager in the amount necessary to reimburse Manager for any
reasonable costs, expenses or losses that Manager incurs as a
result of its implementation of the change net of any benefit
that Manager receives, to the extent the costs, expenses and
losses net of the benefits exceed the parameters set forth in
section 9.3.1(a) or section 9.3.1(b), or
(ii) terminate its continued compliance with the change
and compensate Manager in the amount necessary to reimburse
Manager for any reasonable costs, expenses or losses that
Manager incurs as a result of its implementation of the change
net of any benefit that Manager receives.
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Manager cannot terminate its continued compliance if Sprint PCS
elects to require Manager's continued compliance with the change under
section 9.3.3 above.
(c) A new section 9.7 is added to the Management Agreement:
9.7 REVIEW OF PROGRAM REQUIREMENTS; UNILATERAL CHANGES.
Sprint PCS intends that any change to a Program
Requirement will be in the best interests of Sprint PCS and Manager.
Sprint PCS and Manager will act in good faith to
mitigate (to the extent commercially reasonable) the adverse
economic impact on Manager of the exercise of any right of Sprint
PCS to effect any change under or pursuant to 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 REQUIREMENTS.
Manager will be in material breach of a material term and Sprint PCS
may exercise its rights under section 11 if Manager willfully refuses to
implement a Program Requirement when required to do so under this
agreement.
20. FEES [NEW]. Article 10 of the Management Agreement is amended to read
as follows:
10. FEES
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10.1 GENERAL. Sprint PCS and Manager will pay to each other the fees
and apply the credits in the manner described in this section 10. The
amounts that Sprint PCS is paid or retains are for all obligations of
Manager under this agreement. Many of the definitions for the fees in
section 10.2 are found in section 10.3.
10.2 FEES.
10.2.1 FEE BASED ON BILLED REVENUE. Sprint PCS will pay to
Manager the Fee Based on Billed Revenue as determined in this section
10.2.1.
"BILLED REVENUE" is all customer account activity (e.g., all
activity billed, attributed or otherwise reflected in the customer account
but not including Customer Credits) during the calendar month for which
the fees and payments are being calculated (the "BILLED MONTH") for Sprint
PCS Products and Services related to all Customer accounts within a
customer service area ("CSA") assigned to the Service Area, except (i)
Outbound Roaming Fees, (ii) amounts handled separately in this section 10
(including the amounts in sections 10.2.3 through 10.2.6, 10.4 and 10.8),
(iii) amounts collected from Customers and paid to governmental or
regulatory authorities (e.g., Customer Taxes and USF Charges), and (iv)
other amounts identified in this agreement as not included in Billed
Revenue (these Customer accounts being "MANAGER ACCOUNTS"). Within 30 days
after signing Addendum IV, Sprint PCS will provide Manager with a list of
all revenue accounts included in Billed Revenue, and Sprint PCS will, as
soon as reasonably practicable, provide Manager with updates to that list
as it changes.
Billed Revenue does not include new activity billed to the
Customer solely to recover costs incurred by Sprint PCS, Manager or both
related solely to such new activity. Manager and Sprint PCS will share the
revenues from this billing in proportion to the costs they incur. Any
amounts recovered in excess of costs incurred will be considered Billed
Revenue.
For purposes of clarification, Sprint PCS currently assigns
Customers to CSAs based on customer billing addresses and expects that
procedure to remain in place after the Effective Date.
If Sprint PCS or Manager develops products or services that
bundle Sprint PCS Products and Services with other products or services
(e.g., local service or broadband wireline service), then Sprint PCS and
Manager will use commercially reasonable efforts to agree on the proper
allocation of revenue, bad debt expenses, credits and promotions for the
bundled products and services.
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Sprint PCS will reasonably determine the amount of credits applied
to Manager Accounts during the Billed Month ("CUSTOMER CREDITS").
"NET BILLED REVENUE" for a Billed Month is the amount of the Billed
Revenue less the Customer Credits.
The "FEE BASED ON BILLED REVENUE" for a Billed Month is equal to 92%
of (a) Net Billed Revenue, less (b) the Allocated Write-offs for Net Billed
Revenue.
10.2.2 OUTBOUND ROAMING FEE. Sprint PCS will pay to Manager a fee
equal to the amount of Outbound Roaming Fees that Sprint PCS or its Related
Parties bills to Manager Accounts, less the Allocated Write-offs for Outbound
Roaming Fees. For purposes of clarification, Sprint PCS will settle separately
with Manager the direct cost of providing the capability for the Outbound
Roaming, including any amounts payable to the carrier that handled the roaming
call and the clearinghouse operator for Outbound Roaming.
10.2.3 PHASE II E911 SURCHARGES. Sprint PCS will pay to Manager a
fee equal to a portion of the E911 Phase II Surcharges (attributable to
incremental costs for Phase II E911, including but not limited to related
handset costs, routing costs, implementation costs, trunks and testing costs,
and anticipated write-offs for bad debt) billed during the Billed Month to
Customers with an NPA-NXX assigned to the Service Area, less the Allocated
Write-offs for that portion of E911 Phase II Surcharges in the Billed Month. The
portion of the billed amount attributed to Manager will be based on Manager's
proportional cost (as compared to Sprint PCS' proportional cost) to comply with
Phase II of the E911 requirements. Sprint PCS will determine from time to time
the rate billed to Customers related to Phase II E911 and the portion payable to
Manager.
10.2.4 WIRELESS LOCAL NUMBER PORTABILITY SURCHARGES. Sprint PCS will
pay to Manager a fee equal to a portion of the Wireless Local Number Portability
Surcharges ("WLNP SURCHARGES") billed during the Billed Month to Customers with
an NPA-NXX assigned to the Service Area, less the Allocated Write-offs for that
portion of the WLNP Surcharges in the Billed Month. The portion of the billed
amount attributed to Manager will be based on Manager's proportional cost (as
compared to Sprint PCS' proportional cost) to comply with Wireless Local Number
Portability requirements. Sprint PCS will determine from time to time the rate
billed to Customers related to WLNP Surcharges and the portion payable to
Manager.
10.2.5 CUSTOMER EQUIPMENT CREDITS. Sprint PCS will
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apply as a credit to any other fees under this section 10.2 owing by Sprint PCS
to Manager an amount equal to the amount of the Customer Equipment Credits less
the Allocated Write-offs for Customer Equipment Credits.
10.2.6 WRITE-OFFS FOR CUSTOMER EQUIPMENT CHARGES. Sprint PCS will
apply as a credit to any other fees under this section 10.2 owing by Sprint PCS
to Manager an amount equal to the amount of the Allocated Write-offs for
Customer Equipment Charges.
10.3 DEFINITIONS USED IN FEE CALCULATIONS
10.3.1 WRITE-OFFS. Sprint PCS will determine the amounts written off
net of deposits applied and net of recoveries (the "WRITE-OFFS") in the Sprint
PCS billing system during the Billed Month relating to Manager Accounts.
10.3.2 BILLED COMPONENTS. Each of the following amounts is referred
to as a "BILLED COMPONENT" and collectively they are referred to as the "BILLED
COMPONENTS".
10.3.2.1 Net Billed Revenue. The amount determined as
described in section 10.2.1.
10.3.2.2 Customer Equipment Credits. The reductions of amounts
billed to Manager Accounts related to the sale of handsets and handset
accessories from Sprint PCS inventory are referred to as "CUSTOMER EQUIPMENT
CREDITS". This is a negative amount that reduces the Amount Billed (Net of
Customer Credits).
10.3.2.3 100% Affiliate Retained Amounts. The amounts referred
to as "100% Affiliate Retained Amounts" on Exhibit 10.3, to which Manager is
entitled to 100% of the amounts that Customers are billed for such items.
10.3.2.4 100% Sprint PCS Retained Amounts. The amounts
referred to as "100% Sprint PCS Retained Amounts" on Exhibit 10.3, to which
Sprint PCS is entitled to 100% of the amounts that Customers are billed for such
items.
10.3.2.5 Customer Equipment Charges. The amounts that Sprint
PCS bills to Manager Accounts for subscriber equipment and accessories sold or
leased are referred to as "CUSTOMER EQUIPMENT CHARGES".
10.3.2.6 E911 Phase II Surcharges. The amounts that Sprint PCS
bills to Manager Accounts to recover all costs related to
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Phase II E911 functionality are referred to as "E911 PHASE II SURCHARGES".
10.3.2.7 USF Charges. The amounts that Sprint PCS bills to
Manager Accounts relating to Universal Service Funds are referred to as "USF
CHARGES".
10.3.2.8 WLNP Surcharges. The amounts that Sprint PCS bills to
Manager Accounts to recover costs related to WLNP activities.
10.3.3 AMOUNT BILLED (NET OF CUSTOMER CREDITS). The "AMOUNT BILLED
(NET OF CUSTOMER CREDITS)" for a Billed Month is equal to the sum of the Billed
Components.
10.3.4 THE ALLOCATED WRITE-OFFS. The "ALLOCATED WRITE-OFFS" for all
or a portion of a Billed Component in a Billed Month is the Write-offs for the
Billed Month times the amount of the Billed Component (or portion thereof)
divided by the Amount Billed (Net of Customer Credits).
10.4 OTHER FEES AND PAYMENTS. Sprint PCS and Manager will pay to each
other the fees and payments described below:
10.4.1 INTER SERVICE AREA FEES AND RESELLER CUSTOMER FEES.
10.4.1.1 Inter Service Area Fee and Reseller Customer Fee
Paid. Manager will pay to Sprint PCS an Inter Service Area Fee as set forth in
this section 10.4.1 for each billed minute or kilobyte of use that a Customer
with an NPA-NXX assigned to the Service Area uses a portion of the Sprint PCS
Network other than the Service Area Network. Sprint PCS will pay to Manager an
Inter Service Area Fee for each billed minute or kilobyte of use that a Customer
whose NPA-NXX is not assigned to the Service Area Network uses the Service Area
Network.
(a) Sprint PCS will pay to Manager the fees set forth in this
section 10.4.1 for each billed minute or kilobyte of use that a Reseller
Customer uses the Service Area Network unless otherwise negotiated (such fees
are referred to in this agreement as "RESELLER CUSTOMER FEES"):
(i) with respect to Existing Resale Arrangements (other than
Virgin Mobile USA, which is addressed in clause (ii) below), the amount of
fees set forth in subsections 10.4.1.2 and 10.4.1.3;
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(ii) with respect to Virgin Mobile USA, the amount of fees set
forth in Program Requirement 3.5.2 - VMU; except, that the Resale
Arrangement between Sprint PCS and Virgin Mobile USA will be treated as a
New Resale Arrangement and subject to the compensation set forth in
section 10.4.1.1(a)(iii) or (iv), whichever is applicable, if continued
after the expiration of the initial term of the arrangement;
(iii) with respect to arrangements between Sprint PCS and
resellers that are entered into after April 1, 2004 and before January 1,
2007, or that are renewed or extended during that period, the amount of
fees collected by Sprint PCS from the resellers as payment for the
Reseller Customer's use of the Service Area Network; and
(iv) with respect to arrangements between Sprint PCS and
resellers that are entered into, renewed or extended during the three-year
period beginning on January 1, 2007, or a subsequent three-year period
beginning on the third anniversary of the beginning of the previous
three-year period, the amount of fees determined as described in section
10.4.1.1(c).
(b) With respect to Resale Arrangements described in section
10.4.1.1(a)(iii), Sprint PCS will give Manager Manager's proportional share of
(i) any cash payments received by Sprint PCS from the other party to a Resale
Arrangement, in addition to the reseller rate, relating specifically to the
Resale Arrangements (other than those cash payments for reimbursement of
expenses incurred to implement the Resale Arrangement, which are addressed in
the following paragraph), and (ii) to the extent reasonably able to be made
available to Manager, any non-cash payments received by Sprint PCS from the
other party to the Resale Arrangement relating specifically to the Resale
Arrangements. For purposes of clarification, payments made to Sprint PCS to
reimburse Sprint PCS for actual costs incurred to implement some aspect of the
Resale Arrangement are not cash or non-cash payments subject to this section.
Sprint PCS will use commercially reasonable efforts to
negotiate with the other party to the Resale Arrangement to have the other party
directly reimburse Manager for Manager's actual costs incurred to implement the
Resale Arrangement, if any. If Sprint PCS is unable to negotiate such
reimbursement arrangement with the other party, but collects reimbursement from
the other party to the Resale Arrangement, Sprint PCS will allocate to Manager
Manager's proportional share of any reimbursement received from the other party.
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If the reseller is a Related Party of Sprint PCS or if Sprint
PCS owns a substantial equity interest in the reseller, then Sprint PCS and
Manager must agree on the Reseller Customer Fee to be paid by Sprint PCS to
Manager and any proportional sharing of any other cash and non-cash payments
before Manager will have an obligation to participate in such arrangement.
(c) For each three-year period described in section
10.4.1.1(a)(iv):
(i) Sprint PCS will give Manager proposed terms, fees and
conditions applicable to Manager's participation in Resale Arrangements by
October 31 of the calendar year before the calendar year in which the then
current reseller period ends (e.g., the initial reseller period ends on
December 31, 2006 so the amount has to be presented by October 31, 2005).
Manager's representative and the Sprint PCS representative will begin
discussions regarding the proposed terms, fees and conditions applicable
to Manager's participation in Resale Arrangements within 20 days after
Manager receives the proposed terms, fees and conditions applicable to
Manager's participation in Resale Arrangements from Sprint PCS.
(ii) If the parties do not agree on the new terms, fees and
conditions applicable to Manager's participation in Resale Arrangements
within 30 days after the discussions begin, then Manager may escalate the
discussion to the Sprint PCS Chief Financial Officer or Sprint Spectrum
may escalate the discussion to Manager's Chief Executive Officer or Chief
Financial Officer.
(iii) If the parties cannot agree on the new terms, fees and
conditions applicable to Manager's participation in Resale Arrangements
through the escalation process within 20 days after the escalation process
begins, then without Manager's prior written consent, (A) Manager will not
be required to participate in any Resale Arrangement that is entered into
by Sprint PCS, or renewed or extended, after the Required Resale
Participation Period and (B) Manager will not be required to participate
in Existing Resale Arrangements or Required Resale Arrangements after the
Required Resale Participation Period, provided, however, that Manager will
continue to allow resellers under Existing Resale Arrangements and
resellers under Required Resale Arrangements, which Manager opted into or
in which Manager was required to participate under this agreement, to
activate subscribers with an NPA-NXX assigned to Manager's Service Area
and Manager will continue to support such resellers (x) with respect to
resellers
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under Existing Resale Arrangements and resellers under New Resale
Arrangements, throughout the then remaining term of their Resale
Arrangement with Sprint PCS, without giving effect to any applicable
renewal terms and phase out periods, and (y) with respect to resellers
under Renewed Resale Arrangements, throughout the then remaining renewal
term of their Resale Arrangement with Sprint PCS, without giving effect to
any applicable additional renewal terms and phase out periods. For
purposes of determining renewals and extensions of Resale Arrangements
under this Agreement, including without limitation for purposes of this
section 10.4.1.1(c)(iii), if a Resale Arrangement does not expressly state
an initial term, then the arrangement shall be deemed to have a five-year
initial term, and if a Resale Arrangement states an initial term in excess
of ten years, then the arrangement shall be deemed to have a ten-year
initial term, in each case, after which term such arrangement will be
deemed to be up for renewal or extension. Manager will continue to receive
Reseller Customer Fees with respect to such Resale Arrangements at the
same rates in effect at the end of the Required Resale Participation
Period.
Sprint PCS may not amend, modify or change in any manner the Inter Service
Area Fees between Sprint PCS and Manager or Reseller Customer Fees and other
matters set forth in this section 10.4.1 without Manager's prior written
consent, except as expressly provided in this section. For purposes of
clarification, the parties do not intend the above sentence to limit Sprint PCS'
ability to negotiate fees with resellers.
Sprint PCS will not be obligated to pay Manager those Inter Service Area
Fees not received by Sprint PCS from an Other Manager who is a debtor in a
bankruptcy proceeding with respect to Inter Service Area Fees that Sprint PCS
owes Manager because of CSAs assigned to such Other Manager's Service Area
traveling in the Service Area. For clarification purposes, Sprint PCS does not
have to advance the Inter Service Area Fees for the Other Manager who is
involved in the bankruptcy proceeding to Manager, to the extent that the Other
Manager fails to pay the Inter Service Area Fees. Manager bears the risk of loss
of the Other Manager who is involved in the bankruptcy proceeding not paying the
Inter Service Area Fees to Sprint PCS.
If relief is ordered under title 11 of the United States Code for an Other
Manager or an Other Manager files a voluntary petition for relief under title 11
of the United States Code and such Other Manager fails to pay to Sprint PCS
amounts that such Other Manager owes to Sprint PCS with respect to the Inter
Service Area Fees for travel into Manager's Service Area, at Manager's
direction, (a) Sprint PCS will either (i) take
36
reasonable steps to prevent such Other Manager from continuing after the
commencement of its bankruptcy case to incur Inter Service Area Fees for travel
into Manager's Service Area without timely remitting payment of such Inter
Service Area Fees to Sprint PCS for the benefit of Manager, or (ii) assign to
Manager all of its rights as a creditor of such Other Manager to prevent such
Other Manager from continuing after the commencement of its bankruptcy case to
incur Inter Service Area Fees for travel into Manager's Service Area without
timely remitting payment of such Inter Service Area Fees to Manager, and (b)
Sprint PCS will either (i) include the amount owed by the Other Manager to
Manager in the Sprint PCS proof of claim filed in the bankruptcy proceeding, and
remit to Manager when and as it receives distributions with respect to such
proof of claim for Inter Service Area Fees for travel in Manager's Service Area,
a pro-rata share of such distributions or (ii) immediately assign to Manager all
of its claims and rights as a creditor of such Other Manager for those amounts
owed with respect to Inter Service Area Fees for travel in Manager's Service
Area. Sprint PCS agrees to take all actions necessary to effect these
assignments of rights to Manager, and further agrees that Manager will not be
responsible for any expenses related to such assignments. If Sprint PCS receives
any amounts from an Other Manager who is a debtor in a bankruptcy proceeding
with respect to Inter Service Area Fees for travel into the Service Area, Sprint
PCS will immediately remit those amounts to Manager.
If relief is ordered under title 11 of the United States Code for Sprint
PCS or Sprint PCS files a voluntary petition for relief under title 11 of the
United States Code, then Sprint PCS will be deemed a trustee for Manager's
benefit with respect to any Inter Service Area Fees that Sprint PCS collects
from Other Managers for travel into Manager's Service Area, and Sprint PCS has
no rights to Manager's portion of such Inter Service Area Fees.
Manager acknowledges that if the manner in which the CSAs are assigned
changes because of changes in the manner in which the NPA- NXX is utilized, the
manner in which the Inter Service Area Fees and Reseller Customer Fees, if any,
will be changed accordingly.
10.4.1.2 Voice and 2G Data Rate. The amount of the Inter
Service Area Voice and 2G Data Fee and Reseller Customer Voice and 2G Data Fee
for arrangements between Sprint PCS and resellers in existence as of April 1,
2004, will be as follows:
(a) The Inter Service Area Voice and 2G Data Fee for each
billed minute of use that a Customer uses an Away Network and the Reseller
Customer Fee for each billed minute of use that a Reseller Customer uses
the Service Area Network, will be $0.058 from the Effective Date to
December 31, 2006.
37
(b) For each calendar year during the Term of this agreement
beginning January 1, 2007, the Inter Service Area Voice and 2G Data Fee
for each billed minute of use that a Customer uses an Away Network and the
Reseller Customer Fee for each billed minute of use that a Reseller
Customer uses the Service Area Network, will be an amount equal to 90% of
Sprint PCS' Retail Yield for Voice and 2G Data Usage for the previous
calendar year; provided that such amount for any period will not be less
than Manager's network costs (including a reasonable return using
Manager's weighted average cost of capital applied against Manager's net
investment in the Service Area Network) to provide the services that are
subject to the Inter Service Area Voice and 2G Data Fee. If the parties
have a dispute relating to the determination of the foregoing fees for any
period, then the parties will submit the dispute to binding arbitration as
set forth in sections 14.2 and 10.4.1.3(b).
10.4.1.3 3G Data Rate. The amount of the Inter Service Area 3G
Data Fee and Reseller Customer 3G Data Fee for arrangements between Sprint PCS
and resellers in existence as of April 1, 2004, will be as follows:
(a) From the Effective Date to December 31, 2006 ("INITIAL 3G DATA
FEE PERIOD"), the Inter Service Area 3G Data Fee for each kilobyte of use
that a Customer uses an Away Network and the Reseller Customer 3G Data Fee
for each kilobyte of use that a Reseller Customer uses the Service Area
Network, will be $0.0020; except with respect to Sprint 3G Data Service as
defined and set out in the Program Requirement 3.5.2.
(b) For each calendar year during the Term of this agreement
beginning January 1, 2007, the Inter Service Area 3G Data Fee and the
Reseller Customer 3G Data Fee will be an amount equal to 90% of the Sprint
PCS Retail Yield for 3G Data Usage for the previous calendar year;
provided that such amount for any period will not be less than Manager's
network costs (including a reasonable return using Manager's weighted
average cost of capital applied against Manager's net investment in the
Service Area Network) to provide the services that are subject to the
Inter Service Area 3G Data Fee and the Reseller Customer 3G Data Fee. If
the parties have a dispute relating to the determination of the foregoing
fees for any period, then the parties will submit the dispute to binding
arbitration as set forth in section 14.2 and the next paragraph.
If Manager submits the matter to arbitration the fees that Sprint
PCS proposed will apply starting after December 31 of the
38
first year of the appropriate period as described in section 10.4.1.4 and
will continue in effect unless modified by the final decision of the
arbitrator. If the arbitrator imposes a fee different than the ones in
effect the new fees will be applied as if in effect after December 31 of
the first year of the appropriate period as described in section 10.4.1.4
and if on application of the new fees one party owes the other party any
amount after taking into account payments the parties have already made
then the owing party will pay the other party within 30 days of the date
of the final arbitration order.
10.4.1.4 Rate Changes - Effective Date. All rate changes
related to Inter Service Area Fees and Reseller Customer Fees will be applied to
all activity in a bill cycle that closes after the effective date of the rate
change. The previous rates will apply to all activity in a bill cycle that
closes before the effective date of the rate change.
10.4.1.5 Long Distance. The long distance rates associated
with the Inter Service Area and Reseller Customer usage will be equal to the
actual wholesale transport and terminating costs associated with the originating
and terminating locations. The rates are then applied to cumulative usage at a
BID level for settlement purposes.
10.4.2 INTERCONNECT FEES. Manager will pay to Sprint PCS (or to
other carriers as appropriate) monthly the interconnect fees, if any, as
provided under section 1.4.
10.4.3 TERMINATING AND ORIGINATING ACCESS FEE. Sprint PCS will pay
Manager 92% of any terminating or originating access fees Sprint PCS collects
from an IXC that are not subject to refund or dispute (but it will not be Billed
Revenue). For purposes of clarification, Sprint Corporation's Related Parties
are obligated to pay terminating access to Sprint PCS only if MCI and AT&T pay
terminating or originating access to Sprint PCS. At the Effective Date of
Addendum IV, neither MCI nor AT&T pays terminating access to Sprint PCS. The
ability of wireless carriers to collect access fees is currently subject to
legal challenge. The parties acknowledge that Sprint PCS has limited ability to
require IXCs to pay access fees.
10.4.4 REIMBURSEMENTS FOR MISTAKEN PAYMENTS. If one party mistakenly
pays an amount that the other party is obligated to pay then the other party
will reimburse the paying party, if the paying party identifies the mistake and
notifies the receiving party within 9 calendar months after the date on which
the paying party makes the mistaken payment.
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10.5 TAXES AND PAYMENTS TO THE GOVERNMENT. Manager will pay or reimburse
Sprint PCS for any sales, use, gross receipts or similar tax, administrative
fee, telecommunications fee or surcharge for taxes or fees that a governmental
authority levies on the fees and charges payable by Sprint PCS to Manager.
Manager will report all taxable property to the appropriate taxing
authority for ad valorem tax purposes. Manager will pay as and when due all
taxes, assessments, liens, encumbrances, levies and other charges against the
real estate and personal property that Manager owns or uses in fulfilling its
obligations under this agreement.
Manager is responsible for paying all sales, use or similar taxes on the
purchase and use of its equipment, advertising and other goods or services in
connection with this agreement.
Sprint PCS will be solely responsible for remitting to government agencies
or their designees any and all fees or other amounts owed as a result of the
services provided to the Customers under the Management Agreement. As a
consequence of this responsibility, Sprint PCS is entitled to 100% of any
amounts that Manager, Sprint PCS or their Related Parties receives from
Customers (including Customers whose NPA-NXX is assigned to the Service Area)
relating to these fees or other amounts.
10.6 UNIVERSAL SERVICE FUNDS.
10.6.1 PAID BY GOVERNMENT. Manager is entitled to 100% of any
federal and state subsidy funds (the "SUBSIDY FUNDS"), including Universal
Service Funds, that Manager or Sprint PCS receives from government disbursements
based on customers with mailing addresses located in the Service Area and with
NPA-NXXs assigned to the Service Area, or such other method then in effect under
the rules of the FCC, Universal Service Administrative Company or other federal
or state administrator. For purposes of clarity, Universal Service Funds provide
support payments to Eligible Telecommunications Carriers ("ETC") serving in high
cost areas or providing services to low income individuals. Sprint PCS will file
at its cost on behalf of itself or Manager appropriate ETC documentation in
those jurisdictions in which Sprint PCS determines to make the filing. Manager
will bear the costs of any filing made by Sprint PCS in those jurisdictions in
which Manager requests Sprint PCS to make the filing.
If Manager asks Sprint PCS to make a filing in a jurisdiction and Sprint
PCS reasonably determines not to make the filing because making the filing is
detrimental to Sprint's best interests, then Sprint does not have to make the
filing. If Manager disagrees with the reasonableness of Sprint PCS'
determination not to make the filing, then the parties will submit to
40
binding arbitration in accordance with section 14.2, excluding the escalation
process set forth in section 14.1.
If the process set forth in the previous paragraph results in Sprint PCS
making a filing, Manager will pay all of Sprint PCS' reasonable out-of-pocket
costs associated with the filing and any compliance obligations that arise from
the filing or that are imposed by the jurisdiction in which the filing is made
(e.g. filing fees, legal fees, expert witness retention, universal lifeline
service, enhancing customer care quality, and including, without limitation,
network upgrades). Sprint PCS will remit to Manager 50% of any Subsidy Funds
that Sprint PCS receives from filings Sprint PCS is required to make under the
preceding paragraph that are not payable to Manager under the first paragraph of
this section 10.6.1, until the aggregate amount of the payments to Manager under
this sentence equals 50% of the amount Manager has paid Sprint PCS under the
preceding sentence.
All Subsidy Funds received must be used to support the provision,
maintenance and upgrading of facilities and services for which the funds are
intended. Sprint PCS will attempt to recover from the appropriate governmental
authority Subsidy Funds and will remit the appropriate recoveries to Manager.
10.6.2 PAID BY CUSTOMERS. Sprint PCS will be solely responsible for
remitting to government agencies or their designees, including but not limited
to the Universal Service Administrative Company, all universal service fees. As
a consequence of this responsibility, Sprint PCS is entitled to 100% of any
amounts that Manager, Sprint PCS or their Related Parties receives from
Customers (including Customers whose NPA-NXX is assigned to the Service Area)
relating to the Universal Service Funds.
10.7 EQUIPMENT REPLACEMENT PROGRAM. Sprint PCS is entitled to 100% of the
amounts that Customers pay for participating in any equipment replacement
program offered by Sprint PCS and billed on their Sprint PCS bills. Manager will
not be responsible for or in any way billed for any costs or expenses that
Sprint PCS or any Sprint PCS Related Party incurs in connection with any such
equipment replacement program. Sprint PCS will reimburse Manager for any costs
it incurs if Sprint PCS fails to comply with any Sprint PCS equipment
replacement program. Manager is entitled to 100% of the amounts that Customers
pay for participating in any equipment replacement program offered by Manager
and billed separately by Manager. Manager will reimburse Sprint PCS for any
costs it incurs if Manager fails to comply with any Manager equipment
replacement program.
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10.8 CUSTOMER EQUIPMENT. Sprint PCS is entitled to 100% of the amounts
that Customers pay for subscriber equipment and accessories sold or leased by
Sprint PCS, and Manager is entitled to 100% of the amounts that Customers pay
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 collect 100% of the E911
Phase I Surcharges (e.g., for equipment other than handsets, such as platforms
and networks). Sprint PCS will attempt to recover from the appropriate
governmental authority Phase I E911 reimbursements and will remit the
appropriate amounts to Manager.
10.10 MANAGER DEPOSITS INTO RETAIL BANK ACCOUNTS. Each Business Day,
Manager will deposit into bank accounts and authorize Sprint PCS or a Related
Party that Sprint PCS designates to sweep from such accounts the amounts
collected from Customers on behalf of Sprint PCS and its Related Parties for
Sprint PCS Products and Services. Manager will allow the funds deposited in the
bank accounts to be transferred daily to other accounts that Sprint PCS
designates. Manager will also provide the daily reports of the amounts collected
that Sprint PCS reasonably requires. Manager will not make any changes to the
authorizations and designations Sprint PCS designates for the bank accounts
without Sprint PCS' prior written consent.
10.11 MONTHLY STATEMENTS.
10.11.1 SECTION 10.2 STATEMENT. Each month Sprint PCS will determine
the amount payable to or due from Manager for a Billed Month under section 10.2.
Sprint PCS will deliver a monthly statement to Manager that reports the amount
due to Manager, the manner in which the amount was calculated, the amount due to
Sprint PCS and its Related Parties under this agreement and the Services
Agreement, and the net amount payable to or due from Manager.
10.11.2 OTHER STATEMENTS. Sprint PCS will deliver a monthly
statement to Manager that reports amounts due to Manager or from Manager, other
than amounts described in section 10.12.1, the manner in which the amounts were
calculated, the amount due to Manager or to Sprint PCS and its Related Parties
under this agreement and the Services Agreement, and the net amount payable to
Manager.
10.11.3 THIRD PARTY CHARGES. Sprint PCS will include any third party
charges authorized under the Management Agreement, Services Agreement or either
of the Trademark License Agreements on Manager's statements within three
calendar months after the end of the calendar month during which Sprint PCS
receives the third party charge.
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Sprint PCS' failure to include these charges on Manager's statements within the
three calendar month-period will mean that Sprint PCS cannot collect those third
party charges from Manager. Sprint PCS will use its commercially reasonable
efforts to obtain a third party charge that Sprint PCS has not received within
three calendar months after a third party provides a service or product, and an
estimate of the 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. Sprint PCS will use
reasonable efforts to true-up within 10 Business Days after the date on which
Sprint PCS made the estimated weekly payment.
10.12.2 MONTHLY PAYMENTS. The amounts payable to Manager and Sprint
PCS and its Related Parties under this agreement and the Services Agreement,
other than the payments described in section 10.12.1, will be determined, billed
and paid monthly in accordance with section 10.12.3.
10.12.3 TRANSITION OF PAYMENT METHODS. (a) Sprint PCS and Manager
wish to conduct an orderly transition from making weekly payments to Manager
based on Collected Revenues to weekly payments based on Billed Revenue. The
method of calculating the weekly payments will change on the first day of the
calendar month after the Effective Date of Addendum IV (the "TRANSITION DATE").
The weekly amounts paid to Manager during the calendar month before the
Transition Date and on the first Thursday after the Transition Date will be
based on the Collected Revenues method. The weekly amounts paid to Manager
beginning on the second Thursday of the second calendar month after the
Transition Date will be based on the Billed Revenue method described in this
section 10. To effect an orderly transition, Sprint PCS will pay Manager for the
period beginning on the second Thursday after the Transition Date and ending on
the first Thursday of the calendar month after the Transition Date an amount
calculated as described below in section 10.12.3(b).
(b) Sprint PCS will apply the estimated collection
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percentages that Sprint PCS uses before the Transition Date to the gross
accounts receivable aging categories for Customers with an NPA-NXX assigned to
the Service Area as of the close of business on the day before the Transition
Date to calculate the amount Sprint PCS anticipates collecting on those accounts
receivable. Sprint PCS will pay Manager the amount estimated to be collected in
equal weekly payments on consecutive Thursdays beginning the second Thursday
after the Transition Date and ending the first Thursday of the calendar month
after the Transition Date. Sprint PCS will also pay to Manager no later than the
second Thursday after the Transition Date any Collected Revenues received after
the Saturday before the Transition Date and before the Transition Date.
(c) Sprint PCS will recalculate the estimated collection percentages
and apply the recalculated estimated collection percentages to the gross
accounts receivable aging categories described in the first sentence of section
10.12.3(b) when all applicable data is available. Sprint PCS will increase or
decrease a weekly payment by the amount of the difference between the amount
paid to Manager based on the initial estimated collection percentages and the
amount that would have been paid to Manager using the newer estimated collection
percentages.
10.13 DISPUTE OR CORRECTION OF STATEMENT AMOUNT. A party can only dispute
or correct an amount on a statement in good faith. If a party disputes or
corrects an amount on a statement, the disputing or correcting party must give
the other party written notice of the specific item disputed or corrected, the
disputed or corrected amount with respect to that item and the reason for the
dispute or correction within the later to occur of: (i) three calendar months
after the end of the calendar month during which the disputed or erroneous
statement was delivered and (ii) 30 days after Manager receives information from
Sprint PCS in response to Manager's request relating to amounts on a statement.
Any dispute regarding a statement will be submitted for resolution under
the dispute resolution process in section 14. The parties must continue to pay
to the other party all amounts, except disputed amounts (subject to the next
paragraph), owed under this agreement and the Services Agreement during the
dispute resolution process. If the Disputing Party complies with the
requirements of this paragraph, then the other party or its Related Parties may
not declare the Disputing Party in breach of this agreement or the Services
Agreement because of nonpayment of the disputed amount, pending completion of
the dispute resolution process.
If the aggregate disputed amount, combined with any aggregate disputed
amount under section 10.14, exceeds $1,000,000, then upon the written request of
the other party, the party disputing the amount (the
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"DISPUTING PARTY") will deposit the portion of the disputed amount in excess of
$1,000,000 into an escrow account that will be governed by an escrow agreement
in a form to be mutually agreed upon by the parties. The Disputing Party will
deposit the amount into the escrow account within 10 Business Days after its
receipt of the written request from the other party in accordance with the
foregoing. If the Disputing Party complies with the requirements of this
paragraph, then the other party or its Related Parties may not declare the
Disputing Party in breach of this agreement or the Services Agreement because of
nonpayment of the disputed amount, pending completion of the dispute resolution
process.
The escrow agent will be an unrelated third party that is in the business
of serving as an escrow agent for or on behalf of financial institutions. The
parties will share evenly the escrow agent's fees. The escrow agent will invest
and reinvest the escrowed funds in interest-bearing money market accounts or as
the parties otherwise agree. The escrow agent will disburse the escrowed funds
in the following manner based on the determination made in the dispute
resolution process:
(a) If the Disputing Party does not owe any of the disputed
amounts, then the escrow agent will return all of the escrowed funds to
the Disputing Party with the interest earned on the escrowed funds.
(b) If the Disputing Party owes all of the disputed amounts,
then the escrow agent will disburse all of the escrowed funds with the
interest earned on the escrowed funds to the non-disputing party. If the
interest earned is less than the amount owed based on the Default Rate,
then the Disputing Party will pay the non-disputing party the difference
between those amounts.
(c) If the Disputing Party owes a portion of the disputed
amounts, then the escrow agent will disburse to the non-disputing party
the amount owed with interest at the Default Rate from the escrowed funds
and disburse the balance of the escrowed funds to the Disputing Party. The
Disputing Party will pay the non-disputing party the amount owed for
interest at the Default Rate if the amount of the escrowed funds is
insufficient.
Manager and Sprint PCS will take all reasonable actions necessary to allow
the Disputing Party to continue to reflect the amounts deposited into the escrow
account by the Disputing Party as assets in the Disputing Party's financial
statements.
The parties will use the dispute resolution process under section 14.2 of
this agreement, excluding the escalation process set forth in
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section 14.1, if they cannot agree on the form of escrow agreement.
The parties agree that, despite this section 10.13, Manager will pay all
disputed amounts due to Sprint PCS or any Related Party for fees for CCPU
Services and CPGA Services payable under the Services Agreement for periods
ending on or before December 31, 2006, subject to any other rights and remedies
that Manager has under this agreement and the Services Agreement. The parties
may discuss any amounts that Manager believes are in error in the calculation of
such fees, and attempt to agree on the corrected amounts, but these discussions
do not delay or otherwise affect Manager's payment obligations under this
section 10.13.
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 calendar months after Sprint PCS' receipt
of the third party invoice. Sprint PCS' failure to include the amount in a
statement to Manager within the three calendar month-period will mean that the
third party charges will not be collectible from Manager. Sprint PCS will use
its commercially reasonable efforts to obtain a third party charge that Sprint
PCS has not received within three calendar months after a third party provides a
service or product, and an estimate of the charge.
A party can dispute or correct an amount based on a third party invoice
only in good faith. Modified invoices received by Sprint PCS from a third party
vendor and then sent by Sprint PCS to Manager will be treated as a new statement
for purposes of this section, so long as the modified statement was revised in
good faith and not simply to provide Sprint PCS additional time to resubmit a
previous invoice. Sprint PCS will cooperate with Manager and take commercially
reasonable steps to cause the third party to cooperate with Manager to enable
Manager to ascertain the circumstances leading to a modified invoice.
If a party disputes or corrects an amount on a third party invoice or the
amount Sprint PCS attributed to Manager, the disputing party must give the other
party written notice of the specific item disputed or corrected, the disputed or
corrected amount with respect to that item and the reason for the dispute or
correction within three calendar months after the end of the calendar month
during which the disputed, erroneous or modified 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
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correct.
Any dispute regarding the amount of the third party invoice Sprint PCS
attributed to Manager will be submitted for resolution under the dispute
resolution process in section 14. Manager must continue to pay to Sprint PCS all
amounts, except disputed amounts, owed under this agreement and the Services
Agreement during the information gathering and dispute resolution process. If
the aggregate disputed amount, combined with any aggregate disputed amount under
section 10.13, exceeds $1,000,000, then upon the written request of Sprint PCS,
Manager will deposit the portion of the disputed amount in excess of $1,000,000
into an escrow account that will be governed by an escrow agreement containing
terms similar to the general terms described in section 10.13 and in a form to
be mutually agreed upon by the parties. Manager will deposit the amount into the
escrow account within 10 Business Days after its receipt of the written request
from Sprint PCS in accordance with the foregoing. If Manager complies with the
requirements of this paragraph, then none of Sprint PCS or its Related Parties
may declare Manager in breach of this agreement or the Services Agreement
because of nonpayment of the disputed amount, pending completion of the dispute
resolution process.
The dispute of an item in a statement does not stay or diminish a party's
other rights and remedies under this agreement, except that the parties must
complete the dispute resolution process in section 14 before taking any legal or
equitable action against each other. 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.
10.15 LATE PAYMENTS. Any amount due under this agreement or the Services
Agreement without a specified due date will, in the case of Manager, be due 25
days after the date of an invoice, and will, in the case of Sprint PCS, be due
25 days after collection from the applicable third party. Any amount due under
this agreement and the Services Agreement (including without limitation any
amounts disputed under those agreements that are ultimately determined to be
due) that is not paid by one party to the other party in accordance with the
terms of the applicable agreement will bear interest at the Default Rate
beginning (and including) the 6th day after the invoice or settlement due date
until (and including) the date paid.
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10.16 SETOFF RIGHT IF FAILURE TO PAY AMOUNTS DUE. If Manager fails
to pay any undisputed amount due Sprint PCS or a Related Party of Sprint
PCS under this agreement or any undisputed amount due Sprint PCS or a
Related Party of Sprint PCS under the Services Agreement or any other
agreement with Sprint PCS or a Related Party of Sprint PCS, or any
disputed amount due to Sprint PCS or a Related Party for fees for CCPU
Services or CPGA Services payable under the Services Agreement, then 5
days after the payment due date Sprint PCS may setoff against its payments
to Manager under this section 10 any such undisputed amount that Manager
owes to Sprint PCS or a Related Party of Sprint PCS under such agreements.
Sprint PCS will use reasonable efforts to provide Manager with prior
written notice of Sprint PCS' intent to exercise its setoff right and the
notice will include a list of any and all relevant invoices. This right of
setoff is in addition to any other right that Sprint PCS or a Related
Party of Sprint PCS might have under this agreement, the Services
Agreement or any other agreements with Sprint PCS or a Related Party of
Sprint PCS.
1. TERMINATION RIGHTS [NEW]. Section 11.3.7 is deleted, and all references
in the agreement to section 11.3.7 are also deleted.
2. NON-TERMINATION OF AGREEMENT [ADDM I, SECTION 12]. 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.
23. AUDIT [NEW]. Section 12.1.2 is amended and restated in its entirety to
read as follows:
12.1.2 AUDITS. On reasonable advance notice by one party, the other
party must provide its independent or internal auditors access to its
appropriate financial and operating records, including, without
limitation, vendor and distribution agreements, for purposes of auditing
the amount of fees (including the appropriateness of items excluded from
the Fee Based on Billed Revenue), costs, expenses (including operating
metrics referred to in this agreement and the Services Agreement relating
to or used in the determination of Inter Service Area Fees, Reseller
Customer Fees, CCPU Services or CPGA Services and any other data relied
upon by Manager relating to or used in the determination of any fees,
costs, expenses or charges payable by Manager under this agreement) or
other charges payable in connection with the Service Area for the period
audited. The party that requested the audit may decide if the audit is
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conducted by the other party's independent or internal auditors. Manager
and Sprint PCS may each request no more than one audit per year.
(a) If the audit shows that Sprint PCS was underpaid then,
unless the amount is contested, Manager will pay to Sprint PCS the
amount of the underpayment within 10 Business Days after Sprint PCS
gives Manager written notice of the underpayment determination.
(b) If the audit determines that Sprint PCS was overpaid then,
unless the amount is contested, Sprint PCS will pay to Manager the
amount of the overpayment within 10 Business Days after Manager
gives Sprint PCS written notice of the overpayment determination.
The auditing party will pay all costs and expenses related to the
audit unless the amount owed to the audited party is reduced by more than
10% or the amount owed by the audited party is increased by more than 10%,
in which case the audited party will pay the costs and expenses related to
the audit.
Sprint PCS will provide a report issued in conformity with Statement
of Auditing Standard No. 70 "Reports on the Processing of Transactions by
Service Organizations" ("TYPE II REPORT" or "MANAGER MANAGEMENT REPORT")
to Manager twice annually. If Manager, on the advice of its independent
auditors or its legal counsel, determines that a statute, regulation,
rule, judicial decision or interpretation, or audit or accounting rule, or
policy published by the accounting or auditing profession or other
authoritative rule making body (such as the Securities and Exchange
Commission, the Public Company Accounting Oversight Board or the Financial
Accounting Standards Board) requires additional assurances beyond SAS 70,
then Sprint PCS will reasonably cooperate with Manager to provide the
additional assurances or other information reasonably requested by Manager
so that it can satisfy its obligations under such statute, regulation,
rule, judicial decision or interpretation, or audit or accounting rule, or
policy published by the accounting or auditing profession or other
authoritative rule making body. Sprint PCS' independent auditors will
prepare any Type II Report or Manager Management Report provided under
this section 12.1.2 and will provide an opinion on the controls placed in
operation and tests of operating effectiveness of those controls in effect
at Sprint PCS over Manager Management Processes. "Manager Management
Processes" include those services generally provided within this
agreement, primarily billing and collection of revenues.
24. TERM OF CONFIDENTIALITY [ADDM I, SECTION 12, ADDM II, SECTION 6 AND
ADDM III, SECTION 6]. Section 12.2 is amended to read as follows:
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(a) Except as specifically authorized by this agreement, each of the
parties must, for the Term and 5 years after the date of termination of
this agreement, keep confidential, not disclose to others and use only for
the purposes authorized in this agreement, all Confidential Information
disclosed by the other party to the party in connection with this
agreement, except that the foregoing obligation will not apply to the
extent that any Confidential Information:
(i) is or becomes, after disclosure to a party, publicly known
by any means other than through unauthorized acts or omissions of
the party or its agents; or
(ii) is disclosed in good faith to a party by a third party
entitled to make the disclosure.
(b) Notwithstanding the foregoing, a party may use, disclose or
authorize the disclosure of Confidential Information that it receives
that:
(i) has been published or is in the public domain, or that
subsequently comes into the public domain, through no fault of the
receiving party;
(ii) prior to the effective date of this agreement was
properly within the legitimate possession of the receiving party, or
subsequent to the effective date of this agreement, is lawfully
received from a third party having rights to publicly disseminate
the Confidential Information without any restriction and without
notice to the recipient of any restriction against its further
disclosure;
(iii) is independently developed by the receiving party
through persons or entities who have not had, either directly or
indirectly, access to or knowledge of the Confidential Information;
(iv) is disclosed to a third party consistent with the terms
of the written approval of the party originally disclosing the
information;
(v) is required by the receiving party to be produced under
order of a court of competent jurisdiction or other similar
requirements of a governmental agency, and the Confidential
Information will otherwise continue to be Confidential Information
required to be held confidential for purposes of this agreement;
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(vi) is required by the receiving party to be disclosed by
applicable law or a stock exchange or association on which the
receiving party's securities (or those of its Related Parties) are
or may become listed; or
(vii) is disclosed by the receiving party to a financial
institution or accredited investor (as that term is defined in Rule
501(a) under the Securities Act of 1933) that is considering
providing 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.
(c) Notwithstanding the foregoing, Manager and Sprint PCS authorize
each other to disclose to the public in regulatory filings the other's
identity and the Service Area to be developed and managed by Manager, and
Manager authorizes Sprint PCS to mention Manager and the Service Area in
public relations announcements.
(d) The party making a disclosure under sections 12.2(b)(v),
12.2(b)(vi) or 12.2(b)(vii) must inform the disclosing party as promptly
as is reasonably necessary to enable the disclosing party to take action
to, and use the party's reasonable best efforts to, limit the disclosure
and maintain confidentiality to the extent practicable.
(e) Manager will not except when serving in the capacity of Manager
under this agreement, use any Confidential Information of any kind that it
receives under or in connection with this agreement. For example, if
Manager operates a wireless company in a different license area, Manager
may not use any of the Confidential Information received under or in
connection with this agreement in operating the other wireless business.
25. DISPUTE RESOLUTION [NEW]. Section 14 is hereby deleted in its entirety
and replaced with the following language:
14.1 NEGOTIATION. The parties will attempt in good faith to resolve any
issue, dispute, or controversy arising out of or relating to this Agreement by
negotiation. The following procedures will apply to any such negotiations:
14.1.1 NOTICE. A party commences the negotiation process by giving
the other party written notice of any dispute not resolved in the ordinary
course of business. The notice will expressly state that the notifying party is
commencing the negotiation process provided for in this section; identify the
issues and the amounts in dispute; and, will be delivered in accordance with
Section 17.1 of this Agreement.
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14.1.2 MEETING. Within 10 days after delivery of the written notice
commencing the negotiation process, representatives of both parties will meet in
a manner and at a time and place that is mutually acceptable to the
representatives involved for the purpose of exchanging relevant information and
in an effort to resolve the disputes.
14.1.3 REPRESENTATIVES. Each party's representative(s) at any
meeting conducted pursuant to this Section 14.1 will have authority to resolve
the dispute(s) identified in the notice, except (i) with respect to Sprint the
representative will be at least a vice-president of Sprint PCS, Sprint United
Management Company or Sprint Corporation if the dispute is one that would
require approval of the Board of Directors, the Chief Executive Officer,
President or Chief Financial Office of Sprint Corporation under the then
existing fiscal authorization policies of Sprint Corporation and (ii) with
respect to Manager the representative will be at least a vice-president of
Manager if the dispute is one that would require approval of the Board of
Directors. If a party's representative intends to be accompanied at any meeting
by an attorney, the other party will be given not less than 3 days' notice of
such intention and may also be accompanied by an attorney.
14.1.4 TERMINATION OF PROCESS. In the event that a dispute is not
resolved at the initial meeting of the parties' representatives, the parties may
agree to continue the negotiation process by scheduling additional meetings
and/or including additional representatives. However, at any time after the
first meeting or if the other party refuses to meet, either party may terminate
the negotiation process by delivery of written notice to that effect to the
other party in accordance with section 17.1 of this agreement.
14.1.5 NEGOTIATIONS NOT EVIDENCE. Any and all communications and
negotiations between the parties pursuant to this Section 14.1 are Confidential
Information of both of the parties and will be treated as negotiations of
settlement and compromise as provided for in the Federal Rules of Evidence or
any state's rules of evidence. The substance of any such communications and
negotiations are not to be tendered or introduced into evidence in any
proceeding or litigation between the parties regarding the subject disputes.
14.2 ARBITRATION/LITIGATION. With respect to any claim or dispute, either
party will continue to operate under this agreement and may file suit in a court
of competent jurisdiction or commence an arbitration proceeding in accordance
with the terms of this agreement. Absent the express agreement of a party to
submit an issue or dispute to arbitration (either by the specific terms of this
agreement or some other written agreement between the parties), neither party
can be compelled to submit a dispute to arbitration. The following rules and
procedures will govern any arbitration proceeding agreed to between the parties:
14.2.1 PLACE OF ARBITRATION. All arbitration proceedings between the
parties will be conducted in Chicago, Illinois.
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14.2.2 RULES AND ADMINISTRATION OF PROCEEDING. Except as
specifically modified by the terms of this agreement, any arbitration proceeding
will be conducted in accordance with the rules and procedures of the CPR. To the
extent the terms of this agreement conflict with said rules, the terms of this
agreement will prevail.
14.2.3 CLAIMS AND DISPUTES INVOLVING LESS THAN $250,000. Claims
involving disputed amounts less than $250,000 (whether the amount is raised in
the dispute or in a counterclaim) will be heard before a single arbitrator
selected in accordance with Section 14.2.5, below. The hearing on the merits of
the parties' claims and defenses will be conducted within 60 days of the
appointment of the arbitrator. The parties will be entitled to the following
discovery from each other:
(a) Up to 10 written interrogatories as provided for in Rule 33 of
the Federal Rules of Civil Procedure except that responses to
any such interrogatories will be served within 30 days of
service of the interrogatories;
(b) Up to 10 requests for production of documents and things and
for inspection as provided for in Rule 34 of the Federal Rules
of Civil Procedure except that responses, including the
requested materials to be produced, will be served and/or
produced within 45 days of service of the requests;
(c) Requests for Admission as provided for in Rule 36 of the
Federal Rules of Civil Procedure except that responses to any
such requests will be served within 20 days of service of the
requests; and,
(d) Any other discovery agreed upon by the parties or ordered or
directed by the arbitrator.
The arbitrator may on the motion of a party or on their own
establish different schedules for responding to discovery.
14.2.4 CLAIMS AND DISPUTES INVOLVING $250,000 OR MORE. Claims
involving disputed amounts of $250,000 or more (whether that amount is raised in
the dispute or in a counterclaim) will be heard before the three-arbitrator
panel selected in accordance with Section 14.2.5, below. The parties will be
entitled to the following discovery from each other:
(a) Up to 15 written interrogatories as provided for in Rule 33 of
the Federal Rules of Civil Procedure;
(b) Up to 20 requests for production of documents and things and
for inspection as provided for in Rule 34 of the Federal Rules
of Civil Procedure;
(c) Requests for Admission as provided for in Rule 36 of the
Federal Rules of Civil Procedure;
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(d) Deposition testimony from up to 5 witnesses who are
representatives of the other party, plus any expert witnesses
of the other party, as provided for in Rule 30 of the Federal
Rules of Civil Procedure, except if the claim is in excess of
$1,000,000 the parties will be entitled to a reasonable number
of depositions; and
(e) Any other discovery agreed upon by the parties or ordered or
directed by the arbitration panel.
All discovery disputes and other preliminary matters will be decided by the
arbitration panel.
14.2.5 SELECTION OF ARBITRATORS. Arbitrators will be selected from
the CPR's National Roster within 10 Business Days of the CPR providing a list of
potential arbitrators to the parties. Each arbitrator will serve strictly in a
neutral capacity. Each arbitrator will disclose any facts that might bear upon
his or her ability to serve in a neutral capacity to both parties. Any
challenges as to the neutrality of an arbitrator will be resolved in accordance
with the rules and procedures of the CPR. The following procedures will govern
the selection process:
(a) In matters requiring a single arbitrator, the selection of the
arbitrator will be in accordance with CPR's rules and procedures.
(b) In matters requiring a panel of three arbitrators, the CPR will
submit to the parties a list of 9 qualified potential arbitrators from its
National Roster. If any of the initial 9 potential arbitrators cannot serve
because of a conflict or other reason, the CPR will supplement the list so that
the parties have a total of 9 potential arbitrators from which to select the
panel of 3 arbitrators. Each party will be entitled to strike 3 names from the
list provided. Strikes will be made on alternating basis, with the original
claimant making the first strike, followed by the respondent until each party
has used all 3 of its strikes. The 3 persons not stricken will serve as
arbitrators. Within 5 Business Days of their appointment, the arbitrators will
select the chairman of the panel and provide notice of such selection to the CPR
and the parties. If a vacancy on the panel arises for any reason, a replacement
arbitrator will be selected in accordance with CPR's rules and procedures.
14.2.6 FINAL AWARD. The final award of the arbitrator or panel of
arbitrators, as the case may be, will be in writing, signed by the arbitrators,
and will state the basis for the decision. In proceedings involving a single
arbitrator, the final award will be made within 30 days of the close of the
hearing. In proceedings involving a panel of three arbitrators, the final award
will be made within 30 days of the close of the hearing. The final award will be
confidential, except that to the extent necessary to enforce its terms, either
party may obtain a judgment on the award in any state or federal court of
competent jurisdiction.
14.3 INJUNCTIVE RELIEF. Notwithstanding any other provision in this
Agreement, arbitration may not be used regarding any issue for which injunctive
or
54
similar equitable relief is sought by either party. No arbitrator is vested with
authority or jurisdiction to award an injunction or similar equitable relief
without the express written consent of the parties directed to the arbitration
proceeding.
26. SITING COMPLIANCE AUDITS [ADDM I SECTION 14]. The third sentence of
paragraph 2 of section 16.1 is amended to read as follows:
Every twelve months, and at the request of Sprint PCS, Manager will
provide a written certification from one of Manager's chief officers that
Manager's Service Area Network complies with Siting Regulations.
27. REGULATORY NOTICES [ADDM I SECTION 15]. The first sentence of section
16.4 is amended to read as follows:
Manager will, within five Business Days after its receipt, give
Sprint PCS written notice of all oral and written communications it
receives from regulatory authorities (including but not limited to the
FCC, the FAA, state public service commissions, environmental authorities,
and historic preservation authorities) and complaints respecting Manager's
construction, operation, and management of the Service Area Network that
could result in actions affecting the License as well as written notice of
the details respecting such communications and complaints, including a
copy of any written material received in connection with such
communications and complaints.
28. NOTICES [NEW AND ADDM III, SECTION 3; REVISED BY THIS ADDENDUM]. (a)
Section 17.1 is amended to read as follows:
17.1 NOTICES. (a) Any notice, payment, invoice, demand or
communication required or permitted to be given by any provision of this
agreement must be in writing and mailed (certified or registered mail,
postage prepaid, return receipt requested), sent by hand or overnight
courier, charges prepaid or sent by facsimile or email (in either instance
with acknowledgement or read receipt received), and addressed as described
below, or to any other address or number as the person or entity may from
time to time specify by written notice to the other parties. Sprint PCS
may give notice of changes to a Program Requirement by sending an email
that directs Manager to the changed Program Requirement on the affiliate
intranet website.
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
55
a redline comparison between the old Program Requirement and the new
Program Requirement.
Any notice, demand or communication intended to be notice of a
breach of an agreement or notice of an Event of Termination must:
(A) clearly indicate that intent,
(B) state the section(s) of the agreements allegedly breached,
and
(C) be mailed or sent by overnight courier in the manner
described in the first paragraph in this section 17.1.
Manager will promptly give Sprint PCS a copy of any notice Manager
receives from any administrative agent or any lender on any of Manager's
secured credit facilities, and a copy of any notice Manager gives to any
administrative agent or any lender on any of Manager's secured credit
facilities. Sprint PCS will promptly give Manager a copy of any notice
that Sprint PCS receives from any administrative agent or any lender on
any of Manager's secured credit facilities and a copy of any notice that
Sprint PCS gives to any administrative agent or any lender on any of
Manager's secured credit facilities.
All notices and other communications given to a party in accordance
with the provisions of this agreement will be deemed to have been given
when received.
(b) The parties' notice addresses are as follows:
For all entities comprising Sprint PCS:
Sprint PCS
KSOPHH0312
6180 Sprint Parkway
Overland Park, KS 66251
Telephone: 913-315-6409
Telecopier: 913-523-0539
Email: David.B.Bottoms@mail.sprint.com
Attention: Vice President of Strategic Partnerships
with a copy to:
Sprint Law Department
KSOPHT0101-Z2020
6391 Sprint Parkway
Overland Park, KS 66251
Telephone: 913-315-9315
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Telecopier: 913-523-9823
Email: John.W.Chapman@mail.sprint.com
Attention: John Chapman
For Manager:
Bright Personal Communications Services LLC
68 E. Main Street
Chillicothe, OH 45601
Telephone: 740-703-8289
Telecopier: 740-779-1945
Email: bill.mckell@horizonpcs.com
Attention: William A. McKell
with a copy to:
Arnall Golden Gregory LLP
171 17th Street, Suite 2100
Atlanta, GA 30363
Telephone: 404-873-8638
Telecopier: 404-873-8639
Email: don.hackney@agg.com
Attention: Donald I. Hackney, Jr.
and with copies to the following individual's email address if a notice of
a Program Requirement Change is sent by email:
Monesa Skocik
Email: monesa.skocik@horizonpcs.com
29. FORCE MAJEURE [NEW AND ADDM I, SECTION 16]. Section 17.9.3 is amended
and restated in its entirety 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 any covenant, if the
party's non-compliance with the covenant results primarily from:
(i) any FCC order or any other injunction that any
governmental authority issues that impedes the party's ability
to comply with the covenant,
(ii) the failure of any governmental authority to grant
any consent, approval, waiver or authorization or any delay on
the part of any governmental authority in granting any
consent, approval, waiver or authorization,
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(iii) the failure of any vendor to deliver in a timely
manner any equipment or service, or
(iv) any act of God, act of war or insurrection, riot,
fire, accident, explosion, labor unrest, strike, civil unrest,
work stoppage, condemnation or any similar cause or event not
reasonably within the control of the party.
For the purposes of this section, an event results primarily from
the actions of a governmental authority, vendor or other act beyond the
control of a party if, and only if, the event was not precipitated by a
finally adjudged breach of contract, tortuous, or other wrongful act of
the party claiming such excuse.
30. BINDING EFFECT [ADDM I, SECTION 17]. Section 17.11 is supplemented
with the following language:
The parties further intend that, unless expressly provided in this
agreement, its exhibits, attachments or addenda, the covenants not to
compete and other restrictions on the sale of goods or services contained
within those documents are not binding on the officers, directors,
employees, agents, shareholders or members of Manager or its Related
Parties.
31.GOVERNING LAW, JURISDICTION AND CONSENT TO SERVICE OF PROCESS [NEW].
Section 17.12 is replaced with the following language:
17.12 GOVERNING LAW, JURISDICTION AND CONSENT TO SERVICE OF PROCESS.
17.12.1 GOVERNING LAW. The internal laws of the State of
Kansas (without regard to principles of conflicts of law) govern the
validity of this agreement, the construction of its terms, and the
interpretation of the rights and duties of the parties. The substantive
laws and the procedural laws of the State of Kansas will apply to an
arbitration proceeding conducted under section 14.2, except to the extent
a CPR rule or procedure applies.
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
58
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.
32. ANNOUNCED TRANSACTIONS [ADDM I, SECTION 19]. Section 17.24 is deleted.
33. ADDITIONAL TERMS AND PROVISIONS [ADDM I, SECTION 20 AND FURTHER
REVISED IN THIS ADDENDUM]. Section 17.25 is amended to read as follows:
17.25 ADDITIONAL TERMS AND PROVISIONS. Certain additional and
supplemental terms and provisions of this agreement, if any, are set forth
in various addenda to this Agreement, which addenda are incorporated into
this agreement by this reference. Manager represents and warrants that all
existing contracts and arrangements (written or verbal) that relate to or
affect the rights of Sprint PCS or Sprint under this agreement (e.g.,
agreements relating to long distance telephone services (section 3.4) or
backhaul and transport services (section 3.7)) have been disclosed
verbally or in writing to Sprint PCS, and photocopies of these written
agreements will be delivered to Sprint PCS upon its request.
34. FEDERAL CONTRACTOR COMPLIANCE [ADDM I, SECTION 21]. A new section
17.28, the text of which is attached as Exhibit A to Addendum I, is added and
incorporated by this reference.
35. YEAR 2000 COMPLIANCE [ADDM I, SECTION 22]. The following section 17.29
is added:
17.29 YEAR 2000 COMPLIANCE. Sprint PCS and Manager each separately
represents and warrants that any system or equipment acquired, operated or
designated by it for use in the Service Area Network or for use to support
the Service Area Network, including (without limitation) billing, ordering
and customer service systems, will be capable of correctly processing and
receiving date data, as well as properly
59
exchanging date data with all products (for example, hardware, software
and firmware) with which the Service Area Network is designed to be used,
and will not malfunction or fail to function due to an inability to
process correctly date data in conformance with Sprint PCS requirements
for "Year 2000 Compliance." If the Service Area Network or any system used
to support the Service Area Network fails to operate as warranted due to
defects or failures in any system or equipment selected by Manager
(including systems or equipment of third party vendors and subcontractors
selected by Manager rather than by Sprint PCS) Manager will, at its own
expense, make the repairs, replacements or upgrades necessary to correct
the failure and provide a Year 2000 Compliant Service Area Network. If the
Service Area Network or any system used to support the Service Area
Network fails to operate as warranted due to defects or failures in any
systems or equipment selected by Sprint PCS (including systems or
equipment of third party vendors and subcontractors that Sprint PCS
selects and requires Manager to use), Sprint PCS will, at its own expense,
make the repairs, replacements or upgrades necessary to correct the
failure and provide a Year 2000 Compliant Service Area Network.
"YEAR 2000 COMPLIANCE" means the functions, calculations, and other
computing processes of the Service Area Network (collectively "PROCESSES")
that perform and otherwise process, date-arithmetic, display, print or
pass date/time data in a consistent manner, regardless of the date in time
on which the Processes are actually performed or the dates used in such
data or the nature of the date/time data input, whether before, during or
after January 1, 2000 and whether or not the date/time data is affected by
leap years. To the extent any part of the Service Area Network is intended
to be used in combination with other software, hardware or firmware, it
will properly exchange date/time data with such software, hardware or
firmware. The Service Area Network will accept and respond to two-digit
year-date input, correcting or supplementing as necessary, and store,
print, display or pass date/time data in a manner that is unambiguous as
to century. No date/time data will cause any part of the Service Area
Network to perform an abnormally ending routine or function with the
Processes or generate incorrect final values or invalid results.
SERVICES AGREEMENT
36.NON-EXCLUSIVE SERVICE [NEW]. Section 1.3 of the Services Agreement is
amended and restated in its entirety to read as follows:
1.3 NON-EXCLUSIVE SERVICES. Nothing contained in this agreement
confers upon Manager an exclusive right to any of the Services. Sprint
Spectrum may contract with others to provide expertise and services
identical or similar to those to be made available or provided to Manager
under this agreement.
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37. CHANGES TO ARTICLE 2 [NEW]. Section 24 of Addendum I is deleted.
Additionally, Article 2 of the Services Agreement is amended and restated in its
entirety to read as follows:
2. SERVICES
2.1 SERVICES.
2.1.1 SERVICES. Subject to the terms of this agreement,
through December 31, 2006, Manager will obtain the services set forth on
Schedule 2.1.1 attached to this agreement ("SERVICES") from Sprint
Spectrum in accordance with this section 2.1, and Sprint Spectrum will
provide all or none of the Services. For purposes of clarification, as of
the Effective Date of Addendum IV through December 31, 2006, Sprint
Spectrum is providing all of the Services to Manager and Sprint Spectrum
will not provide individual Services.
The fees charged for the Services and the process for setting
the fees charged for the Services are set forth in section 3.2. Sprint
Spectrum may designate additional Services upon at least 60 days' prior
written notice to Manager by providing an amended Schedule 2.1.1 to
Manager in accordance with the provisions of section 9.1.
Without Manager's prior written consent, neither Sprint
Spectrum nor any of its Related Parties will require Manager to pay for:
(A) any additional services to the extent that they are the
same as or functionally equivalent to any CCPU Service or CPGA Service or
other 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 Addendum IV, or
(B) any other additional service through December 31, 2006,
except for Settled Separately Manager Expenses. After that date the fee
for those other additional Services will be included in the fees for CCPU
Services and CPGA Services; or
(C) Services provided to Manager by a third party or self
provided, if permitted under the Services Agreement.
2.1.2 DISCONTINUANCE OF SERVICES. If Sprint Spectrum
determines to no longer offer a Service, then Sprint Spectrum must
(i) notify Manager in writing a reasonable time before
discontinuing the Service, except Sprint will notify Manager
at least 9 months before Sprint plans to
61
discontinue a significant Service (e.g., billing, collection
and customer care).
(ii) discontinue the Service to all Other Managers.
If Manager determines within 90 days after receipt of notice of discontinuance
that it wants to continue to receive the Service, Sprint Spectrum will use
commercially reasonable efforts to:
(a) help Manager provide the Service itself or find
another vendor to provide the Service, and
(b) facilitate Manager's transition to the new Service
provider.
The fees charged by Sprint Spectrum for the CCPU Services and CPGA
Services will be reduced by any fees payable by Manager to a vendor or new
Service provider in respect of discontinued CCPU Services and CPGA Services, or
by Sprint PCS' cost of providing the Service if Manager self-provides the
discontinued Service, if (x) Sprint Spectrum procures such CCPU Services or CPGA
Services from a vendor or a new Service provider and bills those items as
Settled-Separately Manager Expenses (as defined in subsection 3.2.5 of this
agreement), or (y) Manager procures such CCPU Services or CPGA Services from a
vendor or a new provider of Services, or (z) Manager self-provisions the
Services. No adjustment to the fees will be made if Sprint Spectrum discontinues
a CCPU Service or CPGA Service and Sprint Spectrum does not provide the CCPU
Service or CPGA Service to end users.
2.1.3 PERFORMANCE OF SERVICES. Sprint Spectrum may select the
method, location and means of providing the Services. If Sprint Spectrum wishes
to use Manager's facilities to provide the Services, Sprint Spectrum must obtain
Manager's prior written consent.
2.2 THIRD PARTY VENDORS. Some of the Services might be provided by third
party vendors under arrangements between Sprint Spectrum and the third party
vendors. In some instances, Manager may receive Services from a third party
vendor under the same terms and conditions that Sprint Spectrum receives those
Services. In other instances, Manager may receive Services under the terms and
conditions set forth in an agreement between Manager and the third party vendor.
There will be no additional charge or fee to Manager if such Service is a CCPU
Service or a CPGA Service.
2.3 CUSTOMER CARE SERVICES OUTSOURCING. Manager may elect to outsource all
(and not less than all) of its Customer Care Services in the manner described on
the attached Schedule 2.3 by providing Sprint
62
Spectrum notice of such election during the period beginning on January 1,
2006 and ending on June 30, 2006, together with payment of a $3 million
election fee. Upon receiving notice of Manager's election and the election
fee, the parties agree to abide by the terms and conditions set forth on
Schedule 2.3.
38. CHANGES TO ARTICLE 3 [NEW]. Section 25 of Addendum I is deleted.
Additionally, Article 3 of the Services Agreement is amended and restated in its
entirety 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,
subject to Section 2.1.1. Manager may not obtain these Services from other
sources, except as provided in this agreement.
If an accounting classification change has the effect of moving
a Service from a CCPU Service or CPGA Service to a Settled-Separately
Manager Expense, the fees for the CCPU Services or CPGA Services, as
applicable, charged by Sprint Spectrum will be reduced by the fees payable
by Manager for the new Settled-Separately Manager Expense.
3.2 FEES FOR SERVICES.
3.2.1 INITIAL PRICING PERIOD. The fees Manager will pay Sprint
Spectrum for the CCPU Services and CPGA Services provided to Manager by or
on behalf of Sprint Spectrum each month from the Effective Date of
Addendum IV until December 31, 2006 ("INITIAL PRICING Period"), will be:
(a) for the CCPU Services:
(i) from the Effective Date of Addendum IV through
December 31, 2005, $7.00 per subscriber; and
(ii) from January 1, 2006 through December 31, 2006,
$6.75 per subscriber;
each multiplied by the Number of Customers in Manager's Service Area, and
(b) for the CPGA Services: the Gross Customer Additions in
Manager's Service Area multiplied by the lesser of (i) $23.00 or (ii) the
quotient of (A) the amount that Sprint PCS billed Manager from January 1,
2004 through December 31, 2004 for CPGA Services, divided by (B) the Gross
Customer Additions in Manager's Service Area on which the
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amount billed in clause (A) is based. The parties agree that the
calculation described in (ii) results in an amount equal to $22.00.
The fees will be paid as set forth in section 10 of the
Management Agreement.
3.2.2 PRICING PROCESS. The parties will reset the CCPU and
CPGA amounts to be applied in each pricing period after the Initial
Pricing Period ends. Each subsequent pricing period will last three years
(if Manager continues to use Sprint Spectrum or a Related Party to provide
these Services) with, for example, the second pricing period beginning on
January 1, 2007 and ending on December 31, 2009.
The process for resetting the amounts is as follows:
(a) Sprint Spectrum will give Manager proposed CCPU and CPGA
amounts by October 31 of the calendar year before the calendar year in
which the then-current pricing period ends (e.g. if the pricing period
ends on December 31, 2006 then the amounts have to be presented by October
31, 2005). The proposed amounts will be based on the amount necessary to
recover Sprint PCS' reasonable costs for providing the CCPU Services and
CPGA Services to Manager and the Other Managers. Manager's representative
and the Sprint PCS representative will begin discussions regarding the
proposed CCPU and CPGA amounts within 20 days after Manager receives the
proposed CCPU and CPGA amounts from Sprint Spectrum.
(b) The fee Manager will pay Sprint Spectrum for the CCPU
Services provided to Manager by or on behalf of Sprint Spectrum each month
beginning on January 1, 2007 until December 31, 2008 under the pricing
process described in this section 3.2.2 will not exceed $8.50 per
subscriber multiplied by the Number of Customers in Manager's Service
Area.
(c) If the parties do not agree on new CCPU and CPGA amounts
within 30 days after the discussions begin, then Manager may escalate the
discussion to the Sprint PCS Chief Financial Officer or Sprint Spectrum
may escalate the discussion to Manager's Chief Executive Officer or Chief
Financial Officer.
(d) If the parties cannot agree on the new CCPU and CPGA
amounts through the escalation process within 20 days after the escalation
process begins, then Manager may either
(i) submit the determination of the CCPU and CPGA
amounts to binding arbitration under section 7.2 of this
agreement, excluding the negotiation process set forth
64
in section 7.1 and continue obtaining all of the CCPU Services
and CPGA Services from Sprint Spectrum at the CCPU and CPGA
amounts the arbitrator determines, or
(ii) procure from a vendor other than Sprint Spectrum or
self-provision all of the Services.
Manager has the right to propose to Sprint Spectrum that
Manager self-provision or procure from a vendor some, but not all, of the
Services. Sprint Spectrum will discuss the proposal with Manager, but
Manager can only self-provision or procure from a vendor some of the
Services if Sprint Spectrum agrees.
Manager will begin paying Sprint Spectrum under the CCPU and
CPGA amounts that Sprint Spectrum presents for discussion at the beginning
of the new pricing period until the date on which the parties agree or
until the arbitrator determines the new CCPU and CPGA amounts, whichever
occurs first. Within 30 days after the amounts are determined (either by
agreement or by arbitration), Sprint PCS will recalculate the fees from
the beginning of the new pricing period and give notice to Manager of what
the fees are and the amount of any adjusting payments required. If Sprint
PCS owes Manager a refund of fees already paid, Sprint PCS may pay the
amount to Manager or Sprint PCS, in its sole discretion, may credit the
amount of the refund against any amounts Manager then owes to Sprint PCS.
If Sprint PCS chooses to pay the refund, it will make the payment at the
time it sends the notice to Manager. If Sprint PCS chooses to credit the
refund, it will in the notice indicate the amounts owing to which the
credit will be applied. If Manager owes Sprint PCS additional fees Manager
will pay those fees to Sprint PCS within 10 days after receipt of the
notice.
3.2.3 CUSTOMER-RELATED SERVICES. By December 1, 2006, the
parties will agree on a service level agreement for customer care services
and collection services ("CUSTOMER-RELATED SERVICES") that will apply to
Customer-Related Services delivered by Sprint Spectrum starting on January
1, 2007. If the parties cannot agree on a service level agreement by
December 1, 2006, either party may submit a proposed service level
agreement to binding arbitration under section 7.2 of this agreement,
excluding the negotiation process set forth in section 7.1. If the
arbitration concludes after January 1, 2007 the service level agreement,
as agreed upon through the arbitration process, will be effective as of
January 1, 2007. The agreement will set forth 5 metrics for
Customer-Related Services and will provide that Sprint Spectrum will use
commercially reasonable efforts to meet the industry averages for those
metrics as in effect on December 1, 2006. The 5 metrics are:
(a) Service Grade Rate defined as percentage of calls answered in 60
seconds or less after the customer enters the call queue.
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(b) Average Hold Time defined as average time a customer waits to talk
to a customer service representative once the customer enters the
call queue.
(c) Abandoned Call Rate defined as the percentage of calls that
disconnect prior to talking to a customer service representative
after the customer enters the call queue.
(d) Net Write-Offs Rate defined as monthly write-offs of accounts
receivable, net of customer deposits, divided by monthly subscriber
revenue.
(e) Past-Due Accounts Receivable Aging Rates defined as percentage of
accounts receivable greater than 60 days from due date.
The service level agreement will provide that
Sprint Spectrum will give Manager a quarterly report on the
above metrics. Beginning in 2008, Manager will have the right
to opt out of Sprint Spectrum providing the Customer Related
Services if the average of the metrics reflected in the four
quarterly reports for the prior calendar year indicate that
Sprint Spectrum is not in compliance with any 2 of the 5
metrics. To exercise the opt-out right, Manager must give its
opt-out notice to Sprint Spectrum during the first quarter of
any calendar year that Manager has an opt-out right. Upon
receipt of an opt-out notice, Manager and Sprint Spectrum will
use commercially reasonable efforts to transition the
Customer-Related Services to Manager or a third party vendor
within 9 months after the opt-out notice date. Upon the
parties' completion of the transition, the parties will agree
to an adjustment to the CCPU Service Fee being charged by
Sprint Spectrum to Manager. If the parties cannot agree to an
adjustment, Manager has the right to submit the determination
to binding arbitration under section 7.2 of this agreement,
excluding the negotiation process set forth in section 7.1,
and continue obtaining all the CPGA Services and remaining
CCPU services from Sprint Spectrum. Manager will reimburse
Sprint Spectrum for transition and continuing operation costs
in accordance with Section 3.2.4.
Manager's opt-out right described above is its
sole remedy if Sprint Spectrum is not in compliance with the
metrics; Sprint Spectrum's non-compliance with the metrics
does not constitute a breach of this agreement or any other
agreement between the parties. After
66
December 31, 2006, (i) to the extent that Sprint Spectrum
recovers any penalties or other remuneration from a third
party service provider resulting from its failure to meet
performance metrics established by Sprint Spectrum and such
third party service provider, Sprint Spectrum will pay Manager
its pro rata portion of the net recovery amount, based on an
appropriate unit of measurement, and (ii) to the extent that
Sprint Spectrum has to pay any incentive or other remuneration
to a third party service provider resulting from the third
party service provider exceeding the performance metrics
established by Sprint Spectrum and such third party service
provider, Sprint Spectrum will increase the amount Manager
must pay to Sprint Spectrum by Manager's pro rata portion of
the net paid amount, based on an appropriate unit of
measurement.
3.2.4 TRANSITION AND CONTINUING OPERATING COSTS. Sprint
Spectrum will cooperate with Manager and work diligently and in good faith
to implement the transition of Services to another service provider
(including Manager, if applicable), in a reasonably efficient and
expeditious manner.
Manager will pay for all reasonable out-of-pocket costs that
Sprint Spectrum and its Related Parties actually incur to (i) transfer any
Service(s) provided to Manager to a third party vendor or to enable
Manager to self-provide any Service(s), and (ii) operate and maintain
systems, processes, licenses and equipment to support those Services.
Sprint Spectrum will bill Manager monthly for these costs.
Upon the parties' completion of the transition of any Service,
if such Service is transitioned to a third party, the fee for the CCPU
Service shall be reduced by the amount Manager is required to pay the
third party for such Service, or, if such Service is provided by Manager,
the fee for the CCPU Service shall be reduced by the amount of Sprint PCS'
cost of providing such Service.
3.2.5 SETTLED-SEPARATELY MANAGER EXPENSES. Manager will pay to
or reimburse Sprint Spectrum for any amounts that Sprint Spectrum or its
Related Parties pays for Settled-Separately Manager Expenses.
"SETTLED-SEPARATELY MANAGER EXPENSES" means those items the parties choose
to settle separately between themselves (e.g. accessory margins,
reciprocal retail store cost recovery) that are listed in sections C and D
of Schedule 2.1.1.
Sprint Spectrum will give Manager at least 60 days' prior
written notice by providing an amended Schedule 2.1.1 to Manager in
accordance with the provisions of section 9.1 of any additional Services
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added to sections C and D of Schedule 2.1.1, but no additional service may
be added to the extent it is the same as, or functionally equivalent to,
either:
(a) any service that Sprint Spectrum or any of its
Related Parties currently provides to Manager as a CCPU Service or a
CPGA Service (unless the fees payable by Manager to Sprint Spectrum
hereunder are correspondingly reduced) or
(b) any service or benefit that Manager currently
receives from Sprint Spectrum or its Related Parties but for which
Manager does not pay a separate fee before the Effective Date.
For each Settled-Separately Manager Expense, Sprint Spectrum
will provide sufficient detail to enable Manager to determine how the
expense was calculated, including the unit of measurement (e.g., per
subscriber per month or per call) and the record of the occurrences
generating the expense (e.g., the number of calls attributable to the
expense). If an expense is not reasonably subject to occurrence level
detail, Sprint Spectrum will provide reasonable detail on the process used
to calculate the fee and the process must be reasonable. A detail or
process is reasonable if it is substantially in the form as is customarily
used in the wireless industry. The Settled-Separately Manager Expenses
will be paid as set forth in section 10 of the Management Agreement.
Sprint Spectrum and its Related Parties may arrange for Manager to pay any
of the Settled-Separately Manager Expenses directly to the vendor after
giving Manager reasonable notice.
Unless Manager specifically agrees otherwise, any
Settled-Separately Manager Expense that Sprint Spectrum or any of its
Related Parties is entitled to charge or pass through to Manager under
this agreement or the Management Agreement (a) will reflect solely
out-of-pocket costs and expenses that Sprint Spectrum or its Related
Parties actually incur, (b) will be usage-based, fixed fee or
transaction-based and directly related to revenue-generating products and
services, (c) will not include any allocation of Sprint PCS' or its
Related Parties' internal costs or expenses (including, but not limited
to, allocations of general and administrative expenses or allocations of
employee compensation or related expenses) and (d) will not include any
mark-up or profit by Sprint. For clarity, Sprint Spectrum's or its Related
Parties' out-of-pocket costs for handset and accessory inventory consist
of actual inventory invoice costs less any volume incentive rebates and
price protection credits that Sprint Spectrum or its Related Parties
receive from a vendor.
3.3 LATE PAYMENTS. Any payment due under this section 3 that Manager
fails to pay to Sprint Spectrum in accordance with this
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agreement will bear interest at the Default Rate beginning (and including)
the 6th day after the due date stated on the invoice until (and including)
the date on which the payment is made.
3.4 TAXES. Manager will pay or reimburse Sprint Spectrum for any
sales, use, gross receipts or similar tax, administrative fee,
telecommunications fee or surcharge for taxes or fees that a governmental
authority levies on the fees and charges that Manager pays to Sprint
Spectrum or a Related Party.
39. AUDIT [NEW]. Section 5.1.3 of the Services Agreement is deleted.
Section 5.1.2 of the Services Agreement is amended to read as follows:
5.1.2 AUDITS. On reasonable advance notice by one party, the other
party must provide its independent or internal auditors access to its
appropriate financial and operating records, including, without
limitation, vendor and distribution agreements, for purposes of auditing
the amount of fees (including the appropriateness of items included in
Settled-Separately Manager Expenses), costs, expenses (including operating
metrics referred to in this agreement and the Services Agreement relating
to or used in the determination of Inter Service Area Fees, Reseller
Customer Fees, CCPU Services or CPGA Services and any other data relied
upon by Manager relating to or used in the determination of any fees,
costs, expenses or charges payable by Manager under this agreement) or
other charges payable in connection with the Service Area for the period
audited. The party that requested the audit may decide if the audit is
conducted by the other party's independent or internal auditors. Manager
and Sprint Spectrum may each request no more than one audit per year.
(a) If the audit shows that Sprint Spectrum was underpaid
then, unless the amount is contested, Manager will pay to Sprint
Spectrum the amount of the underpayment within 10 Business Days
after Sprint Spectrum gives Manager written notice of the
underpayment determination.
(b) If the audit determines that Sprint Spectrum was overpaid
then, unless the amount is contested, Sprint Spectrum will pay to
Manager the amount of the overpayment within 10 Business Days after
Manager gives Sprint Spectrum written notice of the overpayment
determination.
The auditing party will pay all costs and expenses related to the
audit unless the amount owed to the audited party is reduced by more than
10% or the amount owed by the audited party is increased by more than 10%,
in which case the audited party will pay the costs and expenses related to
the audit.
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If either party disputes the auditor's conclusion then the dispute
will be submitted to binding arbitration in accordance with section 7.2 of
this agreement, excluding the negotiation process set forth in section 7.1
of this agreement.
Sprint Spectrum will provide a Type II Report to Manager twice
annually. If Manager, on the advice of its independent auditors or its
legal counsel, determines that a statute, regulation, rule, judicial
decision or interpretation, or audit or accounting rule, or policy
published by the accounting or auditing profession or other authoritative
rule making body (such as the Securities and Exchange Commission, the
Public Company Accounting Oversight Board or the Financial Accounting
Standards Board) requires additional assurances beyond SAS 70, then Sprint
Spectrum will reasonably cooperate with Manager to provide the additional
assurances or other information reasonably requested by Manager so that it
can satisfy its obligations under such statute, regulation, rule, judicial
decision or interpretation, or audit or accounting rule, or policy
published by the accounting or auditing profession or other authoritative
rule making body. Sprint Spectrum's independent auditors will prepare any
Type II Report or Manager Management Report provided under this section
5.1.2 and will provide an opinion on the controls placed in operation and
tests of operating effectiveness of those controls in effect at Sprint
Spectrum over Manager Management Processes.
40. TERM OF CONFIDENTIALITY [ADDM I, SECTION 13]. Section 5.2(a) of the
Services Agreement is amended to read as follows:
5.2 CONFIDENTIAL INFORMATION.
(a) Except as specifically authorized by this agreement, each of the
parties must, for the term of this agreement and five years after the date
of termination of this agreement, keep confidential, not disclose to
others and use only for the purposes authorized in this agreement, all
Confidential Information disclosed by the other party to the party in
connection with this agreement, except that the foregoing obligation will
not apply to the extent that any Confidential Information:
(i) is or becomes, after disclosure to a party, publicly known
by any means other than through unauthorized acts or omissions of
the party or its agents; or
(ii) is disclosed in good faith to a party by a third party
entitled to make the disclosure.
41. DISPUTE RESOLUTION [NEW]. Section 7 of the Services Agreement is
hereby deleted in its entirety and replaced with the following language:
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7.1 NEGOTIATION. The parties will attempt in good faith to resolve any
issue, dispute, or controversy arising out of or relating to this agreement by
negotiation. The following procedures will apply to any such negotiations:
7.1.1 NOTICE. A party commences the negotiation process by giving
the other party written notice of any dispute not resolved in the ordinary
course of business. The notice will expressly state that the notifying party is
commencing the negotiation process provided for in this section; identify the
issues and the amounts in dispute; and, will be delivered in accordance with
section 9.1 of this agreement.
7.1.2 MEETING. Within 10 days after delivery of the written notice
commencing the negotiation process, representatives of both parties will meet in
a manner and at a time and place that is mutually acceptable to the
representatives involved for the purpose of exchanging relevant information and
in an effort to resolve the disputes.
7.1.3 REPRESENTATIVES. Each party's representative(s) at any meeting
conducted pursuant to this section 7.1 will have authority to resolve the
dispute(s) identified in the notice, except (i) with respect to Sprint the
representative will be at least a vice-president of Sprint PCS, Sprint United
Management Company or Sprint Corporation if the dispute is one that would
require approval of the Board of Directors, the Chief Executive Officer,
President or Chief Financial Office of Sprint Corporation under the then
existing fiscal authorization policies of Sprint Corporation and (ii) with
respect to Manager the representative will be at least a vice-president of
Manager if the dispute is one that would require approval of the Board of
Directors. If a party's representative intends to be accompanied at any meeting
by an attorney, the other party will be given not less than 3 days' notice of
such intention and may also be accompanied by an attorney.
7.1.4 TERMINATION OF PROCESS. In the event that a dispute is not
resolved at the initial meeting of the parties' representatives, the parties may
agree to continue the negotiation process by scheduling additional meetings
and/or including additional representatives. However, at any time after the
first meeting or if the other party refuses to meet, either party may terminate
the negotiation process by delivery of written notice to that effect to the
other party in accordance with section 9.1 of this agreement.
7.1.5 NEGOTIATIONS NOT EVIDENCE. Any and all communications and
negotiations between the parties pursuant to this section 7.1 are Confidential
Information of both of the parties and will be treated as negotiations of
settlement and compromise as provided for in the Federal Rules of Evidence or
any state's rules of evidence. The substance of any such communications and
negotiations are not to be tendered or introduced into evidence in any
proceeding or litigation between the parties regarding the subject disputes.
7.2 ARBITRATION/LITIGATION. With respect to any claim or dispute, either
party will continue to operate under this agreement and may file suit in a court
of competent jurisdiction or commence an arbitration proceeding in accordance
with the terms of this
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agreement. Absent the express agreement of a party to submit an issue or dispute
to arbitration (either by the specific terms of this agreement or some other
written agreement between the parties), neither party can be compelled to submit
a dispute to arbitration. The following rules and procedures will govern any
arbitration proceeding agreed to between the parties:
7.2.1 PLACE OF ARBITRATION. All arbitration proceedings between the
parties will be conducted in Chicago, Illinois.
7.2.2 RULES AND ADMINISTRATION OF PROCEEDING. Except as specifically
modified by the terms of this agreement, any arbitration proceeding will be
conducted in accordance with the rules and procedures of the CPR. To the extent
the terms of this agreement conflict with said rules, the terms of this
agreement will prevail.
7.2.3 CLAIMS AND DISPUTES INVOLVING LESS THAN $250,000. Claims
involving disputed amounts less than $250,000 (whether the amount is raised in
the dispute or in a counterclaim) will be heard before a single arbitrator
selected in accordance with section 7.2.5, below. The hearing on the merits of
the parties' claims and defenses will be conducted within 60 days of the
appointment of the arbitrator. The parties will be entitled to the following
discovery from each other:
(a) Up to 10 written interrogatories as provided for in Rule 33 of
the Federal Rules of Civil Procedure except that responses to
any such interrogatories will be served within 30 days of
service of the interrogatories;
(b) Up to 10 requests for production of documents and things and
for inspection as provided for in Rule 34 of the Federal Rules
of Civil Procedure except that responses, including the
requested materials to be produced, will be served and/or
produced within 45 days of service of the requests;
(c) Requests for Admission as provided for in Rule 36 of the
Federal Rules of Civil Procedure except that responses to any
such requests will be served within 20 days of service of the
requests; and,
(d) Any other discovery agreed upon by the parties or ordered or
directed by the arbitrator.
The arbitrator may on the motion of a party or on their own
establish different schedules for responding to discovery.
7.2.4 CLAIMS AND DISPUTES INVOLVING $250,000 OR MORE. Claims
involving disputed amounts of $250,000 or more (whether that amount is raised in
the dispute or in a counterclaim) will be heard before the three-arbitrator
panel selected in accordance with section 7.2.5, below. The parties will be
entitled to the following discovery from each other:
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(a) Up to 15 written interrogatories as provided for in Rule 33 of
the Federal Rules of Civil Procedure;
(b) Up to 20 requests for production of documents and things and
for inspection as provided for in Rule 34 of the Federal Rules
of Civil Procedure;
(c) Requests for Admission as provided for in Rule 36 of the
Federal Rules of Civil Procedure;
(d) Deposition testimony from up to 5 witnesses who are
representatives of the other party, plus any expert witnesses
of the other party, as provided for in Rule 30 of the Federal
Rules of Civil Procedure, except if the claim is in excess of
$1,000,000 the parties will be entitled to a reasonable number
of depositions; and
(e) Any other discovery agreed upon by the parties or ordered or
directed by the arbitration panel.
All discovery disputes and other preliminary matters will be decided by the
arbitration panel.
7.2.5 SELECTION OF ARBITRATORS. Arbitrators will be selected from
the CPR's National Roster within 10 Business Days of the CPR providing a list of
potential arbitrators to the parties. Each arbitrator will serve strictly in a
neutral capacity. Each arbitrator will disclose any facts that might bear upon
his or her ability to serve in a neutral capacity to both parties. Any
challenges as to the neutrality of an arbitrator will be resolved in accordance
with the rules and procedures of the CPR. The following procedures will govern
the selection process:
(a) In matters requiring a single arbitrator, the selection of the
arbitrator will be in accordance with CPR's rules and procedures.
(b) In matters requiring a panel of three arbitrators, the CPR will
submit to the parties a list of 9 qualified potential arbitrators from its
National Roster. If any of the initial 9 potential arbitrators cannot serve
because of a conflict or other reason, the CPR will supplement the list so that
the parties have a total of 9 potential arbitrators from which to select the
panel of 3 arbitrators. Each party will be entitled to strike 3 names from the
list provided. Strikes will be made on alternating basis, with the original
claimant making the first strike, followed by the respondent until each party
has used all 3 of its strikes. The 3 persons not stricken will serve as
arbitrators. Within 5 Business Days of their appointment, the arbitrators will
select the chairman of the panel and provide notice of such selection to the CPR
and the parties. If a vacancy on the panel arises for any reason, a replacement
arbitrator will be selected in accordance with CPR's rules and procedures.
7.2.6 FINAL AWARD. The final award of the arbitrator or panel of
arbitrators, as the case may be, will be in writing, signed by the arbitrators,
and will state
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the basis for the decision. In proceedings involving a single arbitrator, the
final award will be made within 30 days of the close of the hearing. In
proceedings involving a panel of three arbitrators, the final award will be made
within 30 days of the close of the hearing. The final award will be
confidential, except that to the extent necessary to enforce its terms, either
party may obtain a judgment on the award in any state or federal court of
competent jurisdiction.
7.3 INJUNCTIVE RELIEF. Notwithstanding any other provision in this
Agreement, arbitration may not be used regarding any issue for which injunctive
or similar equitable relief is sought by either party. No arbitrator is vested
with authority or jurisdiction to award an injunction or similar equitable
relief without the express written consent of the parties directed to the
arbitration proceeding.
42. NOTICES [ADDM III, Section 3 AND NEW]. Section 9.1 of the Services
Agreement is amended and restated in its entirety to read as follows:
9.1 NOTICES. Any notice, payment, invoice, demand or communication
required or permitted to be given by any provision of this agreement must
be in writing and mailed (certified or registered mail, postage prepaid,
return receipt requested), sent by hand or overnight courier, charges
prepaid or sent by facsimile or email (in either instance with
acknowledgement or read receipt received), and addressed as described in
section 17.1(b) of the Management Agreement, or to any other address or
number as the person or entity may from time to time specify by written
notice to the other parties.
The subject line of any email notice that purports to add any
additional service to Schedule 2.1.1 must read "Additional Service to
Schedule 2.1.1". The new Schedule 2.1.1 must also be attached to the
email, and notice will also be provided to those individuals listed for
notices for Manager regarding Program Requirement Changes set forth in
section 17.1(b) of the Management Agreement.
Any notice, demand or communication intended to be notice of a
breach of an agreement or notice of an Event of Termination must clearly
indicate that intent, state the section(s) of the agreements allegedly
breached, and in addition to any other form of notice it must be mailed or
sent by overnight courier in the manner described in the first paragraph
of this section 9.1.
Manager will promptly give Sprint Spectrum a copy of any notice
Manager receives from any administrative agent or any lender on any of
Manager's secured credit facilities, and a copy of any notice Manager
gives to any administrative agent or any lender on any of Manager's
secured credit facilities. Sprint Spectrum will promptly give Manager a
copy of any notice that Sprint Spectrum receives from any administrative
agent or any lender on any of Manager's secured credit facilities and a
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copy of any notice that Sprint Spectrum gives to any administrative agent
or any lender on any of Manager's secured credit facilities.
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.
43. ENTIRE AGREEMENT; AMENDMENTS [NEW]. Section 9.6 of the Services
Agreement is amended and restated in its entirety to read as follows:
9.6 ENTIRE AGREEMENT; AMENDMENTS. The provisions of this agreement
and the Management Agreement including the exhibits to those agreements
set forth the entire agreement and understanding between the parties as to
the subject matter of this agreement and supersede all prior agreements,
oral or written, and other communications between the parties relating to
the subject matter of this agreement. Except for Sprint Spectrum's right
to add additional Services to Schedule 2.1.1 subject to the provisions of
section 2.1.1 and section 3.2.5, this agreement may be modified or amended
only by a written amendment signed by the persons or entities authorized
to bind each party.
44. FORCE MAJEURE [NEW]. The second paragraph of section 9.8 of the
Services Agreement is amended and restated in its entirety to read as follows:
Neither Manager nor Sprint Spectrum, as the case may be, is in
breach of any covenant in this agreement and no Event of Termination will
occur as a result of the failure of such party to comply with any
covenant, if the party's non-compliance with the covenant results
primarily from:
(i) any FCC order or any other injunction that any
governmental authority issues that impedes the party's ability
to comply with the covenant,
(ii) the failure of any governmental authority to grant
any consent, approval, waiver or authorization or any delay on
the part of any governmental authority in granting any
consent, approval, waiver or authorization,
(iii) the failure of any vendor to deliver in a timely
manner any equipment or service, or
(iv) any act of God, act of war or insurrection, riot,
fire, accident, explosion, labor unrest, strike, civil unrest,
work stoppage, condemnation or any similar cause or event not
reasonably within the control of the party.
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45. GOVERNING LAW, JURISDICTION AND CONSENT TO SERVICE OF PROCESS. [NEW].
Section 9.11 of the Services Agreement is amended to read as follows:
9.11 GOVERNING LAW, JURISDICTION AND SERVICE OF PROCESS.
9.11.1 GOVERNING LAW. The internal laws of the State of
Kansas (without regard to principles of conflicts of law)
govern the validity of this agreement, the construction of its
terms, and the interpretation of the rights and duties of the
parties. The substantive laws and the procedural laws of the
State of Kansas will apply to an arbitration proceeding
conducted under section 7.2, except to the extent a CPR rule
or procedure applies.
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
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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
46. AMENDMENT TO TRADEMARK LICENSE AGREEMENTS [ADDM I, Section 27]. The
following sentence is added at the end of section 14.1 of each of the Trademark
Licenses Agreements:
Notwithstanding anything to the contrary contained herein, Licensor
shall not withhold its consent to an assignment of this agreement to a
party to whom Sprint PCS has approved the assignment of the Management
Agreement.
47. NOTICES [NEW AND ADDM III,Section 3]. Section 15.1 of each of the
Trademark License Agreements is amended and restated in its entirety as follows:
Section 15.1. Notices. Any notice, payment, invoice, demand or
communication required or permitted to be given by any provision of this
agreement must be in writing and mailed (certified or registered mail,
postage prepaid, return receipt requested), sent by hand or overnight
courier, charges prepaid or sent by facsimile or email (in either instance
with acknowledgement or read receipt received), charges prepaid and
addressed as described in section 17.1(b) of the Management Agreement, or
to any other address or number as the person or entity may from time to
time specify by written notice to the other parties.
Any notice, demand or communication intended to be notice of a
breach of an agreement or notice of an Event of Termination must clearly
indicate that intent, state the section(s) of the agreements allegedly
breached, and be mailed or sent by overnight courier in the manner
described in the preceding paragraph.
Licensee will promptly give Licensor a copy of any notice Licensee
receives from any administrative agent or any lender on any of Licensee's
secured credit facilities, and a copy of any notice Licensee gives to any
administrative agent or any lender on any of Licensee's secured credit
facilities. Licensor will promptly give Licensee a copy of any notice that
Licensor receives from any administrative agent or any lender on any of
Licensee's secured credit facilities and a copy of any notice that
Licensor gives to any administrative agent or any lender on any of
Licensee's secured credit facilities.
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.
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48. GOVERNING LAW [NEW]. (a) 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.
Section 15.13 of each of the Trademark License Agreements is
replaced by the following language:
15.13 Jurisdiction; Consent to Service of Proce
(a) Each party hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of any
Kansas State court sitting in the County of Johnson or any Federal
court of the United States of America sitting in the District of
Kansas, and any appellate court from any such court, in any suit
action or proceeding arising out of or relating to this agreement,
or for recognition or enforcement of any judgment, and each party
hereby irrevocably and unconditionally agrees that all claims in
respect of any such suit, action or proceeding may be heard and
determined in such Kansas State court or, to the extent permitted by
law, in such Federal court.
(b) Each party hereby irrevocably and unconditionally waives,
to the fullest extent it may legally do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action
or proceeding arising out of or relating to this agreement in Kansas
State court sitting in the County of Johnson or any Federal court
sitting in the District of Kansas. Each party hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such suit, action or
proceeding in any such court and further waives the right to object,
with respect to such suit, action or proceeding, that such court
does not have jurisdiction over such party.
(c) Each party irrevocably consents to service of process in
the manner provided for the giving of notices pursuant to this
agreement, provided that such service shall be deemed to have been
given only when actually received by such party. Nothing in this
agreement shall affect the right of a party to serve process in
another manner permitted by law.
SCHEDULE OF DEFINITIONS
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49. DELETED DEFINITIONS [NEW]. The definition of "Available Services" is
deleted. The definitions of "New Coverage" and "Service Area Network" are
replaced with the definitions provided in paragraph 50 of this Addendum IV.
50. ADDITIONAL, AMENDED OR SUPPLEMENTED DEFINITIONS [NEW]. The following
are new or amended definitions, unless otherwise indicated.
"ALLOCABLE SOFTWARE FEE" has the meaning set forth in section
1.3.4(e) of the Management Agreement.
"ALLOCATED WRITE-OFFS" has the meaning set forth in section 10.3.4
of the Management Agreement.
"AMOUNT BILLED (NET OF CUSTOMER CREDITS)" has the meaning set forth
in section 10.3.3 of the Management Agreement.
"AT&T ARRANGEMENT" has the meaning set forth in section 3.5.2(c) of
the Management Agreement.
"AWAY NETWORK" means:
(i) any portion of the Sprint PCS Network other than
Manager's Service Area Network, in the case of Customers with
an NPA-NXX assigned to the Service Area (or any other such
designation in accordance with section 17.17 of the Management
Agreement), and
(ii) Manager's Service Area Network, in the case of
Customers with an NPA-NXX assigned to an area outside the
Service Area (or any other such designation in accordance with
section 17.17 of the Management Agreement).
"BILLED COMPONENT(s)" has the meaning set forth in section 10.3.2 of
the Management Agreement.
"BILLED MONTH" has the meaning set forth in section 10.2.1 of the
Management Agreement.
"BILLED REVENUE" has the meaning set forth in section 10.2.1 of the
Management Agreement.
"CAPITAL PROGRAM REQUIREMENT CHANGE" has the meaning set forth in
section 9.3.1(b) of the Management Agreement.
"CCPU SERVICES" means those Services listed in section A of Schedule
2.1.1 to the Services Agreement.
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"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.
"CPGA SERVICES" means those Services listed in section B of Schedule
2.1.1 to the Services Agreement.
"CPR" means the Center for Public Resources Institute for Dispute
Resolution.
"CSA" has the meaning set forth in section 10.2.1 of the Management
Agreement.
"CUSTOMER" means any customer, except Reseller Customers or
customers of third parties for which Manager provides solely switching
services, who purchases Sprint PCS Products and Services, regardless of
where their NPA-NXX is assigned.
"CUSTOMER CARE SERVICES" has the meaning set forth in Schedule 2.3
of the Services Agreement.
"CUSTOMER CREDITS" has the meaning set forth in section 10.2.1 of
the Management Agreement.
"CUSTOMER EQUIPMENT CHARGES" has the meaning set forth in section
10.3.2.5 of the Management Agreement.
"CUSTOMER EQUIPMENT CREDITS" has the meaning set forth in section
10.3.2.2 of the Management Agreement.
"CUSTOMER-RELATED SERVICES" has the meaning set forth in section
3.2.2 of the Services Agreement.
"CUSTOMER TAXES" means the amounts that Sprint PCS bills to Manager
Accounts for taxes, including, without limitation, federal, state, and
local sales, use, gross and excise tax.
"EFFECTIVE DATE" has the meaning set forth in the preamble of this
Addendum.
"ENTERPRISE VALUE" means either:
(i) if the entity has issued publicly-traded equity, the combined
book value of the entity's outstanding debt and preferred stock less cash
plus the fair market value of each class of its publicly-traded equity
other than any publicly-traded preferred stock. For the purposes of this
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definition, the fair market value of a class of the entity's
publicly-traded equity (other than publicly-traded preferred stock) is
equal to the product of:
(A) the number of issued and outstanding shares of the class
of publicly-traded equity as of the date of determination, times
(B) the applicable average closing price (or average closing
bid, if traded on the over-the-counter market) per share of the
class of publicly-traded equity over the 21 consecutive trading days
immediately preceding the date of determination; or
(ii) if the entity does not have issued publicly-traded equity, the
combined book value of the entity's outstanding debt and equity less cash.
"E911 PHASE I SURCHARGES" means all costs related to Phase I E911
functionality.
"E911 PHASE II SURCHARGES" has the meaning set forth in section
10.3.2.6 of the Management Agreement.
"ETC" has the meaning set forth in section 10.6.1 of the Management
Agreement.
"EXISTING RESALE ARRANGEMENTS" has the meaning set forth in section
3.5.2(a) of the Management Agreement.
"FEE BASED ON BILLED REVENUE" has the meaning set forth in section
10.2.1 of the Management Agreement.
"GROSS CUSTOMER ADDITIONS IN MANAGER'S SERVICE AREA" means the
average number of Customers activated (without taking into consideration
the number of Customers lost) during the previous month with an NPA-NXX
assigned to the Service Area as reported in Sprint PCS' most recent
monthly KPI report. For purposes of clarification, upgraded Customers are
not included in the calculation of Gross Customer Additions in Manager's
Service Area.
"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.
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"INTER SERVICE AREA 3G DATA FEE" means the fee for use of the Sprint
PCS Network and the Service Area Network for 3G data (except by Reseller
Customers) as determined in section 10.4.1.3 of the Management Agreement.
"INTER SERVICE AREA VOICE AND 2G DATA FEE" means the fee for use of
the Sprint PCS Network and the Service Area Network for voice and 2G data
(except by Reseller Customers) as determined in section 10.4.1.2 of the
Management Agreement.
"INVESTMENT BANKER" has the meaning set forth in section 9.3.2 of
the Management Agreement.
"MANAGER ACCOUNTS" has the meaning set forth in section 10.2.1 of
the Management Agreement.
"MANAGER MANAGEMENT PROCESS" has the meaning set forth in section
12.1.2 of the Management Agreement.
"MANAGER MANAGEMENT REPORT" has the meaning set forth in section
12.1.2 of the Management Agreement.
"NET BILLED REVENUE" has the meaning set forth in section 10.2.1 of
the Management Agreement.
"NEW COVERAGE" means the build-out in the Service Area that is in
addition to the build-out required under the then-existing Build-out Plan,
which build-out Sprint PCS or Manager decides should be built-out. "NEW
RESALE ARRANGEMENTS" has the meaning set forth in section 3.5.2(b) of the
Management Agreement.
"NON-CAPITAL PROGRAM REQUIREMENT CHANGE" has the meaning set forth
in section 9.3.1(a) 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 Customers with NPA-NXXs assigned to the Service Area reported in
Sprint PCS' most recent monthly KPI report.
"OUTBOUND ROAMING FEES" means the amounts that Sprint PCS or its
Related Parties bills to Manager Accounts for calls placed on a non-Sprint
PCS Network.
"OVERALL CHANGES" has the meaning set forth in section 1.10(a) of
the Management Agreement.
82
"PREVIOUSLY DECLINED RESALE ARRANGEMENTS" has the meaning set forth
in section 3.5.2(a) of the Management Agreement.
"PROGRAM REQUIREMENT CHANGE" means a change in a Program Requirement
issued by Sprint PCS in accordance with section 9.2 of the Management
Agreement.
"RENEWED RESALE ARRANGEMENTS" has the meaning set forth in section
3.5.2(b) of the Management Agreement.
"REQUIRED RESALE ARRANGEMENTS" has the meaning set forth in section
3.5.2(b) of the Management Agreement.
"REQUIRED RESALE PARTICIPATION PERIOD" means the period from April
1, 2004, until the later of (1) December 31, 2006 and (2) the expiration
of any three-year period beginning after December 31, 2006, for which
Sprint PCS and Manager have reached agreement in accordance with section
10.4.1.1(c) with respect to the terms, fees and conditions applicable to
Manager's participation in Resale Arrangements entered into by Sprint PCS.
For the avoidance of doubt, if Manager and Sprint PCS are not able to
reach agreement in accordance with section 10.4.1.1(c) with respect to the
terms, fees and conditions applicable to Manager's participation in Resale
Arrangements entered into by Sprint PCS, then the "Required Resale
Participation Period" will automatically end at the expiration of the then
current three-year period.
"RESALE ARRANGEMENT" has the meaning set forth in section 3.5.2.
"RESELLER CUSTOMER" means customers of companies or organizations
with a Private Label PCS Services or similar Resale Arrangement with
Sprint PCS or Manager.
"RESELLER CUSTOMER FEES" has the meaning set forth in section
10.4.1.1 of the Management Agreement.
"RESELLER CUSTOMER 3G DATA FEE" means the fee for use of the Service
Area Network by a Reseller Customer for 3G data as determined in section
10.4.1.3 of the Management Agreement.
"RESELLER CUSTOMER VOICE AND 2G DATA FEE" means the fee for use of
the Service Area Network by a Reseller Customer for voice and 2G data as
determined in section 10.4.1.2 of the Management Agreement.
"SCCLP" has the meaning set forth in section 3.4.2(b) of the
Management Agreement.
"SELECTED SERVICES" means Services.
83
"SERVICE AREA NETWORK" means the network that is directly required
for the provision of telecommunications services to Customers and is
managed by Manager under the Management Agreement in the Service Area
under the License.
"SERVICES" has the meaning set forth in section 2.1.1 of the
Services Agreement.
"SETTLED-SEPARATELY MANAGER EXPENSES" has the meaning set forth in
section 3.2.5 of the Services Agreement.
"SOFTWARE" means only that software and software features currently
existing or developed in the future that are used in connection with
telecommunications equipment owned or leased by Manager in Manager's
provisioning of wireless services in the Service Area and includes,
without limitation, software maintenance, updates, improvements, upgrades
and modifications. "Software" expressly excludes:
(i) software "rights to use" licenses to the extent paid
to the licensor directly by Manager, and
(ii) software operating Sprint PCS' national platforms,
billing system platforms, customer service platforms and like
applications.
"SOFTWARE FEES" means costs associated (including applicable license
fees) with procuring software, software maintenance, software upgrades and
other software costs needed to provide uniform and consistent operation of
the wireless systems within the Sprint PCS Network.
"SPRINT PCS" means any or all of the following Related Parties who
are License holders or signatories to the Management Agreement: Sprint
Spectrum L.P., a Delaware limited partnership, WirelessCo, L.P., a
Delaware limited partnership, SprintCom, Inc., a Kansas corporation,
PhillieCo Partners I, L.P., a Delaware limited partnership, PhillieCo,
L.P., a Delaware limited partnership, Sprint Telephony PCS, L.P., a
Delaware limited partnership, Sprint PCS License, L.L.C., a Delaware
limited liability company, American PCS Communications, LLC, a Delaware
limited liability company, and APC PCS, LLC, a Delaware limited liability
company. Any reference in the Management Agreement or Services Agreement
to Cox Communications PCS, L.P., a Delaware limited partnership, or Cox
PCS License, L.L.C., a Delaware limited liability company, is changed to
Sprint Telephony PCS, L.P., a Delaware limited partnership, or Sprint PCS
License, L.L.C., a Delaware limited
84
liability company, respectively, to reflect name changes filed with the
Delaware Secretary of State in 2002.
"SPRINT PCS ARPU" means the average revenue per user publicly
announced by Sprint PCS or its Related Parties for the most recent
calendar year. Sprint PCS ARPU is generally calculated by dividing
wireless service revenues by average wireless subscribers.
"SPRINT PCS RETAIL YIELD FOR VOICE AND 2G DATA USAGE" means the
quotient calculated by dividing (a) Sprint PCS ARPU less the 3G data
component in the Sprint PCS ARPU by (b) the reported minutes of use per
subscriber for the calendar year for which the Sprint PCS ARPU was
calculated.
"SPRINT PCS RETAIL YIELD FOR 3G DATA USAGE" means the quotient
calculated by dividing (a) the 3G data component in the Sprint PCS ARPU by
(b) the kilobytes of use for 3G data usage per subscriber for the calendar
year for which the Sprint PCS ARPU was calculated.
"SUBSIDY FUNDS" has the meaning set forth in section 10.6.1 of the
Management Agreement.
"3M-POPS MANAGER" means any Other Manager whose ultimate parent
entity (as defined by the Hart-Scott-Rodino Antitrust Improvements Act of
1976) controls entities with 3 million or more covered pops.
"TOTAL SOFTWARE COST" means the amount paid by Sprint PCS to the
Vendor directly associated with the Software used by Sprint PCS, Manager
and Other Managers (if and to the extent Manager and the Other Managers
have agreed to pay any Allocable Software Fee) for the Sprint PCS Network
for which Manager is not obligated to pay the Software Vendor directly,
net of any discounts or rebates and excluding any mark-up by Sprint PCS
for administrative or other fees.
"TRANSITION DATE" has the meaning set forth in section 10.12.3 of
the Management Agreement.
"TYPE II REPORT" has the meaning set forth in section 12.1.2 of the
Management Agreement.
"ULTIMATE PARENT" has the meaning set forth in the Hart-Scott-Rodino
Antitrust Improvements Act of 1976.
"USF CHARGES" has the meaning set forth in section 10.3.2.7 of the
Management Agreement.
"VENDOR" has the meaning set forth in section 1.3.4(b) of the
Management Agreement.
85
"VENDOR SOFTWARE" has the meaning set forth in section 1.3.4(b) of
the Management Agreement.
"WIRELESS MOBILITY COMMUNICATIONS NETWORK" means a radio
communications system operating in the 1900 MHz spectrum range under the
rules designated as Subpart E of Part 24 of the FCC's rules.
"WLNP SURCHARGES" has the meaning set forth in section 10.2.4 of the
Management Agreement.
"WRITE-OFFS" has the meaning set forth in section 10.3.1 of the
Management Agreement.
"YEAR 2000 COMPLIANCE" has the meaning set forth in section 17.29 of
the Management Agreement.
B. CROSS-REFERENCES TO OTHER PARAGRAPHS IN PREVIOUS ADDENDA.
Listed below are those paragraphs in the previous addenda that are
interpretations or applications of the Management Agreement 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
4. Asset Transfer
8. Existing Service Offerings
9. Deployment of Cellular by Manager's Related Parties
18. Member Transfers
23. Services Agreement with Horizon Personal Communications, Inc.
24. Service Period
25. Payment of Fees Under Services Agreement
26. Ownership of Spectrum
28. Branding Guidelines
Addendum II
1. Use of Loan Proceeds
2. Consent and Agreement Not Assignable
3. Notices
5. No Defaults Under Credit Documents or Sprint Agreements
10. Counterparts
Addendum III
1. Use of Loan Proceeds
86
2. Consent and Agreement Not Assignable
5. No Defaults Under Credit Documents or Sprint Agreements
7. Reaffirmation of Sprint Agreements
8. Counterparts
C. OTHER PROVISIONS.
1. MANAGER AND SPRINT PCS' REPRESENTATIONS. Manager and Sprint PCS each
represents and warrants that its respective execution, delivery and performance
of its obligations described in this Addendum have been duly authorized by
proper action of its governing body and do not and will not violate any material
agreements to which it is a party. Each of Manager and Sprint PCS also
represents and warrants that there are no legal or other claims, actions,
counterclaims, proceedings or suits, at law or in arbitration or equity, pending
or, to its knowledge, threatened against it, its Related Parties, officers or
directors that question or may affect the validity of this Addendum, the
execution and performance of the transactions contemplated by this Addendum or
that party's right or obligation to consummate the transactions contemplated by
this Addendum.
2. REAFFIRMATION OF SPRINT AGREEMENTS. Each of the undersigned reaffirms
in their entirety the Management Agreement, the Services Agreement and the
Trademark License Agreements, together with their respective rights and
obligations under those agreements.
3. COUNTERPARTS. This Addendum may be executed in one or more
counterparts, including facsimile counterparts, and each executed counterpart
will have the same force and effect as an original instrument as if the parties
to the aggregate counterparts had signed the same instrument.
[THE REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY.]
87
The parties have caused this Addendum IV to be executed as of the
date first above written.
SPRINT SPECTRUM L.P.
By:_________________________________
Name:____________________________
Title:___________________________
SPRINTCOM, INC.
By:_________________________________
Name:____________________________
Title:___________________________
WIRELESSCO, L.P.
By:_________________________________
Name:____________________________
Title:___________________________
SPRINT COMMUNICATIONS COMPANY L.P.
By:_________________________________
Name:____________________________
Title:___________________________
BRIGHT PERSONAL COMMUNICATIONS
SERVICES, LLC
By:_________________________________
Name:____________________________
Title:___________________________
88
SCHEDULE 1
Program Requirement 3.5.2 dated August 13, 2002 and labeled "Exhibit 3.5.2
Program Requirement for Voluntary Resale of Products and Services By Voluntary
Resellers Under the Private Label Solutions Program" is amended by replacing the
title, preamble and general terms with the following, and by deleting all
attachments:
PROGRAM REQUIREMENT FOR RESALE OF PRODUCTS AND SERVICES
BY
RESELLERS UNDER THE PRIVATE LABEL SOLUTIONS PROGRAM
(8/16/04)
Sprint PCS' Resale Program ("RESALE PROGRAM") is described in
Section 3.5.2 of the Sprint PCS Management or Affiliation Agreement and consists
of this Program Requirement 3.5.2 (the "PROGRAM REQUIREMENT 3.5.2") and separate
attachments to the Program Requirement 3.5.2 ("ATTACHMENT(s)"). Each Attachment
states terms of the Resale Program and includes a specific list of companies
with which Sprint PCS contracts to sell Sprint PCS Products and Services under
brand names other than the Brands.
Any reference to Manager in this Program Requirement refers to
Manager, as such term is defined in the Management Agreement, or Affiliate, as
such term is defined in the Affiliation Agreement, as applicable. Any reference
to Management Agreement in this Program Requirement also refers to an
Affiliation Agreement, as applicable. Capitalized terms used and not otherwise
defined in this Program Requirement 3.5.2 have the meaning ascribed to them in
the Schedule of Definitions in the Management Agreement. Section and exhibit
references are to sections and exhibits of the Management Agreement unless
otherwise noted.
As used in this Program Requirement "NPA-NXX" of Manager means a
NPA-NXX in the Service Area of that Manager or any other such designation in
accordance with section 17.17.
GENERAL TERMS
Unless otherwise specified, the Program Requirements outlined below apply to the
resellers set forth in the Attachments.
1. PRODUCTS AND SERVICES OFFERED. Sprint PCS may from time to time limit
the Sprint PCS Products and Services that are provided to resellers. Manager
will provide to resellers those Sprint PCS Products and Services that Sprint PCS
provides to the resellers, and Manager will support products and services
offered resellers in the same fashion that Manager supports similar Sprint PCS
Products and Services.
2. INFORMATION AND MINS. Manager will allow Sprint PCS access to
information necessary to bill resellers, including Call Detail Records and basic
provisioning information. For purposes of clarification, all such information
will constitute "Confidential Information" for purposes of the Management
Agreement. Neither Sprint PCS nor Manager will have access to resellers'
end-users' personal information. Sprint PCS will administer NPA-NXXs available
for resellers in a manner substantially the same as the MIN allocation process
in place for Sprint PCS owned markets. Sprint PCS will provide resellers with an
unbranded coverage map and zip code information for the Manager's service
area(s) substantially the same as the coverage map and zip code information
provided for Sprint PCS owned service areas.
3. CONTACTS AND DISPUTES. Manager will direct any questions or disputes
regarding a reseller or resale arrangement to the designated representative(s)
within the Management Agreement and will not contact the resellers directly. Any
disputes between Manager and Sprint PCS regarding a resale arrangement will be
resolved under the terms of the Management Agreement.
4. SIX-SECOND INCREMENT BILLING. For all QuickNet Connect (QNC) data and
other traffic on the Manager's Service Area Network for which Sprint PCS bills a
reseller in six-second increments or some other incremental measurement other
than one-minute ("OTHER INCREMENT"), Sprint PCS will settle with Manager in
six-second increments or such Other Increment, as applicable. Billed charges
(per call or event) that result in fractional cents may be rounded up to the
next whole cent.
5. SPRINT 3G DATA SERVICE. In addition to reselling certain Sprint PCS
Products and Services under brand names other than the Brands, some resellers
are also permitted to sell Sprint's 1XRTT advanced multimedia data services and
premium services associated with the PCS Vision service ("SPRINT 3G DATA
SERVICE") using the Sprint and PCS Vision service marks. If Manager specifically
consented to a reseller's use of the Brands in selling Sprint 3G Data Service in
the Manager's Service Area, the Manager will be compensated for Sprint 3G Data
Service as follows:
The revenue for Sprint 3G Data Service sold by resellers using the Brands
to reseller subscribers having an NPA-NXX of Manager will be treated as
Billed Revenue under the Management Agreement. Billed Revenue will be
based on reseller specific Sprint 3G Data Service pricing set forth in
Attachment 1.1 to Program Requirement 3.5.2. From time to time, Sprint may
amend the rates charged to resellers for Sprint 3G Data Service.
6. SHORT MESSAGE SERVICE (SMS). For SMS messages on the Manager's network
used by subscribers of Resellers with an NPA-NXX of Manager, Manager will be
compensated at the rate set forth in Attachment 1.2 to Program Requirement
3.5.2, which may be amended from time to time in accordance with the Management
Agreement. For SMS messages used by subscribers of resellers with an NPA-NXX of
Manager, there will be no compensation either paid or owed when such subscribers
are traveling outside of the Manager's Service Area.
SMS messages means circuit-switched short alphanumeric messages on a
Reseller subscriber's handset.
7. FUTURE SERVICES. If Sprint PCS elects to enter into a resale
arrangement with any resellers for any services other than those services
described in this Program Requirement 3.5.2, including any current Attachment to
this Program Requirement 3.5.2 ("FUTURE SERVICES"), then, subject to section 9.3
of the Management Agreement, Manager must support those Future Services for all
resellers with executed contracts under resale arrangements existing prior to or
entered into, renewed or extended during the Required Resale Participation
Period throughout the remaining term of their resale arrangement with Sprint
PCS. Sprint PCS will compensate Manager for the resale of Future Services at
rates to be established in future Attachments to Program Requirement 3.5.2, as
amended from time to time in accordance with the Management Agreement, which
rates will be communicated in writing to Manager in advance.
ATTACHMENT NO. 1.0 TO PROGRAM REQUIREMENT 3.5.2
RESALE PROGRAM
This Attachment No. 1.0 to Program Requirement 3.5.2 lists the Existing Resale
Arrangements (i.e., the Resale Arrangement s that were in existence before April
1, 2004).
RESELLERS
Effective
Renewal
Date Renewal
Period * Date
---------- ----------
Vartec Telecom, Inc. (Excel) 9/15/2000 12/15/2003 3 Years
ZefCom, L.L.C. (Telespire) 11/17/2000 11/17/2003 3/31/2006
Working Assets Funding Service, Inc.(Working Assets) 12/1/2001 12/31/2003 3 Years
Wherify Wireless, Inc. (Wherify Wireless) 1/7/2002 1/7/2005
QUALCOMM Incorporated (Qualcomm / GlobalTracs) 1/8/2002 1/8/2005
Star Number, Inc. (Liberty Wireless) 8/2/2002 8/2/2005
Telco Group, Inc. (STI Mobile) 2/25/2003 2/25/2006
TRANZACT (Sears Connect) 3/21/2003 3/21/2006
Hal Inc. (U-Mobile PCS) 6/12/2003 6/12/2006
Wireless Retail Inc. (Airlink Mobile) 6/17/2003 6/17/2006
Phonetec, L.P. (PhoneTec) 6/26/2003 6/26/2006
Qwest Wireless, LLC (Qwest) 8/3/2003 3/3/2009
TracFone Wireless, Inc. (TracFone) 1/22/2004 1/22/2007
* If applicable. Not including phase out periods.
Virgin Mobile USA is an Existing Resale Arrangement, but it has a separate
Program Requirement labeled "Program Requirement 3.5.2 - Program Requirements
for Resale of Products and Services By Virgin Mobile USA, LLC (Date Published
9/30/04)".
ATTACHMENT NO. 1.1 TO PROGRAM REQUIREMENT 3.5.2
SPRINT 3G DATA SERVICE PRICING
A) QWEST WIRELESS
Listed below are the Qwest monthly recurring charges ("MRC") and Adjustment
Rates for Sprint 3G Data Service. Qwest will be billed the following MRC and
Adjustment Rate for each subscriber that uses any Qwest service enabled by
Sprint 3G Data Service.
HANDSET DATA SERVICE
Data Transport/Web Browsing/Third Party Instant Messaging
- - MRC $8.10 (unlimited)
- - Adjustment Rate $0.002 per Kb
ADJUSTMENT RATE:
On a monthly basis, Sprint will calculate (as described below) the Sprint
average kilobytes per retail handset subscriber ("SAKPS") and the Qwest average
kilobytes per handset subscriber ("QAKPS"). If the QAKPS exceeds the SAKPS,
Sprint will charge Qwest an amount equal to the difference between the SAKPS and
the QAKPS multiplied by the total number of End users, multiplied by the
Adjustment Rate detailed above.
Sprint will calculate SAKPS by using the total number of kilobytes generated by
Sprint retail handset end users divided by the average number of Sprint retail
handset end users for the previous fiscal quarter. For example, the SAKPS for
May will be divided by the average number of Sprint retail handset end users for
the 1st fiscal quarter (January-March). Average number of Sprint retail handset
end users for the quarter is equal to the beginning number of Sprint retail
handset end users plus the ending number of Sprint retail handset end users,
divided by two.
QAKPS is equal to the total number of kilobytes generated by Qwest handset End
Users divided by the average number of Qwest handset End Users for the previous
fiscal quarter.
AVERAGE NUMBER OF QWEST HANDSET END USERS FOR THE QUARTER IS EQUAL TO THE
BEGINNING NUMBER OF QWEST HANDSET END USERS PLUS THE ENDING NUMBER OF QWEST
HANDSET END USERS, DIVIDED BY TWO.
In making the calculations described in this section, PDAs, "smart phones" and
other similar devices along with air cards will not be considered "handsets" as
that term is used therein.
THE PRICING IN THIS ATTACHMENT NO. 1.1 TO PROGRAM 3.5.2 IS SUBJECT TO CHANGE AS
SPRINT RETAIL PRICES OR INCLUDED SERVICES CHANGE.
ATTACHMENT NO. 1.2 TO PROGRAM REQUIREMENT 3.5.2
SHORT MESSAGE SERVICE PRICING
Unless otherwise specified in this Attachment 1.2 to Program Requirement 3.5.2,
Manager will be compensated at the rates listed below by Reseller.
Short Message Service Rate: $0.0246 per SMS message
Qwest SMS Rate: $0.0110 per SMS message
EXHIBIT 1.7
FINANCING
As of December 31, 2004, Horizon PCS, Inc. and its subsidiaries, Manager and
Horizon Personal Communications, Inc. (a) had cash and cash equivalents of at
least $50,000,000 and (b) had closed and funded, on October 1, 2004, its
offering of $125,000,000 11 3/8% Senior Notes due 2012. As confirmed by Sprint
PCS, Manager has completed its build-out obligations under Section 2.1. As of
this date, Manager has no plans to raise additional capital.
EXHIBIT 10.3
100% AFFILIATE RETAINED AMOUNTS
Outbound Roaming Revenue billed to Sprint Customers
International Roaming Credits
Affiliate Equip Sale On Acct
100% SPRINT PCS RETAINED AMOUNTS
Accrued Sales Taxes
Accrued Federal Excise Taxes
Equipment Replacement Program charges
EXHIBIT 1
ILLUSTRATIVE CALCULATION FOR CASH SETTLEMENT
CASH SIMPLIFICATION
ILLUSTRATIVE ONLY
MONTHLY
----------------------
WRITE-OFFS $ 1,235
BILLED REVENUE $ 10,350
CUSTOMER CREDITS (970)
---------
NET BILLED REVENUE $ 9,380 82.5%
CUSTOMER EQUIPMENT CREDITS (66) -0.6%
100% AFFILIATE RETAINED AMOUNTS 235 2.1%
100% SPRINT PCS RETAINED AMOUNTS 1,479 13.0%
CUSTOMER EQUIPMENT CHARGES 175 1.5%
E911 SURCHARGES 65 0.6%
WIRELESS LOCAL NUMBER PORTABILITY CHARGES 26 0.2%
USF CHARGES 74 0.7%
----------------------
AMOUNT BILLED (NET OF CUSTOMER CREDITS) $ 11,368 100.0%
FEE CALCULATION
NET BILLED REVENUE $ 9,380
ALLOCATED WRITE-OFF (1,019)
---------
$ 8,361
92%
---------
FEE BASED ON BILLED REVENUE $ 7,692
100% AFFILIATE RETAINED AMOUNTS $ 235
ALLOCATED WRITE-OFF (26)
PHASE II E911 SURCHARGES 53
ALLOCATED WRITE-OFF (6)
WIRELESS LOCAL NUMBER PORTABILITY CHARGES 2
ALLOCATED WRITE-OFF (0)
CUSTOMER EQUIPMENT CREDITS (66)
ALLOCATED WRITE-OFF 7
WRITE-OFF FOR CUSTOMER EQUIPMENT CHARGES (19)
---------
$ 180
TOTAL $ 7,872
SCHEDULE 2.1.1
-SECTION A-
PRESENTLY OFFERED CCPU SERVICES
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 (including without
limitation, research and development costs for 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)
NATIONAL PLATFORM COMPONENT
FCAPS (FAULT, CONFIGURATION, ACCOUNTING, PERFORMANCE, SECURITY)
Capital Projects
Expense Projects
Circuit Expense
CLOH
Labor
Forecasts
IN (INTELLIGENT NETWORK)
Capital Expense
Expense Projects
Circuit Expense
CLOH
Labor
Forecasts
OSSN
Capital Expense
Expense Projects
Circuit Expense
CLOH
Labor
Forecasts
3G
Capital Projects
Expense Projects
Circuit Expense
CLOH
Labor
Forecasts
OPERATOR SERVICE
Vendor Fee
WIRELESS WEB
Capital Projects
Expense Projects
Circuit Expense
CLOH
Labor
Forecasts
MESSAGING
Capital Projects
Expense Projects
Circuit Expense
CLOH
Labor
Forecasts
VAD
Capital Projects
Expense Projects
Circuit Expense
CLOH
Labor
Forecasts
VOICE MAIL
Capital
Expense Projects
Circuit Expense
CLOH
Labor
Forecasts
SOFTWARE MAINTENANCE
Openwave
Hewlett Packard
Comverse
Marconi
Lucent
Commworks
Four Corners
Other Vendors (39)
Northwest Frequent Flyer
Premium Vision Services
PreNet
Pricing
Pro Text Messaging Plan
Ringers & More (Includes SBF and PT fees)
Roadside Rescue
Sprint Synch Services
Telecheck Charge
Telematics
Text Messaging Plan
TSC Usage
Type 1 Affiliate Long Distance
Voice Command Web
Wireless Web
-SECTION B-
PRESENTLY OFFERED CPGA SERVICES
PRESENTLY OFFERED CPGA SERVICES
500 Minute Promotion Credit
Activations - Customer Solutions
Activations - E-Commerce (Includes On Line (Web) Activations)
Activations - Telesales
Credit Check Fee
Customer Solutions - Early Life
Demo Phones
EarthLink
Hal Riney Service
Handset Logistics
Handset Obsolescence Fee and Carrying Costs
Local/Indirect Commission
Marketing Collateral Destruction
NAM/CAM
One Sprint Telesales
PGA Expenses
PLS Commission
SmartWorks Printing
-SECTION C-
PRESENTLY OFFERED CCPU SERVICES - Activity Settled Separately
Affiliate Project Authorizations
Long Distance
E911 Phase I Revenue
Microwave Clearing
Roaming
Software Fees
Sprint Local Telephone Usage
Taxes Paid on Behalf of Type III Affiliates
Tower Lease
Travel Revenue and Expense
Upgrade Commission - 2 Step Channel
Vendor Usage-Based Charges on New Products
Wholesale Revenue and Expense
-SECTION D-
PRESENTLY OFFERED CPGA SERVICES -Activity Settled Separately
3G Device Logistics Fee
3rd Party SpiffsAccessory 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 (excluding destruction)
Meeting Competition Fund
RadioShack Promos (Includes RadioShack Golden Quarter, Jumpstart, Relaunch,
Sprint to
Vegas, and Break the Bank)
Rebate Administrative Expense
Rebates
Reciprocal Retail Store Cost Recovery
Sprint LDD Commission
Third Party Promotions
Upgrade Commission - RadioShack
SCHEDULE 2.3
CUSTOMER CARE SERVICES OUTSOURCING
1. OUTSOURCING. Manager may outsource all (and not less than all) of its
Customer Care Services in the manner described in this Schedule 2.3 after it
gives notice of its election and pays the $3 million election fee to Sprint PCS
as set forth in section 2.3 of the Services Agreement. Manager must outsource
the Customer Care Services to a customer care center whose facility and
personnel are managed by Manager or Manager's designee. The customer care center
must utilize Sprint Spectrum's systems and processes.
2. CUSTOMER CARE SERVICES. The term "CUSTOMER CARE SERVICES" means call
center support for all of the following Services, or such other list of Services
to which Manager and Sprint Spectrum agree in writing, and their successors and
functional equivalents if they are combined, replaced, modified or renamed, all
as provided to subscribers (including, if applicable, subscribers of resellers)
with NPA-NXXs assigned to Manager's Service Area:
Activations
Activations- Spanish
Business General
Business Gold
Business Spanish
Business Special Services
Clear Pay
Consumer General
Consumer General Spanish & Clear Pay
Consumer Gold
Corporate End User
Data Support Spanish
Data Support Tier 1
Data Support Tier 2
Loyalty/Retention
Preferred Corporate Care
Refunds
Trouble Inbound
eCare
Early Life Programs (but excluding market-related activity) Mature
Life Programs (but excluding market-related activity)
3. TRANSITION PERIOD. Upon receiving notice of Manager's outsourcing
election, the parties will cooperate and work diligently and in good faith to
implement the transition of all of the Customer Care Services to Manager's
customer care center as contemplated under this Schedule 2.3, in a reasonably
efficient and expeditious manner.
4. TRANSITION COSTS. Manager will pay the vendors directly or reimburse
Sprint Spectrum and its Related Parties, as Sprint Spectrum determines, for all
costs incurred that relate to the transition of the Customer Care Services.
Sprint Spectrum will invoice Manager for the reimbursable costs. Manager will
pay each invoice, whether received from Sprint Spectrum, a Sprint Spectrum
Related Party or a vendor, within 30 days after the date of the invoice.
5. CONTINUED SERVICES PROVIDED BY SPRINT SPECTRUM. Upon the complete
transition of Customer Care Services, in addition to all other Services provided
under the Services Agreement, Sprint Spectrum will continue to provide the
following:
(a) Activation and Customer Care systems;
(b) Call routing of customer; and
(c) Marketing, product, program, system development and direction.
6. ADJUSTED FEES FOR SERVICES. The fees for Services under the Services
Agreement will be modified as follows when Manager makes its election under
section 2.3 of the Services Agreement:
(a) TRANSITION PERIOD. Sprint Spectrum will continue to provide the
Services to Manager until Manager completes the transition of the Customer Care
Services as described in this Schedule 2.3. Sections 3.2.1, 3.2.2 and 3.2.3 of
the Services Agreement will be amended and restated effective as of the date
that Manager makes its election, without any further action by any party, to
read as follows:
"3.2 FEES FOR SERVICES.
3.2.1 TRANSITION PRICING PERIOD. The fees Manager will
pay Sprint Spectrum for the CCPU Services and CPGA Services provided to
Manager by or on behalf of Sprint Spectrum each month from the date that
Manager makes its election to outsource the Customer Care Services (as
that term is defined in paragraph 2 of Schedule 2.3 of this agreement)
(the "OUTSOURCE NOTICE DATE") until the date that Manager completes its
transition of the Customer Care Services (the "TRANSITION PRICING
PERIOD"), will be the then-current costs to Sprint Spectrum of the
Services.
Sprint Spectrum may change the fee for any Service it provides once
during any 12-month period by delivering to Manager notice of the new
costs to Sprint Spectrum of the Services. The amount of the fees for the
Services will be deemed amended on the effective date noted on the notice,
which will be at least 30 days after delivering the notice.
The fees will be paid as set forth in section 10 of the Management
Agreement.
3.2.2 PRICING PROCESS. [omitted intentionally]
3.2.3 CUSTOMER-RELATED SERVICES. [omitted intentionally]"
(b) POST-TRANSITION PERIOD. When Manager completes the transition of
the Customer Care Services, Sprint Spectrum will continue to provide the
Services other than the Customer Care Services as described in this Schedule
2.3. Section 3.2.1 of the Services Agreement will be amended and restated
effective as of the date that Manager completes the transition, without any
further action by any party, to read as follows:
"3.2 FEES FOR SERVICES.
3.2.1 POST-TRANSITION PRICING. The fees Manager will pay
Sprint Spectrum for the CCPU Services and CPGA Services provided to
Manager by or on behalf of Sprint Spectrum each month from the date that
Manager completes the transition of the Customer Care Services (the
"TRANSITION COMPLETION DATE") will be the then-current costs to Sprint
Spectrum of the Services. Notwithstanding the foregoing, the fees Manager
will pay Sprint Spectrum for the CPGA Services through December 31, 2006
will be $15.00 multiplied by the Gross Customer Additions in Manager's
Service Area.
Except for CPGA Services provided through December 31, 2006, Sprint
Spectrum may change the fee for any Service it provides once during any
12-month period by delivering to Manager notice of such change. The amount
of the fees for the Services will be deemed amended on the effective date
noted on the notice, which will be at least 30 days after delivering the
notice.
The fees will be paid as set forth in section 10 of the Management
Agreement."
7. ADDITIONAL SERVICES AND FEES. To support the activities of Manager
contemplated under this Schedule 2.3, Sprint Spectrum will provide
on-going support services and connectivity. The fees for such services
will be the amount of Sprint Spectrum's costs to provide the services.
Exhibit A
SECTION 17.26. FEDERAL CONTRACTOR COMPLIANCE. (1) The Manager will not
discriminate against any employee or applicant for employment because of race,
color, religion, sex, or national origin. The Manager will take affirmative
action to ensure that applicants are employed, and that employees are treated
during employment without regard to their race, color, religion, sex, or
national origin. Such action shall include, but not be limited to the following:
Employment, upgrading, demotion, or transfer; recruitment or recruitment
advertising; layoff or termination; rates of pay or other forms of compensation;
and selection for training, including apprenticeship. The Manager agrees to post
in conspicuous places, available to employees and applicants for employment,
notices to be provided setting forth the provisions of this nondiscrimination
clause.
(2) The Manager will, in all solicitations or advertisements for employees
placed by or on behalf of the Manager, state that all qualified applicants will
receive considerations for employment without regard to race, color, religion,
sex, or national origin.
(3) The Manager will send to each labor union or representative of workers
with which he has a collective bargaining agreement or other contract or
understanding, a notice to be provided advising the said labor union or workers'
representatives of the Manager's commitments under this section, and shall post
copies of the notice in conspicuous places available to employees and applicants
for employment.
(4) The Manager will comply with all provisions of Executive Order 11246
of September 24, 1965, and of the rules, regulations, and relevant orders of the
Secretary of Labor.
(5) The Manager will furnish all information and reports required by
Executive Order 11246 of September 24, 1965, and by rules, regulations, and
orders of the Secretary of Labor, or pursuant thereto, and will permit access to
his books, records, and accounts by the administering agency and the Secretary
of Labor for purposes of investigation to ascertain compliance with such rules,
regulations, and orders.
(6) In the event of the Manager's noncompliance with the nondiscrimination
clauses of this contract or with any of the said rules, regulations, or orders,
this contract may be canceled, terminated, or suspended in whole or in part and
the Manager may be declared ineligible for further Government contracts or
federally assisted construction contracts in accordance with procedures
authorized in Executive Order 11246 of September 24, 1965, and such other
sanctions may be imposed and remedies invoked as provided in Executive Order
11246 of September 24, 1965, or by rule, regulation, or order of the Secretary
of Labor, or as otherwise provided by law.
(7) The Manager will include the portion of the sentence immediately
preceding paragraph (1) and the provisions of paragraphs (1) through (7) in
every subcontract or purchase order unless exempted by rules, regulations, or
orders of the Secretary of Labor issued pursuant to section 204 of Executive
Order 11246 of September 24, 1965, so that such provisions will be binding upon
each subcontractor or vendor. The Manager will take such action with respect to
any subcontract or purchase order as the administering agency may direct as a
means of enforcing such provisions, including sanctions for noncompliance.
Provided, however, that in the event a Manager becomes involved in, or is
threatened with, litigation with a subcontractor or vendor as a result of such
direction by the administering agency the Manager may request the United States
to enter into such litigation to protect the interests of the United States.
(8) In consideration of contracts with Sprint PCS, the Manager agrees to
execute the Certificate of Compliance attached hereto as Attachment I and
further agrees that this certification shall be part of each contract between
Sprint PCS and Manager. The Manager will include Attachment I in every
subcontract or purchase order, so that such provisions will be binding upon each
subcontractor.
Attachment I
CERTIFICATE OF COMPLIANCE WITH
FEDERAL REGULATIONS
In consideration of contracts with SPRINT SPECTRUM L.P., the undersigned
"contractor", "vendor" or "consultant" agrees to the following and further
agrees that this Certification shall be a part of each purchase order, supply
agreement, or contract between SPRINT SPECTRUM L.P. and the undersigned.
1. Equal Opportunity
Executive Order 11246 is herein incorporated by reference.
2. Affirmative Action Compliance
If undersigned Contractor has 50 or more employees and if this contract is
for $50,000 or more, Contractor shall develop a written Affirmative Action
Compliance Program for each of its establishments, as required by rules
and regulations of the Secretary of Labor (41 CFR 60-1 and 60-2).
3. Affirmative Action for Special Disabled and Vietnam Era Veterans
If this contract exceeds $10,000, the undersigned Contractor certifies
that the Contractor does not discriminate against any employee or
applicant because the person is a Special Disabled or Vietnam Veteran and
complies with the rules, regulations and relevant orders of the Secretary
of Labor issued pursuant to the Vietnam Veterans Readjustment Assistance
Act of 1972, as amended.
Contractor hereby represents that it has developed and has on file, at
each establishment, affirmative action programs for Special Disabled and
Vietnam Era Veterans required by the rules and regulations of the
Secretary of Labor (41 CFR 60-250).
4. Affirmative Action for Handicapped Workers
If this contract exceeds $2,500, the undersigned Contractor certifies that
the Contractor does not discriminate against any employee or applicant
because of physical or mental handicap and complies with the rules,
regulations and relevant orders of the Secretary of Labor issued under the
Rehabilitation Act of 1973, as amended.
Contractor hereby represents that it has developed and has on file, at
each establishment, affirmative action programs for Handicapped Workers
required by the rules and regulations of the Secretary of Labor (41 CFR
60-741).
5. Employer Information Report (EEO-1 Standard Form 100)
If undersigned Contractor has 50 or more employees and if this contract is
for $10,000 or more, Contractor shall complete and file government
Standard Form 100, Equal Employment Opportunity Employer Information
Report EEO-1, in accordance with instructions contained therein.
6. Compliance Review
The undersigned Contractor certifies that it has not been subject to a
Government equal opportunity compliance review. If the Contractor has been
reviewed, that review occurred on __________________ (date).
7. Utilization of Small Business Concerns
SPRINT SPECTRUM L.P.'s policy, consistent with Federal Acquisition
Regulations (FAR 52.219-8), is that small business concerns, veteran-owned
small business concerns, service-disabled veteran-owned small business
concerns, HUBZone small business concerns, small disadvantaged business
concerns, and women-owned small business concerns shall have the maximum
practicable opportunity to participate in performing subcontracts under
Government contracts for which SPRINT SPECTRUM L.P. is the Government's
Prime Contractor. SPRINT SPECTRUM L.P. awards contracts to small
businesses to the fullest extent consistent with efficient prime contract
performance. The Contractor agrees to use its best efforts to carry out
this policy in the award of its subcontract to the fullest extent
consistent with the efficient performance of this contract.
Contractor hereby represents that it ___ is ___ is not a small business,
___ is ___ is not a small business owned and controlled by socially and
economically disadvantaged individuals, and ___ is ___ is not a small
business controlled and operated as a women-owned small business as
defined by the regulations implementing the Small Business Act.
If the answer to any of the above is in the affirmative, Contractor will
complete SPRINT SPECTRUM L.P. Small/Minority/Women Owned Business Self
Certification Form. This form is available from Sprint Corporation's Human
Resources Department.
8. Clean Air and Water
The undersigned Contractor certifies that any facility to be used in the
performance of this contract ___ is ___ is not listed on the Environmental
Protection Agency List of Violating Facilities.
[The remainder of this page is intentionally left blank.]
The undersigned Contractor agrees to immediately notify SPRINT SPECTRUM L.P.,
immediately upon the receipt of any communication from the Administrator or a
designee of the Environmental Protection Agency indicating that any facility
that the Contractor proposes to use for the performance of the contract is under
consideration to be listed on the EPA List of Violating Facilities. SPRINT
SPECTRUM L.P. includes this certification and agreement pursuant to FAR
52-223-1(c) which requires including such paragraph (c) in every nonexempt
subcontract.
CONTRACTOR:
____________________________________
Company Name
____________________________________
Address
____________________________________
City State Zip
By _________________________________
Name:____________________________
Title:___________________________