EXHIBIT 10.13
ADDENDUM V
TO
SPRINT PCS MANAGEMENT AGREEMENT AND
SPRINT PCS SERVICES AGREEMENT
Amending these agreements further and restating certain paragraphs in
Addenda I and IV
Dated as of January 30, 2004
Manager: SHENANDOAH PERSONAL COMMUNICATIONS COMPANY
Service Area BTAs: Altoona, PA #12
Hagerstown, MD-Chambersburg, PA-Martinsburg, WV #179
Harrisburg, PA #181
Harrisonburg, VA #183
Washington, DC (Jefferson County, WV only) #471
Winchester, VA #479
York-Hanover, PA #483
This Addendum V (this "Addendum") contains amendments of 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 November
5, 1999 by Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo,
L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications
Company. The Management Agreement, Services Agreement and Trademark License
Agreements were amended by:
(1) Addendum I dated as of November 5, 1999,
(2) Addendum II dated as of August 31, 2000,
(3) Addendum III dated as of September 26, 2001, and
(4) Addendum IV dated as of May 22, 2003.
The purposes of this Addendum are to (1) amend the Management
Agreement, the Services Agreement, the Trademark License Agreements and the
Schedule of Definitions and restate those paragraphs in the addenda executed
previously that amend the Management Agreement, the Services Agreement, the
Trademark License Agreements and the Schedule of Definitions (see section A
below), and (2) provide cross-references to those paragraphs in addenda executed
previously that are not restated in this Addendum (see section B below).
The terms and provisions of this Addendum control over any
conflicting terms and provisions contained in the Management Agreement, the
Services Agreement, the Trademark License Agreements and the Schedule of
Definitions. The Management Agreement, the Services Agreement, the Trademark
Licenses Agreements, the Schedule of Definitions and all prior
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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 become effective on (the "Effective Date"): (1)
January 1, 2004, if on or before January 31, 2004, the Settlement Agreement and
Mutual Release between Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC,
PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal
Communications Company is executed and delivered, and the payment required under
the Settlement Agreement and Mutual Release is paid and received; or (2) the
first calendar day of the first calendar month after both of the events
described in clause (1) occur, if either of the events in clause (1) occur after
January 31, 2004.
On the Effective Date of Addendum V 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. Access to Service Area Network [Addm I,ss.2]. The last paragraph of
section 1.1 is amended to read as follows:
Subject to the terms and conditions of this agreement, including,
without limitation, sections 1.9, 9.5 and 12.1.2, Sprint PCS has the right
to unfettered access to the Service Area Network to be constructed by
Manager under this agreement. The fee to be paid to Manager by Sprint PCS
under section 10 is for all obligations of Manager under this agreement.
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.
Insert: "1.3.3 Exclusive Use." before the third paragraph.
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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 providing for the right of Manager to use
the Software in connection with telecommunications equipment manufactured
by the vendor (collectively the software obtained by Sprint PCS for its
own use and the Software that operates on telecommunications equipment
manufactured by the vendor are for purposes of this section 1.3.4, the
"Vendor Software"; when the term "Vendor Software" is used with respect to
Manager, it means only the Software, and not the software used only by
Sprint PCS).
(c) Manager will arrange independently with the vendor to obtain a
license to the Vendor Software if Sprint PCS cannot reasonably obtain a
license for Manager. Any license that Manager obtains from a vendor must
require the Vendor Software to be tested in Sprint PCS test beds by Sprint
PCS and require Sprint PCS, not the vendor or Manager, to push the Vendor
Software to the Service Area Network unless Sprint PCS otherwise consents
in advance in writing. Sprint PCS agrees to test the Vendor Software in
Sprint PCS test beds within a reasonable period after Manager reasonably
requests the tests in writing.
(d) Sprint PCS will:
(i) notify Manager in writing at least 60 days before the date
of an automatic renewal of, or Sprint PCS' unilateral act to renew
or extend, an agreement that provides Sprint PCS the right to use
the Vendor Software, or
(ii) use reasonable efforts to notify Manager in writing
before the date Sprint PCS intends to start negotiations with a
vendor regarding extension, renewal, pricing or other material terms
relating to Sprint PCS' and Manager's right to use the Vendor
Software (whether for new Software or renewal of an existing
license), and at least 60 days before the date Sprint PCS executes
an agreement, extension or renewal.
The notice by Sprint PCS will include the material terms and
conditions of any such agreement or negotiations to the extent known at
the time of the notice, including the network elements to be covered by
the right to use the Vendor Software. Manager must notify Sprint PCS in
writing within 30 days after
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receiving the notice described in the first sentence of this section
1.3.4(d) if Manager wants Sprint PCS to attempt to obtain or continue the
right for Manager to use the Vendor Software. Sprint PCS will renew or
negotiate the agreement as if Manager will not be a user of the Vendor
Software if Manager does not provide notice to Sprint PCS within the
30-day period. However, Sprint PCS may obtain pricing from the vendor for
the Vendor Software that includes Manager as a user if obtaining the
pricing does not obligate Manager to be a user.
Sprint PCS will advise Manager upon Manager's reasonable request of
the status of the Software negotiations if Manager requested Sprint PCS to
obtain or continue the right for Manager to use the Vendor Software under
Sprint PCS' agreement with the vendor. Sprint PCS will use commercially
reasonable efforts to give Manager notice of the final pricing for the
right to use the Vendor Software no less than 20 days before the expected
execution or renewal of the agreement; provided that, in any event, Sprint
PCS will give Manager notice of the final pricing no less than 10 Business
Days before the expected execution or renewal of the agreement. If
necessary, Manager agrees to use commercially reasonable efforts to enter
into a nondisclosure agreement with the vendor to facilitate providing
such final pricing to Manager.
Manager may give Sprint PCS notice by the time set forth in Sprint
PCS' notice to Manager (which time will not be less than 10 calendar days
after Sprint PCS provides Manager with the final pricing and terms and
conditions of such license agreement) that Manager does not intend to use
the Vendor Software through the agreement between Sprint PCS and the
vendor. If Manager does not give this final notice to Sprint PCS, Manager
is deemed to agree to be a user of the Vendor Software through the
agreement between Sprint PCS and the vendor and will pay the Allocable
Software Fee. Within 15 Business Days after execution of an agreement
between Sprint PCS and the vendor, Sprint PCS will provide to Manager a
forecast of Manager's Allocable Software Fee, the estimated payment due
dates relating to the Allocable Software Fee, and the proportion of
Manager's Allocable Software Fee forecast to be due on each payment due
date.
Sprint PCS does not have to obtain a license for Vendor Software for
Manager, even if Manager requests Sprint PCS to obtain such license, if at
any time before execution of the agreements granting the license Sprint
PCS reasonably believes that Manager is more likely than not to
unreasonably refuse to pay the Allocable Software Fee or Sprint PCS
reasonably believes that the Manager is in such financial condition that
Manager is more likely than not to be unable to pay the Allocable Software
Fee.
If Manager accepts the Vendor Software, Sprint will give Manager,
Manager's proportional share of (i) any cash benefits relating
specifically to the Vendor Software that Sprint PCS obtains from the
vendor, and (ii) to the extent reasonably able to be made available to
Manager, other benefits, including training, relating specifically to the
Vendor Software.
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(e) Sprint PCS will pay all Software Fees relating to the Vendor
Software to the vendor if Sprint PCS obtains a license from the vendor
that provides Manager the right to use the Vendor Software and Manager
agrees to pay any applicable Allocable Software Fee in accordance with
this section 1.3.4(e). Manager will be deemed to agree to pay any
applicable Allocable Software Fee if both:
(i) Manager has notified Sprint PCS that it wants Sprint PCS
to attempt to obtain or continue the right for Manager to use the
Vendor Software under the third paragraph of section (d), and has
not taken the action described in the fifth paragraph of section (d)
above to decline obtaining the right to use the Vendor Software
through the agreement between Sprint PCS and the vendor, and
(ii) Sprint PCS obtains a license providing for the right of
Manager to use the Vendor Software.
Manager will pay Sprint PCS the Allocable Software Fee (as defined
below) within 30 days after receipt of an invoice. Sprint PCS will invoice
Manager only after Sprint PCS pays the underlying Software Fee to the
vendor. The Allocable Software Fee will not include any amount for
Software that is the same as or functionally equivalent to any Software
(y) that is a component of any service for which a fee is charged under
the Services Agreement or (z) for which Sprint PCS otherwise charges
Manager under this agreement.
Sprint PCS will calculate the "Allocable Software Fee" as follows:
For each vendor, multiply:
(i) the Net Software Cost of the Software Fees attributable to
the Vendor Software for which Sprint PCS has obtained for itself,
Manager and Other Managers a license or other right to use, by
(ii) the quotient of:
(A) the number of Customers and Reseller Customers with
an NPA-NXX assigned to the Service Area that are assigned to a
system using the Vendor Software, as reported in the most
recent monthly report that Sprint PCS issues before the date
that Sprint PCS prepares an Allocable Software Fee invoice,
divided by:
(B) the number of Customers and Reseller Customers that
are assigned to any system using the Vendor Software, as
reported in the most recent monthly report that
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Sprint PCS issues before the date that Sprint PCS prepares an
Allocable Software Fee invoice.
(f) Sprint PCS will include with the invoice for the Allocable
Software Fee a list of the component charges, if available from the
Vendor. The Software Fees that Sprint PCS pays to the vendor will reflect
rates no greater than commercial rates negotiated at arms' length, and
Sprint will use reasonable efforts to obtain the most favorable rates for
the Software. For purposes of clarification, the parties acknowledge the
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) either: (x) does not notify Sprint PCS in writing within
the period allowed in the third paragraph of section 1.3.4(d) that
Manager desires to have Sprint PCS obtain a right for Manager to use
the Vendor Software, or (y) notifies Sprint PCS in writing within
the period allowed in the fifth paragraph that it declines to have
Sprint PCS obtain such right,
(ii) obtains its own license providing for Manager's right to
use the Vendor Software, and
(iii) complies with the requirements of section 1.3.4(h).
(h) Manager will obtain its own license providing for Manager's
right to use the Vendor Software from the vendor if Manager elects not to
have Sprint PCS attempt to obtain a right for Manager to use the Vendor
Software under section 1.3.4(d). Manager will notify Sprint PCS in writing
and deliver to Sprint PCS within 10 Business Days after Manager's
execution of Manager's separate license, a signed document from the vendor
confirming that:
(i) the vendor has provided Manager a separate license for the
Vendor Software and the term of that license, which term with
appropriate renewal rights, must be at least as long as the license
Sprint PCS has from the vendor,
(ii) the fees paid by Manager to the vendor reflect commercial
rates negotiated at arms' length,
(iii) the Vendor Software covered by Manager's license
provides the usage and functionality necessary for Manager to
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operate the Service Area Network in compliance with the Sprint PCS
Technical Program Requirements, and
(iv) the Vendor Software may be tested in Sprint PCS test beds
by Sprint PCS and will be pushed to the Service Area Network by
Sprint PCS, not the vendor or Manager, unless Sprint PCS otherwise
consents in advance in writing. Sprint PCS agrees to test the Vendor
Software in Sprint PCS test beds within a reasonable period after
Manager reasonably requests in writing.
3. Interconnection [NEW]. Section 1.4 is amended to read as follows:
If Manager desires to interconnect a portion of the Service Area
Network with another carrier and Sprint PCS can interconnect with that
carrier at a lower rate, then to the extent 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 the actual cost paid by Sprint PCS to
the carrier.
4. Forecasting [NEW]. Section 1.6 is amended to read as follows:
1.6 Forecasting. Manager and Sprint PCS will work cooperatively to
generate mutually acceptable forecasts of important business metrics 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, ss.3].
(a) Section 1.7 is amended to read as follows:
1.7 Financing. The construction and operation of the Service Area
Network requires a substantial financial commitment by Manager. The manner
in which Manager will finance the build-out of the Service Area Network
and provide the necessary working capital to operate the business is
described in detail on Exhibit 1.7. Manager will allow Sprint PCS an
opportunity to review before filing any registration statement or
prospectus or any amendment or supplement thereto and before distributing
any offering memorandum or amendment or supplement thereto, and 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.
(b) Section 3(b) of Addendum I is deleted.
6. Ethical Conduct and Related Covenants [Addm I, ss.4]. Section 1.8 is
deleted.
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7. Information [NEW]. Section 19 of Addendum I is deleted. 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),
(iii) Does not unreasonably threaten the security of the
Sprint PCS Network,
(iv) Does not violate any law regarding the information,
(v) Complies with technical requirements applicable to
the Service Area Network,
(vi) Does not adversely affect any warranty benefiting
Manager or Sprint PCS (e.g., software warranties), and
(vii) With respect to the information processed through
Manager's equipment, including its switches, does not result
in a material breach of any agreement regarding the
information (e.g., national security agreements).
Sprint PCS and Manager will immediately notify the other party
and reasonably cooperate to establish new procedures for allowing both
Manager and Sprint PCS to access, monitor, record and receive the
information in a manner that meets the criteria in clauses (i) through
(vii) above if either Manager or Sprint PCS reasonably determines that the
other party is accessing, monitoring, recording or receiving the
information described in this section 1.9.1 in a manner that does not meet
the criteria in clauses (i) through (vii) above. For the avoidance of
doubt, all such information will be deemed Confidential Information under
section 12.2.
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Manager owns the information processed through its equipment
and regarding the performance of its equipment, except the Customer
information owned by Sprint PCS as described in section 1.9.2. 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
imposed by the FCC 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 specific to Manager that Manager requests in the same
format as Manager requests. Sprint PCS will use commercially reasonable
efforts to provide the information within 5 Business Days.
Sprint PCS will provide the information in the format that
Manager requests if Sprint PCS accesses, monitors, compiles, records,
receives or reports for its own use the information that Manager requests,
but not in the same format that Manager requests, if Manager agrees to pay
or reimburse Sprint PCS for the costs Sprint PCS reasonably incurs to
reformat the information into the format requested by Manager. Sprint PCS
will use commercially reasonable efforts to provide such 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 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 as it
pertains to the use of a Sprint communications service subscribed to by
any Customer. Each of Manager and Sprint PCS may use the information
obtained
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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 (if Sprint PCS has provided Manager with any necessary
specifications requested by Manager as to how to obtain the
information), unless Sprint PCS already has the information in
its possession and has not previously delivered it to Manager,
(ii) Sprint PCS no longer maintains,
(iii) Manager has already received from Sprint PCS or
its Related Parties,
(iv) Sprint PCS does not access, monitor, record,
receive or report, or
(v) Sprint PCS must make system modifications to provide
the raw data, including without limitation modifying or adding
data fields or modifying code.
Sprint PCS will provide Manager a copy of the then-current Sprint
PCS document retention policy from time to time upon reasonable request.
1.9.4 Contracts. Sprint PCS will disclose to Manager the relevant
terms and conditions of any agreement between Sprint PCS and any third
party:
(i) with which Manager must comply, directly or
indirectly, under the Management Agreement, the Services
Agreement or any Program Requirement,
(ii) from which Manager is entitled to any benefit, or
(iii) that relate to any pass-through amounts that
Sprint PCS charges Manager under this agreement or
Settled-Separately Manager Expenses under the Services
Agreement.
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
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agreements in electronic format upon notice to Manager, including by
posting the copies or relevant terms and conditions to a secure website to
which Manager has access. Once each calendar year and from time to time
when a change is effected to any relevant term or condition, Manager may
request copies of the agreements that are not posted to the secure website
or whose relevant terms and conditions are not posted to the secure
website.
Sprint PCS will provide a copy of the agreement to Manager to
the extent permissible by the terms of the agreement. Sprint PCS will
allow Manager or its representatives to review a copy of the agreement to
the extent permissible by the agreement if the agreement prohibits Sprint
PCS from providing Manager a copy. Sprint PCS will satisfy the
requirements of this section 1.9.4 if it chooses to provide a copy of the
agreement in electronic form on a server that Sprint PCS designates.
Sprint PCS will use commercially reasonable efforts to obtain the right
from the third party, if required, to provide a complete copy to Manager
of any agreement between Sprint PCS and any third party of the type
described in this section 1.9.4.
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 this Addendum and
ending December 31, 2006, any of the terms of an Other Manager's
Management Agreement or Services Agreement are amended in any manner for
any reason to be more favorable to the Other 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 Other Manager's Management Agreement and
Services Agreement agreed to since the Effective Date (including
accepting existing terms that relate to the changes or terms that
were previously changed and not previously accepted by Manager but
that remain a part of the latest version of the Other Manager's
agreement) (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 Other Manager, and
(c) No amendments in Manager's Management Agreement and
Services Agreement will be made to reflect changes made in an Other
Manager's Management Agreement and Services Agreement if such
changes are:
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(i) made solely because the Other Manager owns spectrum
on which all or a portion of its network operates, unless the
Other Manager acquired this spectrum from Sprint PCS or its
Related Parties after the Effective Date, or
(ii) compelled by a law, rule or regulation that applies
to the Other Manager, but not to Manager, or
(iii) made solely to modify the build-out plan.
Sprint PCS will prepare and deliver to Manager either an addendum
containing the Overall Changes that have been made to the Other Manager's
agreements in all of its addenda or copies of the Other Manager's amended
and restated Management Agreement, Services Agreement and Trademark
License Agreements (in each case redacted to protect the identity of the
Other Manager) within 10 Business Days after the later of (i) the
effective date of the amendment or other instrument containing these
changes, and (ii) the date of the amendment or other instrument. Manager
then has 30 days to notify Sprint PCS that Manager wants the Overall
Changes.
If Manager does not notify Sprint PCS in this 30-day 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 time period in
writing that it wants the Overall Changes, Sprint PCS will prepare,
execute and deliver to Manager an addendum reflecting the Overall Changes.
The new addendum will have the same effective date as the addendum or the
restated Management Agreement, Services Agreement and Trademark License
Agreements between Sprint PCS and the Other Manager that gave rise to the
new addendum. 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 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
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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, submit the revised signed
addendum to Manager within 10 days after receipt of the arbiter's ruling
and pay all of Manager's expenses and attorneys' fees related to the
arbitration. If the arbiter rules in favor of Sprint PCS, then Manager
may: (i) execute the signed addendum as proffered to Manager within 10
days after Manager's receipt of the arbiter's ruling or (ii) decline to
accept the addendum and pay all of Sprint PCS' expenses and attorneys'
fees related to the arbitration.
The parties acknowledge that Sprint PCS can disclose to Manager who
the Other Manager is that gave rise to the proposed addendum only if the
Other Manager agrees to the disclosure.
Sprint PCS represents and warrants to Manager that this Addendum V
in all material respects reflects the terms of the most recently executed
addendum between an Other Manager and Sprint PCS to implement the new
simplified pricing and cash settlement process and the other modifications
to the Management Agreement, the Services Agreement, the Trademark License
Agreements and the Schedule of Definitions, except for the provisions in
this Addendum V that have been revised because of negotiations between
Sprint and Manager.
9. Revised Build-Out Plan. [Addm III, ss.1; revised by this Addendum]. The
Exhibit 2.1 Build-out Plan Phase Description, Build-out plan Table, and
Build-Out Plan Map in the Management Agreement dated November 5, 1999, was: (a)
amended by the Amended Exhibit 2.1 Build-out Plan Description, Build-out Plan
Table, and Build-out Plan Map (revised effective September 26, 2001) attached to
Addendum III and (b) supplemented on July 17, 2002, by a supplemental Build-out
Plan Description and a new Build-out Map through the Build-out Plan Approval
Process. Sprint PCS acknowledges that Manager has complied with all of the
Build-out Plan requirements as of the Effective Date of this Addendum V. Any
additional Build-out Plan requirements will be subject to section 2.5.
10. Exclusivity of Service Area [Addm I, ss.5]. Section 2.3 is amended to
read as follows:
2.3 Exclusivity of Service Area. Manager will be the only person or
entity that is a manager or operator for Sprint PCS with respect to the
Service Area and neither Sprint PCS nor any of its Related Parties will
own, operate, build, manage or contract with any other person or entity to
own, operate, build or manage another wireless mobility communications
network in the Service Area so long as this agreement remains in full
force and effect and there is no Event of Termination that has occurred
giving Sprint PCS the right to terminate this agreement, except that:
(a) Sprint PCS may cause Sprint PCS Products and Services to
be sold in the Service Area through the Sprint PCS National Accounts
Program
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Requirements and Sprint PCS National or Regional Distribution
Program Requirements;
(b) A reseller of Sprint PCS Products and Services may sell
its products and services in the Service Area so long as such resale
is not contrary to the terms and conditions of this agreement; and
(c) Sprint PCS and its Related Parties may engage in the
activities described in sections 2.4(a) and 2.4(b) with Manager in
the geographic areas within the Service Area in which Sprint PCS or
any of its Related Parties owns an incumbent local exchange carrier
as of the date of this agreement.
11. Coverage Enhancement [New]. Section 2.5 is replaced by the following
language:
2.5 Manager's Right of First Refusal For New Coverage Build-out.
Sprint PCS grants to Manager the right of first refusal to build-out New
Coverage. Sprint PCS will give to Manager a written notice of a New
Coverage within the Service Area that Sprint PCS decides should be
built-out. Manager must communicate to Sprint PCS within 90 days after
receipt of the notice whether it will build-out the New Coverage,
otherwise Manager's right of first refusal terminates with regard to the
New Coverage described in the notice.
If Manager decides to build-out the New Coverage, then Manager and
Sprint PCS will diligently negotiate and execute an amendment to the
Build-out Plan and proceed as set forth in sections 2.1 and 2.2. The
amended Build-out Plan will contain critical milestones that provide
Manager a commercially reasonable period in which to implement coverage in
the New Coverage. In determining what constitutes a "commercially
reasonable period" as used in this paragraph, the parties will consider
several factors, including local zoning processes and other legal
requirements, weather conditions, equipment delivery schedules, the need
to arrange additional financing, and other construction already in
progress by Manager. Manager will construct and operate the network in the
New Coverage in accordance with the terms of this agreement. For avoidance
of doubt, the New Coverage area will be included in the Service Area
Network.
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 or an Other Manager to construct the New
Coverage. Sprint PCS has the right, in a New Coverage that it constructs
or that a Sprint PCS Related Party or an Other Manager constructs, to
manage the network, allow a Sprint PCS Related Party to manage the
network, or hire an Other Manager to operate the network in the New
Coverage. Any New Coverage that Sprint PCS, a Sprint PCS Related Party or
an Other Manager builds out is deemed removed from the Service Area
14
and the Service Area Exhibit is deemed amended to reflect the change in
the Service Area.
Notwithstanding the preceding paragraphs in this section 2.5, the
capacity and footprint parameters contained in the amended Build-out Plan
will not be required to exceed the parameters adopted by Sprint PCS in
building out all of its comparable service area, unless such build-out
relates to an obligation regarding the Service Area Network mandated by
law. When necessary for reasons related to new technical standards, new
equipment or strategic reasons, Sprint PCS decides that New Coverage
within the Service Area should be built-out concurrently with Sprint PCS'
build-out, Sprint PCS will reimburse Manager for its costs and expenses if
Sprint PCS discontinues its related build-out.
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. Long-Distance Pricing [NEW]. Section 7 of Addendum I is deleted.
Additionally, section 3.4 of the Management Agreement is amended to read as
follows:
3.4 IXC Services.
3.4.1. Customer Long Distance. Sprint PCS and Manager will from time
to time mutually define local calling areas in the Service Areas of
Manager 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
15
inter-LATA call for purposes of 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 telephony services used in the Sprint PCS
Network from Sprint Communications Company L.P. or its Related Parties
("SCCLP") as described in section 3.4.2(a) above. Sprint PCS will purchase
these 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 long-distance telephony services 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). Sprint PCS will recover charges associated with telephony
services described in section 3.4.2(a)(ii) within the CCPU Services under
the Services Agreement.
If Sprint Corporation no longer has its "PCS" tracking stock, Sprint
PCS will include the volume of telephony services of Manager and Other
Managers with the volume of Sprint PCS when negotiating the Sprint PCS
rate with the long distance division of Sprint Corporation (currently
SCCLP). The long distance division will continue to provide 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 by Manager of
capacity under this section 3.4.2(c). The terms of section 1.3 do not
apply to purchases of capacity in this section 3.4.2(c).
(d) Pre-existing agreement. If before the date Addendum V to this
agreement is signed, Manager is bound by an agreement for long distance
services or an agreement for private line service and the agreement was
not made in anticipation of this agreement or Addendum V, then the
requirements of this section 3.4.2 do not apply during the term of the
other agreement. If the other agreement terminates for any reason, then
the requirements of this section 3.4.2 do apply from and after the
termination.
16
(e) Resale. Manager may not resell the long-distance telephony
services acquired under this section 3.4.2. For purposes of clarification,
resale under this section 3.4.2(e) includes Manager selling minutes to
carriers for ultimate resale to end users under a brand other than
"Sprint" or selling minutes to end users under a brand other than
"Sprint". Manager may engage in the following activities (i.e., these
activities are not treated as resale of long-distance telephony services):
(1) the transport of long-distance calls for Customers under section
3.4.2(a),
(2) the transport of long-distance calls for resellers under section
3.5, and
(3) the transport of long-distance calls for roaming under section
4.3.
13. Voluntary Resale of Products and Services [Addm I, ss.9]. The second
sentence of the second paragraph of section 3.5.2 is amended to read as follows:
"If Manager wants handsets of subscribers of resellers with NPA-NXXs of Manager
to be activated, Manager must agree to comply with the terms of the program,
including its pricing provisions."
14. Intra-LATA Calls and Backhaul Services [NEW]. Section 13 of Addendum I
is deleted. Additionally, section 3.7 of the Management Agreement is amended 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 (a) intra-LATA calls and (b) 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 (a)
intra-LATA calls and (b) backhaul services for the Service Area Network
if:
(i) Manager decides to use third parties for (a) intra-LATA
calls and (b) 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. For the avoidance of doubt, such
information will be deemed Confidential Information under section 12.2.
Sprint PCS or one of its Related Parties will have a reasonable time to
respond to Manager's request for last
17
offer to provide pricing for capacity for (a) intra-LATA calls and (b)
backhaul services, 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 (a) intra-LATA calls and (b)
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 (a) intra-LATA calls and (b) backhaul services for the Service Area
Network that matches the terms, including pricing, or is better than the
terms and lower than the pricing offered by the third party. For purposes
of this section 3.7, the term "backhaul" means the provision of services
from a cell site of Manager to the corresponding switch associated with
the cell site. For avoidance of doubt, backhaul includes both inter-LATA
and intra-LATA services.
If Manager has an agreement for these services in effect as of the
date Addendum V is signed and the agreement was not made in anticipation
of this agreement or Addendum V, then the requirements of this section 3.7
do not apply during the term of the other agreement. If the other
agreement terminates for any reason, then the requirements of this section
3.7 do apply from and after the termination.
The requirements of this section 3.7 do not apply at any time with
respect to such services so long as such services are provided by a
Related Party of Manager or by Valley Network Partnership and so long as
Sprint PCS or Manager is a partner of Valley Network Partnership.
15. 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").
16. Changes to Program Requirements [NEW].
(a) The first sentence of section 9.2(e) is amended to read as follows:
Manager must implement any changes in the Program Requirements
within a commercially reasonable period of time unless Sprint PCS
otherwise consents, subject to section 9.3.
(b) The last sentence of section 9.2 is amended to read as follows:
Subject to Sprint PCS' obligation to reimburse Manager under section
9.3, any costs and expenses incurred by Manager in connection with
conforming to any change to the Program Requirements during the term of
this agreement are the responsibility of Manager.
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(c) Section 9.3 is amended to read as follows:
9.3 Manager's Rights regarding Changes to Program Requirements.
9.3.1 Parameters for Required Program Requirement Implementation.
(a) Manager may 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
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
Enterprise Value, or
(C) individually cause a decrease in the forecasted
5-year discounted cash flow of Manager (at Manager'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 (at Manager's 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:
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(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 has the right to decline to implement any Capital
Program Requirement Change if Manager determines that the Capital Program
Requirement Change will have a negative net present value applying a
5-year discounted cash flow model.
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 Non-Capital Program
Requirement Change, Sprint PCS may modify the scope of the Non-Capital
Program Requirement Change in all or certain of Manager's markets so that
the modified Non-Capital Program Requirement Change does not satisfy any
of the tests in
20
section 9.3.1(a), in which case Manager will implement the modified
Non-Capital Program Requirement Change. Section 9.3.2 governs any
disagreement between the parties regarding the determination if the
Non-Capital Program Requirement Change satisfies any of the tests in
section 9.3.1(a).
If Manager has the right to decline a Capital Program Requirement
Change, Sprint PCS may modify the scope of the Capital Program Requirement
Change in all or certain of Manager's markets so that the modified Capital
Program Requirement Change does not satisfy the test in section 9.3.1(b),
in which case Manager will implement the modified Capital Program
Requirement Change. Section 9.3.2 governs any disagreement between the
parties regarding the determination if the Capital Program Requirement
Change satisfies the test in section 9.3.1(b).
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
21
implementing the Program Requirement Change will not exceed any of the
parameters described in section 9.3.1.
9.3.3 One or More Parameters Exceeded. Sprint PCS will pay the
Investment Banker's fees if the parties agree or the Investment Banker
determines that implementing the Program Requirement Change will exceed at
least one of the parameters described in section 9.3.1. Sprint PCS may
require Manager to implement the Program Requirement Change whether the
parties agree or disagree or the Investment Banker determines that
implementing the Program Requirement Change will exceed at least one of
the parameters described in section 9.3.1, if Sprint PCS agrees to
compensate Manager the amount necessary to prevent Manager from exceeding
the parameters set forth in section 9.3.1.
9.3.4 Changes with Respect to Pricing Plans and Roaming Program
Requirements. Manager will implement a 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
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
22
incurs as a result of its implementation of the change net of
any benefit that Manager receives.
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.
For the avoidance of doubt, Sprint PCS' right to receive revenue
under section 9.4 does not apply to any change with respect to which
Manager is reimbursed under section 9.3.
(d) A new section 9.7 is added to the Management Agreement:
9.7 Review of Program Requirements; Unilateral Changes.
(a) Within 120 days after the Effective Date of Addendum V
Sprint PCS will review all outstanding Program Requirements to
determine if they need to be revoked, amended or left in place. Any
amendment to a Program Requirement will be implemented in accordance
with section 9.2, subject to section 9.3 with respect to amendments.
(b) Sprint PCS and Manager will in good faith attempt to
mutually agree on how to mitigate the adverse economic impact on
Manager of the exercise of any unilateral right of Sprint PCS under
this agreement, the Services Agreement and either Trademark License
Agreement to the extent Manager believes such change will have a
significant adverse economic impact on Manager's operations, except
with respect to changes involving Sprint PCS National or Regional
Distribution Program Requirements. For purposes of clarification,
the parties intend the preceding sentence to obligate them to a
robust discussion and open dialogue but understand the discussion
and dialogue may not lead to any particular solution of the issues
raised by Manager or Sprint PCS. By way of illustration, under the
second preceding sentence if Manager believed that the exercise of
the unilateral right to change the Trademark Usage Guidelines or the
designation of Sprint PCS Products and Services had an adverse
economic impact on Manager, then Manager and Sprint PCS will in good
faith attempt to mutually agree on how to mitigate the adverse
impact on Manager.
(c) Sprint PCS will use reasonable efforts to discuss with
Manager new proposed pricing plans and marketing initiatives and
other significant proposed changes in business operations. Sprint
PCS will consider reasonable requests by Manager to opt out of
pricing plans and marketing initiatives. Nothing in this Addendum V
is intended to supersede prior agreements between Sprint PCS and
Manager with respect to current pricing plans and promotions, but
subsequent significant changes to such prior pricing plans and
promotions are subject to the terms of this Addendum V.
23
(f) A new section 9.8 is added to the Management Agreement.
9.8 Breach for Failure to Implement Program Requirement.
Manager will be in material breach of a material term and Sprint PCS
may exercise its rights under section 11 if Manager declines to implement
a Program Requirement when required to do so under this agreement, subject
to Manager's rights under section 11.3.3.
17. Fees [NEW]. Article 10 of the Management Agreement is amended to read
as follows:
10. FEES
10.1 General. Sprint PCS and Manager will pay to each other the fees
and apply the credits in the manner described in this section 10. 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").
Billed Revenue does not include new activity billed to the
Customer solely to recover costs incurred by Sprint PCS, Manager or both
related solely to such new activity. Manager and Sprint PCS will share the
revenues from this billing in proportion to the costs they incur.
For purposes of clarification, the parties have in place
procedures to assign Customers to CSAs and expect those procedures to
remain in place after the Effective Date.
24
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. To the extent that such bundled services
are included on the same Customer invoice, the parties will negotiate in
good faith to determine how credits, deposits and payments for such
services are to be applied. If the parties are unable to agree, Manager
may decline to participate in the bundling of such services.
Sprint PCS will reasonably determine the amount of credits
applied to Manager Accounts during the Billed Month ("Customer Credits").
"Net Billed Revenue" for a Billed Month is the amount of the
Billed Revenue less the Customer Credits.
The "Fee Based on Billed Revenue" for a Billed Month is equal
to 92% of (a) Net Billed Revenue, less (b) the Allocated Write-offs for
Net Billed Revenue.
10.2.2 Outbound Roaming Fee. Sprint PCS will pay to Manager a
fee equal to the amount of Outbound Roaming Fees that Sprint PCS or its
Related Parties bills to Manager Accounts, less the Allocated Write-offs
for Outbound Roaming Fees. For purposes of clarification, Sprint PCS will
settle separately with Manager the direct cost of providing the capability
for the Outbound Roaming, including any amounts payable to the carrier
that handled the roaming call and the clearinghouse operator for Outbound
Roaming.
10.2.3 Phase II E911 Surcharges. Sprint PCS will pay to
Manager a fee equal to a portion of the E911 Phase II Surcharges
(attributable to incremental costs for Phase II E911, including but not
limited to related handset costs, routing costs, implementation costs,
trunks and testing costs, and anticipated write-offs for bad debt) billed
during the Billed Month to Customers with an NPA-NXX assigned to the
Service Area, less the Allocated Write-offs for that portion of E911 Phase
II Surcharges in the Billed Month. The portion of the billed amount
attributed to Manager will be based on Manager's proportional cost (as
compared to Sprint PCS' proportional cost) to comply with Phase II of the
E911 requirements. Sprint PCS will determine from time to time the rate
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
25
Wireless Local Number Portability requirements. Sprint PCS will determine
from time to time the rate billed to Customers related to WLNP Surcharges
and the portion payable to Manager.
10.2.5 Customer Equipment Credits. Sprint PCS will apply as a
credit to any other fees under this section 10.2 owing by Sprint PCS to
Manager an amount equal to the amount of the Customer Equipment Credits
less the Allocated Write-offs for Customer Equipment Credits.
10.2.6 Write-offs for Customer Equipment Charges. Sprint PCS
will apply as a credit to any other fees under this section 10.2 owing by
Sprint PCS to Manager an amount equal to the amount of the Allocated
Write-offs for Customer Equipment Charges.
10.3 Definitions used in fee calculations
10.3.1 Write-offs. Sprint PCS will determine, in its
reasonable discretion, the amounts written off net of deposits applied
(the "Write-offs") in the Sprint PCS billing system during the Billed
Month relating to Manager Accounts.
10.3.2 Billed Components. Each of the following amounts
is referred to as a "Billed Component" and collectively they are referred
to as the "Billed Components".
10.3.2.1 Net Billed Revenue. The amount determined as
described in section 10.2.1.
10.3.2.2 Customer Equipment Credits. The reductions of
amounts billed to Manager Accounts related to the sale of handsets and
handset accessories from Sprint PCS inventory are referred to as "Customer
Equipment Credits". This is a negative amount that reduces the Amount
Billed (Net of Customer Credits).
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".
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10.3.2.6 E911 Phase II Surcharges. The amounts that
Sprint PCS bills to Manager Accounts to recover all costs related to Phase
II E911 functionality are referred to as "E911 Phase II Surcharges".
10.3.2.7 USF Charges. The amounts that Sprint PCS bills
to Manager Accounts relating to Universal Service Funds are referred to as
"USF Charges".
10.3.2.8 WLNP Surcharges. The amounts that Sprint PCS
bills to Manager Accounts to recover costs related to WLNP activities.
10.3.3 Amount Billed (Net of Customer Credits). The "Amount
Billed (Net of Customer Credits)" for a Billed Month is equal to the sum
of the Billed Components.
10.3.4 The Allocated Write-offs. The "Allocated Write-offs"
for all or a portion of a Billed Component in a Billed Month is the
Write-offs for the Billed Month times the amount of the Billed Component
(or portion thereof) divided by the Amount Billed (Net of Customer
Credits).
10.4 Other Fees and Payments. Sprint PCS and Manager will pay to
each other the fees and payments described below:
10.4.1 Inter Service Area Fees and Reseller Customer Fees.
10.4.1.1 Inter Service Area Fee and Reseller Customer
Fee Paid. Manager will pay to Sprint PCS an Inter Service Area Fee as set
forth in this section 10.4.1 for each billed minute or kilobyte of use
that a Customer with an NPA-NXX assigned to the Service 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. 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").
Sprint 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. 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
27
Service Area traveling in the Service Area. For clarification purposes,
Sprint PCS does not have to advance the Inter Service Area Fees for the
Other Manager who is involved in the bankruptcy proceeding to Manager, to
the extent that the Other Manager fails to pay the Inter Service Area
Fees. Manager bears the risk of loss of the Other Manager who is involved
in the bankruptcy proceeding not paying the Inter Service Area Fees to
Sprint PCS.
If relief is ordered under title 11 of the United States
Code for an Other Manager or an Other Manager files a voluntary petition
for relief under title 11 of the United States Code and such Other Manager
fails to pay to Sprint PCS amounts that such Other Manager owes to Sprint
PCS with respect to the Inter Service Area Fees for travel into Manager's
Service Area, Sprint PCS will immediately assign to Manager any claim
Sprint PCS has against the Other Manager who is a debtor in a bankruptcy
proceeding 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 this assignment of rights to Manager, and
further agrees that Manager will not be responsible for any expenses
related to such assignment.
Sprint PCS will use reasonable efforts to obtain the
right to setoff Inter Service Area Fee amounts owing to an Other Manager
who is a debtor in a bankruptcy proceeding. To the extent that, on the
date such Other Manager files for relief under title 11 of the United
States Code, Sprint PCS owes Inter Service Area Fees to Other Manager and
Other Manager owes Inter Service Area Fees to Sprint PCS for travel into
Manager's Service Area, Sprint PCS will refrain from paying such Inter
Service Area Fees to Other Manager, absent a court order specifically
directing the turnover of such funds to Sprint PCS. Sprint PCS will give
Manager reasonable notice of any motion seeking such turnover. Sprint PCS
will oppose such motion or authorize Manager to oppose such motion on
Sprint PCS' behalf.
To the extent that, on the date (the "Petition Date")
such Other Manager files for relief under title 11 of the United States
Code, Sprint PCS owes Inter Service Area Fees to Other Manager for travel
by Customers assigned to Manager's Service Area into such Other Manager's
service area, and such Other Manager owes Inter Service Area Fees to
Sprint PCS for travel by Customers assigned to such Other Manager's
service area into Manager's Service Area, Sprint PCS will refrain from
paying such Inter Service Area Fees to Other Manager, absent a court order
specifically directing the turnover of such funds to Sprint PCS. Sprint
PCS will give Manager reasonable notice of any motion seeking such
turnover. Sprint PCS will oppose such motion or authorize Manager to
oppose such motion on Sprint PCS' behalf.
Sprint PCS will use reasonable efforts to obtain a court
order allowing Sprint PCS to exercise the setoff of Inter Service Area Fee
amounts, accruing prior to the Petition Date, owing to an Other Manager
who is a debtor in a
28
bankruptcy proceeding, against Inter Service Area Fee amounts, accruing
prior to the Petition Date, owing by such Other Manager to Sprint PCS.
Sprint PCS will use reasonable efforts to setoff Inter
Service Area Fee amounts, accruing on and after the Petition Date, owing
to such Other Manager against Inter Service Area Fee amounts, accruing on
and after the Petition Date, owing by such Other Manager to Sprint PCS, in
a timely manner, absent a court order specifically prohibiting Sprint PCS
from exercising such setoff. Sprint PCS will give Manager reasonable
notice of any motion seeking such prohibition. Sprint PCS will oppose such
motion or authorize Manager to oppose such motion on Sprint's behalf.
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 a court order allows Sprint PCS to setoff amounts it
owes an Other Manager who is a debtor in a bankruptcy proceeding with
amounts that such Other Manager owes Sprint PCS, then:
(a) Sprint PCS will distribute any setoff amounts
relating to Inter Service Area Fees to Manager, all Other Managers
and Sprint PCS on a pro rata basis;
(b) Sprint PCS will use all setoff amounts not
related to Inter Service Area Fees to setoff all other amounts not
related to Inter Service Area Fees that such Other Manager owes
Sprint PCS; and
(c) Sprint PCS will distribute any setoff amounts
not related to Inter Service Area Fees to Manager, all Other
Managers and Sprint PCS on a pro rata basis only if (i) the Other
Manager who is a debtor in a bankruptcy proceeding still owes Inter
Service Area Fees to Manager, any Other Manager and Sprint PCS and
(ii) all amounts that such Other Manager owes Sprint PCS, other than
Inter Service Area Fees, are completely setoff against the amounts
Sprint PCS owes such Other Manager.
The pro rata calculation will be the Inter Service Area Fees owed to
Manager divided by aggregate amount of all Inter Service Area Fees owed to
Manager, all Other Managers and Sprint PCS. However, the pro rata amount
owed to Manager will be reduced by any amount relating to Inter Service
Area Fees that Manager collected through the bankruptcy proceeding. If
Manager, through the pro rata distribution described above and any
individual collection efforts by Manager, collects more than the pro rata
amount to which it is entitled for Inter Service Area Fees using the
29
above pro rata calculation, Manager will immediately pay that excess
amount to Sprint PCS and Sprint PCS will distribute the excess amount to
the Other Managers and Sprint PCS in accordance with the above pro rata
calculation.
If relief is ordered under title 11 of the United States
Code for Sprint PCS or Sprint PCS files a voluntary petition for relief
under title 11 of the United States Code, then Sprint PCS will be deemed a
trustee for Manager's benefit with respect to any Inter Service Area Fees
that Sprint PCS collects from Other Managers for travel into Manager's
Service Area, and Sprint PCS has no rights to Manager's portion of such
Inter Service Area Fees.
Manager acknowledges that if the manner in which the
CSAs are assigned changes because of changes in the manner in which the
NPA NXX is utilized, the manner in which the Inter Service Area Fees and
Reseller Customer Fees, if any, will be calculated might be changed
accordingly.
10.4.1.2 Voice and 2G Data Rate. The amount of the Inter
Service Area Voice and 2G Data Fee and Reseller Customer Voice and 2G Data
Fee 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 (the
"Voice and 2G Standard Travel Rates") 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 of
Addendum V to December 31, 2006, except as described below in
section 10.4.1.2(b).
(b) The following describes the conditions in which either the
"Adjusted Travel Rate" alternative fee arrangement described below
in (i) or the "Cumulative Travel Fees" alternative fee arrangement
described below in (ii) will apply rather than the Inter Service
Area Voice and 2G Data Fee described in section 10.4.1.2(a). Manager
must elect by delivering a written notice of election to Sprint PCS
within 10 Business Days after Manager receives written notice from
Sprint PCS that the Voice and 2G Net Travel Amount is negative as
determined in accordance with paragraph four (4) of section
10.4.1.2(b)(ii)(A), whether the "Adjusted Travel Rate" alternative
fee arrangement or the "Cumulative Travel Fees" alternative fee
arrangement will apply when appropriate under this section
10.4.1.2(b).
(i) Adjusted Travel Rate alternative fee arrangement.
(A) If the Voice and 2G Travel Ratio for the calendar
year 2003 is less than 1.0, then 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
30
each billed minute of use that a Reseller Customer uses
the Service Area Network, will be $0.058 for 2004,
except that the Inter Service Area Voice and 2G Data Fee
for each billed minute of use that a Customer whose
NPA-NXX is assigned to the Service Area Network uses the
Sprint PCS Network (excluding usage of the Away Network
of the Other Managers by Customers with an NPA-NXX
assigned to the Service Area Network ), will be reduced
to $0.0525 for the calendar year 2004 (the "Voice and 2G
Adjusted Travel Rates").
(B) If the Voice and 2G Adjusted Travel Rates are in
effect during 2004 and the Voice and 2G Travel Ratio for
2004 is less than 1.0, then the Voice and 2G Adjusted
Travel Rates will continue in effect during 2005.
If the Voice and 2G Adjusted Travel Rates are in effect
during 2004 and the Voice and 2G Travel Ratio for 2004
is greater than or equal to 1.0, then the Voice and 2G
Standard Travel Rates apply for 2005. Manager will pay
Sprint PCS by January 31, 2005, the difference between
the amount Manager paid for 2004 with the Voice and 2G
Adjusted Travel Rates and the amount Manager would have
paid for 2004 with the Voice and 2G Standard Travel
Rates.
If the Voice and 2G Adjusted Travel Rates are not in
effect during 2004 and the Voice and 2G Travel Ratio for
2004 is less than 1.0, then the Voice and 2G Adjusted
Travel Rates will apply for 2005. Sprint PCS will pay
Manager by January 31, 2005, the difference between the
amount Manager paid for 2004 with the Voice and 2G
Standard Travel Rates and the amount Manager would have
paid for 2004 with the Voice and 2G Adjusted Travel
Rates. If the Voice and 2G Travel Ratio for 2004 is
greater than or equal to 1.0, then the Voice and 2G
Standard Travel Rates apply for 2005 and no adjustment
to 2004 travel payments is necessary.
(C) If the Voice and 2G Adjusted Travel Rates are in
effect during 2005 and the Voice and 2G Travel Ratio for
2005 is less than 1.0, then the Voice and 2G Adjusted
Travel Rates will continue in effect during 2006.
If the Voice and 2G Adjusted Travel Rates are in effect
during 2005 and the Voice and 2G Travel Ratio for 2005
is greater than or equal to 1.0, then the Voice and 2G
Standard
31
Travel Rates apply for 2006. Manager will pay Sprint PCS
by January 31, 2006, the difference between the amount
Manager paid for 2005 with the Voice and 2G Adjusted
Travel Rates and the amount Manager would have paid for
2005 with the Voice and 2G Standard Travel Rates.
If the Voice and 2G Adjusted Travel Rates are not in
effect during 2005 and the Voice and 2G Travel Ratio for
2005 is less than 1.0, then the Voice and 2G Adjusted
Travel Rates will apply for 2006. Sprint PCS will pay
Manager by January 31, 2006, the difference between the
amount Manager paid for 2005 with the Voice and 2G
Standard Travel Rates and the amount Manager would have
paid for 2005 with the Voice and 2G Adjusted Travel
Rates. If the Voice and 2G Travel Ratio for 2005 is
greater than or equal to 1.0, then the Voice and 2G
Standard Travel Rates apply for 2005 and no adjustment
to 2005 travel payments is necessary.
(D) If the Voice and 2G Adjusted Travel Rates are in
effect during 2006 and the Voice and 2G Travel Ratio for
2006 is greater than or equal to 1.0, then Manager will
pay Sprint PCS by January 31, 2007, the difference
between the amount Manager paid for 2006 with the Voice
and 2G Adjusted Travel Rates and the amount Manager
would have paid for 2006 with the Voice and 2G Standard
Travel Rates.
If the Voice and 2G Adjusted Travel Rates are not in
effect during 2006 and the Voice and 2G Travel Ratio for
2006 is less than 1.0, then Sprint PCS will pay Manager
by January 31, 2007, the difference between the amount
Manager paid for 2006 with the Voice and 2G Standard
Travel Rates and the amount Manager would have paid for
2006 with the Voice and 2G Adjusted Travel Rates.
(ii) Cumulative Travel Fees alternative fee arrangement.
(A) Sprint PCS will determine within 15 Business Days
after the Effective Date or by January 15, 2004, which
ever is later, and by January 15 of 2005 and 2006, the
difference between:
(1) the amount Sprint PCS billed Manager for Inter
Service Area Voice and 2G Data Fees during the
previous calendar year (excluding Inter Service
Area Voice and 2G Data Fees for usage
32
of the Away Network of the Other Managers by
Customers with an NPA-NXX assigned to the Service
Area Network), and
(2) the amount Sprint PCS owed to Manager for
Inter Service Area Voice and 2G Data Fees
(excluding Inter Service Area Voice and 2G Data
Fees that Sprint PCS owed to Manager during the
previous calendar year for usage of the Service
Area Network by Customers with an NPA-NXX assigned
to the Service Area of Other Managers).
The difference between (1) and (2) is referred to
as the "Voice and 2G Net Travel Amount". The Voice and
2G Net Travel Amount is considered to be negative if the
amount of (1) is greater than the amount of (2). The
Voice and 2G Net Travel Amount is considered to be
positive if the amount of (2) is greater than the amount
of (1). The Voice and 2G Net Travel Amount will be
determined based on monthly amounts rather than annual
amounts where appropriate as provided below.
(B) If the Voice and 2G Net Travel Amount for the
calendar years 2003, 2004 or 2005 is negative, then
beginning in February after that year ends and until the
following January, Sprint PCS will determine by the 15th
day of each calendar month, the Voice and 2G Net Travel
Amount for the previous calendar month based on Voice
and 2G Standard Travel Rates.
If the Voice and 2G Net Travel Amount for the calendar
years 2003, 2004 or 2005 is positive, Sprint PCS will
not determine the Voice and 2G Net Travel Amount on a
monthly basis for the next calendar year.
(C) If Sprint PCS determines the Voice and 2G Net Travel
Amount on a monthly basis as required under (B) above
and the Voice and 2G Net Travel Amount for the previous
calendar month is positive, Sprint PCS will receive a
credit for the amount by which it is positive.
If Sprint PCS determines the Voice and 2G Net Travel
Amount on a monthly basis as required under (B) above
and the Voice and 2G Net Travel Amount for the previous
calendar month is negative, Sprint PCS will pay Manager
the amount by which it is negative by the last day of
the calendar
33
month, after applying any remaining cumulative credits
Sprint PCS received during the previous months in the
calendar year.
By January 31 of 2005, 2006 and 2007, Manager will pay
Sprint PCS the amount of any remaining cumulative credit
for the previous calendar year, but not to exceed the
aggregate amount of payments made by Sprint PCS for that
previous calendar year pursuant to this subsection (C).
(D) If Sprint PCS is not required to determine the Voice
and 2G Net Travel Amount on a monthly basis because the
Voice and 2G Net Travel Amount for the previous calendar
year is positive, then if Sprint PCS determines (when
calculating the Voice and 2G Net Travel Amount under (A)
above) that the Voice and 2G Net Travel Amount for the
previous calendar year is negative, then by January 31
of 2005, 2006 or 2007, as the case may be, Sprint PCS
will pay Manager the amount by which the Voice and 2G
Net Travel Amount is negative, and Sprint PCS will begin
determining the Voice and 2G Net Travel Amount monthly
and complying with (B) and (C) above, until no longer
required as provided in this section.
(c) 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 each be
an amount equal to 90% of Sprint PCS' Retail Yield for Voice and 2G
Data Usage for the previous calendar year; provided that such amount
for any period will not be less than Manager's network costs
(including a reasonable return using Manager's weighted average cost
of capital applied against Manager's net investment in the Service
Area Network) to provide the services that are subject to the Inter
Service Area Voice and 2G Data Fee. If the parties have a dispute
relating to the determination of the foregoing fees for any period,
then the parties will submit the dispute to binding arbitration as
set forth in section 10.4.1.3(b).
10.4.1.3 3G Data Rate. The amount of the Inter Service
Area 3G Data Fee and Reseller Customer 3G Data Fee 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 (the "3G
Standard Travel Rate") and the Reseller Customer 3G Data Fee for
each kilobyte of use that
34
a Reseller Customer uses the Service Area Network, will be $0.0020,
except as described below in section 10.4.1.3(b).
(b) the following describes the conditions in which the
"Cumulative Travel Fees" alternative fee arrangement described below
in (i) will apply rather than the Inter Service Area 3G Data Fee as
described in section 10.4.1.3(a).
(i) Cumulative Travel Fees alternative fee arrangement.
(A) Sprint PCS will determine within 15 Business Days
after the Effective Date or by January 15, 2004, which
ever is later, and by January 15 of 2005 and 2006, the
difference between:
(1) the amount Sprint PCS billed Manager for Inter
Service Area 3G Data Fees during or the previous
calendar year (excluding Inter Service Area 3G
Data Fees for usage of the Away Network of the
Other Managers by Customers with an NPA-NXX
assigned to the Service Area Network), and
(2) the amount Sprint PCS owed to Manager for
Inter Service Area 3G Data Fees (excluding Inter
Service Area 3G Data Fees that Sprint PCS owed to
Manager during the previous calendar year for
usage of the Service Area Network by Customers
with an NPA-NXX assigned to the Service Area of
Other Managers).
The difference between (1) and (2) is referred to
as the "3G Net Travel Amount". The 3G Net Travel Amount
is considered to be negative if the amount of (1) is
greater than the amount of (2). The 3G Net Travel Amount
is considered to be positive if the amount of (2) is
greater than the amount of (1). The 3G Net Travel Amount
will be determined based on monthly amounts rather than
annual amounts where appropriate as provided below.
(B) If the 3G Net Travel Amount for the calendar year
2003, 2004 or 2005 is negative, then beginning in
February after that year ends and until the following
January, Sprint PCS will determine by the 15th day of
each calendar month, the 3G Net Travel Amount for the
previous calendar month based on 3G Standard Travel
Rates.
35
If the 3G Net Travel Amount for the calendar years 2003,
2004 or 2005 is positive, Sprint PCS will not determine
the 3G Net Travel Amount on a monthly basis for the next
calendar year.
(C) If Sprint PCS determines the 3G Net Travel Amount on
a monthly basis as required under (B) above and the 3G
Net Travel Amount for the previous calendar month is
positive, Sprint PCS will receive a credit for the
amount by which it is positive.
If Sprint PCS determines the 3G Net Travel Amount on a
monthly basis as required under (B) above and the 3G Net
Travel Amount for the previous calendar month is
negative, Sprint PCS will pay Manager the amount by
which it is negative by the last day of the calendar
month, after applying any remaining cumulative credits
Sprint PCS received during the previous months in the
calendar year.
By January 31 of 2005, 2006 and 2007, Manager will pay
Sprint PCS the amount of any remaining cumulative credit
for the previous calendar year, but not to exceed the
aggregate amount of payments made by Sprint PCS for that
previous calendar year pursuant to this subsection (C).
(D) If Sprint PCS is not required to determine the 3G
Net Travel Amount on a monthly basis because the 3G Net
Travel Amount for the previous calendar year is
positive, then if Sprint PCS determines (when
calculating the 3G Net Travel Amount under (A) above)
that the 3G Net Travel Amount for the previous calendar
year is negative, then by January 31 of 2005, 2006 or
2007, as the case may be, Sprint PCS will pay Manager
the amount by which the 3G Net Travel Amount is
negative, and Sprint PCS will begin determining the 3G
Net Travel Amount monthly and complying with (B) and (C)
above, until no longer required as provided in this
section.
(c) The parties will reset the Inter Service Area 3G Data Fee
and the Reseller Customer 3G Data Fee after the Initial 3G Data Fee
Period ends. The Inter Service Area 3G Data Fee and the Reseller
Customer 3G Data Fee will be based on an appropriate discount from
the Sprint PCS Retail Yield for 3G Data Usage for the previous
calendar year to be negotiated before December 31, 2006. Each
subsequent fee period will last three years with, for example, the
second pricing period beginning on January 1, 2007 and ending on
December 31, 2009.
36
The process for resetting the fees is as follows:
(i) Sprint PCS will give Manager a proposal for the
appropriate discount from the Sprint PCS Retail Yield for 3G
Data Usage by March 31 of the final year of the then current
pricing period. Manager's representative and the Sprint PCS
representative will begin discussions regarding the proposed
schedule of fees within 20 days after Manager receives the
proposed schedule of fees from Sprint PCS.
(ii) Manager may escalate the discussion to the Chief
Financial Officer of Sprint PCS or Sprint PCS may escalate the
discussion to Manager's Chief Executive Officer or Chief
Financial Officer if the parties do not agree on a new
schedule of fees within 30 days after the discussions begin.
(iii) If the parties cannot agree on a new schedule of
fees within 20 days after a party escalates the discussion,
then Manager may either agree to the fees set forth in the
Inter Service Area 3G Data Fee and Reseller Customer 3G Data
Fee proposal or submit the determination of the Inter Service
Area 3G Data Fee and Reseller Customer 3G Data Fee to binding
arbitration based on a market-rate determination of an
appropriate Inter Service Area 3G Data Fee and Reseller
Customer 3G Data Fee in accordance with section 14.2,
excluding the escalation process set forth in section 14.1.
(iv) If Manager submits the matter to arbitration the
fees that Sprint PCS proposed will apply starting after
December 31 of the first year of the appropriate period as
described in section 10.4.1.4 and will continue in effect
unless modified by the final decision of the arbitrator. If
the arbitrator imposes a fee different than the ones in effect
the new fees will be applied as if in effect after December 31
of the first year of the appropriate period as described in
section 10.4.1.4 and if on application of the new fees one
party owes the other party any amount after taking into
account payments the parties have already made then the owing
party will pay the other party within 30 days of the date of
the final arbitration order.
10.4.1.4 Rate Changes - Effective Date. All rate changes
related to Inter Service Area Fees and Reseller Customer Fees will be
applied to all activity in a bill cycle regardless of when the activity
occurred, if the bill cycle ends after the effective date of the rate
change.
10.4.1.5 Long Distance. The long distance rates
associated with the Inter Service Area and Reseller Customer usage will be
equal to the actual wholesale transport and terminating costs associated
with the originating
37
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 V, 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.
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) comprising these fees or other amounts.
38
10.6 Universal Service Funds.
10.6.1 Paid by Government. Manager is entitled to 100% of any
federal and state subsidy funds (the "Subsidy Funds"), including Universal
Service Funds, that Manager or Sprint PCS receives from government
disbursements based on customers with mailing addresses located in the
Service Area and with NPA-NXXs assigned to the Service Area, or such other
method then in effect under the rules of the FCC, Universal Service
Administrative Company or other federal or state administrator. For
purposes of clarity, Universal Service Funds provide support payments to
Eligible Telecommunications Carriers ("ETC") serving in high cost areas or
providing services to low income individuals. Sprint PCS will file on
behalf of itself or Manager appropriate ETC documentation in those
jurisdictions in which Sprint PCS determines to make the filing.
If Manager asks Sprint PCS to make a filing in a jurisdiction and
Sprint PCS reasonably determines not to make the filing because making the
filing is detrimental to Sprint's best interests, then Sprint does not
have to make the filing. If Manager disagrees with the reasonableness of
Sprint PCS' determination not to make the filing, then the parties will
submit to binding arbitration in accordance with section 14.2, excluding
the escalation process set forth in section 14.1.
If the process set forth in the previous paragraph results in Sprint
PCS making a filing, Manager will pay all of Sprint PCS' reasonable
out-of-pocket costs associated with the filing and any compliance
obligations that arise from the filing or that are imposed by the
jurisdiction in which the filing is made (e.g. filing fees, legal fees,
expert witness retention, universal lifeline service, enhancing customer
care quality, and including, without limitation, network upgrades). Sprint
PCS will remit to Manager 50% of any Subsidy Funds that Sprint PCS
receives from filings Sprint PCS is required to make under the preceding
paragraph that are not payable to Manager under the first paragraph of
this section 10.6.1, until the aggregate amount of the payments to Manager
under this sentence equal 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 use reasonable efforts 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) comprising the Universal Service
Funds.
39
10.7 Equipment Replacement Program. Sprint PCS is entitled to 100%
of the amounts that Customers pay for participating in any equipment
replacement program (e.g., an insurance program) billed on their Sprint
PCS bills. Manager will not be responsible for or in any way billed for
any costs or expenses that Sprint PCS or any Sprint PCS Related Party
incurs in connection with any such equipment replacement program.
10.8 Customer Equipment. Sprint PCS is entitled to 100% of the
amounts that Customers pay for subscriber equipment and accessories sold
or leased by Sprint PCS, and Manager is entitled to 100% of the amounts
that Customers pay for subscriber equipment and accessories that Manager
sold or leased, subject to the equipment settlement process in section
4.1.2.
10.9 Phase I E911. Sprint PCS is entitled to collect 100% of amounts
paid by Customers related to the E911 Phase I Surcharges (e.g., for
equipment other than handsets, such as platforms and networks). Sprint PCS
will attempt to recover from the appropriate governmental authority Phase
I E911 reimbursements and will remit the appropriate amounts to Manager.
10.10 Manager Deposits into Retail Bank Accounts. Each Business Day,
Manager will deposit into bank accounts and authorize Sprint PCS or a
Related Party that Sprint PCS designates to sweep from such accounts the
amounts collected from Customers on behalf of Sprint PCS and its Related
Parties for Sprint PCS Products and Services. Manager will allow the funds
deposited in the bank accounts to be transferred daily to other accounts
that Sprint PCS designates. Manager will also provide the daily reports of
the amounts collected that Sprint PCS requires. Manager will not make any
changes to the authorizations and designations Sprint PCS designates for
the bank accounts without Sprint PCS' prior written consent.
10.11 Monthly Statements.
10.11.1 Section 10.2 Statement. Each month Sprint PCS will
determine the amount payable to or due from Manager for a Billed Month
under section 10.2. Sprint PCS will deliver a monthly statement to Manager
that reports the amount due to Manager, the manner in which the amount was
calculated, the amount due to Sprint PCS and its Related Parties under
this agreement and the Services Agreement, and the net amount payable to
or due from Manager.
10.11.2 Other Statements. Sprint PCS will deliver a monthly
statement to Manager that reports amounts due to Manager or from Manager,
other than amounts described in section 10.12.1, the manner in which the
amounts were calculated, the amount due to Manager or to Sprint PCS and
its Related Parties under this agreement and the Services Agreement, and
the net amount payable to Manager.
10.11.3 Third Party Charges. Sprint PCS will include any third
40
party charges for which Manager is responsible under the terms of this
agreement on Manager's statements within three calendar months after the
end of the calendar month during which Sprint PCS receives the third party
charge. Sprint PCS' failure to include these charges on Manager's
statements within the three calendar month-period will mean that Sprint
PCS cannot collect those third party charges from Manager.
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 V
(the "Transition Date"). The weekly amounts paid to Manager during the
calendar month before the Transition Date and on the first Thursday after
the Transition Date will be based on the Collected Revenues method. The
weekly amounts paid to Manager beginning on the second Thursday of the
second calendar month after the Transition Date will be based on the
Billed Revenue method described in this section 10. To effect an orderly
transition, Sprint PCS will pay Manager for the period beginning on the
second Thursday after the Transition Date and ending on the first Thursday
of the calendar month after the Transition Date an amount calculated as
described below in section 10.12.3(b).
(b) Sprint PCS will apply the estimated collection percentages
that Sprint PCS uses before the Transition Date to the gross accounts
receivable aging categories for Customers with an NPA-NXX assigned to the
Service Area as of the
41
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 three
calendar months after the end of the calendar month during which the
disputed or erroneous statement was delivered.
Any dispute regarding a statement will be submitted for resolution
under the dispute resolution process in section 14. The parties must
continue to pay to the other party all amounts, except disputed amounts
(subject to the next paragraph), owed under this agreement and the
Services Agreement during the dispute resolution process. If the aggregate
disputed amount, combined with any aggregate disputed amount under section
10.14, exceeds $100,000, and upon the written request of the other party,
the party disputing the amount (the "Disputing Party") will deposit the
portion of the disputed amount in excess of $100,000 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
42
otherwise agree. The escrow agent will disburse the escrowed funds in the
following manner based on the determination made in the dispute resolution
process:
(a) If the Disputing Party does not owe any of the
disputed amounts, then the escrow agent will return all of the
escrowed funds to the Disputing Party with the interest earned on
the escrowed funds.
(b) If the Disputing Party owes all of the disputed
amounts, then the escrow agent will disburse all of the escrowed
funds with the interest earned on the escrowed funds to the
non-disputing party. If the interest earned is less than the amount
owed based on the Default Rate, then the Disputing Party will pay
the non-disputing party the difference between those amounts.
(c) If the Disputing Party owes a portion of the
disputed amounts, then the escrow agent will disburse to the
non-disputing party the amount owed with interest at the Default
Rate from the escrowed funds and disburse the balance of the
escrowed funds to the Disputing Party. The Disputing Party will pay
the non-disputing party the amount owed for interest at the Default
Rate if the amount of the escrowed funds is insufficient.
Manager and Sprint PCS will take all reasonable actions necessary to
allow the Disputing Party to continue to reflect the amounts deposited
into the escrow account by the Disputing Party as assets in the Disputing
Party's financial statements.
The parties will use the dispute resolution process under section
14.2 of this agreement, excluding the escalation process set forth in
section 14.1, if they cannot agree on the form of escrow agreement.
The parties agree that, despite this section 10.13, Manager will pay
all disputed amounts due to Sprint PCS or any Related Party for fees for
CCPU Services and CPGA Services payable under the Services Agreement for
periods ending on or before December 31, 2006, subject to any other rights
and remedies that Manager has under this agreement and the Services
Agreement.
The dispute of an item in a statement does not stay or diminish a
party's other rights and remedies under this agreement, except that a
party must complete the dispute resolution process in section 14 before
taking any legal or equitable action against the other party.
10.14 Dispute or Correction of a Third Party Invoice Amount. Sprint
PCS will include the applicable portion of any amount based on a 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
43
statement to Manager within the three calendar month-period will mean that
the third party charges will not be collectible from Manager.
A party can dispute or correct an amount based on a third party
invoice only in good faith. Modified invoices received by Sprint PCS from
a third party vendor and then sent by Sprint PCS to Manager will be
treated as a new statement for purposes of this section, so long as the
modification affects the amount owed by Manager and the modified statement
was revised in good faith and not simply to provide Sprint PCS additional
time to resubmit a previous invoice.
If a party disputes or corrects an amount on a third party invoice
or the amount Sprint PCS attributed to Manager, the disputing party must
give the other party written notice of the specific item disputed or
corrected, the disputed or corrected amount with respect to that item and
the reason for the dispute or correction within three calendar months
after the end of the calendar month during which the disputed or erroneous
statement was delivered. Sprint PCS and Manager will cooperate with each
other to obtain the information needed to determine if the amounts billed
by the third party and allocated to Manager were correct.
Any dispute regarding the amount of the third party invoice Sprint
PCS attributed to Manager will be submitted for resolution under the
dispute resolution process in section 14. Manager must continue to pay to
Sprint PCS all amounts, except disputed amounts, owed under this agreement
and the Services Agreement during the information gathering and dispute
resolution process. If the aggregate disputed amount, combined with any
aggregate disputed amount under section 10.13, exceeds $100,000, and upon
the written request of Sprint PCS, Manager will deposit the portion of the
disputed amount in excess of $100,000 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.
10.15 Late Payments. Any amount due under this agreement or the
Services Agreement without a specified due date will be due 20 days after
the paying party receives an invoice. Any amount due under this agreement
and the Services Agreement (including without limitation any amounts
disputed under those agreements that are ultimately
44
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 5th day after the
payment due date until (and including) the date paid.
10.16 Setoff Right If Failure To Pay Amounts Due. If Manager fails
to pay any undisputed amount due Sprint PCS or a Related Party of Sprint
PCS under this agreement, any undisputed amount due Sprint PCS or a
Related Party of Sprint PCS under the Services Agreement or any other
agreement with Sprint PCS or a Related Party of Sprint PCS, or any
disputed amount due to Sprint PCS or a Related Party for fees for CCPU
Services or CPGA Services payable under the Services Agreement, then 5
days after the payment due date Sprint PCS may setoff against its payments
to Manager under this section 10 any such undisputed amount that Manager
owes to Sprint PCS or a Related Party of Sprint PCS. This right of setoff
is in addition to any other right that Sprint PCS or a Related Party of
Sprint PCS might have under this agreement, the Services Agreement or any
other agreement with Sprint PCS or a Related Party of Sprint PCS.
10.17 Effect of Number Portability. The parties acknowledge that,
before wireless local number portability, Customers who received Sprint
PCS Products and Services through Manager were assigned a NPA-NXX that was
unique to the Service Area, but due to wireless local number portability
Customers will now have a unique identification, the MSID, assigned to
them that associates the NPA-NXX through the MSID with the Service Area.
Revenue and expenses associated with such Customers with an MSID
associated with the Service Area will be allocated in the same manner
that, prior to wireless local number portability, revenue and expenses
were associated with Customers with an NPA-NXX assigned to the Service
Area. Sprint will modify its accounting systems to properly allocate such
amounts. In addition, any NPA-NXX-Xs associated with a Customer with an
MSID associated with the Service Area will be deemed to be "used by
Manager" under Addendum IV, Section 2.
18. Non-Renewal Rights of Sprint PCS [Addm I, ss.15]. The following
sentence is added at the end of each of section 11.2.2.1 and section 11.2.2.2:
Sprint PCS will declare, within one-hundred twenty (120) days after
the occurrence of any of the events listed in section 11.2.2, its intent
to exercise its rights under this subsection.
19. Termination of License [Addm I, ss.14]. Section 11.3.1(a) is amended
to read as follows:
(a) At the election of either party this agreement may be
terminated at the time the FCC revokes or fails to renew the License
(except that if the FCC revokes or fails to renew the License
because of a breach of this agreement by Sprint PCS, Sprint PCS may
not terminate this agreement pursuant to this section 11.3.1(a)).
Unless Manager has the right to terminate this agreement under
section 11.3.1(b), neither party has any claim against the other
party if the FCC revokes or fails to renew the License, even if
circumstances would otherwise permit one party
45
to terminate this agreement based on a different Event of
Termination, except that the parties will have the right to pursue
claims against each other as permitted under section 11.4(b).
20. Regulatory Considerations [Addm I, ss.16]. The following sentence is
added at the end of section 11.3.4(b): "A `deemed change of control' in this
section refers to a determination by the FCC that there has been a change of
control of the License resulting from the performance by the parties of their
respective obligations under the agreement."
21. Termination Rights [NEW]. Section 11.3.7 is deleted, and all
references in the agreement to section 11.3.7 are also deleted.
22. Non-termination of Agreement [Addm I, ss.17]. 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. Changes to Exhibit 11.8 [Addm I,ss.30; revised by this Addendum]. The
following changes are made to Exhibit 11.8:
(a) The definition "Operating Assets" in paragraph 1.1.1 is deleted.
(b) Paragraph 1.7 is amended to read as follows:
"Title Insurance. This paragraph 1.7 will apply if the
Property includes any real estate property (including leasehold
interests) ("Real Property"), but with respect to leasehold
interests, only to the extent title insurance is available."
(c) Paragraph 1.8 is amended to read as follows:
"Survey. This paragraph 1.8 will apply if the Property
includes any Real Property, but with respect to leasehold interests,
only to the extent surveys are available."
(d) Paragraph 1.9.8 is amended to read as follows:
1.9.8 Hazardous Materials. To the knowledge of Seller, there
is no condition of the Property or of any substance located on, in,
under or near the Property (including but not limited to any
asbestos or any hazardous substance) that could lead to liability of
the owner of the Property for damages or clean-up costs
46
under any federal, state or local statute or common law except as
disclosed in writing to Buyer.," at the beginning of the paragraph.
(e) Paragraph 1.9.11 is amended to read as follows:
1.9.11 Survival of Representations and Warranties. The
representations and warranties of the parties contained in the
Transaction Documents will survive the Closing and will continue in
effect for a period three (3) years. A waiver of any
misrepresentation or breach of any warranty will not constitute a
waiver of any other misrepresentation or breach of any other
warranty under the Transaction Documents.
(f) Paragraph 1.16.2 is amended is amended to read as follows:
1.16.2 For purposes of this paragraph 1.16, "compete" means
engaging in any business that offers products and services that are
similar to or competitive with the Sprint PCS Products and Services
offered by Sprint PCS as of the date of termination of the
Management Agreement. Manager and its Related Parties will be deemed
to be engaging in a competing business in violation of this
paragraph regardless of whether Manager and its Related Parties are
acting (i) individually or jointly or on behalf of or in concert
with any other individual or entity, or (ii) as a proprietor,
partner, shareholder, member, director, officer, employee, agent or
consultant, or is acting in any other capacity or manner whatsoever,
for any individual or entity that competes with Sprint PCS and its
Related Parties.
24. Audit [NEW]. Section 12.1.2 is amended to read as follows:
12.1.2 Audits. On reasonable advance notice by one party, the other
party must provide its independent or internal auditors access to its
appropriate financial and operating records, including, without
limitation, vendor and distribution agreements, for purposes of auditing
the amount of fees (including the appropriateness of items excluded from
the Fee Based on Billed Revenue), costs, expenses (including operating
metrics referred to in this agreement and the Services Agreement relating
to or used in the determination of Inter Service Area Fees, Reseller
Customer Fees, CCPU Services or CPGA Services) or other charges payable in
connection with the Service Area for the period audited. The party that
requested the audit may decide if the audit is conducted by the other
party's independent or internal auditors. Manager and Sprint PCS may each
request no more than one audit per year.
(a) If the audit shows that Sprint PCS was underpaid then,
unless the amount is contested, Manager will pay to Sprint PCS the
amount of the underpayment within 10 Business Days after Sprint PCS
gives Manager written notice of the underpayment determination.
47
(b) If the audit determines that Sprint PCS was overpaid then,
unless the amount is contested, Sprint PCS will pay to Manager the
amount of the overpayment within 10 Business Days after Manager
gives Sprint PCS written notice of the overpayment determination.
The auditing party will pay all costs and expenses related to the
audit unless the amount owed to the audited party is reduced by more than
10% or the amount owed by the audited party is increased by more than 10%,
in which case the audited party will pay the costs and expenses related to
the audit.
Sprint PCS will provide a report issued in conformity with Statement
of Auditing Standard No. 70 "Reports on the Processing of Transactions by
Service Organizations" ("Type II Report" or "Manager Management Report")
to Manager annually. If Manager, on the advice of its independent auditors
or its legal counsel, determines that a statute, regulation, rule,
judicial decision or interpretation, or audit or accounting rule, policy
or literature published by the accounting or auditing profession or other
authoritative rule making body (such as the Securities and Exchange
Commission, the Public Company Accounting Oversight Board or the Financial
Accounting Standards Board) requires additional assurances beyond SAS 70,
then Sprint PCS will cooperate with Manager to provide the additional
assurances. Sprint PCS' independent auditors will prepare any Type II
Report or Manager Management Report provided under this section 12.1.2 and
will provide an opinion on the controls placed in operation and tests of
operating effectiveness of those controls in effect at Sprint PCS over
Manager Management Processes. "Manager Management Processes" include those
services generally provided within this agreement, primarily billing and
collection of revenues. Sprint PCS or Sprint PCS' auditors will provide
information to Manager or Manager's auditors to perform analysis
procedures requested by Manager in accordance with this paragraph.
25. Regulatory Compliance [Addm I, ss.20]. Section 16.1 is amended to read
as follows:
16.1 Regulatory Compliance. Manager will construct, operate, and
manage the Service Area Network in compliance with applicable federal,
state, and local laws and regulations, including Siting Regulations.
Nothing in this section 16.1 will limit Manager's obligations under
section 2.2 and the remainder of this section 16. Manager acknowledges
that failure to comply with applicable federal, state, and local laws and
regulations in its construction, operation, and management of the Service
Area Network may subject the parties and the License to legal and
administrative agency actions, including forfeiture penalties and actions
that affect the License, such as license suspension and revocation, and
accordingly, Manager agrees that it will cooperate with Sprint PCS to
maintain the License in full force and effect.
Manager will write and implement practices and procedures governing
construction and management of the Service Area Network in compliance with
Siting Regulations.
48
Manager will make its Siting Regulations practices and procedures
available upon request to Sprint PCS in the manner specified by Sprint PCS
for its inspection and review, and Manager will modify those Siting
Regulations practices and procedures as may be requested by Sprint PCS.
Every six months, and at the request of Sprint PCS, Manager will provide a
written certification from one of Manager's chief officers that Manager's
Service Area Network complies with Siting Regulations. Manager's first
certification of compliance with Siting Regulations will be provided to
Sprint PCS six months after the date of this agreement.
Manager will conduct an audit and physical inspection of its Service
Area Network at the request of Sprint PCS to confirm compliance with
Siting Regulations, and Manager will report the results of the audit and
physical inspection to Sprint PCS in the form requested by Sprint PCS.
Manager will bear the cost of Siting Regulations compliance audits and
physical inspections requested by Sprint PCS; provided, however, that
Sprint PCS will bear the cost of any such requested audits and inspections
that are made more often than Sprint PCS makes audits or inspections of
its own network sites.
Manager will retain for 3 years records demonstrating compliance
with Siting Regulations, including compliance audit and inspection
records. Manager will make those records available upon request to Sprint
PCS for production, inspection, and copying in the manner specified by
Sprint PCS. Sprint PCS will bear the cost of production, inspection, and
copying.
26. Notices [NEW]. Paragraph 3 of Addendum III is deleted. (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 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
49
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 of
default Manager receives from the Administrative Agent or any Lender, and
a copy of any related notice Manager gives to the Administrative Agent or
any Lender. Sprint PCS will promptly give Manager a copy of any notice of
default that Sprint PCS receives from the Administrative Agent or any
Lender and a copy of any related notice that Sprint PCS gives to the
Administrative Agent or any Lender.
All notices and other communications given to a party in accordance
with the provisions of this agreement will be deemed to have been given
when received.
(b) The parties' notice addresses are as follows:
For all entities comprising Sprint PCS:
Sprint PCS
KSOPHF0402-4B101
6200 Sprint Parkway
Overland Park, KS 66251
Telephone: 913-794-1530
Telecopier: 913-523-2759
Email: dbotto01@sprintspectrum.com
Attention: Vice President - Wireless Alliances Group
with a copy to:
Sprint Law Department
KSOPHT0101-Z2020
6391 Sprint Parkway
Overland Park, KS 66251
Telephone: 913-315-9315
Telecopier: 913-523-9823
Email: john.w.chapman@mail.sprint.com
Attention: John Chapman
50
For Manager:
Shenandoah Personal Communications Company
124 South Main Street
Post Office Box 459
Edinburg, Virginia 22824-0459
Telephone: (540) 984-5209
Telecopier: (540) 984-8192
Email: cfrench@shentel.net
Attention: Mr. Christopher E. French
and with copies to the following individuals' email addresses if a
notice of a Program Requirement Change is sent by email:
Mr. William L. Pirtle
Email: wpirtle@shentel.net
Mr. Laurence F. Paxton
Email: lfpaxton@shentel.net
Mr. Earle A. MacKenzie
Email: eam@shentel.net
27. Force Majeure [NEW]. The second paragraph of section 17.9.3 is amended
to read as follows:
Neither Manager nor Sprint PCS, as the case may be, is in breach of
any covenant in this agreement, and no Event of Termination will occur as
a result of the failure of such party to comply with 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;
51
28. Governing Law, Jurisdiction and Consent to Service of Process [NEW and
Addm III, ss.2]. Section 17.12 of the Management Agreement is replaced with the
following language:
17.12 Governing Law, Jurisdiction and Consent to Service of Process.
17.12.1 Governing Law. The internal laws of the State of
Kansas (without regard to principles of conflicts of law) govern the
validity of this agreement, the construction of its terms, and the
interpretation of the rights and duties of the parties.
17.12.2 Jurisdiction; Consent to Service of Process.
(a) Each party hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of any
Kansas State court sitting in the County of Johnson or any Federal
court of the United States of America sitting in the District of
Kansas, and any appellate court from any such court, in any suit
action or proceeding arising out of or relating to this agreement,
or for recognition or enforcement of any judgment, and each party
hereby irrevocably and unconditionally agrees that all claims in
respect of any such suit, action or proceeding may be heard and
determined in such Kansas State Court or, to the extent permitted by
law, in such Federal court.
(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.
29. Transfer of Spectrum [Addm I, ss.21]. Section 17.15.5 is amended to
read as follows:
17.15.5 Transfer of Sprint PCS Network. Sprint PCS may sell,
transfer or assign the Sprint PCS Network and, in connection therewith its
rights and obligations under this agreement, the Services Agreement and
any related agreements, to a third party without Manager's consent so long
as the third party assumes the rights and obligations under this agreement
and the Services Agreement and any related agreements. Manager
52
agrees that Sprint PCS and Sprint PCS' Related Parties will be released
from any and all obligations under and with respect to any and all such
agreements upon such sale, transfer or assignment in accordance with this
section 17.15.5, without the need for Manager to execute any document to
effect such release.
Except for (i) intercompany transfers among Sprint's Related
Parties and (ii) any transfer of the License that is part of a sale,
transfer or assignment of the entire Sprint PCS Network (such transfer
described in (i) and (ii), the "Permitted Transfers"), neither Sprint PCS
nor any Sprint Related Party shall sell, transfer or assign any of the
Licenses, or any spectrum under the Licenses, except as follows:
(A) Sprint PCS may sell, transfer or assign up to ten
(10) MHz of spectrum under the Licenses in the aggregate during the
term of this agreement to a third party without Manager's consent;
provided, that no such sale, transfer or assignment shall relieve
Sprint PCS of its obligations under this agreement, the Services
Agreement, or any related agreements.
(B) If Sprint PCS determines it wishes to sell, transfer
or assign spectrum under the Licenses which, when added together
with all prior sales, transfers and assignments of spectrum under
the Licenses (other than Permitted Transfers), exceeds 10 MHz of
spectrum (such spectrum proposed to be sold, assigned or
transferred, the "Offered Spectrum"), then upon receiving any offer
to purchase the Offered Spectrum (a "Spectrum Offer"), Sprint PCS
agrees to promptly deliver to Manager a copy of such Spectrum Offer.
The Spectrum Offer is deemed to constitute an offer to sell to
Manager, on the terms set forth in the Spectrum Offer, all but not
less than all of the Offered Spectrum. Manager will have a period of
sixty (60) days from the date of receipt of the Spectrum Offer to
notify Sprint PCS that Manager agrees to purchase the Offered
Spectrum on such terms. If Manager timely agrees in writing to
purchase the Offered Spectrum, the parties will proceed to
consummate such purchase not later than the one hundred eightieth
(180th) day after the date of Manager's receipt of the Spectrum
Offer. If Manager does not agree within the sixty (60) day period to
purchase the Offered Spectrum, Sprint PCS will have the right, for a
period of one hundred twenty (120) days after such sixtieth (60th)
day, subject to restrictions set forth in this section 17, to sell
to the person or entity identified in the Spectrum Offer all of the
Offered Spectrum on terms and conditions no less favorable to Sprint
PCS than those set forth in the Spectrum Offer. If Sprint PCS fails
to sell the Offered Spectrum to such person or entity on such terms
and conditions within such one hundred twenty (120) day period,
Sprint PCS will again be subject to the provisions of this section
17.15.5(b)(ii) with respect to the Offered Spectrum.
30. Announced Transactions [Addm I, ss.22]. Section 17.24 is deleted.
31. Additional Terms and Provisions [Addm I, ss.23]. Section 17.25 is
amended to read as follows:
53
17.25 Additional Terms and Provisions. Certain additional and
supplemental terms and provisions of this agreement, if any, are set forth
in Addendum I. Manager represents and warrants that the Addendum I also
describes all existing contracts and arrangements (written or verbal) to
which Manager or its Related Parties are a party 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)).
32. Federal Contractor Compliance [Addm I, ss.24]. A new section 17.28,
the text of which is attached as Exhibit B to Addendum I, is added and
incorporated by this reference. When and to the extent required by applicable
law, Manager will comply with the requirement of this section 17.28.
33. Year 2000 Compliance [Addm I,ss.25]. A new section 17.29 is added to
the Management Agreement:
17.29 Year 2000 Compliance. If the Service Area Network or any
system used to support the Service Area Network fails to satisfy the
Sprint PCS requirements for "Year 2000 Compliance" due to defects or
failures in any system or equipment selected by Manager (including systems
or 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. If the Service
Area Network or any system used to support the Service Area Network fails
to satisfy the Sprint PCS requirements for "Year 2000 Compliance" 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.
"Year 2000 Compliance" means the functions, calculations, and other
computing processes of the Service Area Network (collectively "Processes")
that perform and otherwise process, date-arithmetic, display, print or
pass date/time data in a consistent manner, regardless of the date in time
on which the Processes are actually performed or the dates used in such
data or the nature of the date/time data input, whether before, during or
after January 1, 2000, and whether or not the date/time data is affected
by leap years. To the extent any part of the Service Area Network is
intended to be used in combination with other software, hardware or
firmware, it will properly exchange date/time data with such software,
hardware or firmware. The Service Area Network will accept and respond to
two-digit year-date input, correcting or supplementing as necessary, and
store, print, display or pass date/time data in a manner that is
unambiguous as to century. No date/time data will cause any part of the
Service Area Network to perform an abnormally ending routine or function
within the Processes or generate incorrect final values or invalid
results.
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Services Agreement
34. 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.
35. Services Agreement [NEW]. Article 2 of the Services Agreement is
amended to read as follows:
2. SERVICES
2.1 Services.
2.1.1 Services. Subject to the terms of this agreement,
through December 31, 2006, Manager will obtain the services set forth on
Schedule 2.1.1 attached to this agreement ("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 V through December 31, 2006, Sprint
Spectrum is providing all of the Services to Manager and Sprint Spectrum
will not provide individual Services.
The fees charged for the Services and the process for setting
the fees charged for the Services are set forth in section 3.2. Sprint
Spectrum may designate additional Services upon at least 60 days' prior
written notice to Manager by providing an amended Schedule 2.1.1 to
Manager in accordance with the provisions of section 9.1.
Without Manager's prior written consent, neither Sprint
Spectrum nor any of its Related Parties will require Manager to pay for:
(A) any of those additional CCPU Services or CPGA Services to
the extent that they are the same as or functionally equivalent to any
service or benefit that Manager currently receives from Sprint Spectrum or
its Related Parties or Sprint PCS or its Related Parties but for which
Manager does not pay a separate fee immediately after the Effective Date,
or
(B) any other additional CCPU Services or CPGA Services
through December 31, 2006. After that date the fee for those other
additional Services will be included in the fees based on Sprint PCS CCPU
and Sprint PCS CPGA as set forth in section 3.2.
2.1.2 Discontinuance of Services. If Sprint Spectrum
determines to no longer offer a Service, then Sprint Spectrum must
55
(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 discontinue a
significant Service (e.g., billing, collection and customer
care), and
(ii) discontinue the Service to all Other Managers.
If Manager determines within 90 days after receipt of notice of
discontinuance that it wants to continue to receive the Service, Sprint
Spectrum will use commercially reasonable efforts to:
(a) help Manager provide the Service itself or find
another vendor to provide the Service, and
(b) facilitate Manager's transition to the new Service
provider.
The fees charged by Sprint Spectrum for the CCPU Services and
CPGA Services will be reduced by any fees payable by Manager to a vendor
or new Service provider in respect of discontinued CCPU Services and CPGA
Services, if (x) Sprint Spectrum procures such CCPU Services or CPGA
Services from a vendor or a new Service provider and bills those items as
Settled-Separately Manager Expenses (as defined in subsection 3.2.5 of
this agreement), or (y) Manager procures such CCPU Services or CPGA
Services from a vendor or a new provider of Services, or (z) Manager
self-provisions the Service. No adjustment to the fees will be made if
Sprint Spectrum discontinues a CCPU Service or CPGA Service and Sprint
Spectrum does not provide the CCPU Service or CPGA Service to end users.
2.1.3 Performance of Services. Sprint Spectrum may select the
method, location and means of providing the Services. If Sprint Spectrum
wishes to use Manager's facilities to provide the Services, Sprint
Spectrum must obtain Manager's prior written consent.
2.2 Third Party Vendors. Some of the Services might be provided by
third party vendors under arrangements between Sprint Spectrum and the
third party vendors. In some instances, Manager may receive Services from
a third party vendor under the same terms and conditions that Sprint
Spectrum receives those services. In other instances, Manager may receive
Services under the terms and conditions set forth in an agreement between
Manager and the third party vendor.
36. Payment of Fees Under Services Agreement [NEW]. Paragraph 26 of
Addendum I is deleted. Article 3 of the Services Agreement is amended to read as
follows:
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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 a change to Sprint PCS' accounting classifications for the
CCPU Services or CPGA Services materially changes the amount of the Sprint
PCS CCPU or Sprint PCS CPGA relative to the amount immediately before the
change, then the rates outlined in section 3 of the Services Agreement
will be adjusted to reflect the change.
If the 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 first day of the calendar
month following the Effective Date of Addendum V until December 31, 2006
("Initial Pricing Period"), will be:
(a) for the CCPU Services: $7.70 per subscriber multiplied by
the Number of Customers in Manager's Service Area, and
(b) for the CPGA Services: an amount equal to, but not to
exceed $25.00 per Gross Customer Addition in Manager's Service Area:
(i) the most recently publicly reported Sprint PCS CPGA,
multiplied by a percentage equal to the lesser of:
(A) Manager's current percentage of the most recently
publicly reported Sprint PCS CPGA, and
(B) 6.3% of the most recently publicly reported Sprint
PCS CPGA;
multiplied by
(ii) the Gross Customer Additions in Manager's Service Area.
The fees will be paid as set forth in section 10 of the
Management Agreement.
3.2.2 Pricing Process. After the Initial Pricing Period, the
fee for
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CCPU Services will become a percentage of Sprint PCS CCPU and the fee for
CPGA Services will be adjusted to a new percentage of Sprint PCS CPGA. The
parties will reset the CCPU and CPGA percentages to be applied in each
pricing period after the Initial Pricing Period ends. Each subsequent
pricing period will last three years (if Manager continues to use Sprint
Spectrum 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 percentages is as follows:
(a) Sprint Spectrum will give Manager proposed CCPU and CPGA
percentages 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 percentages have to be presented by
October 31, 2005). The proposed percentages 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 percentages within 20 days after
Manager receives the proposed CCPU and CPGA percentages from Sprint
Spectrum.
(b) The fee Manager will pay Sprint Spectrum for the CCPU
Services provided to Manager by or on behalf of Sprint Spectrum each month
beginning on January 1, 2007 until December 31, 2008 under the pricing
process described in this section 3.2.2 will not exceed $8.50 per
subscriber multiplied by the Number of Customers in Manager's Service
Area.
(c) If the parties do not agree on new CCPU and CPGA
percentages within 30 days after the discussions begin, then Manager may
escalate the discussion to the Sprint PCS Chief Financial Officer or
Sprint Spectrum may escalate the discussion to Manager's Chief Executive
Officer or Chief Financial Officer.
(d) If the parties cannot agree on the new CCPU and CPGA
percentages through the escalation process within 20 days after the
escalation process begins, then Manager may either
(i) submit the determination of the CCPU and CPGA
percentages to binding arbitration under section 14.2 of this
agreement, excluding the escalation process set forth in
section 14.1 and continue obtaining all of the CCPU Services
and CPGA Services from Sprint Spectrum at the CCPU and CPGA
percentages the arbitrator determines, or
(ii) procure from a vendor other than Sprint Spectrum or
self-provision all of the Services.
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Manager will begin paying Sprint Spectrum under the CCPU and CPGA
percentages 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 percentages, whichever occurs first.
Within 30 days after the percentages 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.
By December 1, 2006, the parties will agree on a service level
agreement for customer care services and collection services ("Customer-Related
Services") that will apply to Customer-Related Services delivered by Sprint
Spectrum starting on January 1, 2007. If the parties cannot agree on a service
level agreement by December 1, 2006, either party may submit a proposed service
level agreement to binding arbitration under section 14.2 of the Management
Agreement, excluding the escalation process set forth in section 14.1. If the
arbitration concludes after January 1, 2007 the service level agreement, as
agreed upon through the arbitration process, will be effective as of January 1,
2007. The agreement will set forth 5 metrics for Customer-Related Services and
will provide that Sprint Spectrum will use commercially reasonable efforts to
meet the industry averages for those metrics as in effect on December 1, 2006.
The 5 metrics are:
a) Service Grade Rate defined as percentage of calls answered in 60
seconds or less after the customer enters the call queue.
b) Average Hold Time defined as average time a customer waits to talk
to a customer service representative once the customer enters the
call queue.
c) Abandoned Call Rate defined as the percentage of calls that
disconnect prior to talking to a customer service representative
after the customer enters the call queue.
d) Net Write-Offs Rate defined as monthly write-offs of accounts
receivable, net of customer deposits, divided by monthly subscriber
revenue.
e) Past-Due Accounts Receivable Aging Rates defined as percentage of
accounts receivable greater than 60 days from due date.
The service level agreement will provide that Sprint Spectrum will
give Manager a quarterly report on the above metrics. Beginning in 2008, Manager
will have the right to opt out of Sprint Spectrum providing the Customer Related
Services if the average of the metrics reflected in the four quarterly reports
for the prior calendar year indicate that Sprint Spectrum is not in compliance
with any 2 of the 5 metrics. To exercise the opt-out right, Manager must give
its opt-out notice to Sprint Spectrum during the first quarter of any calendar
year that Manager has an opt-
59
out right. Upon receipt of an opt-out notice, Manager and Sprint Spectrum will
use commercially reasonable efforts to transition the Customer-Related Services
to Manager or a third party vendor within 9 months after the opt-out notice
date. Upon the parties' completion of the transition, the parties will agree to
an adjustment to the CCPU Service Fee being charged by Sprint Spectrum to
Manager. If the parties cannot agree to an adjustment, Manager has the right to
submit the determination to binding arbitration under section 14.2 of the
Management Agreement, excluding the escalation process set forth in section
14.1, and continue obtaining all the CPGA Services and remaining CCPU services
from Sprint Spectrum. Manager will reimburse Sprint Spectrum for transition and
continuing operation costs in accordance with Section 3.2.4.
Manager's opt-out right described above is its sole remedy if Sprint
Spectrum is not in compliance with the metrics; Sprint Spectrum's non-compliance
with the metrics does not constitute a breach of this agreement or any other
agreement between the parties.
Manager has the right to propose to Sprint Spectrum that Manager
self-provision or procure from a vendor some, but not all, of the Services.
Sprint Spectrum will discuss the proposal with Manager, but Manager can only
self-provision or procure from a vendor some of the Services if Sprint Spectrum
agrees.
3.2.3 Sprint Spectrum First Right of Refusal. Manager must
give Sprint Spectrum written notice of Manager's decision to procure the
Services from a third party vendor the Services at least 120 days before
the end of the Initial Pricing Period or any subsequent three-year pricing
period and provide the third party vendor terms to Sprint Spectrum. Sprint
Spectrum will have 30 days from the date it receives the third party
vendor's terms to decide if it will provide those Services to Manager
under those terms.
Manager must agree to receive the Services from Sprint
Spectrum if Sprint Spectrum gives notice to Manager that it will provide
the Services to Manager on the third party vendor terms. If Sprint
Spectrum does not exercise its first right of refusal, Manager must sign
the agreement with the third party vendor on the same terms and conditions
as presented to Sprint Spectrum within 10 Business Days after Sprint
Spectrum notifies Manager of its decision not to exercise the first right
of refusal or the expiration of the 30-day period, whichever occurs first.
The procedure set forth in this section 3.2.3 will begin again if Manager
does not sign the agreement with the third party vendor as required in the
preceding sentence.
3.2.4 Transition and Continuing Operating Costs. Sprint
Spectrum will cooperate with Manager and work diligently and in good faith
to implement the transition to another service provider (including
Manager, if applicable), in a reasonably efficient and expeditious manner.
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
60
equipment to support those Services. Sprint Spectrum will bill Manager
monthly for these costs.
3.2.5 Settled-Separately Manager Expenses. Manager will pay to
or reimburse Sprint Spectrum for any amounts that Sprint Spectrum or its
Related Parties pays for Settled-Separately Manager Expenses.
"Settled-Separately Manager Expenses" means those items the parties choose
to settle separately between themselves (e.g. accessory margins,
reciprocal retail store cost recovery) that are listed in sections C and D
of Schedule 2.1.1.
Sprint Spectrum will give Manager at least 60 days' prior
written notice by providing an amended Schedule 2.1.1 to Manager in
accordance with the provisions of section 9.1 of any additional Services
added to sections C and D of Schedule 2.1.1, but no additional service may
be added to the extent it is the same as, or functionally equivalent to,
either:
(a) any service that Sprint Spectrum or any of its
Related Parties currently provides to Manager as a CCPU Service or a
CPGA Service (unless the fees payable by Manager to Sprint Spectrum
hereunder are correspondingly reduced) or
(b) any service or benefit that Manager currently
receives from Sprint Spectrum or its Related Parties but for which
Manager does not pay a separate fee before the Effective Date.
For each Settled-Separately Manager Expense, Sprint Spectrum will
provide sufficient detail to enable Manager to determine how the expense
was calculated, including the unit of measurement (e.g., per subscriber
per month or per call) and the record of the occurrences generating the
expense (e.g., the number of calls attributable to the expense). If an
expense is not reasonably subject to occurrence level detail, Sprint
Spectrum will provide reasonable detail on the process used to calculate
the fee and the process must be reasonable. A detail or process is
reasonable if it is substantially in the form as is customarily used in
the wireless industry. The Settled-Separately Manager Expenses will be
paid as set forth in section 10 of the Management Agreement. Sprint
Spectrum and its Related Parties may arrange for Manager to pay any of the
Settled-Separately Manager Expenses directly to the vendor after giving
Manager reasonable notice.
Unless Manager specifically agrees otherwise, any Settled-Separately
Manager Expense that Sprint Spectrum or any of its Related Parties is
entitled to charge or pass through to Manager under this agreement or the
Management Agreement will reflect solely out-of-pocket costs and expenses
that Sprint Spectrum or its Related Parties actually incur, will be
usage-based or directly related to revenue-generating products and
services, and will not include any allocation of Sprint PCS' or its
Related Parties' internal costs or expenses (including, but not limited
to, allocations of general and administrative expenses or allocations of
employee compensation or related expenses). For clarity, Sprint
61
Spectrum's or its Related Parties' out-of-pocket costs for handset and
accessory inventory consist of actual inventory invoice costs less any
volume incentive rebates and price protection credits that Sprint Spectrum
or its Related Parties receive from a vendor.
3.3 Late Payments. Any payment due under this section 3 that Manager
fails to pay to Sprint Spectrum in accordance with this agreement will
bear interest at the Default Rate beginning (and including) the 6th day
after the due date stated on the invoice until (and including) the date on
which the payment is made.
3.4 Taxes. Manager will pay or reimburse Sprint Spectrum for any
sales, use, gross receipts or similar tax, administrative fee,
telecommunications fee or surcharge for taxes or fees that a governmental
authority levies on the fees and charges that Manager pays to Sprint
Spectrum or a Related Party.
37. Audit [NEW]. 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, costs, expenses (including operating metrics referred
to in this agreement and the Services Agreement relating to or used in the
determination of Inter Service Area Fees, Reseller Customer Fees, CCPU
Services or CPGA Services) or other charges payable in connection with the
Service Area for the period audited. The party that requested the audit
may decide if the audit is conducted by the other party's independent or
internal auditors. Manager and Sprint Spectrum may each request no more
than one audit per year.
(a) If the audit shows that Sprint Spectrum was underpaid
then, unless the amount is contested, Manager will pay to Sprint
Spectrum the amount of the underpayment within 10 Business Days
after Sprint Spectrum gives Manager written notice of the
underpayment determination.
(b) If the audit determines that Sprint Spectrum was overpaid
then, unless the amount is contested, Sprint Spectrum will pay to
Manager the amount of the overpayment within 10 Business Days after
Manager gives Sprint Spectrum written notice of the overpayment
determination.
The auditing party will pay all costs and expenses related to the
audit unless the amount owed to the audited party is reduced by more than
10% or the amount owed by the audited party is increased by more than 10%,
in which case the audited party will pay the costs and expenses related to
the audit.
If either party disputes the auditor's conclusion then the dispute
will be submitted to binding arbitration in accordance with section 14.2
of the Management
62
Agreement, excluding the escalation process set forth in section 14.1 of
the Management Agreement.
Sprint PCS will provide a Type II Report to Manager annually. If
Manager, on the advice of its independent auditors or its legal counsel,
determines that a statute, regulation, rule, judicial decision or
interpretation, or audit or accounting rule, policy or literature
published by the accounting or auditing profession or other authoritative
rule making body (such as the Securities and Exchange Commission, the
Public Company Accounting Oversight Board or the Financial Accounting
Standards Board) requires additional assurances beyond SAS 70, then Sprint
Spectrum will cooperate with Manager to provide the additional assurances.
Sprint Spectrum's independent auditors will prepare any Type II Report or
Manager Management Report provided under this section 5.1.2 and will
provide an opinion on the controls placed in operation and tests of
operating effectiveness of those controls in effect at Sprint PCS over
Manager Management Processes. Sprint PCS or Sprint PCS' auditors will
provide information to Manager or Manager's auditors to perform analysis
procedures requested by Manager in accordance with this paragraph.
38. Emailing Notices [NEW]. Section 9.1 of the Services Agreement is
amended to read as follows:
9.1 Notices. Any notice, payment, invoice, demand or communication
required or permitted to be given by any provision of this agreement must
be in writing and mailed (certified or registered mail, postage prepaid,
return receipt requested), sent by hand or overnight courier, 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 the Administrative Agent or any Lender, and a copy
of any notice Manager gives to the Administrative Agent or any Lender.
Sprint Spectrum will promptly give Manager a copy of any notice that
Sprint Spectrum receives from the
63
Administrative Agent or any Lender and a copy of any notice that Sprint
Spectrum gives to the Administrative Agent or any Lender.
All notices and other communications given to a party in accordance
with the provisions of this agreement will be deemed to have been given
when received.
39. Force Majeure [NEW]. The second paragraph of section 9.8 of the
Services Agreement is amended to read as follows:
Neither Manager nor Sprint Spectrum, as the case may be, is in
breach of any covenant in this agreement and no Event of Termination will
occur as a result of the failure of such party to comply with 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;
40. Governing Law [Addm III, ss.2]]. Section 9.11 of the Services
Agreement is replaced with the following language:
9.11 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.
Trademark License Agreements
41. Marking: Compliance with Trademark Laws [Addm I, ss.29]. The following
sentence is added at the end of section 2.3 to both Trademark License
Agreements: "Licensor shall advise Licensee periodically as to the appropriate
designations for each Licensed Mark."
42. Ownership of Advertising Materials [Addm I, ss.29]. The first sentence
of section 11.5 of both Trademark License Agreements are amended to read as
follows: "All agreements entered into by Licensee with advertising agencies
shall provide that Licensor shall own all
64
advertising materials (including concepts, themes, characters and the like)
created or developed thereunder which incorporate the Licensed Marks."
43. Notices [NEW]. Section 15.1 of each of the Trademark License
Agreements is amended to read as follows:
Section 15.1. Notices. Any notice, payment, invoice, demand or
communication required or permitted to be given by any provision of this
agreement must be in writing and mailed (certified or registered mail,
postage prepaid, return receipt requested), sent by hand or overnight
courier, or sent by facsimile (with acknowledgment received), charges
prepaid and addressed as described in section 17.1(b) of the Management
Agreement, or to any other address or number as the person or entity may
from time to time specify by written notice to the other parties.
Any notice, demand or communication intended to be notice of a
breach of an agreement or notice of an Event of Termination must clearly
indicate that intent, state the section(s) of the agreements allegedly
breached, and be mailed or sent by overnight courier in the manner
described in the preceding paragraph.
Licensee will promptly give Licensor a copy of any notice Licensee
receives from any Administrative Agent or any Lender, and a copy of any
notice Licensee gives to any Administrative Agent or any Lender. Licensor
will promptly give Licensee a copy of any notice that Licensor receives
from the Administrative Agent or any Lender and a copy of any notice that
Licensor gives to the Administrative Agent or any Lender.
All notices and other communications given to a party in accordance
with the provisions of this agreement will be deemed to have been given
when received.
44. Governing Law and Jurisdiction [Addm III, ss.2]. (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.
(b) Section 15.13 of each of the Trademark License Agreements is replaced
by the following language:
15.13 Jurisdiction; Consent to Service of Process.
(a) Each party hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of any
Kansas State court sitting in the County of Johnson or any Federal court
of the United States of America sitting in the District of Kansas, and any
appellate court from any such
65
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
45. Deleted Definitions [NEW]. The definition of "Available Services is
deleted.
46. 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(f) of the Management Agreement.
"Allocated Write-offs" has the meaning set forth in section 10.3.4
of the Management Agreement. "Amended Exhibit 2.1" has the meaning set
forth in section 1 of Addendum III.
"Amount Billed (Net of Customer Credits)" has the meaning set forth
in section 10.3.3 of the Management Agreement.
"Away Network" means:
(i) any portion of the Sprint PCS Network other than Manager's
Service Area Network, in the case of Customers with an NPA-NXX
assigned to the Service Area (or any other such designation in
accordance with section 17.17 of the Management Agreement), and
66
(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 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.
"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.
"CSA" has the meaning set forth in section 10.2.1 of the Management
Agreement.
"Customer" means any customer, except Reseller Customers or
customers of third parties for which Manager provides solely switching
services, who purchases Sprint PCS Products and Services, regardless of
where their NPA-NXX is assigned.
"Customer Credits" has the meaning set forth in section 10.2.1 of
the Management Agreement.
"Customer Equipment Charges" has the meaning set forth in section
10.3.2.5 of the Management Agreement.
"Customer Equipment Credits" has the meaning set forth in section
10.3.2.2 of the Management Agreement.
"Customer-Related Services" has the meaning set forth in section
3.2.2 of the Services Agreement.
"Customer Taxes" means the amounts that Sprint PCS bills to Manager
Accounts for taxes, including, without limitation, federal, state, and
local sales, use, gross and excise tax.
67
"Effective Date" has the meaning set forth in the preamble of
Addendum V.
"Enterprise Value" means the combined book value of an entity's
outstanding debt and equity less cash.
"E911 Phase I Surcharges" means all costs related to Phase I E911
functionality.
"E911 Phase II Surcharges" has the meaning set forth in section
10.3.2.6 of the Management Agreement.
"ETC" has the meaning set forth in section 10.6.1 of the Management
Agreement.
"Fee Based on Billed Revenue" has the meaning set forth in section
10.2.1 of the Management Agreement.
"Gross Customer Additions in Manager's Service Area" means the
average number of Customers activated (without taking into consideration
the number of Customers lost) during the previous month with an NPA-NXX
assigned to the Service Area as reported in Sprint PCS' most recent
monthly KPI report.
"Initial 3G Data Fee Period" has the meaning set forth in section
10.4.1.3(a) of the Management Agreement.
"Initial Pricing Period" has the meaning set forth in section 3.2.1
of the Services Agreement.
"Inter Service Area Fee" has the meaning set forth in section 4.3 of
the Management Agreement.
"Investment Banker" has the meaning set forth in section 9.3.2 of
the Management Agreement.
"Manager Accounts" has the meaning set forth in section 10.2.1 of
the Management Agreement.
"Manager Management Process" has the meaning set forth in section
12.1.2 of the Management Agreement.
"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.
"Net Software Cost" means the amount paid by Sprint PCS to the
vendor directly associated with the Software used by Manager in the
Service Area for
68
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, and is limited to that proportionate amount
attributable to Manager.
"New Coverage" means the build-out in the Service Area that is in
addition to the build-out required under the then-existing Build-out Plan,
which build-out Sprint PCS or Manager decides should be built-out.
"NPA-NXX" means NPA-NXX or an equivalent identifier, such as a
network access identifier (NAI).
"Non-Capital Program Requirement Change" has the meaning set forth
in section 9.3.1(a) of the Management Agreement.
"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.
"Offered Spectrum" has the meaning set forth in section 17.15.5 of
the Management Agreement.
"Operating Assets" [Addm I, ss.28] means the assets Manager owns and
uses in connection with the operation of the Service Area Network, at the
time of termination, to provide the Sprint PCS Products and Services.
Operating Assets does not include items such as furniture, fixtures and
buildings that Manager uses in connection with other businesses. Operating
Assets includes any contracts or agreements between Manager and its
Related Parties that are necessary to operate the Service Area Network.
Operating Assets does not include any logos or trademarks registered to
Manager or its Related Parties or any rights of Manager that survive
termination of the agreement. Examples of Operating Assets include without
limitation: switches, towers, cell sites, systems, records and retail
stores.
"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.
"Program Requirement Change" means a change in a Program Requirement
issued by Sprint PCS in accordance with section 9.2 of the Management
Agreement.
"Real Property" has the meaning set forth in paragraph 1.7 of
Exhibit 11.8 to the Management Agreement.
"Related Party" means, with respect to any Person, any other Person
that directly or indirectly through one or more intermediaries controls,
is controlled by, or is under common control with the Person. For purposes
of the Management Agreement, Sprint
69
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, APC PCS, LLC, a Delaware limited liability
company, and Sprint Communications Company L.P., a Delaware partnership,
will be deemed to be Related Parties of Sprint PCS. For purposes of this
definition, the term "controls" (including its correlative meanings
"controlled by" and "under common control with") means the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise.
"Reseller Customer" means customers of companies or organizations
with a Private Label PCS Services or similar resale agreement with Sprint
PCS or Manager.
"Reseller Customer Fees" has the meaning set forth in section
10.4.1.1 of the Management Agreement.
"SCCLP" has the meaning set forth in section 3.4.2(b) of the
Management Agreement.
"Selected Services" means Services.
"Service Area Network" means the network that is directly required
for the provision of Sprint PCS Products and 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 Sprint PCS Products and Services and that are necessary in
Manager's provisioning of Sprint Products and Services in the Service Area
and includes, without limitation, software maintenance, updates,
improvements, upgrades and modifications to the software. "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.
70
"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.
"Spectrum Offer" has the meaning set forth in section 17.15.5 of the
Management Agreement.
"Sprint PCS" means any or all of the following Related Parties who
are License holders or signatories to the Management Agreement: Sprint
Spectrum L.P., a Delaware limited partnership, WirelessCo, L.P., a
Delaware limited partnership, SprintCom, Inc., a Kansas corporation,
PhillieCo Partners I, L.P., a Delaware limited partnership, PhillieCo,
L.P., a Delaware limited partnership, Sprint Telephony PCS, L.P., a
Delaware limited partnership, Sprint PCS License, L.L.C., a Delaware
limited liability company, American PCS Communications, LLC, a Delaware
limited liability company, and APC PCS, LLC, a Delaware limited liability
company. Any reference in the Management Agreement or Services Agreement
to Cox Communications PCS, L.P., a Delaware limited partnership, or Cox
PCS License, L.L.C., a Delaware limited liability company, is changed to
Sprint Telephony PCS, L.P., a Delaware limited partnership, or Sprint PCS
License, L.L.C., a Delaware limited liability company, respectively, to
reflect name changes filed with the Delaware Secretary of State in 2002.
"Sprint PCS ARPU" means the average revenue per user publicly
announced by Sprint PCS or its Related Parties for the most recent
calendar year. Sprint PCS ARPU is generally calculated by dividing
wireless service revenues by average wireless subscribers.
"Sprint PCS CCPU" means the cash cost per user publicly announced by
Sprint PCS or its Related Parties for the most recent quarter. Sprint PCS
CCPU is generally calculated by dividing costs of wireless service
revenues, service delivery and other general and administrative costs by
average wireless subscribers.
"Sprint PCS CPGA" means the cost per gross addition publicly
announced by Sprint PCS or its Related Parties for the most recent
quarter. Sprint PCS CPGA is calculated by dividing the aggregate costs of
acquiring new wireless subscribers, including equipment subsidies,
marketing costs and selling expenses, by gross additional subscribers.
"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.
71
"Subsidy Funds" has the meaning set forth in section 10.6.1 of the
Management Agreement.
"Transition Date" has the meaning set forth in section 10.12.3 of
the Management Agreement.
"3G Net Travel Amount" has the meaning set forth in section
10.4.1.3(b)(i)(A) of the Management Agreement.
"3G Standard Travel Rate" has the meaning set forth in section
10.4.1.3(a) of the Management Agreement.
"3G Travel Ratio" means an amount determined where the numerator is
the total billed kilobytes of use that Customers with an NPA-NXX that is
not assigned to the Service Area Network use the Service Area Network for
Inter Service Area 3G Data during a calendar month, calendar year or other
period and the denominator is total billed kilobytes of use that Customers
with an NPA-NXX assigned to the Service Area use a portion of the Sprint
PCS Network other than the Service Area Network for Inter Service Area 3G
Data for the same measured period.
"Type II Report" has the meaning set forth in section 12.1.2 of the
Management Agreement.
"USF Charges" has the meaning set forth in section 10.3.2.7 of the
Management Agreement.
"Vendor Software" has the meaning set forth in section 1.3.4(b) of
the Management Agreement.
"Voice and 2G Adjusted Travel Rates" has the meaning set forth in
section 10.4.1.2(b)(i)(A)of the Management Agreement.
"Voice and 2G Net Travel Amount" has the meaning set forth in
section 10.4.1.2(b)(ii)(A) of the Management Agreement.
"Voice and 2G Standard Travel Rates" has the meaning set forth in
section 10.4.1.2(a) of the Management Agreement.
"Voice and 2G Travel Ratio" means an amount determined where the
numerator is the total billed minutes of use that Customers with an
NPA-NXX that is not assigned to the Service Area Network use the Service
Area Network for Inter Service Area Voice and 2G Data during a calendar
month, calendar year or other period and the denominator is total billed
minutes of use that Customers with an NPA-NXX assigned to the Service Area
use a portion of the Sprint PCS Network other than the Service Area
Network for Inter Service Area Voice and 2G Data for the same measured
period.
72
"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.
73
B. Cross-references to Other Paragraphs in Previous Addenda.
Listed below are those paragraphs in the previous addenda that are
hereby deleted in their entirety.
Addendum I
8. Switching Charges
12. Deployment of Cellular by Manager's Related Parties
Listed below are those paragraphs in the previous addenda that are
interpretations or applications of the Management Agreement, the Services
Agreement, the Trademark License Agreements or the Schedule of Definitions 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
1. Ownership of Spectrum
6. Development and Purchase of Cell Sites
8. Switching Charges (Deleted by Addm V, B)
10. Branding and Retail Store Presentation
11. Use of Manager's PCS Licenses and GSM Assets
12. Deployment of Cellular by Manager's Related Parties (Deleted
by Addm V, B)
18. Regulatory Approvals for Transfers
27. Result of Services Agreement Breach
Addendum II
1. Transfer of Spectrum (Deleted by Addm IV, ss.1)
2. Counterparts
Addendum III
None
Addendum IV
1. Transfer of Spectrum - Deleted
2. NPA-NXX-X Transfer
3. Counterparts.
74
C. Other Provisions.
1. Manager and Sprint PCS' Representations. Manager and Sprint PCS each
represents and warrants that its respective execution, delivery and performance
of its obligations described in this Addendum have been duly authorized by
proper action of its governing body and do not and will not violate any material
agreements to which it is a party. Each of Manager and Sprint PCS also
represents and warrants that there are no legal or other claims, actions,
counterclaims, proceedings or suits, at law or in arbitration or equity, pending
or, to its knowledge, threatened against it, its Related Parties, officers or
directors that question or may affect the validity of this Addendum, the
execution and performance of the transactions contemplated by this Addendum or
that party's right or obligation to consummate the transactions contemplated by
this Addendum.
2. Reaffirmation of Sprint Agreements. Each of the undersigned reaffirms
in their entirety the Management Agreement, the Services Agreement and the
Trademark License Agreements, together with their respective rights and
obligations under those agreements.
3. Counterparts. This Addendum may be executed in one or more
counterparts, including facsimile counterparts, and each executed counterpart
will have the same force and effect as an original instrument as if the parties
to the aggregate counterparts had signed the same instrument.
[THE REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY.]
75
The parties have caused this Addendum V to be executed as of the date
first above written.
SPRINT SPECTRUM L.P.
By: /S/ David B. Bottoms
-----------------------------------
Name: David B. Bottoms
Title: VP Alliances
WIRELESSCO, L.P.
By: /S/ David B. Bottoms
-----------------------------------
Name: David B. Bottoms
Title: VP Alliances
APC PCS, LLC
By: /S/ David B. Bottoms
-----------------------------------
Name: David B. Bottoms
Title: VP Alliances
PHILLIECO, L.P.
By: /S/ David B. Bottoms
-----------------------------------
Name: David B. Bottoms
Title: VP Alliances
SPRINT COMMUNICATIONS COMPANY L.P.
By: /S/ Thomas E. Murphy
-----------------------------------
Name: Thomas E. Murphy
Title: Sr. VP Communications & Brand
Management
SHENANDOAH PERSONAL
COMMUNICATIONS COMPANY
By: /S/ Christopher E. French
-----------------------------------
Name: Christopher E. French
Title: President
76
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
---------------------
77
Schedule 2.1.1
-SECTION A-
Presently Offered CCPU Services - Activity Applied as % to Sprint PCS reported
CCPU
3G Fees
A/P Backhaul/Facility Disputes
Affiliate Utilities
ATM Soft Hand Off
Bank Fees
BI Performance Services - Initiation
BI Performance Services - Maintenance
Bid Cost
Billing
Check Free
Clarify Maintenance Fee
CO Usage
Collection Agency Fees
Conferences
Costs associated with rollout of new products and services
Credit Card Processing/Fees
Customer Care
Customer Solutions - Mature Life
Directory Assistance
DS3
E - Commerce PT
Enhanced Voicemail
Entrance Facility Expenses (Includes Terminating/Trunking Charge)
Ford Revenue
Ford Telematics
Gift Card Payable
Gift Card Receivable
Hal Riney Ad Kit
High Speed Remote Access Server
ICS Clearing House Costs (Includes Illuminet, Roaming Clearing House, and TSI)
IMT Charges
Interconnection
Inter-Machine Trunk
IT (Includes E-Commerce)
LD Verification
LIDB / CNAM
Local Loop, COC, ACF, IXC, etc. (National Platform Expense - Local Loop Cost,
Central Office Connection (COC), access Coordination Fee (ACF),
Co-Location Charges, and Inter Exchange Carrier (IXC) Charges)
Lockbox 261
MCI Disconnect Adjusted
National Platform - COA
National Platform Disputes
National Platform (2G) (Includes Voice Activated Dialing)
78
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
79
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
80
-SECTION B-
Presently Offered CPGA Services - Activity Applied as % to Sprint PCS reported
CPGA
500 Minute Promotion Credit
Activations - Customer Solutions
Activations - E-Commerce (Includes On Line (Web) Activations)
Activations - Telesales
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 Spiffs
Accessory Margin
Commissions - National 3rd Party
Commissions - Other 3rd Party
Coop Advertising - Local 3rd Party
Coop Advertising - National 3rd Party
Handset returns
81
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
82