ADDENDUM VI
TO
SPRINT PCS MANAGEMENT AGREEMENT AND
SPRINT PCS SERVICES AGREEMENT
AMENDING THESE AGREEMENTS FURTHER AND RESTATING CERTAIN
PARAGRAPHS IN ADDENDA I THROUGH V
DATED AS OF SEPTEMBER 12, 2003
MANAGER: WASHINGTON OREGON WIRELESS, LLC
SERVICE AREA BTAS:
Bend, OR # 38
Coos Bay-North Bend, OR # 97
Kennewick-Pasco-Richland, WA #228
Medford-Grants Pass, OR #000
Xxxxxxx Xxxxx, XX # 000
Xxxxxxxx, XX # 000
Xxxxx Xxxxx, XX-Xxxxxxxxx, XX # 000
Xxxxxxxxx, XX # 000
Xxxxxx, XX # 482
Columbia River Gorge, OR # 358
This Addendum VI (this "ADDENDUM") contains amendments to the terms of
the Sprint PCS Management Agreement and the Sprint PCS Services Agreement, both
of which were entered into on January 25, 1999 by the same parties to this
Addendum. The Management Agreement and Services Agreement were amended by:
(1) Addendum I dated as of January 25, 1999,
(2) Addendum II dated as of April 12, 2000,
(3) Addendum III dated as of February 14, 2001,
(4) Addendum IV dated as of March 30, 2001, and
(5) Addendum V dated as of July 19, 2002.
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).
-1-
The terms and provisions of this Addendum control over any conflicting
terms and provisions contained in the Management Agreement, the Services
Agreement, the Trademark License Agreements and the Schedule of Definitions. The
Management Agreement, the Services Agreement, the Trademark License Agreements,
the Schedule of Definitions and all prior addenda continue in full force and
effect, except for express modifications made in this Addendum. This Addendum
does not change the effective date of any prior amendment made to the Management
Agreement, the Services Agreement, the Trademark License Agreements and the
Schedule of Definitions through previously executed addenda.
Capitalized terms used and not otherwise defined in this Addendum have
the meaning ascribed to them in the Schedule of Definitions, as amended, and
additional terms defined in prior addenda. Section and Exhibit references are to
sections and Exhibits of the Management Agreement unless otherwise noted.
The parties are executing this Addendum as of the date noted
above, but the terms of this Addendum do not become effective until the first
calendar day of the first calendar month after all of the following conditions
are satisfied or waived by Sprint PCS in writing:
(1) The Settlement Agreement and Mutual Release between Sprint Spectrum
L.P., SprintCom, Inc., Sprint Communications Company L.P., WirelessCo, L.P.,
Alamosa Holdings, Inc., Alamosa (Delaware), Inc., Alamosa Holdings, LLC, Alamosa
Missouri, LLC (f/k/a Xxxxxxx Wireless Communications, LLC), Southwest PCS, L.P.,
Washington Oregon Wireless LLC, Alamosa Wisconsin Limited Partnership and Texas
Telecommunications, LP is executed and delivered, and the payment required under
that agreement is paid and received.
(2) The following addenda, each dated September 12, 2003, are executed
and delivered to Sprint PCS and the appropriate Alamosa Managers:
o Alamosa Missouri, LLC Addendum X,
o Alamosa Wisconsin Limited Partnership Addendum IX,
o Southwest PCS, L.P. Addendum V,
o Texas Telecommunications, LP Addendum X, and
o Washington Oregon Wireless LLC Addendum VI.
(3) Alamosa Holdings, Inc. and Alamosa (Delaware), Inc. consummate the
Exchange Offer, the Proposed Amendments and the amendment of the terms of the
Senior Secured Credit Facility, all as described in the Offer to Exchange of
Alamosa Holdings, Inc. and Alamosa (Delaware), Inc.
-2-
A. NEW AMENDMENTS AND RESTATEMENT OF PREVIOUS AMENDMENTS TO SPRINT PCS
AGREEMENTS.
MANAGEMENT AGREEMENT
1. VENDOR PURCHASE AGREEMENTS - SOFTWARE FEES [NEW]. Section 1.3 is
amended to read as follows:
Insert: "1.3.1 DISCOUNTED VOLUME-BASED PRICING." before the first
paragraph.
Insert: "1.3.2 SUBSCRIBER AND INFRASTRUCTURE EQUIPMENT." before the
second paragraph.
Insert: "1.3.3 EXCLUSIVE USE." before the third paragraph.
Add a new section 1.3.4 as follows:
1.3.4 SOFTWARE FEES.
(A) MANAGER ACKNOWLEDGES THAT (I) IT CURRENTLY HAS AN INDEPENDENT
LICENSING ARRANGEMENT FOR SOFTWARE IN EFFECT ON THE DATE OF THIS
ADDENDUM THAT CONTINUES SO LONG AS MANAGER IS AN AFFILIATE OF SPRINT
PCS, (II) SUCH INDEPENDENT LICENSING ARRANGEMENT DOES NOT NECESSARILY
EXTEND TO FUTURE IMPROVEMENTS UPON OR EXPANSIONS OF SUCH SOFTWARE, OR
INCLUDE ANY NEW SOFTWARE DEVELOPED BY OR FOR SPRINT PCS IN CONNECTION
WITH PROGRAM REQUIREMENTS AND (III) SPRINT PCS ADMINISTERS THE TESTING
AND IMPLEMENTATION OF THE SOFTWARE INTO THE SERVICE AREA NETWORK.
(B) SPRINT PCS WILL USE COMMERCIALLY REASONABLE EFFORTS TO OBTAIN
A LICENSE PROVIDING FOR THE RIGHT OF MANAGER TO USE THE SOFTWARE
(CURRENTLY EXISTING OR DEVELOPED IN THE FUTURE) OR TO USE THE
IMPROVEMENTS UPON OR EXPANSIONS OF THE EXISTING OR NEWLY DEVELOPED
SOFTWARE FROM VENDORS IN CONNECTION WITH A TELECOMMUNICATIONS EQUIPMENT
PURCHASE AGREEMENT THAT IS NOT COVERED BY MANAGER'S EXISTING LICENSES
(COLLECTIVELY FOR PURPOSES OF THIS SECTION 1.3.4, THE "VENDOR
SOFTWARE").
(C) MANAGER WILL ARRANGE INDEPENDENTLY WITH THE VENDOR TO OBTAIN A
LICENSE IF SPRINT PCS CANNOT REASONABLY OBTAIN A LICENSE FOR MANAGER.
ANY LICENSE OBTAINED BY MANAGER
-3-
FROM A VENDOR MUST REQUIRE THE VENDOR SOFTWARE TO BE TESTED IN SPRINT
PCS TEST BEDS BY SPRINT PCS AND REQUIRE SPRINT PCS TO PUSH THE SOFTWARE
TO THE SERVICE AREA NETWORK, NOT THE VENDOR OR MANAGER, UNLESS
OTHERWISE CONSENTED TO IN ADVANCE BY SPRINT PCS IN WRITING.
(D) SPRINT PCS WILL PAY ALL SOFTWARE FEES TO THE VENDOR IF SPRINT
PCS OBTAINS A LICENSE FROM THE VENDOR THAT PROVIDES MANAGER THE RIGHT
TO USE THE VENDOR SOFTWARE AND SPRINT PCS REASONABLY EXPECTS MANAGER TO
PAY ITS ALLOCABLE SOFTWARE FEE.
(E) SPRINT PCS WILL NOTIFY MANAGER IN WRITING AT LEAST 60 DAYS
BEFORE (I) THE DATE OF AN AUTOMATIC RENEWAL OF OR UNILATERAL ACT OF
SPRINT PCS TO RENEW OR EXTEND AN AGREEMENT THAT PROVIDES SPRINT PCS THE
RIGHT TO USE THE VENDOR SOFTWARE OR (II) SPRINT PCS INTENDS TO START
NEGOTIATIONS WITH A VENDOR REGARDING PRICING OR OTHER MATERIAL TERMS
RELATING TO MANAGER'S RIGHT TO USE THE VENDOR SOFTWARE (WHETHER FOR NEW
SOFTWARE OR RENEWAL OF AN EXISTING LICENSE). MANAGER MUST NOTIFY SPRINT
PCS IN WRITING WITHIN 30 DAYS AFTER RECEIVING THE NOTICE DESCRIBED IN
THE PRECEDING SENTENCE IF MANAGER WANTS SPRINT PCS TO ATTEMPT TO OBTAIN
A RIGHT FOR MANAGER TO USE THE VENDOR SOFTWARE. SPRINT PCS WILL RENEW
OR NEGOTIATE THE AGREEMENT AS IF MANAGER WILL NOT BE A USER OF THE
VENDOR SOFTWARE IF MANAGER DOES NOT PROVIDE NOTICE TO SPRINT PCS WITHIN
THE 30-DAY PERIOD. HOWEVER, SPRINT PCS MAY OBTAIN PRICING FROM THE
VENDOR FOR THE VENDOR SOFTWARE THAT INCLUDES MANAGER AS A USER AS LONG
AS OBTAINING THE PRICING DOES NOT OBLIGATE MANAGER TO BE A USER.
SPRINT PCS WILL ADVISE MANAGER FROM TIME TO TIME OF THE STATUS OF
THE SOFTWARE NEGOTIATIONS IF MANAGER REQUESTED SPRINT PCS TO OBTAIN OR
CONTINUE THE RIGHT FOR MANAGER TO USE THE VENDOR SOFTWARE UNDER SPRINT
PCS' AGREEMENT WITH THE VENDOR. SPRINT PCS WILL GIVE MANAGER NOTICE OF
THE FINAL PRICING FOR THE RIGHT TO USE THE VENDOR SOFTWARE A REASONABLE
TIME BEFORE THE EXPECTED EXECUTION OR RENEWAL OF THE AGREEMENT. MANAGER
MAY GIVE SPRINT PCS NOTICE BY THE TIME SET FORTH IN SPRINT PCS' NOTICE
TO MANAGER (WHICH TIME WILL NOT BE LESS THAN 10 BUSINESS DAYS) THAT
MANAGER DOES NOT INTEND TO USE THE VENDOR SOFTWARE THROUGH THE
AGREEMENT BETWEEN SPRINT PCS AND THE VENDOR. IF MANAGER DOES NOT GIVE
THIS FINAL NOTICE TO SPRINT PCS, MANAGER
-4-
WILL BE DEEMED TO AGREE TO BE A USER OF THE VENDOR SOFTWARE THROUGH THE
AGREEMENT BETWEEN SPRINT PCS AND THE VENDOR AND WILL PAY THE ALLOCABLE
SOFTWARE FEE.
(F) MANAGER WILL PAY SPRINT PCS A FEE FOR SPRINT PCS'
ADMINISTRATION AND IMPLEMENTATION OF THE VENDOR SOFTWARE AND MANAGER'S
RIGHT TO USE THE VENDOR SOFTWARE ("ALLOCABLE SOFTWARE FEE") WITHIN 30
DAYS AFTER RECEIPT OF AN INVOICE IF MANAGER HAS NOT TAKEN THE ACTION
DESCRIBED IN THE PREVIOUS PARAGRAPHS AND SPRINT PCS OBTAINS A LICENSE
PROVIDING FOR THE RIGHT OF MANAGER TO USE THE VENDOR SOFTWARE. SPRINT
PCS WILL XXXX THE MANAGER ONLY AFTER SPRINT PCS PAYS THE UNDERLYING
SOFTWARE FEE TO THE VENDOR. SPRINT PCS WILL CALCULATE THE ALLOCABLE
SOFTWARE FEE AS FOLLOWS:
FOR EACH SOFTWARE VENDOR, MULTIPLY (I) THE SOFTWARE FEES
ATTRIBUTABLE TO THE VENDOR SOFTWARE AND FOR WHICH SPRINT PCS HAS
OBTAINED FOR ITSELF, MANAGER AND OTHER MANAGERS A LICENSE OR OTHER
RIGHT TO USE BY (II) THE QUOTIENT OF (A) THE NUMBER OF CUSTOMERS
AND SPRINT PCS RESELLER CUSTOMERS WITH AN NPA-NXX ASSIGNED TO THE
SERVICE AREA THAT ARE ASSIGNED TO A SYSTEM USING THE VENDOR
SOFTWARE, AS REPORTED IN THE MOST RECENT MONTHLY REPORT ISSUED BY
SPRINT PCS BEFORE THE DATE THAT SPRINT PCS PREPARES AN ALLOCABLE
SOFTWARE FEE INVOICE, DIVIDED BY (B) THE NUMBER OF CUSTOMERS AND
SPRINT PCS RESELLER CUSTOMERS THAT ARE ASSIGNED TO A SYSTEM USING
THE VENDOR SOFTWARE, AS REPORTED IN THE MOST RECENT MONTHLY REPORT
ISSUED BY SPRINT PCS BEFORE THE DATE THAT SPRINT PCS PREPARES AN
ALLOCABLE SOFTWARE FEE INVOICE.
(G) SPRINT PCS WILL INCLUDE WITH THE INVOICE FOR THE ALLOCABLE
SOFTWARE FEE A LIST OF THE COMPONENT CHARGES, IF DETERMINABLE. THE
SOFTWARE FEES PAID BY SPRINT PCS TO THE VENDOR WILL REFLECT COMMERCIAL
RATES NEGOTIATED AT ARMS' LENGTH. FOR PURPOSES OF CLARIFICATION, THE
PARTIES ACKNOWLEDGE THE VENDOR MAY INSIST ON A COMPREHENSIVE FEE
WITHOUT LISTING EACH COMPONENT, BUT RATHER ASSERT THE FEE COVERS ALL
SOFTWARE NECESSARY TO OPERATE THE EQUIPMENT.
-5-
(H) MANAGER WILL NOT BE CHARGED THE ALLOCABLE SOFTWARE FEE FOR
THAT VENDOR SOFTWARE IF MANAGER (I) NOTIFIES SPRINT PCS IN WRITING
WITHIN THE PERIOD ALLOWED THAT MANAGER DECLINES TO HAVE SPRINT PCS
OBTAIN A RIGHT FOR MANAGER TO USE THE VENDOR SOFTWARE OR GIVES FINAL
NOTICE TO SPRINT PCS THAT IT DOES NOT INTEND TO USE THE VENDOR
SOFTWARE, (II) OBTAINS ITS OWN LICENSE PROVIDING FOR MANAGER'S RIGHT TO
USE THE VENDOR SOFTWARE, AND (III) COMPLIES WITH THE REQUIREMENTS OF
SECTION 1.3.4(I).
(I) MANAGER WILL OBTAIN ITS OWN LICENSE PROVIDING FOR MANAGER'S
RIGHT TO USE THE VENDOR SOFTWARE FROM THE VENDOR IF MANAGER ELECTS NOT
TO HAVE SPRINT PCS ATTEMPT TO OBTAIN A RIGHT FOR MANAGER TO USE THE
VENDOR SOFTWARE UNDER SECTION 1.3.4(E). MANAGER WILL NOTIFY SPRINT PCS
IN WRITING AND DELIVER TO SPRINT PCS WITHIN 10 DAYS AFTER MANAGER'S
EXECUTION OF MANAGER'S SEPARATE LICENSE, A SIGNED DOCUMENT FROM THE
VENDOR CONFIRMING THAT (A) THE VENDOR HAS PROVIDED MANAGER A SEPARATE
LICENSE FOR THE VENDOR SOFTWARE AND THE TERM OF THAT LICENSE, WHICH
TERM WITH APPROPRIATE RENEWAL RIGHTS, MUST BE AT LEAST AS LONG AS THE
LICENSE SPRINT PCS HAS FROM THE VENDOR, (B) THE FEES PAID BY MANAGER TO
THE VENDOR REFLECT COMMERCIAL RATES NEGOTIATED AT ARMS' LENGTH, (C) THE
VENDOR SOFTWARE COVERED BY MANAGER'S LICENSE PROVIDES THE SAME USAGE
AND FUNCTIONALITY FOR ALL OF THE SAME NETWORK ELEMENTS AS SPRINT PCS'
LICENSE, AND (D) THE VENDOR SOFTWARE MAY BE TESTED IN SPRINT PCS TEST
BEDS BY SPRINT PCS AND WILL BE PUSHED TO THE SERVICE AREA NETWORK BY
SPRINT PCS, NOT THE VENDOR OR MANAGER, UNLESS OTHERWISE CONSENTED TO IN
ADVANCE IN WRITING BY SPRINT PCS.
2. INTERCONNECTION [NEW]. SECTION 1.4 IS AMENDED TO READ AS FOLLOWS:
IF MANAGER DESIRES TO INTERCONNECT A PORTION OF THE SERVICE AREA
NETWORK WITH ANOTHER CARRIER AND SPRINT PCS CAN INTERCONNECT WITH THAT
CARRIER AT A LOWER RATE, THEN TO THE EXTENT PERMITTED BY APPLICABLE LAWS,
TARIFFS AND AGREEMENTS, SPRINT PCS WILL ARRANGE FOR THE INTERCONNECTION
UNDER ITS AGREEMENTS WITH THE CARRIER AND IF IT DOES SO, SPRINT PCS WILL
XXXX THE INTERCONNECTION FEES TO MANAGER AT ACTUAL COST.
3. FORECASTING [NEW]. Section 1.6 is amended to read as follows:
1.6 FORECASTING. Manager and Sprint PCS will work cooperatively to
generate mutually acceptable forecasts of important
-6-
business metrics agreed upon by Manager and Sprint PCS. The forecasts
are for planning purposes only and do not constitute either party's
obligation to meet the quantities forecast.
4. REVISED FINANCING PLAN [NEW]. Exhibit 1.7 attached to this Addendum
supersedes and replaces Exhibit 1.7 attached to Addendum IV to the Management
Agreement.
5. INFORMATION [NEW]. A new section 1.9 is added to the Management
Agreement.
1.9 ACCESS TO INFORMATION.
1.9.1 MANAGER EQUIPMENT. Manager and Sprint PCS will have
unfettered access to, and may monitor, record, or otherwise receive,
information processed through equipment, including switches, in the
Service Area Network, if the access, monitoring, recording or receipt
of the information is accomplished in a manner that:
(i) Does not unreasonably impede Manager or Sprint PCS from
accessing, monitoring, recording or receiving the information;
(ii) Does not unreasonably encumber Manager's or Sprint PCS'
operations;
(iii) Does not unreasonably threaten the security of the
Sprint PCS Network;
(iv) Does not violate any law regarding the information;
(v) Complies with technical requirements applicable to the
Service Area Network;
(vi) Does not adversely affect any warranty benefiting
Manager or Sprint PCS (e.g., software warranties); and
(vii) With respect to the information processed through
Manager's equipment, including its switches, does not result in a
material breach of any agreement regarding the information (e.g.,
national security agreements).
Sprint PCS and Manager will immediately notify the other
party and cooperate to establish new procedures for allowing both
Manager and Sprint PCS to access, monitor, record and receive the
information in a manner that meets the criteria in (i) through (vii) if
either
-7-
Manager or Sprint PCS reasonably determines that either Manager or
Sprint PCS is accessing, monitoring, recording or receiving the
information described in this section 1.9.1 in a manner that does not
meet the criteria in (i) through (vii). Manager owns the information
regarding the performance of its equipment. Each of Manager and Sprint
PCS may use the information obtained under this section 1.9.1 for any
reasonable business purpose, during and after termination of this
agreement, the Services Agreement and the Trademark License Agreements
provided the use would be in accordance with those agreements if those
agreements were still in effect.
1.9.2 SPRINT PCS INFORMATION. Manager will be entitled to receive
information Sprint PCS accesses, monitors, records or receives
concerning the Service Area Network or the Sprint PCS customers with
NPA-NXXs assigned to Manager's Service Area, subject to Manager's
compliance with CPNI requirements and any other legal requirements
applicable to the confidentiality and safeguarding of such information.
Sprint PCS will use commercially reasonable efforts to provide the
information in the format requested by Manager at no additional charge
to Manager within 5 Business Days after receipt of a written request
from Manager if the information requested by Manager is accessed,
monitored, recorded, received, or reported by Sprint PCS specific to
Manager for Sprint PCS' own use in the same manner and format as that
requested by Manager.
Sprint PCS will use commercially reasonable efforts to provide the
information in the format requested by Manager within 15 Business Days
after receipt of a written request from Manager if the information
requested by Manager is accessed, monitored, recorded, received, or
reported by Sprint PCS for its own use, but not in the same manner or
format requested by Manager and if Manager agrees to pay or reimburse
Sprint PCS for the costs Sprint PCS reasonably incurs. Sprint PCS will
use commercially reasonable efforts to provide the requested
information as raw data (subject to the conditions in this section
1.9.2 and section 1.9.3) within 15 Business Days after receipt of a
written request from Manager if the information requested by Manager is
accessed, monitored, recorded, received, or reported by Sprint PCS for
its own use, but not in the same manner or format requested by Manager,
and if Sprint PCS cannot provide the information as described in the
preceding sentence.
Sprint PCS has no obligation to access, monitor, record, receive,
or report the information requested by Manager if the information
-8-
is not accessed, monitored, recorded, received, or reported by Sprint
PCS for its own use.
Sprint PCS owns the information regarding the Customers. Each of
Manager and Sprint PCS may use the information obtained under this
section 1.9.2 during and after termination of this agreement, the
Services Agreement and the Trademark License Agreements provided the
use would be in accordance with those agreements if those agreements
were still in effect.
1.9.3 LIMITATIONS AND Obligations. Sprint PCS does not have to
provide any information requested by Manager that: (i) Manager can
obtain itself in accordance with section 1.9.1 (unless Sprint PCS
already has such information in its possession and has not previously
delivered it to Manager); (ii) is no longer maintained by Sprint PCS;
or (iii) Manager has already received from Sprint PCS or its Related
Parties. Sprint PCS will provide Manager a copy of the then-current
Sprint PCS document retention policy from time to time.
1.9.4 CONTRACTS. Sprint PCS will disclose to Manager the relevant
terms and conditions of any agreement between Sprint PCS and any third
party (i) with which Manager is required to comply, directly or
indirectly, pursuant to the Management Agreement, the Services
Agreement or any Program Requirement or (ii) from which Manager is
entitled to any benefit; in each case in sufficient detail to enable
Manager to determine the obligations or benefits with which Manager is
required to comply or benefit. Sprint PCS will provide a copy of such
agreement to Manager to the extent permissible by the terms of the
agreement. Sprint PCS will allow Manager or its representatives to
review a copy of the agreement to the extent permissible by the
agreement if the agreement prohibits Sprint PCS from providing Manager
a copy. Sprint PCS will satisfy the requirements of this section 1.9.4
if it chooses to provide a copy of the agreement in electronic form on
a server designated by Sprint PCS.
6. MOST FAVORED NATION [NEW]. A new section 1.10 is added to the
Management Agreement:
1.10 SUBSEQUENT AMENDMENTS TO OTHER MANAGERS' MANAGEMENT
AGREEMENTS AND SERVICES AGREEMENTS. Manager has the right to amend the
terms in its Management Agreement and Services Agreement as described
in this section 1.10 if during the period beginning on the date of this
Addendum and ending December 31, 2006, any of the terms of a Similarly
Situated Manager's Management Agreement or Services Agreement are
amended to be more favorable to such Similarly Situated Manager than
the terms of Manager's Management Agreement or Services Agreement are
to Manager, subject to the following:
-9-
(a) All Alamosa Managers must elect to accept all, but not less
than all, of the terms of the Similarly Situated Manager's Management
Agreement and Services Agreement (including accepting existing terms
that relate to the changes or terms that were previously changed and
not previously accepted by Manager but which remain a part of the
latest version of the Similarly Situated Manager's agreement)
(collectively, "OVERALL CHANGES"); and
(b) No changes will be made that are made for a Similarly Situated
Manager if such changes are either (i) made solely because the
Similarly Situated Manager owns the spectrum on which its network
operates, unless the Similarly Situated Manager acquired such spectrum
from Sprint PCS or its Related Parties after September 1, 2003, (ii)
compelled by a law, rule or regulation that applies to the Similarly
Situated Manager, but not to Manager, or (iii) build-out plan changes.
Sprint PCS will prepare and deliver to Manager either a redacted
addendum containing the cumulative changes made to the Similarly Situated
Manager's agreements in all of its addenda or redacted copies of the
Similarly Situated Manager's amended and restated Management Agreement,
Services Agreement and Trademark License Agreements within 10 business days
after the effective date of the amendment or other instrument containing
such changes. Manager then has 30 days to notify Sprint PCS that Manager
wants the Overall Changes.
No changes will be made in the agreements between Manager and Sprint
PCS if Manager does not notify Sprint PCS in the time specified and Manager
will be deemed to have waived its rights under this section 1.10 with
respect to the changes contained in the addendum or the agreements
presented.
Sprint PCS will prepare, execute and deliver to all Alamosa Managers
addenda reflecting the Overall Changes in the redacted addendum or
agreements if Manager notifies Sprint PCS within the time specified. The new
addenda will have the same effective date as the addendum or the restated
Management Agreement, Services Agreement and Trademark License Agreements
between Sprint PCS and the Similarly Situated Manager that gave rise to the
new addendum.
No changes will be made in the agreements between the Alamosa Managers
and Sprint PCS if any Alamosa Manager does not execute and return the signed
addendum within 30 days after receipt of the signed addendum and Manager
will be deemed to have waived its rights under this section 1.10 with
respect to the changes contained in the addendum presented; except that if
Manager and Sprint PCS disagree as to whether the terms of the signed
addendum accurately reflect the Overall Changes, then the parties will
submit the issue to binding arbitration in accordance
-10-
with section 14.2, excluding the escalation process set forth in section
14.2. If the arbiter rules in favor of Manager, then Sprint PCS will make
changes to the signed addendum as are necessary to reflect the arbiter's
ruling and submit the revised signed addendum to Manager within 10 days
after receipt of the arbiter's ruling. If the arbiter rules in favor of
Sprint PCS, then Manager will execute the signed addendum as proffered to
Manager within 10 days after Manager's receipt of the arbiter's ruling.
The parties acknowledge that Sprint PCS can disclose to Manager who the
Similarly Situated Manager is that gave rise to the proposed addendum only
if the Similarly Situated Manager agrees to the disclosure.
7. MODIFICATION OF BUILD-OUT PLAN [ADDM V, (Section)1]. The Exhibit 2.1
Build-Out Plan Table and Build-Out Plan Map is hereby superseded and replaced by
the Exhibit 2.1 Build-Out Plan Table and Build-Out Plan Map attached to
Addendum V.
8. CONTINGENT COVERAGE AREAS [ADDM V,(SECTION)2]. Section 2.1 is
supplemented with the following language:
(a) Description of Contingent Coverage Areas. Manager is not
required to build-out the following partial BTA:
(i) Coverage in XX Xxxxxxx 0 xx XX Xxxxxxx 00 interchange near
Leavenworth, Washington from the original build commitment
for Wenatchee, Washington BTA to the Seattle-Tacoma,
Washington BTA border (the "LEAVENWORTH CONTINGENT COVERAGE
AREA").
(ii) Coverage along US Highway 395 within Kennewich-Pasco-Richland
BTA at I-90 interchange northeast to Spokane, Washington BTA
border (the "KPR CONTINGENT COVERAGE AREA").
(b) Build-out and Operational and Network Readiness.
(i) If Sprint PCS sends notice to Manager of a commitment to
build-out along US Highway 2 in the Seattle-Tacoma,
Washington BTA, to the Wenatchee, Washington BTA border,
Manager will have nine (9) [FOURTEEN (14)] months from the
date the Manager receives the notice to build-out and achieve
"Operational and Network Readiness," as defined below, for
the Leavenworth Contingent Coverage Area.
(ii) If Sprint PCS sends notice to Manager of a commitment to
build-out along US Highway 395 in the Spokane, Washington
BTA, Manager will have nine (9) [FOURTEEN (14)] months from
the date the Manager receives the notice
-11-
to build-out and achieve "Operational and Network Readiness,"
as defined below, for the KPR Contingent Coverage Area.
"OPERATIONAL AND NETWORK READINESS" and "OPERATIONAL AND NETWORK
READY" mean that the Manager has (i) met all Program Requirements
(which includes, but is not limited to, completion of test plans,
coverage definition, assessment of site readiness, network optimization
and operational and systems readiness) and (ii) received Sprint PCS's
approval to launch each of the cell sites within the particular
Contingent Coverage Area.
9. EXCLUSIVITY OF SERVICE AREA [ADDM III,(SECTION)5]. In section 2.3
and the Schedule of Definitions, the phrase "wireless mobility communications
network" is replaced by the phrase "Wireless Mobility Communications Network".
10. COVERAGE ENHANCEMENT [ADDM I,(SECTION)2]. Section 2.5 is
supplemented with the following language:
Sprint PCS hereby confirms that Manager will be required to
build-out New Coverage in the Service Area under this section 2.5 only
to the extent that each cell will provide radio frequency coverage for
a minimum of 10,000 covered pops per cell site and provide for coverage
for all interstate and major highways.
Manager will not be required under this section 2.5 to build
coverage of lesser density than 10,000 covered pops per cell site until
the adoption of less dense build-out requirements under and pursuant to
the terms of section 2.5.
The following cities (i) have been identified as meeting this
build-out requirement of greater than 10,000 pops per cell site as of
the signing of this Agreement, (ii) are the only cities in the Service
Area not included in the initial Build Plan Exhibit 2.1 that meet this
build-out requirement, and (iii) will be exempted from this section 2.5
build-out requirement until January 1, 2003:
CITY POPULATION BTA
---- ---------- ---
La Grande TBD 460
This is also to confirm that the highway coverage to be built by
Manager as provided for in Exhibit 2.1 of the Management Agreement
meets the interstate and major highway coverage requirements as
required under this section 2.5.
-12-
11. IXC RATES [NEW]. Section 3 of Addendum I and section 5 of Addendum
II are deleted. Additionally, section 3.4 of the Management Agreement is amended
to read as follows:
3.4 IXC SERVICES.
3.4.1. CUSTOMER LONG DISTANCE. Sprint PCS and Manager will from
time to time mutually define local calling areas in the Service Areas
of Manager to be used by Sprint PCS and Manager in determining when a
customer will be billed for a "long distance call" under the applicable
rate plan of the Customer. The parties acknowledge that these local
calling areas (i) may change in geographic scope in response to
competitive pressures or perceived market opportunities, and (ii) may
not be able to be changed because of regulatory, industry, or system
limitations. The local calling areas will not be used by the parties to
determine "long distance telephony services" under section 3.4.2. If
the parties cannot agree on the extent of the local calling area they
will resolve the matter through the dispute resolution process in
section 14.
3.4.2. LONG DISTANCE SERVICES
(a) Required purchase. Manager must obtain (i) long-distance
telephony services through Sprint PCS or its Related Parties to provide
long-distance service to users of the Sprint PCS Network and (ii)
telephony services through Sprint PCS or its Related Parties to connect
the Service Area Network with the national platforms used by Sprint PCS
to provide services to Manager under this agreement or the Services
Agreement. The term "long distance telephony service" means any
inter-LATA call for purposes of this section 3.4.2 as it relates to
long-distance telephony services provided to users of the Sprint PCS
Network.
(b) Pricing and procedure. Sprint PCS will purchase long-distance
telephony services used in the Sprint PCS Network from Sprint
Communications Company L.P. or its Related Parties ("SCCLP") for Sprint
PCS, Manager and Other Managers. Sprint PCS will purchase the
long-distance telephony services at a price at least as favorable to
Sprint PCS, Manager, and the Other Managers (considering Sprint PCS,
Manager and the Other Managers as a single purchaser) as the best
prices offered by SCCLP to any wholesale customer of SCCLP in similar
situations when taking into account all relevant factors (e.g., volume,
peak/off-peak usage, length of commitment). Sprint PCS will pay the
invoice from SCCLP, except for items directly billed by SCCLP under
section 3.4.2(c). Sprint PCS will xxxx 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 Sprint PCS
-13-
Reseller Customers in the Service Area, except for items directly
billed by SCCLP under section 3.4.2(c). Sprint PCS and SCCLP will
clarify pricing if the PCS Group is no longer a separately tracked
group covered by a tracking stock of Sprint Corporation.
(c) Call routing. Manager, or the Alamosa Managers acting as a
single purchaser, may purchase private line capacity (or other forms of
capacity) from SCCLP for inter-LATA calls to the extent that such
capacity can be obtained on terms more favorable to Manager (or the
Alamosa Managers as a single purchaser). SCCLP will sell that capacity
to Manager at the best price offered by SCCLP to third parties in
similar situations when taking into account all relevant factors. SCCLP
will directly xxxx Manager for any purchase of capacity under this
section 3.4.2(c). The terms of section 1.3 do not apply to purchases of
capacity in this section 3.4.2(c).
(d) Pre-existing agreement. If before the date Addendum VI 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 VI, then the
requirements of this section 3.4.2 do not apply during the term of the
other agreement. If the other agreement terminates for any reason, then
the requirements of this section 3.4.2 do apply.
(e) Resale. Manager may not resell the long-distance telephony
services acquired under this section 3.4.2. For purposes of
clarification, resale under this section 3.4.2(e) includes Manager
selling minutes to carriers for ultimate resale to end users under a
brand other than "Sprint" or selling minutes to end users under a brand
other than "Sprint". Manager may engage in the following activities
(i.e., these activities are not treated as resale of long-distance
telephony services):
(1) the transport of long-distance calls for Customers under
section 3.4.2(a),
(2) the transport of long-distance calls for resellers under
section 3.5, and
(3) the transport of long-distance calls for roaming under
section 4.3.
(f) Sprint Rural Alliance Program. The rights and obligations of
Manager, if any, for the provision of long-distance telephony services
for Sprint Rural Alliance program participants will be set forth in a
separate agreement.
-14-
12. VOLUNTARY RESALE OF PRODUCTS AND SERVICES [ADDM II, (SECTION)7].
The second sentence of the second paragrapH of section 3.5.2 is amended to read
as follows: "If Manager wants handsets of subscribers of resellers with NPA-NXXs
of Manager to be activated, Manager must agree to comply with the terms of the
program, including its pricing provisions."
13. NON-COMPETITION [ADDM I,(SECTION)4]. Section 3.6 is replaced with
the following language:
3.6 NON-COMPETITION. Neither Manager nor any of its Related
Parties may offer Sprint PCS Products and Services outside of the
Service Area without the prior written approval of Sprint PCS.
Within the Service Area, Manager may offer, market or promote
telecommunications products or services only under the following
brands:
(a) Products or services with the Brands;
(b) Other products and services approved under section 3.2;
(c) Products or services with Manager's brand; or
(d) Products or services with the brands of Manager's Related Parties;
except no brand of a significant competitor of Sprint PCS or its
Related Parties in the telecommunications business may be used by
Manager on these products and services. Within the Service Area, if a
Related Party or Manager offers a product or service of a significant
competitor of Sprint PCS or its Related Parties in the
telecommunications business or of Manager, then Manager will not allow
that Related Party of Manager to offer any Sprint PCS Products or
Services.
If Manager or any of its Related Parties has licenses to provide
broadband personal communication services outside the Service Area,
neither manager nor such Related Party may utilize the spectrum to
offer Sprint PCS Products and Services without prior written consent
from Sprint PCS. Additionally, when Manager's customers from inside the
Service Area travel or roam to other geographic areas, manager will
route the customers' calls, both Program Requirements, without regard
to any wireless networks operated by Manager or its Related Parties.
For example, Manager will program the preferred roaming list for
handsets sold in the Service Area to match the Sprint PCS preferred
roaming list.
14. INTRA-LATA CALLS AND BACKHAUL SERVICES [NEW]. Section 3.7 is
amended to read as follows:
-15-
3.7 INTRA-LATA CALLS AND BACKHAUL SERVICES. Manager, or the
Alamosa Managers acting as a single purchaser, may purchase capacity
(including private line capacity) from SCCLP for intra-LATA calls and
backhaul services. SCCLP will sell that capacity to Manager at the best
price offered by SCCLP to third parties in similar situations when
taking into account all relevant factors.
Manager will offer to Sprint PCS or one of its Related Parties the
right to make to Manager the last offer to provide capacity for
intra-LATA calls and backhaul services for the Service Area Network if
(i) Manager decides to use third parties for intra-LATA calls and
backhaul services rather than self-provisioning the capacity or
purchasing the capacity from Related Parties of Manager and (ii) Sprint
PCS or one of its Related Parties has provided evidence to Manager that
SCCLP or one of its Related Parties has facilities to provide the
capacity requested. Manager will deliver to Sprint PCS the terms under
which the third party will provide the capacity. Sprint PCS or one of
its Related Parties will have a reasonable time to respond to Manager's
request for last offer to provide pricing for capacity for intra-LATA
calls and backhaul, which will be no greater than 5 Business Days after
receipt of the request for the pricing and the third party's terms from
Manager. Manager will acquire capacity for intra-LATA calls and
backhaul services from Sprint PCS or one of its Related Parties if
Sprint PCS or one of its Related Parties offers Manager pricing for
intra-LATA calls and backhaul services for the Service Area Network
that matches or is lower than the pricing offered by the third party.
For purposes of this section 3.7, the term "backhaul" means the
provision of services from a cell site of Manager to the corresponding
switch associated with the cell site.
If Manager has an agreement for these services in effect as of the
date Addendum VI is signed and the agreement was not made in
anticipation of this agreement or Addendum VI, 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.
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].
-16-
(a) The first sentence of section 9.2(e) is amended to read as
follows:
Manager must implement any changes in the Program Requirements
within a commercially reasonable period of time unless otherwise
consented to by Sprint PCS, subject to the terms of section 9.3.
(b) Section 9.3 is amended to read as follows:
9.3 MANAGER'S RIGHTS REGARDING CHANGES TO PROGRAM REQUIREMENTS.
9.3.1 PARAMETERS FOR REQUIRED PROGRAM REQUIREMENT IMPLEMENTATION.
Manager has the right to decline to implement any new Program
Requirement or any change to any existing Program Requirement (a
"PROGRAM REQUIREMENT CHANGE") if Manager determines that any such
Program Requirement Change, other than a change involving Sprint PCS
National or Regional Distribution Program Requirements, will have an
adverse impact on Manager that meets or exceeds the parameters set
forth below in subparagraphs (a) through (d). For purposes of this
section 9.3 a Program Requirement Change will include any change in any
"guidelines," "policies," "standards" or "specifications" proposed by
Sprint PCS under this agreement, the Services Agreement or either of
the Trademark License Agreements, and the exercise by Sprint PCS of any
unilateral right under those agreements, except changes to the
Trademark Usage Guidelines, the Marketing Communications Guidelines, or
the definition of Sprint PCS Products and Services (other than the
pricing of those products and services, i.e. pricing is a Program
Requirement Change). If Manager determines to decline to implement any
Program Requirement Change, other than a change involving a national
distribution program, then Manager must, within 10 days after Sprint
PCS provides Manager with notice of the Program Requirement Change,
give Sprint PCS (i) a written assessment of the impact of the Program
Requirement Change on Manager using the parameters set forth in
subparagraphs (a) through (d) below, and (ii) written notice that
Manager declines to implement the Program Requirement Change. Manager
may, without being deemed in default of this agreement, decline to
implement any Program Requirement Change that will:
(a) individually cause the combined peak negative cash flow of the
Alamosa Managers to be an amount greater than 3% of Alamosa Holdings,
Inc.'s Enterprise Value; or
(b) when combined with the original assessments made in accordance
with section 9.3.1(a) of all other Program Requirement changes that
Sprint PCS announced and the Alamosa Managers agreed to
-17-
implement, both within the preceding 12 calendar months, cause the
combined cumulative peak negative cash flow of the Alamosa Managers to
be an amount greater than 5% of Alamosa Holdings, Inc.'s Enterprise
Value; or
(c) individually cause a decrease in the forecasted 5-year
discounted cash flow of the Alamosa Managers (at the Alamosa Managers'
appropriate discount rate) of more than 3% on a combined net present
value basis; or
(d) when combined with the original assessments made in accordance
with section 9.3.1(c) of all other Program Requirement changes that
Sprint PCS announced and Manager agreed to implement, both within the
preceding 12 calendar months, cause a decrease in the forecasted 5-year
discounted cash flow of the Alamosa Managers (at the Alamosa Managers'
appropriate discount rate) of more than 5% on a combined net present
value basis.
Manager may discuss with Sprint PCS in the manner described in
section 9.7(c) any change that does not meet or exceed the parameters
set forth in this section 9.3.1, except any change involving Sprint PCS
National or Regional Distribution Program Requirements.
9.3.2. DISAGREEMENT WITH ASSUMPTIONS OR METHODOLOGY. Sprint PCS
must notify Manager of any disagreement with Manager's assumptions or
methodology within 10 days after its receipt of Manager's assessment
under section 9.3.1. Manager will not be required to implement the
Program Requirement Change if Sprint PCS fails to notify Manager of any
disagreement within such 10-day period unless Sprint PCS elects to
require such compliance under section 9.3.3 below. Either party may
escalate the review of the assumptions and methodology underlying the
assessment to the parties' respective Chief Financial Officers if
Sprint PCS disagrees with Manager's assessment and the parties are
unable to agree on the assumptions and methodology within 20 days after
Sprint PCS notifies Manager of the disagreement.
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.
-18-
Sprint PCS and Manager will cooperate fully and provide all information
reasonably requested by the Investment Banker; except that any
Investment Banker selected by the American Arbitration Association, and
its investment bank, must have no current engagement with either
Manager or Sprint PCS and must not have been engaged by either such
party within the 12 calendar months preceding the engagement under this
section. A business relationship between Manager or Sprint PCS and a
commercial bank or other organization affiliated with an investment
bank will not disqualify the investment bank. Sprint PCS and Manager
will cooperate fully and provide all information reasonably requested
by the Investment Banker. The Investment Banker will have 20 days from
the date of engagement to make its decision.
Manager will pay any Investment Banker's fees and implement
the Program Requirement Change if the parties agree or the Investment
Banker determines that implementing the Program Requirement Change will
not exceed any of the parameters described in section 9.3.1.
9.3.3 ONE OR MORE PARAMETERS EXCEEDED. Sprint PCS will pay the
Investment Banker's fees if the parties agree or the Investment Banker
determines that implementing the Program Requirement Change will exceed
at least one of the parameters described in section 9.3.1. Sprint PCS
may require Manager to implement the Program Requirement Change whether
the parties agree or disagree or the Investment Banker determines that
implementing the Program Requirement Change will exceed at least one of
the parameters described in section 9.3.1, if Sprint PCS agrees to
compensate Manager the amount necessary to prevent Manager from
exceeding the parameters set forth in section 9.3.1.
9.3.4 CHANGES WITH RESPECT TO PRICING PLANS AND ROAMING PROGRAM
REQUIREMENTS. Manager will implement a Program Requirement Change in
the manner requested by Sprint PCS that
(i) relates to a pricing plan under section 4.4 or roaming
program and
(ii) Sprint PCS reasonably determines must be implemented on
an immediate or expedited basis to respond to competitive market
forces,
notwithstanding Manager's determination that implementation of the
Program Requirement Change will have an adverse impact on Manager that
meets or exceeds the parameters set forth in section 9.3.1. Manager's
implementation of the Program Requirement Change will not adversely
affect Manager's right to object to the implementation of the Program
-19-
Requirement Change. Manager will continue to comply with the Program
Requirement Change if the parties agree or the Investment Banker
determines that implementing the Program Requirement Change will not
exceed any of the parameters described in section 9.3.1. If Sprint PCS
does not successfully challenge Manager's assessment of the adverse
impact of the Program Requirement Change on Manager in accordance with
section 9.3.2, Sprint PCS can require Manager either to (i) continue to
comply with the Program Requirement Change and compensate Manager in
the amount necessary to reimburse Manager for any reasonable costs,
expenses or losses that Manager incurred as a result of its
implementation of the Program Requirement Change net of any benefit
received by Manager, to the extent the costs, expenses and losses net
of the benefits exceed the parameters set forth in section 9.3.1 or
(ii) terminate its continued compliance with the Program Requirement
Change and compensate Manager in the amount necessary to reimburse
Manager for any reasonable costs, expenses or losses that Manager
incurred as a result of its implementation of the Program Requirement
Change net of any benefit received by Manager. Manager cannot terminate
its continued compliance if Sprint PCS elects to require Manager's
continued compliance with the Program Requirement Change under section
9.3.3 above.
(c) A new section 9.7 is added to the Management Agreement:
9.7 MANDATORY REQUIREMENTS; UNILATERAL CHANGES.
(a) Any "guidelines," "policies," "standards" or "specifications"
previously issued by Sprint PCS are mandatory requirements with which
Manager, the Other Managers and Sprint PCS must comply (subject to
Sprint PCS' right to grant waivers as provided in Article 9 of this
agreement), unless otherwise identified by Sprint PCS within 120 days
after the date of this Addendum.
(b) Any changes to or new "guidelines," "policies," "standards" or
"specifications" proposed by Sprint PCS under this agreement, the
Services Agreement or either of the Trademark License Agreements are
mandatory requirements with which Manager, the Other Managers and
Sprint PCS must comply (subject to Sprint PCS' right to grant waivers
as provided in Article 9 of this agreement). Sprint PCS will when
issuing them reference the applicable section of this agreement, the
Services Agreement, the Trademark License Agreements and if applicable,
the Program Requirement to which they relate.
(c) Sprint PCS and Manager will in good faith attempt to mutually
agree on how to mitigate the adverse economic impact on Manager of the
-20-
exercise of any unilateral right of Sprint PCS under this agreement,
the Services Agreement and either Trademark License Agreement to the
extent Manager believes such change will have a significant adverse
economic impact on Manager's operations, except with respect to changes
involving Sprint PCS National or Regional Distribution Program
Requirements. For purposes of clarification, the parties intend the
preceding sentence to obligate them to a robust discussion and open
dialogue but understand the discussion and dialogue may not lead to any
particular solution of the issues raised by Manager or Sprint PCS. By
way of illustration, under the second preceding sentence if Manager
believed that the exercise of the unilateral right to change the
Trademark Usage Guidelines or the designation of Sprint PCS Products
and Services had an adverse economic impact on Manager, then Manager
and Sprint PCS will in good faith attempt to mutually agree on how to
mitigate the adverse impact on Manager.
(d) A new section 9.8 is added to the Management Agreement.
9.8 BREACH FOR FAILURE TO IMPLEMENT PROGRAM REQUIREMENT.
Manager will be in material breach of a material term and Sprint
PCS may exercise its rights under section 11 if Manager declines to
implement a Program Requirement when required to do so under this
agreement.
17. FEES [NEW]. (a) Section 5 of Addendum I is deleted.
Article 10 of the Management Agreement is amended to read as follows:
10. FEES
10.1 GENERAL. Sprint PCS and Manager will pay to each other the
fees and apply the credits in the manner described in this section 10. Many of
the definitions for the fees in section 10.2 are found in section 10.3.
10.2 FEES.
10.2.1 FEE BASED ON BILLED REVENUE. Sprint PCS will pay to
Manager the Fee Based on Billed Revenue as determined in this section
10.2.1.
"BILLED REVENUE" is all customer account activity (e.g., all
activity billed, attributed or otherwise reflected in the customer account
but not including Customer Credits or similar adjustments) during the
calendar month for which the
-21-
fees and payments are being calculated (the "BILLED MONTH") for Sprint PCS
Products and Services related to all Sprint PCS customer accounts within a
customer service area ("CSA") assigned to the Service Area, except Outbound
Roaming Fees, amounts handled separately in this section 10 (including the
amounts in sections 10.2.3 through 10.2.5, 10.4 and 10.8) and amounts
collected from customers and paid to governmental or regulatory authorities
(e.g., Customer Taxes, USF Charges) (these Sprint PCS customer accounts
being "MANAGER ACCOUNTS"). For purposes of clarification, the parties have
in place procedures to assign customers to CSAs. Billed Revenue does not
include new activity billed to the Customer solely to recover costs incurred
by Sprint PCS, Manager or both; Manager and Sprint PCS will share such
revenue in proportion to the costs they incur.
Sprint PCS will determine the amount of credits applied to Manager
Accounts during the Billed Month ("CUSTOMER CREDITS").
"NET BILLED REVENUE" for a Billed Month is the amount of the
Billed Revenue less the Customer Credits.
The "FEE BASED ON BILLED REVENUE" for a Billed Month is equal to
92% of (a) Net Billed Revenue, less (b) the Allocated Write-offs for Net
Billed Revenue.
10.2.2 OUTBOUND ROAMING FEES. Sprint PCS will pay to Manager a fee
equal to the amount of Outbound Roaming Fees that Sprint PCS or its Related
Parties bills to Manager Accounts, less the Allocated Write-offs for
Outbound Roaming Fees. For purposes of clarification, Sprint PCS will settle
separately with Manager the direct cost of providing the capability for the
Outbound Roaming, including any amounts payable to the carrier that handled
the roaming call and the clearinghouse operator.
10.2.3 PHASE II E911 Surcharges. Sprint PCS will pay to Manager a
fee equal to a portion of the E911 Surcharges (attributable to incremental
costs for Phase II E911, including but not limited to related handset costs,
routing costs, implementation costs, trunks and testing costs, and
anticipated write-offs for bad debt) billed during the Billed Month to
Customers with an NPA-NXX assigned to the Service Area, less the Allocated
Write-offs for that portion of E911 Surcharges in the Billed Month. The
portion of the billed amount attributed to Manager will be based on
Manager's proportional cost (as compared to Sprint PCS' proportional cost)
to comply with Phase II of the E911 requirements. The rate billed to
Customers related to Phase II E911 and the portion payable to Manager will
be determined from time to time by Sprint PCS.
10.2.4 CUSTOMER EQUIPMENT Credits. Sprint PCS will apply as a
credit to any other fees under this section 10.2 owing by Sprint PCS to
Manager
-22-
an amount equal to the amount of the Customer Equipment Credits less the
Allocated Write-offs for Customer Equipment Credits.
10.2.5 WRITE-OFFS FOR CUSTOMER EQUIPMENT CHARGES. Sprint PCS will
apply as a credit to any other fees under this section 10.2 owing by Sprint
PCS to Manager an amount equal to the amount of the Allocated Write-offs for
Customer Equipment Charges.
10.3 DEFINITIONS USED IN FEE CALCULATIONS
10.3.1 WRITE-OFFS. Sprint PCS will determine the amounts written
off (the "WRITE-OFFS") in the Sprint PCS billing system during the Billed
Month relating to Manager Accounts.
10.3.2 BILLED COMPONENTS. Each of the following eight amounts
is referred to as a "BILLED COMPONENT" and collectively they are referred to
as the "BILLED COMPONENTS".
10.3.2.1 Net Billed Revenue. The amount determined as
described in section 10.2.1.
10.3.2.2 Customer Equipment Credits. The reductions of
amounts billed to Manager Accounts related to the sale of handsets and
handset accessories from Sprint PCS inventory are referred to as "CUSTOMER
EQUIPMENT CREDITS". This is a negative amount that reduces the Amount Billed
(Net of Credits).
10.3.2.3 Outbound Roaming Fees. The amounts that Sprint PCS
or its Related Parties bills to Manager Accounts for calls placed on a
non-Sprint PCS Network are referred to as "OUTBOUND ROAMING FEES".
10.3.2.4 Customer TAXES. The amounts that Sprint PCS bills to
Manager Accounts for taxes, including, without limitation, federal, state,
and local sales, use, gross and excise tax (collectively, "CUSTOMER TAXES").
10.3.2.5 Equipment Replacement Program Fees. The amounts that
Sprint PCS bills to Manager Accounts for participating in an equipment
replacement program are referred to as "EQUIPMENT REPLACEMENT PROGRAM FEES".
10.3.2.6 Customer Equipment Charges. The amounts that Sprint
PCS bills to Manager Accounts for subscriber equipment and accessories sold
or leased are referred to as "CUSTOMER EQUIPMENT CHARGES".
-23-
10.3.2.7 E911 SURCHARGES. The amounts that Sprint PCS bills
to Manager Accounts to recover all costs related to Phase II E911
functionality are referred to as "E911 SURCHARGES".
10.3.2.8 USF Charges. The amounts that Sprint PCS bills to
Manager Accounts relating to Universal Service Funds are referred to as "USF
CHARGES".
10.3.3 AMOUNT BILLED (NET OF CUSTOMER CREDITS). The "AMOUNT
BILLED (NET OF CUSTOMER CREDITS)" for a Billed Month is equal to the sum of
the Billed Components.
10.3.4 THE ALLOCATED Write-offs. The "ALLOCATED WRITE-OFFS"
for all or a portion of a Billed Component in a Billed Month is the
Write-offs for the Billed Month times the amount of the Billed Component (or
portion thereof) divided by the Amount Billed (Net of Customer Credits).
10.4 OTHER FEES AND PAYMENTS. Sprint PCS and Manager will pay to each
other the fees and payments described below:
10.4.1 INTER SERVICE AREA FEES.
10.4.1.1 Inter Service Area Fee Paid. Manager will pay to
Sprint PCS an Inter Service Area Fee as set out in this section 10.4.1 for
each billed minute of use that a subscriber with an NPA-NXX assigned to the
Service Area uses a portion of the Sprint PCS Network other than the Service
Area Network. Sprint PCS will pay to Manager an Inter Service Area Fee for
each billed minute of use that a Sprint PCS customer whose NPA-NXX is not
assigned to the Service Area Network uses the Service Area Network.
Sprint PCS will not be obligated to pay Manager those Inter
Service Area Fees not received by Sprint PCS from an Other Manager who is a
debtor in a bankruptcy proceeding with respect to Inter Service Area Fees
that Sprint PCS owes Manager because of CSAs assigned to such Other
Manager's Service Area traveling in the Service Area. For clarification
purposes, Sprint PCS does not have to advance the Inter Service Area Fees
for the Other Manager who is involved in the bankruptcy proceeding to
Manager, even if the Other Manager is late or never pays the Inter Service
Area Fees. Manager bears the risk of loss of the Other Manager who is
involved in the bankruptcy proceeding not paying the Inter Service Area Fees
to Sprint PCS. Manager acknowledges that if the manner in which the CSAs are
assigned changes because of changes in the manner in which the NPA-NXX is
utilized, the manner in which the Inter Service Area Fees, if any, will be
calculated might be changed.
-24-
10.4.1.2 Voice and 2G Data Rate. The amount of the Inter
Service Area Voice and 2G Data Fee will be as follows:
(a) From September 1, 2003 to December 31, 2005, the Inter
Service Area Voice and 2G Data Fee for each billed minute of use that a
Customer or Sprint PCS Reseller Customer uses an Away Network will be
$0.058.
(b) From January 1, 2006 until the end of the Term of the
agreement, the Inter Service Area Voice and 2G Data Fee for each billed
minute of use that a Customer or Sprint PCS Reseller Customer uses an
Away Network will be an amount equal to 90% of retail yield for Voice
and 2G Data Usage.
10.4.1.3 3G Data Rate. The amount of the Inter Service Area
3G Data Fee will be as follows:
(a) From September 1, 2003 to December 31, 2005, the Inter
Service Area 3G Data Fee for each kilobit of use that a Customer or
Sprint PCS Reseller Customer uses an Away Network will be $0.0014
("INITIAL 3G DATA FEE PERIOD").
(b) The parties will engage in the following pricing process
to set the Inter Service Area 3G Data Fee for each kilobit of use that
a Customer or Sprint PCS Reseller Customer uses an Away Network after
the Initial 3G Data Fee Period ends. The Inter Service Area 3G Data Fee
will be based on an appropriate discount from the retail yield for 3G
Data Usage to be negotiated before December 31, 2005. Each subsequent
fee period will last three years with the second pricing period
beginning on January 1, 2006 and ending on December 31, 2008.
(i) Sprint PCS will give Manager an Inter Service Area
3G Data Fee proposal by March 31 of the final year of the then current
pricing period. Manager's representative and the Sprint PCS
representative will begin discussions regarding the proposed schedule
of fees within 20 days after Manager receives the proposed schedule of
fees from Sprint Spectrum.
(ii) Manager may escalate the discussion to the Chief
Financial Officer of Sprint PCS or Sprint PCS may escalate the
discussion to Manager's Chief Executive Officer or Chief Financial
Officer if the parties do not agree on a new schedule of fees within 30
days after the discussions begin.
(iii) If the parties cannot agree on a new schedule of
fees within 20 days after a party escalates the discussion, then
Manager
-25-
may either agree to the fees set forth in the Inter Service Area 3G
Data Fee proposal or submit the determination of the Inter Service Area
3G Data Fee to binding arbitration in accordance with section 14.2,
excluding the escalation process set forth in section 14.2.
(iv) If Manager submits the matter to arbitration the
fees proposed by Sprint PCS will apply starting after December 31 of
the first year of the appropriate period as described in section
10.4.1.4 and will continue in effect unless modified by the final
decision of the arbitrator. If the arbitrator imposes a fee different
than the ones in effect the new fees will be applied as if in effect
after December 31 of the first year of the appropriate period as
described in section 10.4.1.4 and if on application of the new fees one
party owes the other party any amount after taking into account
payments already made by the parties then the owing party will pay the
other party within 30 days of the date of the final arbitration order.
10.4.1.4 Rate Changes - Effective Date. All rate changes
related to Inter Service Area Fees will be applied to all activity in a xxxx
cycle regardless of when the activity occurred, if the xxxx cycle ends after
the effective date of the rate change.
10.4.1.5 Long Distance. The long distance rates associated
with the Inter Service Area usage will be equal to the actual wholesale
transport and terminating costs associated with the originating and
terminating locations. The rates are then applied to cumulative usage at a
BID level for settlement purposes.
10.4.2 INTERCONNECT FEES. Manager will pay to Sprint PCS (or to
other carriers as appropriate) monthly the interconnect fees, if any, as
provided under section 1.4.
10.4.3 TERMINATING AND ORIGINATING ACCESS FEE. If Sprint PCS
collects from an IXC terminating or originating access fees that are not
subject to refund or dispute, then Sprint PCS will pay Manager 92% of the
amount collected (but it will not be Billed Revenue). Manager will refund to
Sprint PCS any amounts Sprint PCS pays or has paid to Manager for access
fees if Sprint PCS is required to refund that access fee to an IXC
(including a Sprint Corporation Related Party. For purposes of
clarification, Sprint Corporation's Related Parties are obligated to pay
terminating access to Sprint PCS only if Sprint Corporation's major
competitors have to pay terminating or originating access to Sprint PCS. At
the present time, none of the major competitors pay terminating access to
Sprint PCS. The ability of wireless carriers to collect access fees is
currently subject to legal challenge. The parties acknowledge that Sprint
PCS has limited ability to require IXCs to pay access fees.
-26-
10.4.4 REIMBURSEMENTS FOR MISTAKEN PAYMENTS. If one party
mistakenly pays an amount that the other party is obligated to pay then the
other party will reimburse the paying party.
10.5 TAXES AND PAYMENTS TO THE GOVERNMENT. Manager will pay or
reimburse Sprint PCS for any sales, use, gross receipts or similar tax,
administrative fee, telecommunications fee or surcharge for taxes or fees levied
by a governmental authority on the fees and charges payable by Sprint PCS to
Manager.
Manager will report all taxable property to the appropriate taxing
authority for ad valorem tax purposes. Manager will pay as and when due all
taxes, assessments, liens, encumbrances, levies, and other charges against the
real estate and personal property owned by Manager or used by Manager in
fulfilling its obligations under this agreement.
Manager is responsible for paying all sales, use, or similar taxes on
the purchase and use of its equipment, advertising, and other goods or services
in connection with this agreement.
Sprint PCS will be solely responsible for remitting to government
agencies and/or their designees any and all fees or other amounts owed as a
result of the services provided to the Customers under the Management Agreement.
As a consequence of this responsibility, Sprint PCS is entitled to 100% of any
amounts received by Manager, Sprint PCS or their Related Parties from Customers
(including Sprint PCS customers whose NPA-NXX is assigned to the Service Area)
relating to such fees.
10.6 UNIVERSAL SERVICE FUNDS.
10.6.1 PAID BY GOVERNMENT. Manager is entitled to 92% of any
federal and state subsidy funds (the "SUBSIDY FUNDS") (and Sprint PCS is
entitled to the remainder of the Subsidy Funds), including Universal Service
Funds, received by Manager or Sprint PCS from government disbursements based
on customers with mailing addresses located in the Service Area and with
NPA-NXXs assigned to the Service Area, or such other method then in effect
under the rules of the FCC, USAC or other federal or state administrator.
For purposes of clarity, Universal Service Funds provide support payments to
Eligible Telecommunications Carriers ("ETC") serving in high cost areas and
providing services to low income individuals. Sprint PCS, as the Common
Carrier of record, on behalf of itself or Manager (with respect to the
Service Area), might qualify as an ETC. All Subsidy Funds received must be
used to support the provision, maintenance and upgrading of facilities and
services for which the funds are intended.
-27-
10.6.2 PAID BY CUSTOMERS. Sprint PCS will be solely responsible
for remitting to government agencies and/or their designees, including but
not limited to the Universal Service Administrative Company, any and all
universal service fees. As a consequence of this responsibility, Sprint PCS
is entitled to 100% of any amounts received by Manager, Sprint PCS or their
Related Parties from Customers (including Sprint PCS customers whose NPA-NXX
is assigned to the Service Area) relating to the Universal Service Funds.
10.7 EQUIPMENT REPLACEMENT PROGRAM. Sprint PCS is entitled to 100%
of the amounts paid by Customers for participating in any equipment
replacement program billed on their Sprint PCS bills. Manager will not be
responsible for or in any way billed for any costs or expenses incurred by
Sprint PCS or any Sprint PCS Related Party in connection with any such
equipment replacement program.
10.8 CUSTOMER EQUIPMENT. Sprint PCS is entitled to 100% of the
amounts paid by Customers for subscriber equipment and accessories sold or
leased by Sprint PCS, and Manager is entitled to 100% of the amounts paid by
Customers for subscriber equipment and accessories sold or leased by
Manager, subject to the equipment settlement process in section 4.1.2.
10.9 PHASE I E911. Sprint PCS is entitled to 100% of amounts paid
by Customers related to Phase I E911 (e.g., for equipment other than
handsets, such as platforms and networks). Sprint PCS will attempt to
recover from the appropriate governmental authority Phase I E911
reimbursements and will remit the appropriate amounts to Manager.
10.10 MANAGER DEPOSITS INTO SPRINT PCS ACCOUNTS. Each Business
Day, Manager will deposit into bank accounts in the name of Sprint PCS or a
Related Party designated by Sprint PCS, the amounts collected from Customers
on behalf of Sprint PCS and its Related Parties for Sprint PCS Products and
Services. Manager will allow the funds deposited in the bank accounts to be
transferred daily to other accounts designated by Sprint PCS. Manager will
also provide the daily reports of the amounts collected required by Sprint
PCS. Manager will not make any changes to the authorized signatories on the
bank accounts without the prior written consent of Sprint PCS.
10.11 MONTHLY STATEMENTS.
10.11.1 SECTION 10.2 STATEMENT. Each month Sprint PCS will
determine the amount payable to Manager for a Billed Month under section
10.2. Sprint PCS will deliver a monthly statement to Manager that reports
the amount due to Manager, the manner in which the amount was calculated,
the amount due to Sprint PCS and its Related Parties under this agreement,
the Services Agreement and the Trademark License Agreements, and the net
amount payable
-28-
to 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, the Services Agreement and the
Trademark License Agreements, and the net amount payable to Manager.
10.11.3 THIRD PARTY CHARGES. Sprint PCS will include any
third party charges on Manager's statements within three calendar months
after the end of the calendar month during which Sprint PCS receives the
third party charge.
10.12 PAYMENTS.
10.12.1 WEEKLY PAYMENTS. Sprint PCS will pay the amount
payable to Manager for a Billed Month under section 10.2 in equal weekly
payments on consecutive Thursdays beginning the second Thursday of the
calendar month following the Billed Month and ending on the first Thursday
of the second calendar month after the Billed Month. If Sprint PCS is unable
to determine the amount due to Manager in time to make the weekly payment on
the second Thursday of a calendar month, then Sprint PCS will pay Manager
for that week the same weekly amount it paid Manager for the previous week.
Sprint PCS will true-up any difference between the actual amount due for the
first weekly payment of the Billed Month and amounts paid for any estimated
weekly payments after Sprint PCS determines what the weekly payment is for
that month.
10.12.2 MONTHLY PAYMENTS. The amounts payable to Manager and
Sprint PCS and its Related Parties under this agreement, the Services
Agreement and the Trademark License Agreements, other than the payments
described in section 10.12.1, will be determined, billed and paid monthly in
accordance with section 10.12.3.
10.12.3 NET PAYMENTS. The amount of each payment to Manager
will be the net amount due to Manager, if any, after reducing the amount
payable to Manager by any amounts due to Sprint PCS and its Related Parties
under this agreement, the Services Agreement and the Trademark License
Agreements. If the amount due to Sprint PCS exceeds the amount due to
Manager, Sprint PCS will xxxx Manager or reduce the next weekly or monthly
payment to Manager (and will reduce subsequent weekly and monthly payments
if necessary) by the amount of the excess.
10.12.4 TRANSITION OF PAYMENT METHODS. (a) Sprint PCS and
Manager wish to conduct an orderly transition from making weekly payments to
-29-
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 Alamosa Holdings, Inc, Alamosa
(Delaware), Inc. and the Alamosa Managers complete their restructuring (the
"TRANSITION DATE"). The weekly amounts paid to Manager during the calendar
month before the Transition Date and on the first Thursday after the
Transition Date will be based on the Collected Revenues method. The weekly
amounts paid to Manager beginning on the second Thursday of the second
calendar month after the Transition Date will be based on the Billed Revenue
method described in this Section 10. To effect an orderly transition, Sprint
PCS will pay Manager for the period beginning on the second Thursday after
the Transition Date and ending on the first Thursday of the calendar month
after the Transition Date an amount calculated as described below in Section
10.12.4(b).
(b) Sprint PCS will apply the estimated collection
percentages used by Sprint PCS before the Transition Date to the gross
accounts receivable aging categories for Customers with an NPA-NXX assigned
to the Service Area as of the close of business on the day before the
Transition Date to calculate the amount Sprint PCS anticipates collecting on
those accounts receivable. Sprint PCS will pay Manager the amount estimated
to be collected in equal weekly payments on consecutive Thursdays beginning
the second Thursday after the Transition Date and ending the first Thursday
of the calendar month after the Transition Date. Sprint PCS will also pay to
Manager no later than the second Thursday after the Transition Date any
Collected Revenues received after the Saturday before the Transition Date
and before the Transition Date.
(c) Sprint PCS will recalculate the estimated collection
percentages and apply the recalculated estimated collection percentages to
the gross accounts receivable aging categories described in the first
sentence of section 10.12.4(b) when all applicable data is available. Sprint
PCS will increase or decrease a weekly payment by the amount of the
difference between the amount paid to Manager based on the initial estimated
collection percentages and the amount that would have been paid to Manager
using the newer estimated collection percentages.
10.13 DISPUTE OR CORRECTION OF STATEMENT AMOUNT. A party can only
dispute or correct an amount on a statement in good faith. If a party
disputes or corrects an amount on a statement, the disputing or correcting
party must give the other party written notice of the specific item disputed
or corrected, the disputed or corrected amount with respect to that item and
the reason for the dispute or correction within three calendar months after
the end of the calendar month during which the disputed or erroneous
statement was delivered.
Any dispute regarding a statement will be resolved through the
dispute resolution process in section 14. The parties must continue to pay
to the other
-30-
party all amounts, including disputed amounts, owed under this agreement,
the Services Agreement and the Trademark License Agreements during 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 a party
must complete the dispute resolution process in section 14 before taking any
legal or equitable action against the other party.
10.14 DISPUTE OR CORRECTION OF A THIRD PARTY INVOICE AMOUNT.
Sprint PCS will include the applicable portion of any amount based on a
third party invoice in a statement to Manager within three months of Sprint
PCS' receipt of the third party invoice.
A party can only dispute or correct an amount based on a third
party invoice in good faith. Modified invoices received by Sprint PCS from a
third party vendor and then sent by Sprint PCS to Manager will be treated as
a new statement for purposes of this section.
If a party disputes or corrects an amount on a third party invoice
or the amount Sprint PCS attributed to Manager, the disputing party must
give the other party written notice of the specific item disputed or
corrected, the disputed or corrected amount with respect to that item and
the reason for the dispute or correction within three calendar months after
the end of the calendar month during which the disputed or erroneous
statement was delivered. Sprint PCS and Manager will cooperate with each
other to obtain the information needed to determine if the amounts billed by
the third party and allocated to Manager were correct.
Any dispute regarding the amount of the third party invoice Sprint
PCS attributed to Manager will be resolved through the dispute resolution
process in section 14. Manager must continue to pay to Sprint PCS all
amounts, including disputed amounts, owed under this agreement, the Services
Agreement and the Trademark License Agreements during the information
gathering and dispute resolution process; provided, however, that to the
extent any such monies are found to be owing to Manager, Manager shall be
entitled to interest thereon at the Default Rate from the date of payment by
Manager to Sprint PCS until the date such refund is actually received by
Manager.
The dispute of an item in a statement does not stay or diminish a
party's other rights and remedies under this agreement, except that the
parties must complete the dispute resolution process in section 14 before
taking any legal or equitable action against each other.
10.15 LATE PAYMENTS. Any amount due under this agreement, the
-31-
Services Agreement and the Trademark License Agreements without a specified
due date will be due 20 days after Manager receives an invoice. Any amount
due under this agreement, the Services Agreement and the Trademark License
Agreements (including without limitation any amounts disputed under those
agreements that are ultimately determined to be due), that is not paid by
one party to the other party in accordance with the terms of the applicable
agreement will bear interest at the Default Rate beginning (and including)
the 3rd day after the invoice or settlement due date until (and including)
the date paid.
10.16 SETOFF RIGHT IF FAILURE TO PAY AMOUNTS DUE. If Manager fails
to pay any amount due Sprint PCS or a Related Party of Sprint PCS under this
agreement, or any amount under the Services Agreement or any other agreement
with Sprint PCS or a Related Party of Sprint PCS, then Sprint PCS may setoff
against its payments to Manager under this section 10, any such amount that
Manager owes to Sprint PCS or a Related Party of Sprint PCS.
This right of setoff is in addition to any other right that Sprint
PCS may have under this agreement.
18. TERMINATION RIGHTS [NEW]. Section 11.3.7 is deleted, and all references
in the agreement to section 11.3.7 are also deleted.
19. NON-TERMINATION OF AGREEMENT [ADDM II,(SECTION)8]. Sections 11.5.3 and
11.6.4 are replaced with the following paragraphs:
11.5.3 MANAGER'S ACTION FOR DAMAGES OR OTHER RELIEF. Manager,
in accordance with the dispute resolution process in section 14, may seek
damages or other appropriate relief, but such action does not terminate this
agreement.
11.6.4 SPRINT PCS' ACTION FOR DAMAGES OR OTHER RELIEF. Sprint
PCS, in accordance with the dispute resolution process in section 14, may
seek damages or other appropriate relief, but such action does not terminate
this agreement.
20. BUSINESS VALUATION [ADDM III,(SECTION)4]. A new subsection 11.7.4(f) is
added:
(f) In the event the Entire Business Value of the Manager is
being determined, the entire value of any Operating Asset may be
allocated among the Manager and one or more of the Other Affiliates,
where appropriate, but the sum of the values attributed to that
Operating Asset in determining the Entire Business Value of the Manager
and the Other Affiliates shall not exceed the value of that Operating
Asset if it were used to calculate only the Manager's Entire Business
Value (i.e. "double counting" is prohibited).
21. AUDIT [NEW]. Section 12.1.2 is amended to read as follows:
-32-
12.1.2 Audits. On reasonable advance notice, each party must
provide access to appropriate records to the independent auditors selected
by the other party for purposes of auditing the amount of fees, costs,
expenses or other charges payable in connection with the Selected Services
with respect to the period audited. The auditing party will conduct the
audit no more frequently than annually. If the audit shows that Sprint PCS
was underpaid then, unless the amount is contested, Manager will pay to
Sprint PCS the amount of the underpayment within 10 Business Days after
Sprint PCS gives Manager written notice of the determination of the
underpayment. If the audit determines that Sprint PCS was overpaid then,
unless the amount is contested, Sprint PCS will pay to Manager the amount of
the overpayment within 10 Business Days after Manager determines Sprint PCS
was overpaid. The auditing party will pay all costs and expenses related to
the audit unless the amount owed to the audited party is reduced by more
than 10% or the amount owed by the audited party is increased by more than
10%, in which case the costs and expenses related to the audit will be paid
by the audited party.
Notwithstanding the above provisions of this section 12.1.2 and
subject to section 1.9, rather than allow Manager's independent auditors
access to Sprint PCS' records, Sprint PCS may provide a report issued in
conformity with Statement of Auditing Standard No. 70 "Reports on the
Processing of Transactions by Service Organizations" ("TYPE II REPORT" or
"MANAGER MANAGEMENT REPORT"); except that, if Manager, on the advice of its
independent auditors or its legal counsel, determines additional assurances
beyond SAS 70 are required by statute, regulation, rule, judicial decision
or interpretation, or audit or accounting rule, policy or literature
published by the accounting or auditing profession or other authoritative
rule making body (such as the SEC, the PCAOB or the FASB), then Sprint PCS
will cooperate with Manager to provide such additional assurances. Any Type
II Report or Manager Management Report provided pursuant to this section
12.1.2 will be prepared by Sprint PCS' independent auditors and will provide
an opinion on the controls placed in operation and tests of operating
effectiveness of those controls in effect at Sprint PCS over Manager
Management Processes. "Manager Management Processes" include those services
generally provided within this agreement, primarily billing and collection
of revenues.
22. SHARING CONFIDENTIAL INFORMATION WITH LENDERS [ADDM II,(SECTION)16].
section 12.2(b)(vii) of the Management Agreement is replaced with the following
paragraph:
(vii) is disclosed by the receiving party to a financial
institution or accredited investor (as that term is defined in Rule
501(a) under the Securities Act of 1933) that is considering providing
or has provided financing to the receiving party and which financial
institution or
-33-
accredited investor has agreed to keep the Confidential Information
confidential in accordance with an agreement at least as restrictive as
this section 12.2.
23. REGULATORY NOTICES (RESPONSE PERIOD) [ADDM I, (SECTION)6]. The first
sentence of section 16.4 is amended tO read as follows:
Manager will, within 5 Business Days after its receipt, give Sprint PCS
written notice of all oral and written communications it receives from
regulatory authorities (including but not limited to the FCC, the FAA, state
public service commissions, environmental authorities, and historic
preservation authorities) and complaints respecting Manager's construction,
operation, and management of the Services Area Network that could result in
actions affecting the License as well as written notice of the details
respecting such communications and complaints, including a copy of any
written material received in connection with such communications and
complaints.
24. REGULATORY NOTICES (COSTS) [ADDM I, (SECTION)7]. The last sentence of
section 16.4 is replaced with the following language: "If Sprint PCS chooses to
respond to such communications and complaints, Manager will not respond to them
without the consent of Sprint PCS. Sprint PCS will bear the cost of responding
to any such communications and complaints unless (1) such response is primarily
the result of Manager's acts or omissions that constitute negligence, willful
misconduct, or breach of any provision of this agreement (in which case Manager
will pay the costs of Sprint PCS' response), or (2) Manager's response is not
requested by Sprint PCS."
25. EMAILING NOTICES [NEW AND ADDM V,(SECTION)5]. (a) Section 17.1 is
amended to read as follows:
17.1 NOTICES. Any notice, payment, invoice, demand, or communication
required or permitted to be given by any provision of this agreement must be
in writing and mailed (certified or registered mail, postage prepaid, return
receipt requested), sent by hand or overnight courier, or sent by facsimile
or email (in either instance with acknowledgment or read receipt received),
charges prepaid and addressed as described below, or to any other address or
number as the person or entity may from time to time specify by written
notice to the other parties. Sprint PCS may give notice of changes to a
Program Requirement by sending an email that directs Manager to the changed
Program Requirement on the affiliate intranet website.
The subject line of any email notice that purports to amend any Program
Requirement must read "Program Requirement Change" and the first paragraph
must indicate (i) which Program Requirement is being modified, (ii) what is
being modified in the Program Requirement, and (iii) when the Program
Requirement will take effect. The email must also include either a detailed
summary of the Program Requirement change or
-34-
a redline comparison between the old Program Requirement and the new Program
Requirement.
Any notice, demand or communication intended to be notice of a breach
of an agreement or notice of an Event of Termination, must clearly indicate
that intent, state the section(s) of the agreements allegedly breached, and
be mailed or sent by overnight courier in the manner described in the first
paragraph in this section 17.1.
2. Manager agrees to promptly give Sprint PCS a copy of any notice
Manager receives from the Administrative Agent or any Lender (as those terms
are defined in the Consent and Agreement), and a copy of any notice Manager
gives to the Administrative Agent or any Lender. Sprint PCS agrees to
promptly give Manager a copy of any notice Sprint PCS receives from the
Administrative Agent or any Lender, and a copy of any notice that Sprint PCS
gives to the Administrative Agent or any Lender.
All notices and other communications given to a party in accordance
with the provisions of this agreement will be deemed to have been given when
received.
(b) The parties' notice addresses are as follows:
For all entities comprising Sprint PCS:
Sprint PCS
KSOPHJ0212-2A101
0000 Xxxxxx Xxxxxxx
Xxxxxxxx Xxxx, XX 00000
Telephone: 000-000-0000
Telecopier: 000-000-0000
Email: xxxxxx00@xxxxxxxxxxxxxx.xxx
Attention: Vice President - Affiliations, PLS & ICS
with a copy to:
Sprint Law Department
KSOPHT0101-Z2020
0000 Xxxxxx Xxxxxxx
Xxxxxxxx Xxxx, XX 00000
Telephone: 000-000-0000
Telecopier: 000-000-0000
Email: xxxx.x.xxxxxxx@xxxx.xxxxxx.xxx
Attention: Xxxx Xxxxxxx
-35-
For Manager:
Texas Telecommunications, LP
0000 X. Xxxx 000
Xxxxx 000
Xxxxxxx, XX 00000
Telephone: 000-000-0000
Telecopier: 000-000-0000
Email: xxxxxxxxx@xxxxxxxxxx.xxx
Attention: Xxxxx Xxxxxxxx, President
with a copy to:
-36-
Xxxxxxxx, Xxxxxx & Xxxxx, L.L.P.
Xxxxx Fargo Center
0000 Xxxxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxx 00000
Telephone: 000-000-0000
Telecopier: 000-000-0000
Email: XXxXxxxxxx@xxxxxx.xxx
Attention: Xxxx XxXxxxxxx, Xx.
and with copies to the following individuals' email addresses if a
notice of a Program Requirement Change is sent by email:
Xxxxxxx X. Xxxxx, Chief Financial Officer
Email: xxxxxx@xxxxxxxxxx.xxx
Xxxxxxx X. Xxxxxxxxxx, Chief Operating Officer
Email: xxxxxxxxxxx@xxxxxxxxxx.xxx
Xxxx X. Xxxxxxxx, Senior Vice
President of Corporate Finance
Email: xxxxxxxxx@xxxxxxxxxx.xxx
26. FORCE MAJEURE [NEW] The second paragraph of section 17.9.3 is
amended to read as follows:
NEITHER MANAGER NOR SPRINT PCS, AS THE CASE MAY BE, IS IN BREACH
OF ANY COVENANT IN THIS AGREEMENT, AND NO EVENT OF TERMINATION WILL
OCCUR AS A RESULT OF THE FAILURE OF SUCH PARTY TO COMPLY WITH SUCH
COVENANT, IF SUCH PARTY'S NON-COMPLIANCE WITH THE COVENANT RESULTS
PRIMARILY FROM:
(I) ANY FCC ORDER OR ANY OTHER INJUNCTION ISSUED BY ANY
GOVERNMENTAL AUTHORITY IMPEDING THE ABILITY TO COMPLY WITH THE
COVENANT;
(II) THE FAILURE OF ANY GOVERNMENTAL AUTHORITY TO GRANT ANY
CONSENT, APPROVAL, WAIVER, OR AUTHORIZATION OR ANY DELAY ON THE
PART OF ANY GOVERNMENTAL AUTHORITY IN GRANTING ANY CONSENT,
APPROVAL, WAIVER OR AUTHORIZATION;
(III) THE FAILURE OF ANY VENDOR TO DELIVER IN A TIMELY MANNER
ANY EQUIPMENT OR SERVICE; OR
(IV) ANY ACT OF GOD, ACT OF WAR OR INSURRECTION, RIOT, FIRE,
ACCIDENT, EXPLOSION, LABOR UNREST, STRIKE, CIVIL UNREST, WORK
STOPPAGE, CONDEMNATION OR ANY SIMILAR CAUSE OR EVENT NOT
REASONABLY WITHIN THE CONTROL OF SUCH PARTY;
-37-
except that, to the extent a party's obligation to perform any covenant
under this agreement is suspended by reason of an event specified in subsection
17.9.3(i), (ii), (iii) or (iv) above, then any obligation of the other party to
make a payment in respect of or relating to such covenant shall be suspended
until performance of such covenant is reinstated, and in no event shall any
amounts accrue or otherwise be due and owing in respect of or relating to such
covenant for the period during which performance of such covenant was suspended
by this section.
27. GOVERNING LAW, JURISDICTION AND CONSENT TO SERVICE OF PROCESS [ADDM
V,(SECTION)3]. 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
Xxxxxxx 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 Xxxxxxx 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,
-38-
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.
28. TRANSFER OF SPRINT PCS NETWORK [ADDM III, (SECTION)9]. The first
sentence of section 17.15.5 is replaced with the following sentence:
In conjunction with the sale of the Sprint PCS Network, Sprint PCS
may sell, transfer or assign the Sprint PCS Network and any of the
Licenses, including its rights and obligations under this agreement,
the Services Agreement and any related agreements, to a third party
without Manager's consent so long as the third party assumes the rights
and obligations under this agreement and the Services Agreement.
29. NUMBER PORTABILITY [ADDM I,(SECTION)8]. The second sentence of
section 17.17 is replaced by the following language :
To the extent the relationship between NPA-NXX and the Service
Area changes, Sprint PCS will develop an alternative system to
attempt to assign customers who primarily live and work in the
Service Area to the Service Area, in a manner that preserves the
economic benefits of this agreement to each party.
30. ANNOUNCED TRANSACTIONS [ADDM II,(SECTION)9]. Section 17.24 is
deleted.
31. ADDITIONAL TERMS AND PROVISIONS [ADDM II, (SECTION)10; REVISED
BY THIS ADDENDUM]. Section 17.25 is replaced with the following paragraph:
17.25 ADDITIONAL TERMS AND PROVISIONS. Certain
additional and supplemental terms and provisions of this
agreement, if any, are set forth in the Addendum to Sprint PCS
Management Agreement attached hereto and incorporated herein
by this reference. Manager represents and warrants that all
existing contracts and arrangements (written or verbal) that
relate to or affect the rights of Sprint PCS or any of its
Related Parties under this agreement (e.g., agreements
relating to long distance telephone services (section 3.4))
are described on Exhibit 17.25, and photocopies of any such
written agreements have been delivered to Sprint PCS.
32. FEDERAL CONTRACTOR COMPLIANCE [ADDM I, (Section)10]. A new
section 17.28, the text of which is attached to Addendum I as Exhibit A, is
added to the agreement. For purposes of this provision, contracts and
subcontracts not exceeding $10,000 are exempt from these requirements.
However, where the contracts or subcontracts in any 12 month period have an
aggregate value (or can reasonably be expected to have an aggregate total
value) exceeding $10,000, the exemption does not apply.
-39-
33. YEAR 2000 COMPLIANCE [ADDM I,(SECTION)11]. A new section 17.29
is added to the agreement:
SECTION 17.29 YEAR 2000 Compliance. Sprint PCS and Manager
each separately represents and warrants that any system or
equipment acquired, operated or designated by it for use in the
Service Area Network or for use to support the Service Area
Network, including (without limitation) billing, ordering and
customer service systems, will be capable of correctly processing
and receiving date data, as well as properly exchanging date data
with all products (for example, hardware, software and firmware)
with which the Service Area Network is designed to be used, and
will not malfunction or fail to function due to an inability to
process correctly date data in conformance with Sprint PCS
requirements for "Year 2000 Compliance." If the Service Area
Network or any system used to support the Service Area Network
fails to operate as warranted due to defects or failures in any
system or equipment selected by Manager (including systems or
equipment of third party vendors and subcontractors selected by
Manager rather than by Sprint PCS) Manager will, at its own
expense, make the repairs, replacements or upgrades necessary to
correct the failure and provide a Year 2000 Compliant Service Area
Network. If the Service Area Network or any system used to support
the Service Area Network fails to operate as warranted due to
defects or failures in any system or equipment selected by Sprint
PCS (including systems or equipment of third party vendors and
subcontractors which Sprint PCS selects and requires manager to
use), Sprint PCS will, at its own expense, make the repairs,
replacements or upgrades necessary to correct the failure and
provide a Year 2000 Compliant Service Area Network.
"YEAR 2000 COMPLIANCE" means the functions, calculations, and
other computing processes of the Service Area Network
(collectively "Processes") which 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.
-40-
34. CROSS-DEFAULT [ADDM III,(SECTION)2 AND ADDM IV, (SECTION)2]. A new
section 17.30 is added:
17.30 CROSS-DEFAULT. A breach or Event of Termination under
any of the Sprint Agreements (as that term is defined in the Consent
and Agreement) by Texas Telecommunications, L.P., a Texas limited
partnership, Alamosa Missouri, LLC, a Missouri limited liability
company, Southwest PCS, L.P., an Oklahoma limited partnership, or
Alamosa Wisconsin Limited Partnership, a Wisconsin limited Partnership,
or their respective successors or assigns (collectively the "OTHER
AFFILIATES") also constitutes a breach or Event of Termination, as the
case may be, by the Manager of the same provision of the applicable
Sprint Agreement to which the Manager is a party, and the Sprint
Parties (as that term is defined in the Consent and Agreement) shall
have the same rights under the Sprint Agreements and the Consent and
Agreement to which the Manager is a party as if the same breach or
Event of Termination had occurred under such Sprint Agreement. The
Manager has no right to cure any breach or Event of Termination with
respect to an Other Affiliate. Such breach or Event of Termination by
an Other Affiliate shall not qualify as a force majeure under the
Sprint Agreements or the Consent and Agreement.
35. PERFORMANCE/PAYMENT OF OTHER AFFILIATES' OBLIGATIONS [ADDM
III,(SECTION)3]. A new section 17.31 is added:
17.31. PERFORMANCE/PAYMENT OF OTHER AFFILIATES' OBLIGATIONS. To
induce the Sprint Parties to enter into the Consent and Agreement with
Citicorp, Manager absolutely and unconditionally guarantees the prompt
and punctual performance and payment of the Obligations (as that term
is defined in the Consent and Agreement) of the Other Affiliates and
their respective successors or assigns when due and payable pursuant to
the terms of the Other Affiliates' Sprint Agreements as they may be
amended and modified. Manager agrees that the Sprint Parties shall not
be required first to collect from any other guarantor of any such
obligation or to proceed against or exhaust any collateral or security
for any obligation before requiring Manager to perform or pay the
obligation guaranteed under this section. Any Sprint Party may bring
suit against Manager without joining the Other Affiliates or any other
guarantor. Manager agrees that notice given by a Sprint Party to any
Other Affiliate under such Other Affiliate's Sprint Agreements or the
Consent and Agreement constitutes notice to the Manager.
-41-
36. FINANCIAL INFORMATION [ADDM II,(SECTION)14]. A new section 17.32 is
added to the Management Agreement:
17.32 COPIES OF FINANCIAL INFORMATION. Manager agrees to give
Sprint PCS a copy of all financial information it gives the
Administrative Agent or any Lender (as such parties are defined in the
Consent and Agreement).
SERVICES AGREEMENT
37. SERVICES AGREEMENT [NEW]. Article 2 of the Services Agreement is amended
to read as follows:
2. SERVICES
2.1 SERVICES.
2.1.1 SERVICES. Subject to the terms of this agreement,
through December 31, 2006, Manager will obtain the Services set forth
on Schedule 2.1.1 attached to this agreement from Sprint Spectrum in
accordance with the provisions of this section 2.1. Sprint Spectrum
will provide all or none of (i) the grouping of services listed under
Section A of Exhibit 2.1.1 ("CCPU SERVICES"), and (ii) the grouping of
services listed under Section B of Exhibit 2.1.1 ("CPGA SERVICES" and
together with CCPU Services, "SERVICES"). Sprint Spectrum will not
provide individual CCPU Services or CPGA Services. The fees charged for
the Services are set forth in section 3.2. Sprint Spectrum may
designate Additional Services as Available Services and Selected
Services; except that, without Manager's prior written consent, neither
Sprint Spectrum nor any of its Related Parties will require Manager to
pay for (i) any such additional Available Services or Selected Services
to the extent that such services are the same as or functionally
equivalent to any service or benefit that Manager currently receives
from Sprint Spectrum or its Related Parties or Sprint PCS or its
Related Parties but for which Manager does not pay a separate fee
immediately after the effective date of this Addendum or (ii) any other
additional Available Services or Selected Services through December 31,
2006.
2.1.2 DISCONTINUANCE OF Services. If Sprint Spectrum
determines to no longer offer a Service itself, then Sprint Spectrum
must give Manager written notice at least 9 months before its
discontinuance of that Service that Sprint Spectrum will no longer
offer that Service. If Manager determines within 30 days after receipt
of notice of discontinuance that it wants to continue to receive the
Service, Sprint Spectrum will use commercially reasonable efforts to
(a) help Manager provide the Service itself or find another vendor to
provide the Service and (b) facilitate Manager's transition to the new
Service provider. If Sprint Spectrum procures such Service from a
-42-
vendor or a new Service provider and bills those items as
Settled-Separately Manager Expenses (as defined in subsection 3.2.5 of
this agreement) or Manager procures such Services from a vendor or a
new Service provider, then the fees charged by Sprint Spectrum for the
Services will be reduced by any fees payable by the Manager to such
vendor or new Service provider in respect of such discontinued
Services. If Sprint Spectrum discontinues a Service and neither Sprint
nor Manager procure such Service from a vendor or a new Service
provider, then no adjustment to the fees will be made.
2.1.3 PERFORMANCE OF SERVICES. Sprint Spectrum may select the
method, location and means of providing the Services. If Sprint
Spectrum wishes to use Manager's facilities to provide the Services,
Sprint Spectrum must obtain Manager's prior written consent.
2.2 THIRD PARTY VENDORS. Some of the Services might be
provided by third party vendors under arrangements between Sprint
Spectrum and the third party vendors. In some instances, Manager may
receive Services from a third party vendor under the same terms and
conditions that Sprint Spectrum receives those services. In other
instances, Manager may receive Services under the terms and conditions
set forth in an agreement between Manager and the third party vendor.
38. CHANGES TO ARTICLE 3 [NEW]. (a) Section 12 of Addendum I is
deleted. Article 3 of the Services Agreement is amended to read as follows:
3. FEES FOR SERVICES
3.1 SERVICES. Manager will pay Sprint Spectrum a fee for the
Services provided by or on behalf of Sprint Spectrum now or in the
future. Manager will not be permitted to obtain the Services from other
sources, except as provided in this agreement.
If changes to Sprint PCS' accounting reclassifications for
the Sprint PCS CCPU Services or Sprint PCS CPGA Services materially
impact the calculations of the Sprint PCS CCPU Services and Sprint PCS
CCPU Services, then the rates outlined in section 3 of the Services
Agreement will be adjusted accordingly.
3.2 FEES FOR SERVICES.
3.2.1 INITIAL PRICING PERIOD. The fee Manager will pay Sprint
Spectrum for the Services provided to Manager by or on behalf of Sprint
Spectrum each month until December 31, 2006 ("INITIAL PRICING PERIOD"),
will equal the sum of: (a) $7.70 per subscriber multiplied by the
Number of Customers in Manager's Service Area for the CCPU Services,
plus (b) 5% of the Sprint PCS CPGA multiplied by Gross Customer
Additions in Manager's Service Area for the CPGA Services. The fee will
be paid as set forth in section 10 of the
-43-
Management Agreement.
3.2.2 PRICING PROCESS. After the Initial Pricing Period, the
$7.70 fee in 3.2.1(a) will become a percentage of Sprint PCS CCPU and
the fee in section 3.2.1(b) will be adjusted to a new percentage of
Sprint PCS CPGA. The parties will engage in the following pricing
process to set the CCPU and CPGA percentages to be applied in each
pricing period after the Initial Pricing Period ends. Each subsequent
pricing period will last three years (if Manager continues to use
Sprint Spectrum to provide the Services) with the second pricing period
beginning on January 1, 2007 and ending on December 31, 2009.
(a) Sprint Spectrum will give Manager proposed CCPU and CPGA
percentages by March 31 of the final year of the then current pricing
period. The proposed percentages will be based on a reasonable amount
to recover Sprint PCS' costs for providing the CCPU Services and CPGA
Services to Manager and the Other Managers. Manager's representative
and the Sprint PCS representative will begin discussions regarding the
proposed CCPU and CPGA percentages within 20 days after Manager
receives the proposed CCPU and CPGA percentages from Sprint Spectrum.
(b) The fee Manager will pay Sprint Spectrum for the CCPU
Services provided to Manager by or on behalf of Sprint Spectrum each
month beginning on January 1, 2007 until December 31, 2008 under the
pricing process described in this section 3.2.2 will not exceed $8.50
per subscriber multiplied by the Number of Customers in Manager's
Service Area.
(c) If the parties do not agree on new CCPU and CPGA
percentages within 30 days after the discussions begin, then Manager
may escalate the discussion to the Sprint PCS Chief Financial Officer
or Sprint Spectrum may escalate the discussion to Manager's Chief
Executive Officer or Chief Financial Officer.
(d) If the parties cannot agree on the new CCPU and CPGA
percentages through the escalation process within 20 days after the
escalation process begins, then Manager may either
(i) submit the determination of the CCPU and CPGA
percentages to binding arbitration in accordance with section 14.2
of the agreement, excluding the escalation process set forth in
section 14.2, and continue obtaining the Services from Sprint
Spectrum at the CCPU and CPGA percentages determined by the
arbitrator,
(ii) self-provide the Services, or
(iii) procure the Services from third-party vendors,
subject
-44-
to Sprint Spectrum's first right of refusal described in
section 3.2.3.
Manager will begin paying Sprint Spectrum under the CCPU and CPGA
percentages presented for discussion by Sprint Spectrum at the beginning of
the new pricing period until the date on which the parties agree on or the
arbitrator determines the new CCPU and CPGA percentages, whichever occurs
first. Fees paid before the new CCPU and CPGA percentages are established
will be retroactively adjusted from the beginning of the new pricing period
when the parties agree on or the arbitrator determines the new CCPU and CPGA
percentages.
3.2.3 SPRINT SPECTRUM FIRST RIGHT OF REFUSAL. Manager must give
Sprint Spectrum written notice of Manager's decision to procure the CCPU
Services and CPGA Services from a third party vendor at least 120 days
before the end of the Initial Pricing Period or any subsequent three-year
pricing period and provide the third party vendor terms to Sprint Spectrum.
Sprint Spectrum will have 30 days from the date it receives the third party
vendor's terms to decide if it will provide those Services to Manager under
those terms.
Manager must agree to receive the Services from Sprint Spectrum if
Sprint Spectrum gives notice to Manager that it will provide the Services to
Manager on the third party vendor terms. If Sprint Spectrum does not
exercise its first right of refusal, Manager must sign the agreement with
the third party vendor on the same terms and conditions as presented to
Sprint Spectrum within 10 business days after Sprint Spectrum notifies
Manager of its decision not to exercise the first right of refusal or the
expiration of the 30-day period, whichever occurs first. The procedure set
forth in this section 3.2.3 will begin again if Manager does not sign the
agreement with the third party vendor as required in the preceding sentence.
3.2.4 TRANSITION COSTS. Manager will pay for all reasonable
out-of-pocket costs and reasonable out-of-pocket expenses actually incurred
by Sprint Spectrum and its Related Parties to transfer Manager to a third
party vendor's services or for Manager to self-provide the Services or to
enable Manager to self-provide Services.
3.2.5 SETTLED-SEPARATELY MANAGER EXPENSES. Manager will pay to or
reimburse Sprint Spectrum for any amounts that Sprint Spectrum or its
Related Parties pays for Settled-Separately Manager Expenses.
"SETTLED-SEPARATELY MANAGER EXPENSES" means (i) any amounts that Sprint
Spectrum or its Related Parties pays to third parties for usage of the
products and services used in providing Sprint PCS Products and Services
relating to revenue generating activities, and (ii) those items the parties
choose to settle separately between themselves (e.g. accessory margins,
reciprocal retail store cost recovery) including those items listed in
sections C and D of Exhibit 2.1.1. Sprint
-45-
Spectrum will give notice to Manager of any additional services added to
section C and D of Exhibit 2.1.1; except that no such additional service may
be added to the extent such additional service is the same as, or
functionally equivalent to, either (a) any service that Sprint Spectrum or
any of its Related Parties currently provides to Manager hereunder (unless
the fees payable by Manager to Sprint Spectrum hereunder are correspondingly
reduced) or (b) any service or benefit that Manager currently receives from
Sprint Spectrum or its Related Parties but for which Manager does not pay a
separate fee before the effective date of this Addendum. For each
Settled-Separately Manager Expense, Sprint Spectrum will provide sufficient
detail to enable Manager to determine how the expense was calculated,
including the unit of measurement (e.g., per subscriber per month or per
call) and the record of the occurrences generating the expense (e.g., the
number of calls attributable to the expense). If an expense is not
reasonably subject to occurrence level detail, Sprint Spectrum will provide
reasonable detail on the process used to calculate the fee and the process
must be reasonable. A detail or process is reasonable if it is substantially
in the form as is customarily used in the wireless industry. The
Settled-Separately Manager Expenses will be paid as set forth in section 10
of the Management Agreement. Sprint Spectrum and its Related Parties may at
any time arrange for Manager to pay any of the Settled-Separately Manager
Expenses directly to the vendor.
Unless Manager specifically agrees otherwise, any
Settled-Separately Manager Expense that Sprint Spectrum or any of its
Related Parties is entitled to charge or pass through to Manager pursuant to
any term or provision of this agreement or the Management Agreement will
reflect solely out-of-pocket costs and out-of-pocket expenses actually
incurred by Sprint Spectrum or its Related Parties, and will in no way
reflect any allocation of internal costs or expenses (including but not
limited to allocations of general and administrative expenses or allocations
of employee compensation or related expenses).
3.3 LATE PAYMENTS. Any payment due under this section 3 that is not
paid by Manager to Sprint Spectrum in accordance with the terms of this
agreement will bear interest at the Default Rate beginning (and including) the
3rd day after the due date stated on the invoice until (and including) the date
on which the payment is made.
3.4 TAXES. Manager will pay or reimburse Sprint Spectrum for any sales,
use, gross receipts or similar tax, administrative fee, telecommunications fee
or surcharge for taxes or fees levied by a governmental authority on the fees
and charges payable to Sprint Spectrum or a Related Party by Manager.
39. AUDIT [NEW]. Section 5.1.2 of the Services Agreement is amended to
read as follows:
5.1.2 AUDITS. On reasonable advance notice, each party must
provide access to appropriate records to the independent auditors
selected by the other
-46-
party for purposes of auditing the amount of fees, costs, expenses or
other charges payable in connection with the Selected Services with
respect to the period audited. The auditing party will conduct the
audit no more frequently than annually. If the audit shows that Sprint
Spectrum was underpaid then, unless the amount is contested, Manager
will pay to Sprint Spectrum the amount of the underpayment within 10
Business Days after Sprint Spectrum gives Manager written notice of the
determination of the underpayment. If the audit determines that Sprint
Spectrum was overpaid then, unless the amount is contested, Sprint
Spectrum will pay to Manager the amount of the overpayment within 10
Business Days after Manager determines Sprint Spectrum was overpaid.
The auditing party will pay all costs and expenses related to the audit
unless the amount owed to the audited party is reduced by more than 10%
or the amount owed by the audited party is increased by more than 10%,
in which case the costs and expenses related to the audit will be paid
by the audited party.
Notwithstanding the above provisions of this section 5.1.2 and
subject to section 1.9 of the Management Agreement, rather than allow
Manager's independent auditors access to Sprint PCS' records, Sprint
PCS may provide a Type II Report; except that, if Manager, on the
advice of its independent auditors or its legal counsel, determines
additional assurances beyond SAS 70 are required by statute,
regulation, rule, judicial decision or interpretation, or audit or
accounting rule, policy or literature published by the accounting or
auditing profession or other authoritative rule making body (such as
the SEC, the PCAOB or the FASB), then Sprint Spectrum will cooperate
with Manager to provide such additional assurances. Any Type II Report
or Manager Management Report provided pursuant to this section 5.1.2
will be prepared by Sprint Spectrum's independent auditors and will
provide an opinion on the controls placed in operation and tests of
operating effectiveness of those controls in effect at Sprint PCS over
Manager Management Processes. "Manager Management Processes" include
those services generally provided within the Management Agreement,
primarily billing and collection of revenues.
40. EMAILING NOTICES [NEW]. Section 9.1 of the Services Agreement is
amended to read as follows:
9.1 NOTICES. Any notice, payment, invoice, demand, or
communication required or permitted to be given by any provision of
this agreement must be in writing and mailed (certified or registered
mail, postage prepaid, return receipt requested), sent by hand or
overnight courier, or sent by facsimile or email (in either instance
with acknowledgment or read receipt received), charges prepaid and
addressed as described in subparagraph b of paragraph 25 of Addendum
VI, 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.
-47-
The subject line of any email notice that purports to amend any
Program Requirement must read "Program Requirement Change" and the
first paragraph must indicate (i) which Program Requirement is being
modified, (ii) what is being modified in the Program Requirement, and
(iii) when the Program Requirement will take effect. The email must
also include either a detailed summary of the Program Requirement
change or a redline comparison between the old Program Requirement and
the new Program Requirement.
The subject line of any email notice that purports to add any
additional service to section C or D of Exhibit 2.1.1 must read
"Additional Service to section C/D of Exhibit 2.1.1". The new Exhibit
2.1.1 must also be attached to the email.
Any notice, demand or communication intended to be notice of a
breach of an agreement or notice of an Event of Termination must
clearly indicate that intent, state the section(s) of the agreements
allegedly breached, and be mailed or sent by overnight courier in the
manner described in the preceding paragraph.
Manager agrees to promptly give Sprint Spectrum a copy of any
notice Manager receives from the Administrative Agent or any Lender (as
those terms are defined in the Consent and Agreement), and a copy of
any notice Manager gives to the Administrative Agent or any Lender.
Sprint Spectrum agrees to promptly give Manager a copy of any notice
Sprint Spectrum receives from the 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.
41. FORCE MAJEURE [NEW]. The second paragraph of section 9.8 of the
Services Agreement is amended to read as follows:
NEITHER MANAGER NOR SPRINT SPECTRUM, AS THE CASE MAY BE, IS IN
BREACH OF ANY COVENANT IN THIS AGREEMENT AND NO EVENT OF TERMINATION
WILL OCCUR AS A RESULT OF THE FAILURE OF SUCH PARTY TO COMPLY WITH SUCH
COVENANT, IF SUCH PARTY'S NON-COMPLIANCE WITH THE COVENANT RESULTS
PRIMARILY FROM:
(I) ANY FCC ORDER OR ANY OTHER INJUNCTION ISSUED BY ANY
GOVERNMENTAL AUTHORITY IMPEDING THE ABILITY TO COMPLY WITH THE
COVENANT;
-48-
(II) THE FAILURE OF ANY GOVERNMENTAL AUTHORITY TO GRANT ANY
CONSENT, APPROVAL, WAIVER, OR AUTHORIZATION OR ANY DELAY ON THE
PART OF ANY GOVERNMENTAL AUTHORITY IN GRANTING ANY CONSENT,
APPROVAL, WAIVER OR AUTHORIZATION;
(III) THE FAILURE OF ANY VENDOR TO DELIVER IN A TIMELY MANNER
ANY EQUIPMENT OR SERVICE; OR
(IV) ANY ACT OF GOD, ACT OF WAR OR INSURRECTION, RIOT, FIRE,
ACCIDENT, EXPLOSION, LABOR UNREST, STRIKE, CIVIL UNREST, WORK
STOPPAGE, CONDEMNATION OR ANY SIMILAR CAUSE OR EVENT NOT
REASONABLY WITHIN THE CONTROL OF SUCH PARTY;
except that, to the extent a party's obligation to perform any covenant
under this agreement is suspended by reason of an event specified in
subsection 9.8(i), (ii), (iii) or (iv) above, then any obligation of
the other party to make a payment in respect of or relating to such
covenant shall be suspended until performance of such covenant is
reinstated, and in no event shall any amounts accrue or otherwise be
due and owing in respect of or relating to such covenant for the period
during which performance of such covenant was suspended by this
section.
42. GOVERNING LAW, JURISDICTION AND CONSENT TO SERVICE OF PROCESS.
[ADDM V,(SECTION)3]. Section 9.11 of the Services Agreement is replaced with the
following language:
9.11 GOVERNING LAW, JURISDICTION AND SERVICE OF PROCESS.
9.11.1 GOVERNING LAW. The internal laws of the State of Kansas
(without regard to principles of conflicts of law) govern the validity
of this agreement, the construction of its terms, and the
interpretation of the rights and duties of the parties.
9.11.2 JURISDICTION; CONSENT TO SERVICE OF PROCESS.
(a) Each party hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any Kansas
State court sitting in the County of Xxxxxxx 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.
-49-
(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 Xxxxxxx or any Federal court sitting in
the District of Kansas. Each party hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum
to the maintenance of such suit, action or proceeding in any such court
and further waives the right to object, with respect to such suit,
action or proceeding, that such court does not have jurisdiction over
such party.
(c) Each party irrevocably consents to service of process in the
manner provided for the giving of notices pursuant to this agreement,
provided that such service shall be deemed to have been given only when
actually received by such party. Nothing in this agreement shall affect
the right of a party to serve process in another manner permitted by
law.
TRADEMARK LICENSE AGREEMENTS
43. NOTICES [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 subparagraph (b) of
paragraph 25 of Addendum VI, or to any other address or number as the
person or entity may from time to time specify by written notice to the
other parties.
Any notice, demand or communication intended to be notice of a
breach of an agreement or notice of an Event of Termination must
clearly indicate that intent, state the section(s) of the agreements
allegedly breached, and be mailed or sent by overnight courier in the
manner described in the preceding paragraph.
Manager agrees to promptly give Sprint PCS a copy of any
notice Manager receives from the Administrative Agent or any Lender (as
those terms are defined in the Consent and Agreement), and a copy of
any notice Manager gives to the Administrative Agent or any Lender.
Sprint PCS agrees to promptly give Manager a copy of any notice Sprint
PCS receives from the Administrative Agent or any Lender, and a copy of
any notice that Sprint PCS gives to the Administrative Agent or any
Lender.
-50-
All notices and other communications given to a party in
accordance with the provisions of this agreement will be deemed to have
been given when received.
44. GOVERNING LAW [ADDM V,(SECTION)3]. Section 15.8 of each of the
Trademark License Agreements is replaced by the following language:
15.8 Governing Law. The internal laws
of the State of Kansas (without regard to principles
of conflicts of law) govern the validity of this
agreement, the construction of its terms, and the
interpretation of the rights and duties of the
parties.
45. JURISDICTION [ADDM V,(SECTION)3]. 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 Xxxxxxx 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 Xxxxxxx 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.
-51-
SCHEDULE OF DEFINITIONS
46. ADDITIONAL, AMENDED OR SUPPLEMENTED DEFINITIONS [NEW]. The
following definitions are new or amended, unless otherwise indicated:
"ALAMOSA MANAGERS" means Manager and the Other Managers
controlled by Alamosa Holdings, Inc.
"ALLOCABLE SOFTWARE FEE" has the meaning set forth in section
1.3.4(f) of the Management Agreement.
"ALLOCATED WRITE-OFFS" has the meaning set forth in section
10.3.4 of the Management Agreement.
"AMOUNT BILLED (NET OF CUSTOMER CREDITS)" has the meaning set
forth in section 10.3.3 of the Management Agreement.
"AWAY NETWORK" means: (i) in the case of Customers (as
defined below) with an NPA-NXX of Manager (or any other such
designation in accordance with section 17.17 of the Management
Agreement), any portion of the Sprint PCS Network other than Manager's
Service Area Network, and (ii) in the case of Customers with an NPA-NXX
of Sprint PCS or Other Managers (or any other such designation in
accordance with section 17.17 of the Management Agreement), Manager's
Service Area Network.
"BILLED COMPONENT(S)" has the meaning set forth in section
10.3.2 of the Management Agreement.
"BILLED MONTH" has the meaning set forth in section 10.2.1 of
the Management Agreement.
"BILLED REVENUE" has the meaning set forth in section 10.2.1
of the Management Agreement.
"CCPU SERVICES" has the meaning set forth in section 2.1.1 of
the Services Agreement.
"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" has the meaning set forth in section 2.1.1 of
the Services Agreement.
"CSA" has the meaning set forth in section 10.2.1 of the
Management Agreement.
-52-
"CUSTOMER" means any customer, except Sprint PCS Reseller
Customers or customers of third parties for which Manager provides
solely switching services, who purchases Sprint PCS Products and
Services, regardless of where their NPA-NXX is assigned.
"CUSTOMER CREDITS" has the meaning set forth in section
10.2.1 of the Management Agreement.
"CUSTOMER EQUIPMENT CHARGES" has the meaning set forth in
section 10.3.2.6 of the Management Agreement.
"CUSTOMER EQUIPMENT CREDITS" has the meaning set forth in
section 10.3.2.2 of the Management Agreement.
"CUSTOMER TAXES" has the meaning set forth in section
10.3.2.4 of the Management Agreement.
"ENTERPRISE VALUE" means the combined book value of an
entity's outstanding debt and preferred stock less cash plus the fair
market value of each class of its publicly-traded equity other than any
publicly-traded preferred stock. For the purposes of this definition of
Enterprise Value, the fair market value of a class of an entity's
publicly-traded equity (other than publicly-traded preferred stock)
shall be equal to the product of (i) the number of issued and
outstanding shares of such class of publicly-traded equity as of the
date of determination, times (ii) the applicable average closing price
(or average closing bid, if traded on the over-the-counter market) per
share of such class of publicly-traded equity over the 21 consecutive
trading days immediately preceding the date of determination.
"EQUIPMENT REPLACEMENT PROGRAM FEES" has the meaning set
forth in section 10.3.2.5 of the Management Agreement.
"ETC" has the meaning set forth in section 10.6.1 of the
Management Agreement.
"E911 SURCHARGES" has the meaning set forth in section
10.3.2.7 of the Management Agreement.
"FEE BASED ON BILLED REVENUE" has the meaning set forth in
section 10.2.1 of the Management Agreement.
"GROSS CUSTOMER ADDITIONS IN MANAGER'S SERVICE AREA" means
the average number of Sprint PCS customers activated (without taking
into consideration the number of Sprint PCS customers lost) during the
previous month with an NPA-NXX assigned to the Service Area as reported
in Sprint PCS' most recent monthly KPI report.
-53-
"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.
"KPR CONTINGENT COVERAGE AREA" [ADDM V, (SECTION)2 REVISED BY
THIS ADDENDUM] has the meaning set forth in section 2.1 of the
Management Agreement.
"LEAVENWORTH CONTINGENT COVERAGE AREA" [ADDM V, (SECTION)2
REVISED BY THIS ADDENDUM] has the meaning seT forth in section 2.1 of
the Management Agreement.
"MANAGER ACCOUNTS" has the meaning set forth in section
10.2.1 of the Management Agreement.
"MANAGER MANAGEMENT REPORT" has the meaning set forth in
section 12.1.2 of the Management Agreement.
"NET BILLED REVENUE" has the meaning set forth in section
10.2.1 of the Management Agreement.
"NPA-NXX" means NPA-NXX or an equivalent identifier, such as
a network access identifier (NAI).
"NUMBER OF CUSTOMERS IN MANAGER'S SERVICE AREA" means the
average number of Sprint PCS customers with NPA-NXXs assigned to the
Service Area reported in Sprint PCS' most recent monthly KPI report.
"OPERATIONAL AND NETWORK READY" and "OPERATIONAL AND NETWORK
READINESS" [ADDM V, (SECTION)2 REVISED BY THIS ADDENDUM] have the
meaning set forth in section 2.1 of the Management Agreement.
"OTHER AFFILIATES"[ADDM III,(SECTION)2 AND ADDM IV
(SECTION)2] has the meaning set forth in section 17.30 of the
Management Agreement.
"OUTBOUND ROAMING FEES" has the meaning set forth in section
10.3.2.3 of the Management Agreement.
"OVERALL CHANGES" has the meaning set forth in section
1.10(a)(ii).
-54-
"PROGRAM REQUIREMENT CHANGE" has the meaning set forth in
section 9.3.1.
"SCCLP" has the meaning set forth in section 3.4.2 of the
Management Agreement.
"SERVICE AREA NETWORK" means the network that is directly
required for the provision of telecommunications services to Customers
and is managed by Manager under the Management Agreement in the Service
Area under the License.
"SERVICES" has the meaning set forth in section 2.1.1 of the
Services Agreement.
"SETTLED-SEPARATELY MANAGER EXPENSES" has the meaning set
forth in section 3.2.5 of the Services Agreement.
"SIMILARLY SITUATED MANAGER" means any Other Manager whose
ultimate parent entity (as defined by the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976) controls entities with 3 million or more
covered pops.
"SOFTWARE FEES" means costs associated (including applicable
license fees) with procuring software, software maintenance, software
upgrades and other software costs needed to provide uniform and
consistent operation of the wireless systems within the Sprint PCS
Network.
"SPRINT PCS" means any or all of the following Related
Parties who are License holders or signatories to the Management
Agreement: Sprint Spectrum L.P., a Delaware limited partnership,
WirelessCo, L.P., a Delaware limited partnership, SprintCom, Inc., a
Kansas corporation, PhillieCo Partners I, L.P., a Delaware limited
partnership, PhillieCo, L.P., a Delaware limited partnership, Sprint
Telephony PCS, L.P., a Delaware limited partnership, Sprint PCS
License, L.L.C., a Delaware limited liability company, American PCS
Communications, LLC, a Delaware limited liability company, and APC PCS,
LLC, a Delaware limited liability company. Any reference in the
Management Agreement or Services Agreement to Xxx Communications PCS,
L.P., a Delaware limited partnership, or Xxx PCS License, L.L.C., a
Delaware limited liability company, is changed to Sprint Telephony PCS,
L.P., a Delaware limited partnership, or Sprint PCS License, L.L.C., a
Delaware limited liability company, respectively, to reflect name
changes filed with the Delaware Secretary of State in 2002.
"SPRINT PCS CCPU" means the cash cost per user for the
most-recently publicly announced quarter by Sprint PCS or its Related
Parties. Sprint PCS CCPU is generally calculated by dividing costs of
wireless service revenues, service delivery and other general and
administrative costs by weighted average
-55-
monthly wireless subscribers. CCPU is a measure analysts use to
evaluate the cash costs to operate the business on a per user basis.
"SPRINT PCS CPGA" means the cost per gross addition for the
most-recently publicly announced quarter by Sprint PCS or its Related
Parties. Sprint PCS CPGA is calculated by dividing the aggregate costs
of acquiring new wireless subscribers, including equipment subsidies,
marketing costs and selling expenses, by gross additional subscribers.
Analysts use this measure in conjunction with the other measures to
evaluate the profitability of the operation.
"SPRINT PCS RESELLER CUSTOMER" means customers of companies
or organizations with a Private Label PCS Services or similar resale
agreement with Sprint PCS.
"SUBSIDY FUNDS" has the meaning set forth in section 10.6.1
of the Management Agreement.
"TRANSITION DATE" has the meaning set forth in section
10.12.4 of the Management Agreement.
"TYPE II REPORT" has the meaning set forth in section 12.1.2
of the Management Agreement.
"USF CHARGES" has the meaning set forth in section 10.3.2.8
of the Management Agreement.
"VENDOR SOFTWARE" has the meaning set forth in section
1.3.4(b).
"WRITE-OFFS" has the meaning set forth in section 10.3.1 of
the Management Agreement.
"YEAR 2000 COMPLIANCE" has the meaning set forth in section
17.29 of the Management Agreement.
B. CROSS-REFERENCES TO OTHER PARAGRAPHS IN PREVIOUS ADDENDA.
Listed below are those paragraphs in the previous addenda that are
interpretations or applications of the Management Agreement and the Services
Agreement and that are not listed above. These serve as cross-references to
facilitate finding provisions in the previous addenda. The number shown at the
beginning of each item is the paragraph reference in the designated Addendum.
Addendum I
----------
1. Exclusivity of Service Area
9. Financing Arrangements
-56-
Addendum II
-----------
1. Expansion of Service Area
2. Decline of Build Out Right
3. Modification of Build Out Plan
4. Expedite Fees
11. Consent and Agreement ("C&A")-Related: Use of Loan Proceeds
12. C&A-Related: C&A Not Assignable
13. Notices
15. No Defaults under Credit Documents or Sprint Agreements
17. Financing
18. Reaffirmation of Sprint Agreements
19. Counterparts
Addendum III
1. C&A-Related: Use of Loan Proceeds
6. Expiration of Limited Remedies Period
7. Revised financing Plan
8. Exclusivity of Service Xxxx
00. Reaffirmation of Sprint Agreements
11. Counterparts
Addendum IV
1. C&A-Related: Use of Loan Proceeds
3. Financing Plan
4. Reaffirmation of Sprint Agreements
5. Counterparts
Addendum V
4. Notice Addresses
6. Counterparts
C. OTHER PROVISIONS.
1. MANAGER AND SPRINT PCS' REPRESENTATIONS. Manager and Sprint PCS each
represents and warrants that its respective execution, delivery and performance
of its obligations described in this Addendum have been duly authorized by
proper action of its governing body and do not and will not violate any material
agreements to which it is a party. Each of Manager and Sprint PCS also
represents and warrants that there are no legal or other claims, actions,
counterclaims, proceedings or suits, at law or in arbitration or equity, pending
or, to its knowledge, threatened against it, its Related Parties, officers or
directors that question or may affect the validity of this Addendum, the
execution and
-57-
performance of the transactions contemplated by this Addendum or that party's
right or obligation to consummate the transactions contemplated by this
Addendum.
2. REAFFIRMATION OF SPRINT AGREEMENTS. Each of the undersigned
reaffirms in their entirety the Management Agreement, the Services Agreement and
the Trademark License Agreements, together with their respective rights and
obligations under those agreements.
3. COUNTERPARTS. This Addendum may be executed in one or more
counterparts, including facsimile counterparts, and each counterpart will have
the same force and effect as an original instrument as if the parties to the
aggregate counterparts had signed the same instrument.
[THE REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY.]
-58-
The parties have caused this Addendum VI to be executed as of the date
first above written. .
SPRINT SPECTRUM L.P.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President - Affiliations, PLS & ICS
WIRELESSCO, L.P.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President - Affiliations, PLS & ICS
SPRINT COMMUNICATIONS COMPANY L.P.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President - Communication
& Brand Management
WASHINGTON OREGON WIRELESS, LLC
An Oregon limited liability company
By: ALAMOSA HOLDINGS, LLC
Delaware limited liability company,
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Xxxxx X. Xxxxxxxx,
President
-59-
CC 1178391v7
EXHIBIT 1
ILLUSTRATIVE CALCULATION FOR CASH SETTLEMENT
ILLUSTRATIVE ONLY
------------------------------------------------------------------------------------------------------------
MONTH 1
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Write-offs ((Section)10.3.1) $ 1,235
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Billed Revenue ((Section)10.2.1) $ 10,350
------------------------------------------------------------------------------------------------------------
Customer Credits ((Section)10.2.1) (970)
------------------------------------------------------------------------------------------------------------
Net Billed Revenue ((Sections)10.2.1 and 10.3.2.1) 9,380 82.5%
------------------------------------------------------------------------------------------------------------
Customer Equipment Credits ((Sections)10.2.4 & 10.3.2.2) (66) -0.6%
------------------------------------------------------------------------------------------------------------
Outbound Roaming Fees ((Sections)10.2.2 & 10.3.2.3) 235 2.1%
------------------------------------------------------------------------------------------------------------
Customer Taxes ((Section)10.3.2.4) 1,323 11.6%
------------------------------------------------------------------------------------------------------------
Equipment Replacement Program Fees ((Section)10.3.2.5) 156 1.4%
------------------------------------------------------------------------------------------------------------
Customer Equipment Charges ((Section)10.3.2.6) 175 1.5%
------------------------------------------------------------------------------------------------------------
E911 Surcharges((Section)10.3.2.7) 91 0.8%
------------------------------------------------------------------------------------------------------------
USF Charges ((Section)10.3.2.8) 74 0.7%
------------------------------------------------------------------------------------------------------------
Amount Billed (Net of Customer Credits) ((Section)10.3.3) $ 11,368 100.0%
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
FEE CALCULATION
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Net Billed Revenue ((Sections)10.2.1 and 10.3.2.1) $ 9,380
------------------------------------------------------------------------------------------------------------
Allocated Write-off ((Section)10.3.4) (1,019)
------------------------------------------------------------------------------------------------------------
$ 8,361
------------------------------------------------------------------------------------------------------------
92%
------------------------------------------------------------------------------------------------------------
Fee Based on Billed Revenue ((Section)10.2.1) $ 7,692
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Outbound Roaming Fees ((Section)10.2.2) $ 235
------------------------------------------------------------------------------------------------------------
Allocated Write-off (26)
------------------------------------------------------------------------------------------------------------
E911 Surcharges - Handsets ((Section)10.2.3) 85
------------------------------------------------------------------------------------------------------------
Allocated Write-off (9)
------------------------------------------------------------------------------------------------------------
Customer Equipment Credits ((Section)10.2.4) (66)
------------------------------------------------------------------------------------------------------------
Allocated Write-off 7
------------------------------------------------------------------------------------------------------------
Write-off for Customer Equipment Charges ((Section)10.2.5) (19)
------------------------------------------------------------------------------------------------------------
$ 208
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Total $ 7,900
------------------------------------------------------------------------------------------------------------
-60-
EXHIBIT 1.7
BUILD-OUT AND WORKING CAPITAL FINANCING
o Alamosa Holdings, Inc. and its direct and indirect subsidiaries, have
received equity contributions and debt financing that exceed in the aggregate
$947 million. Alamosa Holdings, Inc. is the ultimate parent of Texas
Telecommunications, LP, Alamosa Wisconsin Limited Partnership, Alamosa Missouri,
LLC, Washington Oregon Wireless LLC and Southwest PCS, LP (each a "Manager"
under a separate Management Agreement with Sprint PCS, and collectively the
"Managers"). This capital has been and will be made available to the Managers
when needed to fund the build-out (requirements to date are substantially
complete) and operations of their PCS systems and to perform their obligations
under their respective Sprint Agreements. The following summarizes the sources
of funds:
--------------------------------------------------------------------------
(dollars in thousands) CONTRIBUTED
AMOUNTS AND
NET PROCEEDS
--------------------------------------------------------------------------
--------------------------------------------------------------------------
EQUITY $ 283,061
--------------------------------------------------------------------------
--------------------------------------------------------------------------
SENIOR SECURED DEBT 225,000
(includes $25 million in undrawn revolver)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
SENIOR NOTES:
--------------------------------------------------------------------------
12.875% SENIOR DISCOUNT NOTES 180,515
--------------------------------------------------------------------------
12.50% SENIOR NOTES 182,807
--------------------------------------------------------------------------
13.625% SENIOR NOTES 101,306
--------------------------------------------------------------------------
--------------------------------------------------------------------------
TOTAL $ 972,689
-------------------------------------------------------===================
Alamosa Holdings, Inc. and its direct and indirect subsidiaries, have undertaken
a restructuring to adjust the capital structure. The restructuring includes an
exchange of existing bonds for: a) new notes representing 65% of accreted value;
b) preferred stock with a liquidation value of 25% of accreted value,
convertible into 35% of the common equity of Alamosa Holdings, Inc.; and c)
extinguishment of 10% of the accreted value. The following summarizes the effect
on existing Senior Note categories, new Senior Note categories and new Preferred
Stock:
--------------------------------------------------------------------------------
(dollars in thousands) PRE- POST-
RESTRUCTURE RESTRUCTURE
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SENIOR NOTES*
--------------------------------------------------------------------------------
12.875% SENIOR DISCOUNT NOTES $ 298,443 $ -
--------------------------------------------------------------------------------
12.50% SENIOR NOTES 250,000 -
--------------------------------------------------------------------------------
13.625% SENIOR NOTES 150,000 -
--------------------------------------------------------------------------------
NEW 12% SENIOR DISCOUNT NOTES - 193,988
--------------------------------------------------------------------------------
NEW 11% SENIOR NOTES - 260,000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TOTAL 698,443 453,988
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PREFERRED STOCK - 174,600
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TOTAL $ 698,443 $ 628,588
---------------------------------------------===================================
--------------------------------------------------------------------------------
* Assumes 100% of the noteholders agree to exchange for new notes. In the event
that less than 100% agree to exchange, some of the existing notes would
remain outstanding and the new notes would be decreased. Preferred Stock
would also be adjusted to reflect a lower exchange ratio.
--------------------------------------------------------------------------------
o The funds from contributed capital and net proceeds from borrowings, in
conjunction with capital restructuring, are sufficient to meet all build-out and
working capital requirements.
-61-
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
Xxx Xxxxx 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
-62-
National Platform Disputes
National Platform (2G) (Includes Voice Activated Dialing)
Northwest Frequent Flyer
Premium Vision Services
PreNet
Pricing
Pro Text Messaging Plan
Ringers & More (Includes SBF and PT fees)
Roadside Rescue
Sprint Synch Services
Telecheck Charge
Telematics
Text Messaging Plan
TSC Usage
Type 1 Affiliate Long Distance
Voice Command
Web Wireless Web
-SECTION B-
PRESENTLY OFFERED CPGA SERVICES - Activity Applied as % to
Sprint PCS reported CPGA
500 Minute Promotion Credit
Activations - Customer Solutions
Activations - E-Commerce (Includes On Line (Web) Activations)
Activations - Telesales
Commission Credit
Credit Check Fee
Customer Solutions - Early Life
Demo Phones
EarthLink
Xxx Xxxxx Service
Handset Logistics
Local/Indirect Commission
NAM/CAM
One Sprint Telesales
PGA Expenses
PLS Commission
SmartWorks Printing
-SECTION C-
PRESENTLY OFFERED CCPU SERVICES - Activity Settled Separately
Affiliate Project Authorizations
Long Distance
Microwave Clearing
Roaming
Software Fees
Sprint Local Telephone Usage
Taxes Paid on Behalf of Type III Affiliates
Tower Lease
Travel Revenue and Expense
Upgrade Commission - 2 Step Channel
Vendor Usage-Based Charges on New Products
Wholesale Revenue and Expense
-SECTION D-
PRESENTLY OFFERED CPGA SERVICES -Activity Settled Separately
3G Device Logistics Fee
3rd Party Spiffs
Accessory Margin
Commissions - National 3rd Party
Commissions - Other 3rd Party
Coop Advertising - Local 3rd Party
Coop Advertising - National 3rd Party
Handset returns
Handset subsidies
Handsets
Marketing Collateral
Meeting Competition Fund
RadioShack Promos (Includes RadioShack Golden Quarter,
Jumpstart, Relaunch, Sprint to Vegas, and Break the Bank)
Rebate Administrative Expense
Rebates
Reciprocal Retail Store Cost Recovery
Sprint LDD Commission
Third Party Promotions
Upgrade Commission - RadioShack