EXHIBIT 10.1
SPRINT PCS MANAGEMENT AGREEMENT
This SPRINT PCS MANAGEMENT AGREEMENT is made July 22, 1998, between
SprintCom, Inc., a Kansas corporation, and AirGate Wireless, L.L.C., a Delaware
limited liability company (but not any Related Party) ("Manager"). The
definitions for this agreement are set forth on the "Schedule of Definitions."
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RECITALS
A. Sprint Spectrum L.P., a Delaware limited partnership, SprintCom, Inc.,
a Kansas corporation, American PCS Communications, LLC, a Delaware limited
liability company, PhillieCo Partners I, L.P., a Delaware limited partnership,
and ▇▇▇ Communications PCS, L.P., a Delaware limited partnership, hold and
exercise, directly or indirectly, control over licenses to operate wireless
services networks.
B. The entity or entities named in Recital A that execute this agreement
hold, directly or indirectly, the Licenses for the areas identified on the
Service Area Exhibit and are referred to in this agreement as "Sprint PCS."
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Because this agreement addresses the rights and obligations of each license
holder with respect to each of its Licenses, each reference in this agreement to
"Sprint PCS" refers to the entity that owns, directly or indirectly, the License
referred to in that particular instance or application of the provision of this
agreement. If Sprint Spectrum does not own the License, it will provide on
behalf of Sprint PCS most or all of the services required under this agreement
to be provided by Sprint PCS.
C. The Sprint PCS business was established to use the Sprint PCS Network,
a nationwide wireless services network, to offer seamless, integrated voice and
data services using wireless technology. Sprint PCS offers the services to
customers under a single national brand.
D. This agreement, therefore, includes provisions defining Manager's
obligations with respect to:
. The design, construction and management of the Service Area Network;
. Offering and promoting products and services designated by Sprint PCS
as the Sprint PCS Products and Services of the Sprint PCS Network;
. Adherence to Program Requirements established by Sprint PCS to ensure
seamless interoperability throughout the Sprint PCS Network and
uniform and consistent quality of product and service offerings;
. Adherence to Customer Service Program Requirements established by
Sprint PCS to ensure consistency in interactions with customers
(including billing, customer care, etc.); and
. Adherence to Program Requirements relating to the marketing, promotion
and distribution of Sprint PCS Products and Services.
E. Manager wishes to enter into this agreement to help construct,
operate, manage and maintain for Sprint PCS a portion of the Sprint PCS Network
in the Service Area. Sprint PCS has determined that permitting Manager to manage
a portion of the Sprint PCS Network in accordance with the terms of this
agreement will facilitate Sprint PCS' expansion of fully digital, wireless
coverage under the License and will enhance the wireless service for customers
of Sprint PCS.
F. All managers of a portion of the business of Sprint PCS, including
Manager, must construct facilities and operate in accordance with Program
Requirements established by Sprint PCS with respect to certain aspects of the
development and offering of wireless products and services and the presentation
of the products and services to customers, to establish and operate the Sprint
PCS Network successfully by providing seamless, integrated voice and data
services, using wireless technology.
AGREEMENT
In consideration of the recitals and mutual covenants and agreements
contained in this agreement, the sufficiency of which are hereby acknowledged,
the parties, intending to be bound, agree as follows:
1. MANAGER
1.1 Hiring of Manager. Sprint PCS hires Manager:
(a) to construct and manage the Service Area Network in compliance
with the License and in accordance with the terms of this agreement;
(b) to distribute continuously during the Term the Sprint PCS Products
and Services and to establish distribution channels in the Service Area;
(c) to conduct continually during the Term advertising and promotion
activities in the Service Area (including mutual decisions to "go dark", with
respect to advertising and promotion activities, for reasonable periods of
time); and
(d) to manage that portion of the customer base of Sprint PCS that has
the NPA-NXX assigned to the Service Area Network.
Sprint PCS has the right to unfettered access to the Service Area Network
to be constructed by Manager under this agreement. The fee to be paid to
Manager by Sprint PCS under Section 10 is for Manager's utilization of the
Service Area Network, sales and marketing costs, management of the Service Area
Network, and for all other obligations of Manager under this agreement.
1.2 Program Requirements. Manager must adhere to the Program Requirements
established by Sprint PCS and as modified from time to time to ensure uniform
and consistent
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operation of all wireless systems within the Sprint PCS Network and to present
the Sprint PCS Products and Services to customers in a uniform and consistent
manner under the Brands.
1.3 Vendor Purchase Agreements. Manager may participate in discounted
volume-based pricing on wireless-related products and services and in the
warranties Sprint PCS receives from its vendors, as is commercially reasonable
and to the extent permitted by applicable procurement agreements (e.g.,
agreements related to network infrastructure equipment, subscriber equipment,
interconnection, and collocation). Sprint PCS will use commercially reasonable
efforts to obtain for managers the same price Sprint PCS receives from vendors;
this does not prohibit Sprint PCS from entering into procurement agreements that
do not provide managers with the Sprint PCS prices.
Manager must purchase subscriber and infrastructure equipment from a Sprint
PCS approved list of products, which will include a selection from a variety of
manufacturers. Where required, the products must include proprietary software
developed by the manufacturers for Sprint PCS to allow seamless interoperability
in the Sprint PCS Network. Sprint PCS or the vendor may require Manager to
execute a separate license agreement for the software prior to Manager's use of
the software.
Manager may only make purchases under this Section 1.3 for items to be used
exclusively in the Service Area (e.g., Manager may not purchase base stations
under a Sprint PCS contract for use in a system not affiliated with Sprint PCS).
1.4 Interconnection. If Manager desires to interconnect a portion of the
Service Area Network with another carrier and Sprint PCS can interconnect with
that carrier at a lower rate, then to the extent permitted by applicable laws,
tariffs and contracts, Sprint PCS may arrange for the interconnection under its
agreements with the carrier and if it does so, Sprint PCS will ▇▇▇▇ the
interconnection fees to Manager.
1.5 Seamlessness. Manager will design and operate its systems, platforms,
products and services in the Service Area and the Service Area Network so as to
seamlessly interface them into the Sprint PCS Network.
1.6 Forecasting. Manager and Sprint PCS will work cooperatively to
generate mutually acceptable forecasts of important business metrics including
traffic volumes, handset sales, subscribers and Collected Revenue for the Sprint
PCS Products and Services. The forecasts are for planning purposes only and do
not constitute Manager's obligation to meet the quantities forecast.
1.7 Financing. The construction and operation of the Service Area Network
requires a substantial financial commitment by Manager. The manner in which
Manager will finance the build-out of the Service Area Network and provide the
necessary working capital to operate the business is described in detail on
Exhibit 1.7. Manager will allow Sprint PCS an opportunity to review before
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filing any registration statement or prospectus or any amendment or supplement
thereto before distributing any offering memorandum or amendment or supplement
thereto, and agrees not to file or distribute any such document if Sprint PCS
reasonably objects in writing on
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a timely basis to any portion of the document that refers to Sprint PCS, its
Related Parties, their respective businesses, this agreement or the Services
Agreement.
1.8 Ethical Conduct and Related Covenants. Each party must perform its
obligations under this agreement in a diligent, legal, ethical, and professional
manner.
2. BUILD-OUT OF NETWORK
2.1 Build-out Plan. Manager will build-out the Service Area Network in
the Service Area in accordance with a Build-out Plan. Sprint PCS and Manager
will jointly develop each Build-out Plan, except Sprint PCS must approve the
final Build-out Plan. Manager will report to Sprint PCS its performance
regarding the critical milestones included in the Build-out Plan on a periodic
basis as mutually agreed to by the parties, but no less frequently than
quarterly. The Build-out Plan and the Service Area Network as built must comply
with Sprint PCS Program Requirements and federal and local regulatory
requirements.
Any modifications, additions or expansions to a Build-out Plan will be
subject to prior written approval by Sprint PCS. The Build-out Plan in effect
as of the date of this agreement is attached as Exhibit 2.1. Each new or
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amended Build-out Plan will also become part of Exhibit 2.1.
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2.2 Compliance with Regulatory Rules. During the build-out of the Service
Area Network, Sprint PCS authorizes Manager to make all filings with regulatory
authorities regarding the build-out, including filings with the Federal Aviation
Administration, environmental authorities, and historical districts. Manager
may further delegate its duty under this Section 2.2 to a qualified site
acquisition company. Manager must ensure that a copy of every filing is given
to Sprint PCS. Manager must ensure that Sprint PCS is notified in writing of
any contact by a regulatory agency including the FCC with Manager or Manager's
site acquisition company regarding any filing. Sprint PCS has the right to
direct any proceeding, inquiry, dispute, appeal or other activity with a
regulatory or judicial authority regarding any filing made on behalf of Sprint
PCS. Manager will amend, modify, withdraw, refile and otherwise change any
filing as Sprint PCS requires. Notwithstanding the preceding sentences in this
Section 2.2, and in conjunction with Section 16, Sprint PCS is solely
responsible for making any and all filings with the FCC regarding the build-out.
Manager will notify Sprint PCS of any activity, event or condition related to
the build-out that might require an FCC filing.
2.3 Exclusivity of Service Area. Manager will be the only person or
entity that is a manager or operator for Sprint PCS with respect to the Service
Area and neither Sprint PCS nor any of its Related Parties will own, operate,
build or manage another wireless mobility communications network in the Service
Area so long as this agreement remains in full force and effect and there is no
Event of Termination that has occurred giving Sprint PCS the right to terminate
this agreement, except that:
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(a) Sprint PCS may cause Sprint PCS Products and Services to be sold
in the Service Area through the Sprint PCS National Accounts Program
Requirements and Sprint PCS National or Regional Distribution Program
Requirements;
(b) A reseller of Sprint PCS Products and Services may sell its
products and services in the Service Area;
(c) Sprint PCS may build-out and sell Sprint PCS Products and Services
in a New Area, or permit a third party to do so, if Manager has chosen not to
build-out the New Area; and
(d) Sprint PCS and its Related Parties may engage in the activities
described in Sections 2.4(a) and 2.4(b) with Manager in the geographic areas
within the Service Area in which one of them owns an incumbent local exchange
carrier as of the date of this agreement.
2.4 Restriction. In geographic areas within the Service Area in which
Sprint PCS or any of its Related Parties owns an incumbent local exchange
carrier as of the date of this agreement, Manager must not offer any Sprint PCS
Products or Services specifically designed for the competitive local exchange
market ("fixed wireless local loop"), except that:
(a) Manager may designate the local exchange carrier that is a Related
Party of Sprint to be the exclusive distributor of the fixed wireless local loop
product in the territory served by the local exchange carrier, even if a portion
of its territory is within the Service Area; or
(b) Manager may sell the fixed wireless local loop product under the
terms and conditions specified by Sprint PCS (e.g., including designation by
Sprint PCS of an exclusive distribution agent for the territory).
This restriction exists with respect to a particular geographic area only so
long as Sprint PCS or its Related Party owns such incumbent local exchange
carrier.
Nothing in this Section 2.4 prohibits Manager from offering Sprint PCS
Products and Services primarily designed for mobile functionality. The
restricted markets as of the date of this agreement are set forth on Exhibit
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2.4.
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2.5 Manager's Right of First Refusal for New Area Build-out. Sprint PCS
grants to Manager the right of first refusal to build-out New Areas. Sprint PCS
will give to Manager a written notice of a New Area within the Service Area that
Sprint PCS decides should be built-out. Manager must communicate to Sprint PCS
within 90 days after receipt of the notice whether it will build-out the New
Area, otherwise Manager's right of first refusal terminates with regard to the
New Area described in the notice.
If Manager decides to build-out the New Area then Manager and Sprint PCS
will diligently negotiate and execute an amendment to the Build-out Plan and
proceed as set forth in Sections 2.1 and 2.2. The amended Build-out Plan will
contain critical milestones that provide
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Manager a commercially reasonable period in which to implement coverage in the
New Area. In determining what constitutes a "commercially reasonable period" as
used in this paragraph, the parties will consider several factors, including
local zoning processes and other legal requirements, weather conditions,
equipment delivery schedules, the need to arrange additional financing, and
other construction already in progress by the Manager. Manager will construct
and operate the network in the New Area in accordance with the terms of this
agreement.
If Manager declines to exercise its right of first refusal or Manager fails
to build-out the New Area in accordance with the amended Build-out Plan then
Sprint PCS may construct the New Area itself or allow a Sprint PCS Related Party
or an Other Manager to construct the New Area. Sprint PCS has the right, in a
New Area that it constructs or that is constructed by a third party, to manage
the network, allow a Sprint PCS Related Party to manage the network, or hire a
manager to operate the network in the New Area. Any New Area that Sprint PCS or
a third party builds-out is deemed removed from the Service Area and the Service
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Area Exhibit is deemed amended to reflect the change in the Service Area. If
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Manager does not exercise its right of first refusal with respect to a New Area,
Manager's right of first refusal does not terminate with respect to the
remainder of the Service Area.
2.6 Purchase of Assets by Manager. If Sprint PCS has assets located in
the Service Area that Manager could reasonably use in its construction of the
Service Area Network and if Sprint PCS is willing to sell such assets, then
Manager agrees to purchase from Sprint PCS and Sprint PCS agrees to sell to
Manager the assets in accordance with the terms and conditions of the asset
purchase agreement attached as Exhibit 2.6.
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2.7 Microwave Relocation. Sprint PCS will relocate interfering microwave
sources in the spectrum in the Service Area to the extent necessary to permit
the Service Area Network to carry the anticipated call volume as set out in the
Build-out Plan. If the spectrum cleared is not sufficient to carry the actual
call volume then Sprint PCS will clear additional spectrum of its choosing to
accommodate the call volume. Sprint PCS may choose to clear spectrum one
carrier at a time. The parties will share equally all costs associated with
clearing spectrum under this Section 2.7.
2.8 Determination of pop. If any provision in this agreement requires the
determination of pops in a given area, then the pops will be determined using
the census block group pop forecast then used by Sprint PCS, except that a
different forecast will be used for any FCC filing and in preparing the Build-
out Plan if required by the FCC. Sprint PCS presently uses the forecast of
Equifax/NDS, but it may choose in its sole discretion to use another service
that provides comparable data.
3. PRODUCTS AND SERVICES; IXC SERVICES
3.1 Sprint PCS Products and Services. Manager must offer for sale,
promote and support all Sprint PCS Products and Services within the Service
Area, unless the parties otherwise agree in advance in writing. Within the
Service Area, Manager may only sell, promote and support wireless products and
services that are Sprint PCS Products and Services or are other
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products and services authorized under Section 3.2. The Sprint PCS Products and
Services as of the date of this agreement are attached as Exhibit 3.1. Sprint
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PCS may modify the Sprint PCS Products and Services from time to time in its
sole discretion by delivering to Manager a new Exhibit 3.1.
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3.2 Other Products and Services. Manager may offer wireless products and
services that are not Sprint PCS Products and Services, on the terms Manager
determines, if the offer of the additional products and services:
(a) does not violate the obligations of Manager under this agreement;
(b) does not cause distribution channel conflict with or consumer
confusion regarding Sprint PCS' regional and national offerings of Sprint PCS
Products and Services;
(c) complies with the Trademark License Agreements; and
(d) does not materially impede the development of the Sprint PCS
Network.
Manager will not offer any products or services under this Section 3.2 that
are confusingly similar to Sprint PCS Products and Services. Manager must
request that Sprint PCS determine whether Sprint PCS considers a product or
service to be confusingly similar to any Sprint PCS Products and Services by
providing advance written notice to Sprint PCS that describes those products and
services that could be interpreted to be confusingly similar to Sprint PCS
Products and Services. If Sprint PCS fails to provide a response to Manager
within 30 days after receiving the notice, then the products and services are
deemed to create confusion with the Sprint PCS Products and Services and the
request therefore rejected. In rejecting any request Sprint PCS must provide
the reasons for the rejection. If the rejection is based on Sprint PCS' failure
to respond within 30 days and Manager requests an explanation for the deemed
rejection, then Sprint PCS must provide within 30 days the reasons for the
rejection.
3.3 Cross-selling with Sprint. Manager and Sprint and Sprint's Related
Parties may enter into arrangements to sell Sprint's services, including long
distance service (except those long distance services governed by Section 3.4),
Internet access, customer premise equipment, prepaid phone cards, and any other
services that Sprint or its Related Parties make available from time to time.
Sprint's services may be packaged with the Sprint PCS Products and Services.
If Manager chooses to resell the long distance services, Internet access or
competitive local telephony services including prepaid phone cards, of third
parties (other than Manager's Related Parties), Manager will give Sprint the
right of last offer to provide those services on the same terms and conditions
as the offer to which Manager is prepared to agree, subject to the terms of any
existing agreements Manager was subject to prior to execution of this agreement.
Within the Service Area, Manager will facilitate sales by Sprint of the
Sprint PCS Products and Services, including the packaging of wireless, local
exchange and other products and services with Sprint products and services.
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3.4 IXC Services. Manager must purchase from Sprint long distance
telephony services for the Sprint PCS Products and Services at wholesale rates.
Long distance telephone calls are those calls between the local calling area for
the Service Area Network and areas outside the local calling area. The local
calling area will be defined by mutual agreement of Sprint PCS and Manager. If
the parties cannot agree on the extent of the local calling area they will
resolve the matter through the dispute resolution process in Section 14. Any
arrangement must have terms at least as favorable to Manager (in all material
respects) as those offered by Sprint to any wholesale customer of Sprint in
comparable circumstances (taking into consideration volume, traffic patterns,
etc.). If Manager is bound by an agreement for these services and the agreement
was not made in anticipation of this agreement, then the requirements of this
Section 3.4 do not apply during the term of the other agreement. If the other
agreement terminates for any reason then the requirements of this Section 3.4 do
apply.
3.5 Resale of Products and Services.
3.5.1 Mandatory Resale of Products and Services. Sprint PCS must,
under FCC rules, permit Sprint PCS' service plans to be resold by a purchaser of
the service plan. Sprint PCS will not grant the purchaser of a service plan the
right to use any of the support services offered by Sprint PCS, including
customer care, billing, collection, and advertising, nor the right to use the
Brands. The reseller only has the right to use the service purchased.
Consequently, Manager agrees not to interfere with any purchaser of the Sprint
PCS Products or Services who resells the service plans in accordance with this
agreement and applicable law. Manager will notify purchaser that the purchaser
does not have a right to use the Brands or Sprint PCS' support services. In
addition, Manager will notify Sprint PCS if it reasonably believes a reseller of
retail service plans is using the support services or Brands.
3.5.2 Voluntary Resale of Products and Services. Sprint PCS may
choose to offer a resale product under which resellers will resell Sprint PCS
Products and Services under brand names other than the Brands, except Sprint PCS
may permit the resellers to use the Brands for limited purposes related to the
resale of Sprint PCS Products and Services (e.g., to notify people that the
handsets of the resellers will operate on the Sprint PCS Network). The
resellers may also provide their own support services (e.g., customer care and
billing) or may purchase the support services from Sprint PCS. If Sprint PCS
chooses to offer a voluntary resale product, it will adopt a program that will
be a Program Requirement under this agreement and that addresses the manner in
which Manager and Other Managers interact with the resellers. Sprint PCS will
discuss such program with Manager during development.
Manager must not sell Sprint PCS Products and Services for resale unless
Sprint PCS consents to such sales in advance in writing, except as required
under the regulations and rules concerning mandatory resale.
3.6 Non-competition. Neither Manager nor any of its Related Parties may
offer Sprint PCS Products and Services outside of the Service Area without the
prior written approval of Sprint PCS.
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Within the Service Area, Manager and Related Parties may offer, market or
promote telecommunications products or services only under the following brands:
(a) products or services with the Brands;
(b) other products and services approved under Section 3.2, except no
brand of a significant competitor of Sprint PCS or its Related Parties in the
telecommunications business may be used by Manager's Related Parties on these
products and services;
(c) products or services with Manager's brand; or
(d) products or services with the brands of Manager's Related Parties,
except no brand of a significant competitor of Sprint PCS or its Related Parties
in the telecommunications business may be used by Manager's Related Parties on
these products and services.
If Manager or any of its Related Parties has licenses to provide broadband
personal communication services outside the Service Area, neither Manager nor
such Related Party may utilize the spectrum to offer Sprint PCS Products and
Services without prior written consent from Sprint PCS. Additionally, when
Manager's customers from inside the Service Area travel or roam to other
geographic areas, Manager will route the customers' calls, both incoming and
outgoing, according to the Sprint PCS Network Roaming and Inter Service Area
Program Requirements, without regard to any wireless networks operated by
Manager or its Related Parties. For example, Manager will program the preferred
roaming list for handsets sold in the Service Area to match the Sprint PCS
preferred roaming list.
3.7 Right of Last Offer. Manager will offer to Sprint the right to make
to Manager the last offer to provide backhaul and transport services for call
transport for the Service Area Network, if Manager decides to use third parties
for backhaul and transport services rather than self-provisioning the services
or purchasing the services from Related Parties of Manager. Sprint will have a
reasonable time to respond to Manager's request for last offer to provide
backhaul and transport pricing and services, which will be no greater than 5
Business Days after receipt of the request for the services and pricing from
Manager.
If Manager has an agreement in effect as of the date of this agreement for
these services and the agreement was not made in anticipation of this agreement,
then the requirements of this Section 3.7 do not apply during the term of the
other agreement. If the other agreement terminates for any reason then the
requirements of this Section 3.7 do apply.
4. MARKETING AND SALES ACTIVITIES
4.1 Sprint PCS National or Regional Distribution Program Requirements.
During the term of this agreement, Manager must participate in any Sprint PCS
National or Regional Distribution Program (as in effect from time to time), and
will pay or receive compensation for its participation in accordance with the
terms and conditions of that program.
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The Sprint PCS National or Regional Distribution Program Requirements in effect
as of the date of this agreement are attached as Exhibit 4.1.
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4.1.1 Territorial Limitations of Manager's Distribution Activities.
Neither Manager nor any of its Related Parties will market, sell or distribute
Sprint PCS Products and Services outside of the Service Area, except:
(a) as otherwise agreed upon by the parties in advance in writing; or
(b) Manager may place advertising in media that has distribution
outside of the Service Area, so long as that advertising is intended by Manager
to reach primarily potential customers within the Service Area.
Manager may establish direct local distribution programs in accordance with
the Sprint PCS Distribution Program Requirements, subject to the terms and
conditions of the Trademark License Agreements and the non-competition and other
provisions contained in this agreement.
4.1.2 Settlement of Equipment Sales. Sprint PCS will establish a
settlement policy and process that will be included in the Sprint PCS National
or Regional Distribution Program Requirements to:
(a) reconcile sales of subscriber equipment made in the service areas
of Sprint PCS or Other Managers of Sprint PCS, that result in activations in the
Service Area; and
(b) reconcile sales of subscriber equipment made in the Service Area
that result in activations in service areas of Sprint PCS or Other Managers.
In general, the policy will provide that the party in whose service area
the subscriber equipment is activated will be responsible for the payment of any
subsidy (i.e., the difference between the price paid to the manufacturer and the
suggested retail price for direct channels and the difference between the price
paid to the manufacturer and the wholesale price for third party retailers) and
for other costs associated with the sale, including logistics, inventory
carrying costs, direct channel commissions and other retailer compensation.
4.1.3 Use of Third-Party Distributors. Manager may request that
Sprint PCS and a local distributor enter into Sprint PCS' standard distribution
agreement regarding the purchase from Sprint PCS of handsets and accessories.
Sprint PCS will use commercially reasonable efforts to reach agreement with the
local distributor. Sprint PCS may refuse to enter into a distribution agreement
with a distributor for any reasonable reason, including that the distributor
fails to pass Sprint PCS' then current credit and background checks or the
distributor fails to agree to the standard terms of the Sprint PCS distribution
agreement. Any local distributor will be subject to the terms of the Trademark
License Agreements or their equivalent. Manager will report to Sprint PCS the
activities of any local distributor that Manager believes to be in violation of
the distribution agreement.
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4.2 Sprint PCS National Accounts Program Requirements. During the term of
this agreement, Manager must participate in the Sprint PCS National Accounts
Program (as in effect from time to time), and will be entitled to compensation
for its participation and will be required to pay the expenses of the program in
accordance with the terms and conditions of that program. The Sprint PCS
National Accounts Program Requirements in effect as of the date of this
agreement are attached as Exhibit 4.2.
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4.3 Sprint PCS Roaming and Inter Service Area Program Requirements.
Manager will participate in the Sprint PCS Roaming and Inter Service Area
Program established and implemented by Sprint PCS, including roaming price plans
and inter-carrier settlements. The Sprint PCS Roaming and Inter Service Area
Program Requirements in effect as of the date of this agreement are attached as
Exhibit 4.3.
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As part of the Sprint PCS Roaming and Inter Service Area Program
Requirements, Sprint PCS will establish a settlement policy and process to
equitably distribute between the members making up the Sprint PCS Network (i.e.,
Sprint PCS, Manager and all Other Managers) the revenues received by one member
for services used by its customers when they travel into other members' service
areas.
4.4 Pricing. Manager will offer and support all Sprint PCS pricing plans
designated for regional or national offerings of Sprint PCS Products and
Services (e.g. , national inter service area rates, regional home rates, and
local price points). The Sprint PCS pricing plans as of the date of this
agreement are attached as Exhibit 4.4. Sprint PCS may modify the Sprint PCS
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pricing plans from time to time in its sole discretion by delivering to Manager
a new Exhibit 4.4.
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Additionally, with prior approval from Sprint PCS, which approval will not
be unreasonably withheld, Manager may establish price plans for Sprint PCS
Products and Services that are only offered in its local market, subject to:
(a) the non-competition and other provisions contained in this
agreement;
(b) consistency with regional and national pricing plans;
(c) regulatory requirements; and
(d) capability and cost of implementing rate plans in Sprint PCS
systems (if used).
Manager must provide advance written notice to Sprint PCS with details of
any pricing proposal for Sprint PCS Products or Services in the Service Area.
If Sprint PCS fails to respond to Manager within 20 days after receiving such
notice, then the price proposed for those Sprint PCS Products or Services is
deemed approved.
At the time Sprint PCS approves a pricing proposal submitted by Manager,
Sprint PCS will provide Manager an estimate of the costs and expenses Sprint PCS
will incur to implement the proposed pricing plan. Manager agrees to promptly
reimburse Sprint PCS for any cost or
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expense incurred by Sprint PCS to implement such a pricing plan, which will not
exceed the amount estimated by Sprint PCS if Manager waited for Sprint PCS'
response to Manager's proposal.
4.5 Home Service Area. Sprint PCS and Manager will agree to the initial
home service area for each base station in the Service Area Network prior to the
date the Service Area Network goes into commercial operation. If the parties
cannot agree to the home service area for each base station in the Service Area
Network, then the parties will use the dispute resolution process in Section 14
of this agreement to assign each base station to a home service area.
5. USE OF BRANDS
5.1 Use of Brands.
(a) Manager must enter into the Trademark License Agreements on or
before the date of this agreement.
(b) Manager must use the Brands exclusively in the marketing,
promotion, advertisement, distribution, lease or sale of any Sprint PCS Products
and Services within the Service Area, except Manager may use other brands to the
extent permitted by the Trademark License Agreements and not inconsistent with
the terms of this agreement.
(c) Neither Manager nor any of its Related Parties may market,
promote, advertise, distribute, lease or sell any of the Sprint PCS Products and
Services or Manager's Products and Services on a non-branded, "private label"
basis or under any brand, trademark, trade name or trade dress other than the
Brands, except (i) for sales to resellers required under this agreement, or (ii)
as permitted under the Trademark License Agreements.
(d) The provisions of this Section 5.1 do not prohibit Manager from
including Sprint PCS Products and Services under the Brands within the Service
Area as part of a package with its other products and services that bear a
different brand or trademark. The provisions of this Section 5.1 do not apply
to the extent that they are inconsistent with applicable law or in conflict with
the Trademark License Agreements.
5.2 Conformance to Marketing Communications Guidelines. Manager must
conform to the Marketing Communications Guidelines in connection with the
marketing, promotion, advertisement, distribution, lease and sale of any of the
Sprint PCS Products and Services. The Marketing Communications Guidelines in
effect as of the date of this agreement have been provided to Manager. Sprint
and Sprint Spectrum may amend the Marketing Communications Guidelines from time
to time in accordance with the terms of the Trademark License Agreements.
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5.3 Joint Marketing with Third Parties.
(a) Manager may engage in various joint marketing activities (e.g.,
promotions with sports teams and entertainment providers or tournament
sponsorships) with third parties in the Service Area from time to time during
the term of this agreement with respect to the Sprint PCS Products and Services,
except that Manager may engage in the joint marketing activities only if the
joint marketing activities:
(i) Are conducted in accordance with the terms and conditions
of the Trademark License Agreements and the Marketing Communications
Guidelines;
(ii) Do not violate the terms of this agreement;
(iii) Are not likely (as determined by Sprint PCS, in its sole
discretion) to cause confusion between the Brands and any other trademark
or service ▇▇▇▇ used in connection with the activities;
(iv) Are not likely (as determined by Sprint, in its sole
discretion) to cause confusion between the Sprint Brands and any other
trademark or service ▇▇▇▇ used in connection with the activities; and
(v) Are not likely (as determined by Sprint PCS, in its sole
discretion) to give rise to the perception that the Sprint PCS Products and
Services are being advertised, marketed or promoted under any trademark or
service ▇▇▇▇ other than the Brands, except as provided in the Trademark
License Agreements. Manager will not engage in any activity that includes
co-branding involving use of the Brands (that is, the marketing, promotion,
advertisement, distribution, lease or sale of any of the Sprint PCS
Products and Services under the Brands and any other trademark or service
▇▇▇▇), except as provided in the Trademark License Agreements.
(b) Manager must provide advance written notice to Sprint PCS
describing those joint marketing activities that may:
(i) cause confusion between the Brands and any other trademark
or service ▇▇▇▇ used in connection with the proposed activities; or
(ii) give rise to the perception that the Sprint PCS Products
and Services are being advertised, marketed or promoted under any trademark
or service ▇▇▇▇ other than the Brands, except as provided in the Trademark
License Agreements.
(c) If Sprint PCS fails to provide a response to Manager within 20
days after receiving such notice, then the proposed activities are deemed, as
the case may be:
(i) not to create confusion between the Brands and any other
trademark or service ▇▇▇▇; or
13
(ii) not to give rise to the perception that Manager's products
and services are being advertised, marketed or promoted under any trademark
or service ▇▇▇▇ other than the Brands, except as provided in the Trademark
License Agreements.
5.4 Prior Approval of Use of Brands. Manager must obtain advance written
approval from Sprint for use of the Sprint Brands to the extent required by the
Sprint Trademark License Agreement and from Sprint PCS for use of the Sprint PCS
Brands to the extent required by the Sprint PCS Trademark License Agreement.
Sprint PCS will use commercially reasonable efforts to facilitate any review of
Manager's use of the Brands, if Sprint PCS is included in the review process.
5.5 Duration of Use of Brand. Manager is entitled to use the Brands only
during the term of the Trademark License Agreements and any transition period
during which Manager is authorized to use the Brands following their
termination.
6. ADVERTISING AND PROMOTION
6.1 National Advertising and Promotion. Sprint PCS is responsible for (a)
all national advertising and promotion of the Sprint PCS Products and Services,
including the costs and expenses related to national advertising and promotions,
and (b) all advertising and promotion of the Sprint PCS Products and Services in
the markets where Sprint PCS operates without the use of a Manager.
6.2 In-Territory Advertising and Promotion. Manager must advertise and
promote the Sprint PCS Products and Services in the Service Area (and may do so
in the areas adjacent to the Service Area so long as Manager intends that such
advertising or promotion primarily reach potential customers within the Service
Area). Manager must advertise and promote the Sprint PCS Products and Services
in accordance with the terms and conditions of this agreement, the Trademark
License Agreements and the Marketing Communication Guidelines. Manager is
responsible for the costs and expenses incurred by Manager with respect to
Manager's advertising and promotion activities in the Service Area.
Manager will be responsible for a portion of the cost of any promotion or
advertising done by third party retailers in the Service Area (e.g., Best Buy)
in accordance with any cooperative advertising arrangements based on per unit
handset sales.
Sprint PCS has the right to use in any promotion or advertising done by
Sprint PCS any promotion or advertising materials developed by Manager from time
to time with respect to the Sprint PCS Products and Services. Sprint PCS will
reimburse Manager for the reproduction costs related to such use.
Sprint PCS will make available to Manager the promotion or advertising
materials developed by Sprint PCS from time to time with respect to Sprint PCS
Products and Services in current use by Sprint PCS (e.g., radio ads, television
ads, design of print ads, design of point of sale materials, retail store
concepts and designs, design of collateral). Manager will bear the cost
14
of using such materials (e.g., cost of local radio and television ad placements,
cost of printing collateral in quantity, and building out and finishing retail
stores).
6.3 Review of Advertising and Promotion Campaigns. Sprint PCS and Manager
will jointly review the upcoming marketing and promotion campaigns of Manager
with respect to Sprint PCS Products and Services (including advertising and
promotion expense budgets) and will use good faith efforts to coordinate
Manager's campaign with Sprint PCS' campaign to maximize the market results of
both parties. Sprint PCS and Manager may engage in cooperative advertising or
promotional activities during the term of this agreement as the parties may
agree in writing.
6.4 Public Relations. If Manager conducts local public relations efforts,
then Manager must conduct the local public relations efforts consistent with the
Sprint PCS Communications Policies. The Sprint PCS Communications Policies as
of the date of this agreement are attached as Exhibit 6.4. Sprint PCS may
-----------
modify the Sprint PCS Communications Policies from time to time by delivering to
Manager a new Exhibit 6.4.
-----------
7. SPRINT PCS TECHNICAL PROGRAM REQUIREMENTS
7.1 Conformance to Sprint PCS Technical Program Requirements.
(a) Manager must meet or exceed the Sprint PCS Technical Program
Requirements established by Sprint PCS from time to time for the Sprint PCS
Network. Manager will be deemed to meet the Sprint PCS Technical Program
Requirements if:
(i) Manager operates the Service Area Network at a level equal
to or better than the lower of the Operational Level of Sprint PCS or the
operational level contemplated by the Sprint PCS Technical Program
Requirements; or
(ii) Sprint PCS is responsible under the Services Agreement to
ensure the Service Area Network complies with the Sprint PCS Technical
Program Requirements.
(b) Manager must demonstrate to Sprint PCS that Manager has complied
with the Sprint PCS Technical Program Requirements prior to connecting the
Service Area Network to the rest of the Sprint PCS Network. Once the Service
Area Network is connected to the Sprint PCS Network, Manager must continue to
comply with the Sprint PCS Technical Program Requirements. Sprint PCS agrees
that the Sprint PCS Technical Program Requirements adopted for Manager will be
the same Sprint PCS Technical Program Requirements applied by Sprint PCS to the
Sprint PCS Network.
7.2 Establishment of Sprint PCS Technical Program Requirements. Sprint
PCS has delivered to Manager a copy of the current Sprint PCS Technical Program
Requirements, attached as Exhibit 7.2. Sprint PCS drafted the Sprint PCS
-----------
Technical Program Requirements to ensure a minimum, base-line level of quality
for the Sprint PCS Network. The Sprint PCS
15
Technical Program Requirements include standards relating to voice quality,
interoperability, consistency (seamlessness) of coverage, RF design parameters,
system design, capacity, and call blocking ratio. Sprint PCS has selected code
division multiple access as the initial air interface technology for the Sprint
PCS Network (subject to change in accordance with Section 7.3).
7.3 Handoff to Adjacent Networks. If technically feasible and commercially
reasonable, Manager will operate the Service Area Network in a manner that
permits a seamless handoff of a call initiated on the Service Area Network to
any adjacent PCS network that is part of the Sprint PCS Network, as specified in
the Sprint PCS Technical Program Requirements. Sprint PCS agrees that the terms
and conditions for seamless handoffs adopted for the Service Area Network will
be the same as the terms Sprint PCS applies to the other parts of the Sprint PCS
Network for similar configurations of equipment.
8. SPRINT PCS CUSTOMER SERVICE PROGRAM REQUIREMENTS
8.1 Compliance With Sprint PCS Customer Service Program Requirements.
Manager must comply with the Sprint PCS Customer Service Program Requirements in
providing the Sprint PCS Products and Services to any customer of Manager,
Sprint PCS or any Sprint PCS Affiliate. Manager will be deemed to meet the
standards if:
(a) Manager operates the Service Area Network at a level equal to or
better than the lower of the Operational Level of Sprint PCS or the operational
level contemplated by the Program Requirements; or
(b) Manager has delegated to Sprint PCS under the Services Agreement
responsibility to ensure the Service Area Network complies with the Sprint PCS
Customer Service Standards.
Sprint PCS has delivered to Manager a copy of the Sprint PCS Customer
Service Standards, which are attached as Exhibit 8.1.
-----------
9. SPRINT PCS PROGRAM REQUIREMENTS
9.1 Program Requirements Generally. This agreement contains numerous
references to Sprint PCS National and Regional Distribution Program
Requirements, Sprint PCS National Accounts Program Requirements, Sprint PCS
Roaming and Inter Service Area Program Requirements, Sprint PCS Technical
Program Requirements and Sprint PCS Customer Service Program Requirements.
Sprint PCS may unilaterally amend from time to time in the manner described in
Section 9.2 all Program Requirements, guidelines and policies mentioned in this
agreement. The most current version of the requirements programs, guidelines and
policies mentioned in the first sentence of this Section 9.1 have been provided
to Manager.
9.2 Amendments to Program Requirements. Sprint PCS may amend any of the
Sprint PCS Program Requirements, subject to the following conditions:
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(a) The applicable Program Requirements, as amended, will apply
equally to Manager, Sprint PCS and each Other Manager, except if Manager and
Sprint PCS agree otherwise or if Sprint PCS grants a waiver to Manager. Sprint
PCS may grant waivers to Other Managers without affecting Manager's obligation
to comply with the Program Requirements;
(b) Each amendment will be reasonably required to fulfill the
purposes set forth in Section 1.2 with respect to uniform and consistent
operations of the Sprint PCS Network and the presentation of Sprint PCS Products
and Services to customers in a uniform and consistent manner;
(c) Each amendment will otherwise be on terms and conditions that are
commercially reasonable with respect to the construction, operation and
management of the Sprint PCS Network. With respect to any amendment to Program
Requirements, Sprint PCS may provide for reasonable transition periods and,
where appropriate, grandfathering provisions for existing activities by Manager
that were permitted under the applicable Program Requirements before the
amendment;
(d) Sprint PCS must give Manager reasonable, written notice of the
amendment, but in any event the notice will be given at least 30 days prior to
the effective date of the amendment; and
(e) Manager must implement any changes in the Program Requirements
within a commercially reasonable period of time unless otherwise consented to by
Sprint PCS. Sprint PCS will determine what constitutes a commercially reasonable
period of time taking into consideration relevant business factors, including
the strategic significance of the changes to the Sprint PCS Network, the
relationship of the changes to the yearly marketing cycle, and the financial
demands on and capacity generally of Other Managers. Notwithstanding the
preceding two sentences, Manager will not be required to implement any change in
the Service Area Network or the business of Manager required by an amendment to
a Program Requirement until Sprint PCS has implemented the required changes in
substantially all of that portion of the Sprint PCS Network that Sprint PCS
operates without the use of a manager, unless the amendment to the Program
Requirement relates to an obligation regarding the Service Area Network mandated
by law. When necessary for reasons related to new technical standards, new
equipment or strategic reasons, Sprint PCS can require Manager to implement the
changes in the Service Area Network or Manager's business concurrently with
Sprint PCS, in which case Sprint PCS will reimburse Manager for its costs and
expenses if Sprint PCS discontinues the Program Requirement changes prior to
implementation.
Sprint PCS may grant Manager appropriate waivers and variances from the
requirements of any Program Requirements. Sprint PCS has the right to adopt any
Program Requirements that implement any obligation regarding the Service Area
Network mandated by law.
Any costs and expenses incurred by Manager in connection with conforming to
any change to the Program Requirements during the term of this agreement are the
responsibility of Manager.
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9.3 Manager's Right to Request Review of Change. If Sprint PCS announces
a change to a Program Requirement that will:
(a) cause the Manager to spend an additional amount greater than 5% of
Manager's shareholder's equity or capital account plus Manager's long-term debt
(i.e., notes that mature more than one year from the date issued), as reflected
on Manager's books; or
(b) cause the long term operating expenses of Manager on a per unit
basis using a 10-year time frame to increase by more than 10% on a net present
value basis,
then Manager may give Sprint PCS a written notice requesting Sprint PCS to
reconsider the change.
The Sprint PCS Vice President or the designee of the Sprint PCS Chief
Officer in charge of the group that manages the Sprint PCS relationship with
Manager will review Manager's request. If after the review and decision by the
Vice President, Manager is still dissatisfied, then Manager may ask that the
Chief Officer to whom the Vice President reports review the matter. If Sprint
PCS still requires Manager to implement the change to the Program Requirement,
then upon Manager's failure to implement the change Sprint PCS will have the
rights under Section 11.
9.4 Sprint PCS' Right to Implement Changes. If Manager requests Sprint PCS
to reconsider a change to a Program Requirement as permitted under Section 9.3
and Sprint PCS decides it will not require Manager to make the change, Sprint
PCS may, but is not required to, implement the change at Sprint PCS' expense, in
which event Manager will be required to operate the Service Area Network, as
changed, but Sprint PCS will be entitled to any revenue derived from the change.
9.5 Rights of Inspection. Sprint PCS and its authorized agents and
representatives may enter upon the premises of any office or facility operated
by or for Manager at any time, with reasonable advance notice to Manager if
possible, to inspect, monitor and test in a reasonable manner the Service Area
Network, including the facilities, equipment, books and records of Manager, to
ensure that Manager has complied or is in compliance with all covenants and
obligations of Manager under this agreement, including Manager's obligation to
conform to the Program Requirements. The inspection, monitoring and testing may
not disrupt the operations of the office or facility, nor impede Manager's
access to the Service Area Network.
9.6 Manager's Responsibility to Interface with Sprint PCS. Manager will
use platforms fully capable of interfacing with the Sprint PCS platforms in
operating the Service Area Network and in providing Sprint PCS Products and
Services. Manager will pay the expense of making its platforms fully capable of
interfacing with Sprint PCS, including paying for the following:
(i) Connectivity;
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(ii) Any changes that Manager requests Sprint PCS to make to
Sprint PCS systems to interconnect with Manager's systems that Sprint PCS,
in its sole discretion, agrees to make;
(iii) Equipment to run Manager's software;
(iv) License fees for Manager's software; and
(v) Manager upgrades or changes to its platforms.
10. FEES
10.1 Fees and Payments.
10.1.1 Fee Based on Collected Revenue. Sprint PCS will pay to Manager
a weekly fee equal to 92% of Collected Revenues for the week for: (a)
utilization of the Service Area Network; (b) sales and marketing costs; (c)
Manager's management of the Service Area Network; and (d) all other obligations
of Manager under this Agreement. The fee will be due on Thursday of the week
following the week for which the fee is calculated.
10.1.2 Payment of Universal Service Funds. Sprint PCS and Manager
will share any federal and state subsidy funds (e.g., payments by a state of
universal service fund subsidies to Sprint PCS or Manager), if any, received by
Sprint PCS or Manager for customers who reside in the portion of the Service
Area served by the Service Area Network. Manager is entitled to 92% of any
amount received by either party and Sprint PCS is entitled to 8% of such
amounts.
10.1.3 Inter Service Area Fees. Sprint PCS will pay to Manager
monthly a fee as set out in the Sprint PCS Roaming and Inter Service Area
Program, for each minute of use that a customer of Sprint PCS or one of the
Other Managers whose NPA-NXX is not assigned to the Service Area Network uses
the Service Area Network. Manager will pay to Sprint PCS a fee, as set out in
the Sprint PCS Roaming and Inter Service Area Program, for each minute of use
that a customer whose NPA-NXX is assigned to the Service Area Network uses a
portion of the Sprint PCS Network other than the Service Area Network. Manager
acknowledges that the manner in which the NPA-NXX is utilized could change,
which will require a modification in the manner in which the inter service area
fees, if any, will be calculated.
10.1.4 Interconnect Fees. Manager will pay to Sprint PCS (or to
other carriers as appropriate) monthly the interconnect fees, if any, as
provided under Section 1.4.
10.1.5 Outbound Roaming Fees. If not otherwise provided under any
Program Requirement:
(a) Sprint PCS will pay to Manager monthly the amount of Outbound
Roaming fees that Sprint PCS collects for the month from end users whose NPA-NXX
is assigned to the Service Area; and
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(b) Manager will pay to Sprint PCS (or to a clearinghouse or other
carrier as appropriate) the direct cost of providing the capability for the
Outbound Roaming, including any amounts payable to the carrier that handled the
roaming call and the clearinghouse operator.
10.1.6 Reimbursements. Manager will pay to or reimburse Sprint PCS
for any amounts that Sprint PCS is required to pay to a third party (e.g., a
telecommunications carrier) to the extent Sprint PCS already paid such amount to
Manager under this Section 10.
10.2 Monthly True Up. Manager will report to Sprint PCS monthly the amount
of Collected Revenue received directly by the Manager (e.g., customer mails
payment to the business address of Manager rather than to the lockbox or a
customer pays a direct sales force representative in cash). Sprint PCS will on a
monthly basis true up the fees and payments due under Section 10.1 against the
actual payments made by Sprint PCS to Manager. Sprint PCS will provide to
Manager a true up report each month showing the true up and the net amount due
from one party to the other, if any. If the weekly payments made to Manager
exceed the actual fees and payments due to Manager, then Manager will remit the
amount of the overpayment to Sprint PCS within 5 Business Days after receiving
the true up report from Sprint PCS. If the weekly payments made to Manager are
less than the actual fees and payments due to Manager, then Sprint PCS will
remit the shortfall to Manager within 5 Business Days after sending the true up
report to Manager.
If a party disputes any amount on the true up report, the disputing party
must give the other party written notice of the disputed amount and the reason
for the dispute within 90 days after it receives the true up report. The dispute
will be resolved through the dispute resolution process in Section 14. The
parties must continue to pay to the other party any undisputed amounts owed
under this agreement during the dispute resolution process. The dispute of an
item does not stay or diminish a party's other rights and remedies under this
agreement.
10.3 Taxes. Manager will pay or reimburse Sprint PCS for any sales, use,
gross receipts or similar tax, administrative fee, telecommunications fee or
surcharge for taxes or fees levied by a governmental authority on the fees and
charges payable by Sprint PCS to Manager.
10.4 Collected Revenues Definition. "Collected Revenues" means actual
payments received by or on behalf of Sprint PCS or Manager for Sprint PCS
Products and Services from others including the customers whose NPA-NXX is the
same as that for the portion of the Service Area served by the Service Area
Network. In determining Collected Revenues the following principles will apply.
(a) The following items will be treated as follows:
(i) Collected Revenues do not include revenues from federal and
state subsidy funds; they are handled separately as noted in Section
10.1.2;
20
(ii) Collected Revenues do include any amounts received for
the payment of Inbound Roaming charges and interconnect fees when calls are
carried on the Service Area Network; and
(iii) Collected Revenues do not include any amounts received
with respect to any changes made by Sprint PCS under Section 9.4.
(b) The following items are not Collected Revenues; Sprint PCS is
obligated to remit the amounts received with respect to such items, if any, to
Manager, as follows:
(i) Inter service area payments will be paid as provided
under Section 10.1.3;
(ii) Outbound Roaming and related charges will be paid as
provided under Section 10.1.5;
(iii) Proceeds from the sale or lease of subscriber equipment
and accessories will be paid to Manager, subject to the equipment
settlement process in Section 4.1.2;
(iv) Proceeds from sales not in the ordinary course of
business (e.g., sales of switches, cell sites, computers, vehicles or other
fixed assets); and
(v) Any amounts collected with respect to sales and use
taxes, gross receipts taxes, transfer taxes, and similar taxes,
administrative fees, telecommunications fees, and surcharges for taxes and
fees that are collected by a carrier for the benefit of a governmental
authority, subject to Manager's obligation under Section 10.3.
(c) The following items are not Collected Revenues; neither party
will collect any amounts respecting such items:
(i) Reasonable adjustments of a customer's account (e.g.,
if Sprint PCS or Manager reduces a customer's ▇▇▇▇, then the amount of the
adjustment is not Collected Revenue); and
(ii) Amount of bad debt and fraud associated with customers
whose NPA-NXX is assigned to the Service Area (e.g., if Sprint PCS or
Manager writes off a customer's ▇▇▇▇ as a bad debt, there is no Collected
Revenue on which a fee is due to Manager).
10.5 Late Payments. Any amount due under this Section 10 that is not paid
by one party to the other party in accordance with the terms of this agreement
will bear interest at the Default Rate beginning (and including) the 3rd day
after the due date until (and including) the date paid.
21
10.6 Setoff Right If Failure To Pay Amounts Due. If Manager fails to pay
any undisputed amount due Sprint PCS or a Related Party of Sprint PCS under this
agreement, the Services Agreement, or any other agreement with Sprint PCS or a
Related Party, then Sprint PCS may setoff against standard payment intervals
(e.g. weekly) against the amounts paid to Manager under Section 10.1 until such
time as Manager pays any such unpaid amounts.
Sprint PCS may setoff the following amounts:
(a) any amount that Manager owes to Sprint PCS or a Related Party of
Sprint PCS, including amounts due under the Services Agreement; and
(b) any amount that Sprint PCS reasonably estimates will be due to
Sprint PCS for the current month under the Services Agreement (e.g., if under
the Services Agreement customer care calls are billed monthly, Sprint PCS can
deduct from the weekly payment to Manager an amount Sprint PCS reasonably
estimates will be due Sprint PCS under the Services Agreement).
On a monthly basis Sprint PCS will true up the estimated amounts deducted
against the actual amounts due Sprint PCS. If the estimated amounts deducted by
Sprint PCS exceed the actual amounts due to Sprint PCS, then Sprint PCS will
remit the excess to Manager with the next weekly payment. If the estimated
amounts deducted are less than the actual amounts due to Sprint PCS and its
Related Parties, then Sprint PCS may continue to setoff the payments to Manager
against the amounts due to Sprint PCS. This right of setoff is in addition to
any other right that Sprint PCS may have under this agreement.
11. TERM; TERMINATION; EFFECT OF TERMINATION
11.1 Initial Term. This agreement commences on the date of execution and,
unless terminated earlier in accordance with the provisions of this Section 11,
continues for a period of 20 years (the "Initial Term").
11.2 Renewal Terms. Following expiration of the Initial Term, this
agreement will automatically renew for 3 successive 10-year renewal periods (for
a maximum of 50 years including the Initial Term), unless at least 2 years prior
to the commencement of any renewal period either party notifies the other party
in writing that it does not wish to renew this agreement.
11.2.1 Non-renewal Rights of Manager. If this agreement will
terminate because Sprint PCS gives Manager timely written notice of non-renewal
of this agreement, then Manager may exercise its rights under Section 11.2.1.1
or, if applicable, its rights under Section 11.2.1.2.
11.2.1.1 Manager's Put Right. Manager may within 30 days
after the date Sprint PCS gives notice of non-renewal put to Sprint
PCS all of the Operating Assets. Sprint PCS will pay to Manager for
the Operating Assets an
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amount equal to 80% of the Entire Business Value. The closing of the
purchase of the Operating Assets will occur within 20 days after the
later of (a) the receipt by Sprint PCS of the written notice of
determination of the Entire Business Value provided by the appraisers
under Section 11.7 or (b) the receipt of all materials required to be
delivered to Sprint PCS under Section 11.8. Upon closing the purchase
of the Operating Assets this agreement will be deemed terminated. The
exercise of the put, the determination of the Operating Assets, the
representations and warranties made by Manager with respect to the
Operating Assets and the business, and the process for closing the
purchase will be subject to the terms and conditions set forth in
Section 11.8.
11.2.1.2 Manager's Purchase Right.
(a) If Sprint PCS owns 20 MHz or more of PCS spectrum
in the Service Area under the License on the date this agreement is
terminated, then Manager may, subject to receipt of FCC approval of
the necessary disaggregation and partition, purchase from Sprint PCS
the Disaggregated License for an amount equal to the greater of (1)
the original cost of the License to Sprint PCS (pro rated on a pops
and spectrum basis) plus the microwave relocation costs paid by Sprint
PCS or (2) 10% of the Entire Business Value.
(b) Upon closing the purchase of the spectrum this
agreement will be deemed terminated. The closing of the purchase of
the Disaggregated License will occur within the later of:
(1) 20 days after the receipt by Manager of the
written notice of determination of the Entire Business Value by
the appraisers under Section 11.7; or
(2) 10 days after the approval of the sale of the
Disaggregated License by the FCC.
(c) The exercise of the purchase right, the
determination of the geographic extent of the Disaggregated License
coverage, the representations and warranties made by Sprint PCS with
respect to the Disaggregated License, and the process for closing the
purchase will be subject to the terms and conditions set forth in
Section 11.8.
(d) After the closing of the purchase Manager will
allow:
(1) subscribers of Sprint PCS to roam on Manager's
network; and
(2) Sprint PCS to resell Manager's Products and
Services.
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Manager will charge Sprint PCS a MFN price in either case.
11.2.2 Non-renewal Rights of Sprint PCS. If this agreement will
terminate because of any of the following five (5) events, then Sprint PCS may
exercise its rights under Section 11.2.2.1 or, if applicable, its rights under
Section ▇▇.▇.▇.▇:
(a) Manager gives Sprint PCS timely written notice of non-
renewal of this agreement;
(b) both parties give timely written notices of non-
renewal;
(c) this agreement expires with neither party giving a
written notice of non-renewal;
(d) either party elects to terminate this agreement under
Section 11.3.4(a); or
(e) Manager elects to terminate this agreement under
Section 11.3.4(b).
11.2.2.1 Sprint PCS' Purchase Right. Sprint PCS may purchase from
Manager all of the Operating Assets. Sprint PCS will pay to Manager an
amount equal to 80% of the Entire Business Value. The closing of the
purchase of the Operating Assets will occur within 20 days after the
later of (a) the receipt by Sprint PCS of the written notice of
determination of the Entire Business Value provided by the appraisers
under Section 11.7 or (b) the receipt of all materials required to be
delivered to Sprint PCS under Section 11.8. Upon closing the purchase
of the Operating Assets this agreement will be deemed terminated. The
exercise of the purchase right, the determination of the Operating
Assets, the representations and warranties made by Manager with
respect to the Operating Assets and the business, and the process for
closing the purchase will be subject to the terms and conditions set
forth in Section 11.8.
11.2.2.2 Sprint PCS' Put Right.
(a) Sprint PCS may, subject to receipt of FCC approval, put
to Manager the Disaggregated License for a purchase price equal to the
greater of (1) the original cost of the License to Sprint PCS (pro
rated on a pops and spectrum basis) plus the microwave relocation
costs paid by Sprint PCS or (2) 10% of the Entire Business Value.
(b) Upon closing the purchase of the Disaggregated License
this agreement will be deemed terminated. The closing of the purchase
of the Disaggregated License will occur within the later of:
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(1) 20 days after the receipt by Sprint PCS of the
written notice of determination of the Entire Business Value by
the appraisers under Section 11.7; or
(2) 10 days after the approval of the sale of the
Disaggregated License by the FCC.
(c) The exercise of the put, the determination of the
geographic extent of the Disaggregated License coverage, the
representations and warranties made by Sprint PCS with respect to the
Disaggregated License, and the process for closing the purchase will
be subject to the terms and conditions set forth in Section 11.8.
(d) Manager may, within 10 days after it receives notice of
Sprint PCS' exercise of its put, advise Sprint PCS of the amount of
spectrum (not to exceed 10 MHz) it wishes to purchase. After the
purchase Manager will allow:
(1) subscribers of Sprint PCS to roam on Manager's
network; and
(2) Sprint PCS to resell Manager's Products and
Services.
Manager will charge Sprint PCS a MFN price in either case.
11.2.2.3 Extended Term Awaiting FCC Approval. If Manager is
buying the Disaggregated License as permitted or required under
Sections 11.2.1.2 or 11.2.2.2, then the Term of this agreement will
extend beyond the original expiration date until the closing of the
purchase of the Disaggregated License. The parties agree to exercise
their respective commercially reasonable efforts to obtain FCC
approval of the transfer of the Disaggregated License.
11.3 Event of Termination. An "Event of Termination" is deemed to occur
when a party gives written notice to the other party of the Event of Termination
as permitted below:
11.3.1 Termination of License.
(a) At the election of either party this agreement may be
terminated at the time the FCC revokes or fails to renew the License.
Unless Manager has the right to terminate this agreement under Section
11.3.1(b), neither party has any claim against the other party if the
FCC revokes or fails to renew the License, even if circumstances would
otherwise permit one party to terminate this agreement based on a
different Event of Termination, except that the parties will have the
right to pursue claims against each other as permitted under Section
11.4(b).
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(b) If the FCC revokes or fails to renew the License
because of a breach of this agreement by Sprint PCS, then Manager has
the right to terminate this agreement under Section 11.3.3 and not
this Section 11.3.1.
11.3.2 Breach of Agreement: Payment of Money Terms. At the election
of the non-breaching party this agreement may be terminated upon the failure by
the breaching party to pay any amount due under this agreement or any other
agreement between the parties or their respective Related Parties, if the breach
is not cured within 30 days after the breaching party's receipt of written
notice of the nonpayment from the non-breaching party.
11.3.3 Breach of Agreement: Other Terms. At the election of the non-
breaching party this agreement may be terminated upon the material breach by the
breaching party of any material term contained in this agreement that does not
regard the payment of money, if the breach is not cured within 30 days after the
breaching party's receipt of written notice of the breach from the non-breaching
party, except the cure period will continue for a reasonable period beyond the
30-day period, but will under no circumstances exceed 180 days after the
breaching party's receipt of written notice of the breach, if it is unreasonable
to cure the breach within the 30-day period, and the breaching party takes
action prior to the end of the 30-day period that is reasonably likely to cure
the breach and continues to diligently take action necessary to cure the breach.
11.3.4 Regulatory Considerations.
(a) At the election of either party this agreement may
be terminated if this agreement violates any applicable law in any
material respect where such violation (i) is classified as a felony or
(ii) subjects either party to substantial monetary fines or other
substantial damages, except that before causing any termination the
parties must use best efforts to modify this agreement, as necessary
to cause this agreement (as modified) to comply with applicable law
and to preserve to the extent possible the economic arrangements set
forth in this agreement.
(b) At the election of Manager this agreement may be
terminated if the regulatory action described under 11.3.4(a) is the
result of a deemed change of control of the License and the parties
are unable to agree upon a satisfactory resolution of the matter with
the regulatory authority without a complete termination of this
agreement.
11.3.5 Termination of Trademark License Agreements. If either
Trademark License Agreement terminates under its terms, then:
(a) Manager may terminate this agreement if the
Trademark License Agreement terminated because of a breach of the
Trademark License Agreement by Sprint PCS or Sprint; and
26
(b) Sprint PCS may terminate this agreement if the
Trademark License Agreement terminated because of a breach of the
Trademark License Agreement by Manager.
11.3.6 Financing Considerations. At the election of Sprint PCS this
agreement may be terminated upon the failure of Manager to obtain the financing
described in Exhibit 1.7 by the deadline(s) set forth on such Exhibit.
-----------
11.3.7 Bankruptcy of a Party. At the election of the non-bankrupt
party, this agreement may be terminated upon the occurrence of a Voluntary
Bankruptcy or an Involuntary Bankruptcy of the other party.
"Voluntary Bankruptcy" means:
(a) The inability of a party generally to pay its debts as
the debts become due, or an admission in writing by a party of its
inability to pay its debts generally or a general assignment by a
party for the benefit of creditors;
(b) The filing of any petition or answer by a party seeking
to adjudicate itself a bankrupt or insolvent, or seeking any
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition for itself or its debts under any
law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking, consenting to, or acquiescing in the entry of an
order for relief or the appointment of a receiver, trustee, custodian
or other similar official for itself or for substantially all of its
property; or
(c) Any action taken by a party to authorize any of the
actions set forth above.
"Involuntary Bankruptcy" means, without the consent or acquiescence of
a party:
(a) The entering of an order for relief or approving a
petition for relief or reorganization;
(b) Any petition seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or other similar
relief under any present or future bankruptcy, insolvency or similar
statute, law or regulation;
(c) The filing of any petition against a party, which
petition is not dismissed within 90 days; or
(d) Without the consent or acquiescence of a party, the
entering of an order appointing a trustee, custodian, receiver or
liquidator of party or of all or any substantial part of the property
of the party, which order is not dismissed within 90 days.
27
11.4 Effect of an Event of Termination.
(a) Upon the occurrence of an Event of Termination, the party with
the right to terminate this agreement or to elect the remedy upon the Event of
Termination, as the case may be, may:
(i) in the case of an Event of Termination under Sections
11.3.1(a) or 11.3.7, give the other party written notice that the agreement
is terminated effective as of the date of the notice, in which case neither
party will have any other remedy or claim for damages (except any claim the
non-bankrupt party has against the bankrupt party and any claims permitted
under Section 11.4(b)); or
(ii) in the case of an Event of Termination other than under
Section 11.3.1(a), give the other party written notice that the party is
exercising one of its rights, if any, under Section 11.5 or Section 11.6.
(b) If the party terminates this agreement under Section 11.4(a)(i)
then all rights and obligations of each party under this agreement will
immediately cease, except that:
(i) Any rights arising out of a breach of any terms of this
agreement will survive any termination of this agreement;
(ii) The provisions of this Section 11.4 and of Sections 12.2,
13, 14 and 16 will survive any termination of this agreement;
(iii) The payment obligations under Section 10 will survive any
termination of this agreement if, and to the extent, any costs or fees have
accrued or are otherwise due and owing as of the date of termination of
this agreement from Manager to Sprint PCS or any Sprint PCS Related Party
or from Sprint PCS to Manager or any Manager Related Party;
(iv) Either party may terminate this agreement in accordance
with the terms of this agreement without any liability for any loss or
damage arising out of or related to such termination, including any loss or
damage arising out of the exercise by Sprint PCS of its rights under
Section 11.6.3;
(v) The parties will use all commercially reasonable efforts
to cease immediately all of their respective efforts to market, sell,
promote or distribute the Sprint PCS Products and Services;
(vi) Sprint PCS has the option to buy from Manager any new
unsold subscriber equipment and accessories, at the prices charged to
Manager;
28
(vii) The parties will immediately stop making any statements or
taking any action that might cause third parties to infer that any business
relationship continues to exist between the parties, and where necessary or
advisable, the parties will inform third parties that the parties no longer
have a business relationship; and
(viii) If subscriber equipment and accessories are in transit
when this agreement is terminated, Sprint PCS may, but does not have the
obligation to, cause the freight carrier to not deliver the subscriber
equipment and accessories to Manager but rather to deliver the subscriber
equipment and accessories to Sprint PCS.
(c) If the party exercises its rights under Section 11.4(a)(ii), this
agreement will continue in full force and effect until otherwise terminated.
(d) If this agreement terminates for any reason other than Manager's
purchase of the Disaggregated License, Manager will not, for 3 years after the
date of termination compile, create, or use for the purpose of selling
merchandise or services similar to the Sprint PCS Products or Services, or sell,
transfer or otherwise convey to a third party, a list of customers who
purchased, leased or used Sprint PCS Products or Services. Manager may use such
a list for its own internal analysis of its business practices and operations.
If this agreement terminates because of Manager's purchase of the Disaggregated
License, then Sprint PCS will transfer to Manager the Sprint PCS customers with
a MIN assigned to the Service Area covered by the Disaggregated License, but
Sprint PCS retains the customers of a national account and any resellers who
have entered into a resale agreement with Sprint PCS. Manager agrees not to
solicit, directly or indirectly, any customers of Sprint PCS not transferred to
Manager under this Section 11.4(d) for 2 years after the termination of this
agreement.
11.5 Manager's Event of Termination Rights and Remedies. In addition to
any other right or remedy that Manager may have under this agreement, the
parties agree that Manager will have the rights and remedies set forth in this
Section 11.5 and that such rights and remedies will survive the termination of
this agreement. If Manager has a right to terminate this agreement as the
result of the occurrence of an Event of Termination under Sections 11.3.2,
11.3.3, 11.3.5 or 11.3.7 (if Manager is the non-bankrupt party), then Manager
has the right to elect one of the following three (3) remedies, except Manager
cannot elect its remedies under Sections 11.5.1 or 11.5.2 during the first 2
years of the Initial Term with respect to an Event of Termination under Section
11.3.3.
11.5.1 Manager's Put Right. Manager may put to Sprint PCS within 30
days after the Event of Termination all of the Operating Assets. Sprint PCS
will pay to Manager an amount equal to 80% of the Entire Business Value. The
closing of the purchase of the Operating Assets will occur within 20 days after
the later of:
(a) the receipt by Sprint PCS of the written notice of
determination of the Entire Business Value by the appraisers under
Section 11.7; or
29
(b) the receipt of all materials required to be delivered to
Sprint PCS under Section 11.8.
Upon closing the purchase of the Operating Assets this agreement will be
deemed terminated. The exercise of the put, the determination of the Operating
Assets, the representations and warranties made by the Manager with respect to
the Operating Assets and the business, and the process for closing the purchase
will be subject to the terms and conditions set forth in Section 11.8.
11.5.2 Manager's Purchase Right.
(a) If Sprint PCS owns 20 MHz or more of PCS spectrum in the
Service Area under the License on the date this agreement is executed,
then Manager may, subject to receipt of FCC approval, purchase from
Sprint PCS the Disaggregated License for the greater of (1) the
original cost of the License to Sprint PCS (pro rated on a pops and
spectrum basis) plus the microwave relocation costs paid by Sprint PCS
or (2) 9% (10% minus a 10% penalty) of the Entire Business Value.
(b) Upon closing the purchase of the Disaggregated License
this agreement will be deemed terminated. The closing of the purchase
of the Disaggregated License will occur within the later of:
(1) 20 days after the receipt by Manager of the written
notice of determination of the Entire Business Value by the
appraisers under Section 11.7; or
(2) 10 days after the approval of the sale of the
Disaggregated License by the FCC.
The exercise of the purchase right, the determination of the
geographic extent of the Disaggregated License coverage, the
representations and warranties made by Sprint PCS with respect to the
Disaggregated License, and the process for closing the purchase will
be subject to the terms and conditions set forth in Section 11.8.
(c) After the closing of the purchase Manager will allow:
(1) subscribers of Sprint PCS to roam on Manager's
network; and
(2) Sprint PCS to resell Manager's Product and
Services.
Manager will charge Sprint PCS a MFN price in either case.
30
11.5.3 Manager's Action for Damages or Other Relief. Manager may
seek damages or other appropriate relief in accordance with the dispute
resolution process in Section 14.
11.6 Sprint PCS' Event of Termination Rights and Remedies. In addition to
any other right or remedy that Sprint PCS may have under this agreement, the
parties agree that Sprint PCS will have the rights and remedies set forth in
this Section 11.6 and that such rights and remedies will survive the termination
of this agreement. If Sprint PCS has a right to terminate this agreement as the
result of the occurrence of an Event of Termination under Sections 11.3.2,
11.3.3, 11.3.5, 11.3.6 or 11.3.7 (if Sprint PCS is the non-bankrupt party), then
Sprint PCS has the right to elect one of the following four (4) remedies, except
that (i) if Sprint PCS elects the remedies under Sections 11.6.1, 11.6.2 or
11.6.4, Sprint PCS may pursue its rights under Section 11.6.3 concurrently with
its pursuit of one of the other three remedies, (ii) Sprint PCS cannot elect its
remedies under Sections 11.6.1 or 11.6.2 during the first 2 years of the Initial
Term with respect to an Event of Termination under Section 11.3.3 (unless the
Event of Termination is caused by a breach related to the Build-out Plan or the
build-out of the Service Area Network), and (iii) Sprint PCS cannot elect its
remedy under Section 11.6.2 during the first 2 years of the Initial Term with
respect to an Event of Termination under Section 11.3.6.
11.6.1 Sprint PCS' Purchase Right. Sprint PCS may purchase from
Manager all of the Operating Assets. Sprint PCS will pay to Manager an amount
equal to 72% (80% minus a 10% penalty) of the Entire Business Value. The closing
of the purchase of the Operating Assets will occur within 20 days after the
later of:
(a) the receipt by Sprint PCS of the written notice of
determination of the Entire Business Value by the appraisers pursuant
to Section 11.7; or
(b) the receipt of all materials required to be delivered to
Sprint PCS under Section 11.8.
Upon closing the purchase of the Operating Assets this agreement will be
deemed terminated. The exercise of the purchase right, the determination of the
Operating Assets, the representations and warranties made by Manager with
respect to the Operating Assets and the business, and the process for closing
the purchase will be subject to the terms and conditions set forth in Section
11.8.
11.6.2 Sprint PCS' Put Right.
(a) Sprint PCS may, subject to receipt of FCC approval, put
to Manager the Disaggregated License for a purchase price equal to the
greater of (1) the original cost of the License to Sprint PCS (pro
rated on a pops and spectrum basis) plus the microwave relocation
costs paid by Sprint PCS or (2) 10% of the Entire Business Value.
31
(b) Upon closing the purchase of the Disaggregated License
this agreement will be deemed terminated. The closing of the purchase
of the Disaggregated License will occur within the later of:
(1) 20 days after the receipt by Sprint PCS of the
written notice of determination of the Entire Business Value by
the appraisers under Section 11.7; or
(2) 10 days after the approval of the sale of the
Disaggregated License by the FCC.
(c) The exercise of the put, the determination of the
geographic extent of the Disaggregated License coverage, the
representations and warranties made by Sprint PCS with respect to the
Disaggregated License, and the process for closing the purchase will
be subject to the terms and conditions set forth in Section 11.8.
(d) Manager may, within 10 days after it receives notice of
Sprint PCS' exercise of its put, advise Sprint PCS of the amount of
spectrum (not to exceed 10 MHz) it wishes to purchase. After the
closing of the purchase Manager will allow:
(1) subscribers of Sprint PCS to roam on Manager's
network; and
(2) Sprint PCS to resell Manager's Products and
Services.
Manager will charge Sprint PCS a MFN price in either case.
11.6.3 Sprint PCS' Right to Cause A Cure.
(a) Sprint PCS' Right. Sprint PCS may, but is not obligated
to, take such action as it deems necessary to cure Manager's breach of
this agreement, including assuming operational responsibility for the
Service Area Network to complete construction, continue operation,
complete any necessary repairs, implement changes necessary to comply
with the Program Requirements and terms of this agreement, or take
such other steps as are appropriate under the circumstances, or Sprint
PCS may designate a third party or parties to do the same, to assure
uninterrupted availability and deliverability of Sprint PCS Products
and Services in the Service Area, or to complete the build-out of the
Service Area Network in accordance with the terms of this agreement.
In the event that Sprint PCS elects to exercise its right under this
Section 11.6.3, Sprint PCS will give Manager written notice of such
election. Upon giving such notice:
32
(1) Manager will collect and make available at a
convenient, central location at its principal place of business,
all documents, books, manuals, reports and records related to the
Build-out Plan and required to operate and maintain the Service
Area Network; and
(2) Sprint PCS, its employees, contractors and
designated third parties will have the unrestricted right to
enter the facilities and offices of Manager for the purpose of
curing the breach and, if Sprint PCS deems necessary, operate the
Service Area Network.
Manager agrees to cooperate with and assist Sprint PCS to the extent
requested by Sprint PCS to enable Sprint PCS to exercise its rights
under this Section 11.6.3.
(b) Liability. Sprint PCS' exercise of its rights under
this Section 11.6.3 will not be deemed an assumption by Sprint PCS of
any liability attributable to Manager or any other party, except that,
without limiting the provisions of Section 13, during the period that
Sprint PCS is curing a breach under this agreement or operating any
portion of the Service Area Network pursuant to this Section 11.6.3,
Sprint PCS will indemnify and defend Manager and its directors,
partners, officers, employees and agents from and against, and
reimburse and pay for, all claims, demands, damages, losses,
judgments, awards, liabilities, costs and expenses (including
reasonable attorneys' fees, court costs and other expenses of
litigation), whether or not arising out of third party claims, in
connection with any suit, claim, action or other legal proceeding
relating to the bodily injury, sickness or death of persons or the
damage to or destruction of property, real or personal, resulting from
or arising out of Sprint PCS' negligence or willful misconduct in
curing the breach or in the operation of the Service Area Network.
Sprint PCS' obligation under this Section 11.6.3(b) will not apply to
the extent of any claims, demands, damages, losses, judgments, awards,
liabilities, costs and expenses resulting from the negligence or
willful misconduct of Manager or arising from any contractual
obligation of Manager.
(c) Costs and Payments. During the period that Sprint PCS
is curing a breach or operating the Service Area Network under this
Section 11.6.3, Sprint PCS and Manager will continue to make any and
all payments due to the other party and to third parties under this
agreement, the Services Agreement and any other agreements to which
such party is bound, except that Sprint PCS may deduct from its
payments to Manager all reasonable costs and expenses incurred by
Sprint PCS in connection with the exercise of its right under this
Section 11.6.3. Sprint PCS' operation of the Service Area Network
pursuant to this Section 11.6.3 is not a substitution for Manager's
performance of its obligations under this agreement and does not
relieve Manager of its other obligations under this agreement.
(d) Length of Right. Sprint PCS may continue to operate the
Service Area Network in accordance with Section 11.6.3 until (i)
Sprint PCS
33
cures all breaches by Manager under this agreement; (ii) Manager cures
all breaches and demonstrates to Sprint PCS' satisfaction that it is
financially and operationally willing, ready and able to perform in
accordance with this agreement and resumes such performance; (iii)
Sprint PCS consummates the purchase of the Operating Assets under
Section 11.6.1 or the sale of the Disaggregated License under Section
11.6.2; or (iv) Sprint PCS terminates this agreement.
(e) Not Under Services Agreement. The exercise by Sprint
PCS of its right under this Section 11.6.3 does not represent services
rendered under the Services Agreement, and therefore it does not allow
Manager to be deemed in compliance with the Program Requirements under
Sections 7.1(a)(ii), 8.1(b).
11.6.4 Sprint PCS' Action for Damages or Other Relief. Sprint PCS
may seek damages or other appropriate relief in accordance with the dispute
resolution process in Section 14.
11.7 Determination of Entire Business Value.
11.7.1 Appointment of Appraisers. Sprint PCS and Manager must each
designate an independent appraiser within 30 days after giving the Purchase
Notice under Exhibit 11.8. Sprint PCS and Manager will direct the two
------------
appraisers to jointly select a third appraiser within 15 days after the day the
last of them is appointed. Each appraiser must be an expert in the valuation of
wireless telecommunications businesses. Sprint PCS and Manager must direct the
three appraisers to each determine, within 45 days after the appointment of the
last appraiser, the Entire Business Value. Sprint PCS and Manager will each
bear the costs of the appraiser appointed by it, and they will share equally the
costs of the third appraiser.
11.7.2 Manager's Operating Assets. The following assets are included
in the Operating Assets (as defined in the Schedule of Definitions):
-----------------------
(a) network assets, including all personal property, real
property interests in cell sites and switch sites, leasehold
interests, collocation agreements, easements, and rights of way;
(b) all of the real, personal, tangible and intangible
property and contract rights that Manager owns and uses in conducting
the business of providing the Sprint PCS Products and Services,
including the goodwill resulting from Manager's customer base;
(c) sale and distribution assets primarily dedicated (i.e.,
at least 80% of their revenue is derived from the sale of Sprint PCS
Products and Services) to the sale by Manager of Sprint PCS Products
and Services. For example, a retail store that derives at least 80%
of its revenue from the sale of
34
Sprint PCS Products and Services is an operating asset. A store that
derives 65% of its revenue from Sprint PCS Products and Services is
not an operating asset;
(d) customers, if any, that use both the other products and
services approved under Section 3.2 and the Sprint PCS Products and
Services;
(e) handset inventory;
(f) books and records of the wireless business, including
all engineering drawings and designs and financial records;
(g) all contracts used by Manager in operating the wireless
business including T1 service agreements, service contracts,
interconnection agreements, distribution agreements, software license
agreements, equipment maintenance agreements, sales agency agreements
and contracts with all equipment suppliers.
11.7.3 Entire Business Value. Utilizing the valuation principles set
forth below and in Section 11.7.4, "Entire Business Value" means the fair market
value of Manager's wireless business in the Service Area, valued on a going
concern basis.
(a) The fair market value is based on the price a willing
buyer would pay a willing seller for the entire on-going business.
(b) The appraisers will use the then-current customary
means of valuing a wireless telecommunications business.
(c) The business is conducted under the Brands and existing
agreements between the parties and their respective Related Parties.
(d) Manager owns the Disaggregated License (in the case
where Manager will be buying the Disaggregated License under Sections
11.2.1.2, 11.2.2.2, 11.5.2 or 11.6.2) or Manager owns the spectrum and
the frequencies actually used by Manager under this agreement (in the
case where Sprint PCS will be buying the Operating Assets under
Sections 11.2.1.1, 11.2.2.1, 11.5.1 or 11.6.1).
(e) The valuation will not include any value for the
business represented by Manager's Products and Services or any
business not directly related to Sprint PCS Products and Services.
11.7.4 Calculation of Entire Business Value. The Entire Business
Value to be used to determine the purchase price of the Operating Assets or the
Disaggregated License under this agreement is as follows:
35
(a) If the highest fair market value determined by the
appraisers is within 10% of the lowest fair market value, then the
Entire Business Value used to determine the purchase price under this
agreement will be the arithmetic mean of the three appraised fair
market values.
(b) If two of the fair market values determined by the
appraisers are within 10% of one another, and the third value is not
within 10% of the other fair market values, then the Entire Business
Value used to determine the purchase price under this agreement will
be the arithmetic mean of the two more closely aligned fair market
values.
(c) If none of the fair market values is within 10% of the
other two fair market values, then the Entire Business Value used to
determine the purchase price under this agreement will be the middle
value of the three fair market values.
11.8 Closing Terms and Conditions. The closing terms and conditions for
the transactions contemplated in this Section 11 are attached as Exhibit 11.8.
------------
11.9 Contemporaneous and Identical Application. The parties agree that any
action regarding renewal or non-renewal and any Event of Termination will occur
contemporaneously and identically with respect to all Licenses. For example, if
Manager exercises its purchase right under Section 11.5.2, it must exercise such
right with respect to all of the Licenses under this agreement. The Term of
this agreement will be the same for all Licenses; Manager will not be permitted
to operate a portion of the Service Area Network with fewer than all of the
Licenses.
12. BOOKS AND RECORDS; CONFIDENTIAL INFORMATION; INSURANCE
12.1 Books and Records.
12.1.1 General. Each party must keep and maintain books and records
to support and document any fees, costs, expenses or other charges due in
connection with the provisions set forth in this agreement. The records must be
retained for a period of at least 3 years after the fees, costs, expenses or
other charges to which the records relate have accrued and have been paid, or
such other period as may be required by law.
12.1.2 Audit. On reasonable advance notice, each party must provide
access to appropriate records to the independent auditors selected by the other
party for purposes of auditing the amount of fees, costs, expenses or other
charges payable in connection with the Service Area with respect to the period
audited. The auditing party will conduct the audit no more frequently than
annually. If the audit shows that Sprint PCS was underpaid then, unless the
amount is contested, Manager will pay to Sprint PCS the amount of the
underpayment within 10 Business Days after Sprint PCS gives Manager written
notice of the determination of the underpayment. If the audit determines that
Sprint PCS was overpaid then, unless the amount is
36
contested, Sprint PCS will pay to Manager the amount of the overpayment within
10 Business Days after Sprint PCS determines Sprint PCS was overpaid.
Notwithstanding the above provisions of this Section 12.1.2, Sprint PCS may
elect to have its own independent auditors certify to the accuracy of the
charges with respect to Manager, rather than allow Manager's independent
auditors access to Sprint PCS' records.
12.1.3 Contesting an Audit. If the party that did not select the
independent auditor does not agree with the findings of the audit, then such
party can contest the findings by providing notice of such disagreement to the
other party (the "Dispute Notice"). The date of delivery of such notice is the
"Dispute Notice Date." If the parties are unable to resolve the disagreement
within 10 Business Days after the Dispute Notice Date, they will resolve the
disagreement in accordance with the following procedures.
The two parties and the auditor that conducted the audit will all agree on
an independent certified public accountant with a regional or national
accounting practice in the wireless telecommunications industry (the "Arbiter")
within 15 Business Days after the Dispute Notice Date. If, within 15 Business
Days after the Dispute Notice Date, the three parties fail to agree on the
Arbiter, then at the request of either party to this agreement, the Arbiter will
be selected pursuant to the rules then in effect of the American Arbitra-tion
Association. Each party will submit to the Arbiter within 5 Business Days after
its selection and engagement all information reasonably requested by the Arbiter
to enable the Arbiter to independently resolve the issue that is the subject of
the Dispute Notice. The Arbiter will make its own determina-tion of the amount
of fees, costs, expenses or other charges payable under this agreement with
respect to the period audited. The Arbiter will issue a written report of its
determi-nation in reasonable detail and will deliver a copy of the report to the
parties within 10 Business Days after the Arbiter receives all of the
information reasonably requested. The determination made by the Arbiter will be
final and binding and may be en-forced by any court having jurisdiction. The
parties will cooperate fully in assisting the Arbiter and will take such actions
as are necessary to expedite the completion of and to cause the Arbiter to
expedite its assignment.
If the amount owed by a contesting party is reduced by more than 10% or the
amount owed to a contesting party is increased by more than 10% then the non-
contesting party will pay the costs and expenses of the Arbiter, otherwise the
contesting party will pay the costs and expenses of the Arbiter.
12.2 Confidential Information.
(a) Except as specifically authorized by this agreement, each of the
parties must, for the Term and 3 years after the date of termination of this
agreement, keep confidential, not disclose to others and use only for the
purposes authorized in this agreement, all Confidential Information disclosed by
the other party to the party in connection with this agreement, except that the
foregoing obligation will not apply to the extent that any Confidential
Information:
(i) is or becomes, after disclosure to a party, publicly known
by any means other than through unauthorized acts or omissions of the party
or its agents; or
37
(ii) is disclosed in good faith to a party by a third party
entitled to make the disclosure.
(b) Notwithstanding the foregoing, a party may use, disclose or
authorize the disclosure of Confidential Information that it receives that:
(i) has been published or is in the public domain, or that
subsequently comes into the public domain, through no fault of the
receiving party;
(ii) prior to the effective date of this agreement was properly
within the legitimate possession of the receiving party, or subsequent to
the effective date of this agreement, is lawfully received from a third
party having rights to publicly disseminate the Confidential Information
without any restriction and without notice to the recipient of any
restriction against its further disclosure;
(iii) is independently developed by the receiving party through
persons or entities who have not had, either directly or indirectly, access
to or knowledge of the Confidential Information;
(iv) is disclosed to a third party consistent with the terms of
the written approval of the party originally disclosing the information;
(v) is required by the receiving party to be produced under
order of a court of competent jurisdiction or other similar requirements of
a governmental agency, and the Confidential Information will otherwise
continue to be Confidential Information required to be held confidential
for purposes of this agreement;
(vi) is required by the receiving party to be disclosed by
applicable law or a stock exchange or association on which the receiving
party's securities (or those of its Related Parties) are or may become
listed; or
(vii) is disclosed by the receiving party to a financial
institution or accredited investor (as that term is defined in Rule 501(a)
under the Securities Act of 1933) that is considering providing financing
to the receiving party and which financial institution or accredited
investor has agreed to keep the Confidential Information confidential in
accordance with an agreement at least as restrictive as this Section 12.
(c) Notwithstanding the foregoing, Manager authorizes Sprint PCS to
disclose to the public in public relations announcements and regulatory filings
Manager's identity and the Service Area to be developed and managed by Manager.
(d) The party making a disclosure under Sections 12.2(b)(v),
12.2(b)(vi) or 12.2(b)(vii) must inform the disclosing party as promptly as is
reasonably necessary to enable the disclosing party to take action to, and use
the party's reasonable best efforts to, limit the disclosure and maintain
confidentiality to the extent practicable.
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(e) Manager will not except when serving in the capacity of Manager
under this agreement, use any Confidential Information of any kind that it
receives under or in connection with this agreement. For example, if Manager
operates a wireless company in a different license area, Manager may not use any
of the Confidential Information received under or in connection with this
agreement in operating the other wireless business.
12.3 Insurance.
12.3.1 General. During the term of this agreement, Manager must
obtain and maintain, and will cause any subcontractors to obtain and maintain,
with financially reputable insurers licensed to do business in all jurisdictions
where any work is performed under this agreement and who are reasonably
acceptable to Sprint PCS, the insurance described in the Sprint PCS Insurance
Requirements. The Sprint PCS Insurance Requirements as of the date of this
agreement are attached as Exhibit 12.3. Sprint PCS may modify the Sprint PCS
------------
Insurance Requirements as is commercially reasonable from time to time by
delivering to Manager a new Exhibit 12.3.
------------
12.3.2 Waiver of Subrogation. Manager must look first to any
insurance in its favor before making any claim against Sprint PCS or Sprint, and
their respective directors, officers, employees, agents or representatives for
recovery resulting from injury to any person (including Manager's or its
subcontractor's employees) or damage to any property arising from any cause,
regardless of negligence. Manager does hereby release and waive to the fullest
extent permitted by law, and will cause its respective insurers to waive, all
rights of recovery by subrogation against Sprint PCS or Sprint, and their
respective directors, officers, employees, agents or representatives.
12.3.3 Certificates of Insurance. Manager and all of its
subcontractors, if any, must, as a material condition of this agreement and
prior to the commencement of any work under and any renewal of this agreement,
deliver to Sprint PCS a certificate of insurance, satisfactory in form and
content to Sprint PCS, evidencing that the above insurance, including waiver of
subrogation, is in force and will not be canceled or materially altered without
first giving Sprint PCS at least 30 days prior written notice and that all
coverages are primary to any insurance carried by Sprint PCS, its directors,
officers, employees, agents or representatives.
Nothing contained in this Section 12.3.3 will limit Manager's liability to
Sprint PCS, its directors, officers, employees, agents or representatives to the
limits of insurance certified or carried.
13. INDEMNIFICATION
13.1 Indemnification by Sprint PCS. Sprint PCS agrees to indemnify, defend
and hold harmless Manager, its directors, managers, officers, employees, agents
and representatives from and against any and all claims, demands, causes of
action, losses, actions, damages, liability and expense, including costs and
reasonable attorneys' fees, against manager, its directors,
39
managers, officers, employees, agents and representatives arising from or
relating to the violation by Sprint PCS of any law, regulation or ordinance
applicable to Sprint PCS or by Sprint PCS' breach of any representation,
warranty or covenant contained in this agreement or any other agreement between
Sprint PCS or its Related Parties and Manager or its Related Parties except
where and to the extent the claim, demand, cause of action, loss, action,
damage, liability and/or expense results solely from the negligence or willful
misconduct of Manager.
13.2 Indemnification by Manager. Manager agrees to indemnify, defend and
hold harmless Sprint PCS and Sprint, and their respective directors, managers,
officers, employees, agents and representatives from and against any and all
claims, demands, causes of action, losses, actions, damages, liability and
expense, including costs and reasonable attorneys' fees, against Sprint PCS or
Sprint, and their respective directors, managers, officers, employees, agents
and representatives arising from or relating to Manager's violation of any law,
regulation or ordinance applicable to Manager, Manager's breach of any
representation, warranty or covenant contained in this agreement or any other
agreement between Manager or its Related Parties and Sprint PCS and its Related
Parties, Manager's ownership of the operating assets or the operation of the
Service Area Network, or the actions or failure to act of any of Manager's
contractors, subcontractors, agents, directors, managers, officers, employees
and representatives of any of them in the performance of any work under this
agreement, except where and to the extent the claim, demand, cause of action,
loss, action, damage, liability and expense results solely from the negligence
or willful misconduct of Sprint PCS or Sprint, as the case may be.
13.3 Procedure.
13.3.1 Notice. Any party being indemnified ("Indemnitee") will give
the party making the indemnification ("Indemnitor") written notice as soon as
practicable but no later than 5 Business Days after the party becomes aware of
the facts, conditions or events that give rise to the claim for indemnification
if:
(a) Any claim or demand is made or liability is asserted
against Indemnitee; or
(b) Any suit, action, or administrative or legal proceeding
is instituted or commenced in which Indemnitee is involved or is named
as a defendant either individually or with others.
Failure to give notice as described in this Section 13.3.1 does not modify
the indemnification obligations of this provision, except if Indemnitee is
harmed by failure to provide timely notice to Indemnitor, then Indemnitor does
not have to indemnify Indemnitee for the harm caused by the failure to give the
timely notice.
13.3.2 Defense by Indemnitor. If within 30 days after giving notice
Indemnitee receives written notice from Indemnitor stating that Indemnitor
disputes or intends to defend against the claim, demand, liability, suit, action
or proceeding, then Indemnitor will have the right to select counsel of its
choice and to dispute or defend against the claim, demand, liability, suit,
action or proceeding, at its expense.
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Indemnitee will fully cooperate with Indemnitor in the dispute or defense
so long as Indemnitor is conducting the dispute or defense diligently and in
good faith. Indemnitor is not permitted to settle the dispute or claim without
the prior written approval of Indemnitee, which approval will not be
unreasonably withheld. Even though Indemnitor selects counsel of its choice,
Indemnitee has the right to retain additional representation by counsel of its
choice to participate in the defense at Indemnitee's sole cost and expense.
13.3.3 Defense by Indemnitee. If no notice of intent to dispute or
defend is received by Indemnitee within the 30-day period, or if a diligent and
good faith defense is not being or ceases to be conducted, Indemnitee has the
right to dispute and defend against the claim, demand or other liability at the
sole cost and expense of Indemnitor and to settle the claim, demand or other
liability, and in either event to be indemnified as provided in this Section
13.3.3. Indemnitee is not permitted to settle the dispute or claim without the
prior written approval of Indemnitor, which approval will not be unreasonably
withheld.
13.3.4 Costs. Indemnitor's indemnity obligation includes reasonable
attorneys' fees, investigation costs, and all other reasonable costs and
expenses incurred by Indemnitee from the first notice that any claim or demand
has been made or may be made, and is not limited in any way by any limitation on
the amount or type of damages, compensation, or benefits payable under
applicable workers' compensation acts, disability benefit acts, or other
employee benefit acts.
14. DISPUTE RESOLUTION
14.1 Negotiation. The parties will attempt in good faith to resolve any
dispute arising out of or relating to this agreement promptly by negotiation
between or among representatives who have authority to settle the controversy.
Either party may escalate any dispute not resolved in the normal course of
business to the appropriate (as determined by the party) officers of the parties
by providing written notice to the other party.
Within 10 Business Days after delivery of the notice, the appropriate
officers of each party will meet at a mutually acceptable time and place, and
thereafter as often as they deem reasonably necessary, to exchange relevant
information and to attempt to resolve the dispute.
Either party may elect, by giving written notice to the other party, to
escalate any dispute arising out of or relating to the determination of fees
that is not resolved in the normal course of business or by the audit process
set forth in Sections 12.1.2 and 12.1.3, first to the appropriate financial or
accounting officers to be designated by each party. The designated officers
will meet in the manner described in the preceding paragraph. If the matter has
not been resolved by the designated officers within 30 days after the notifying
party's notice, either party may elect to escalate the dispute to the
appropriate (as determined by the party) officers in accordance with the prior
paragraphs of this Section 14.1.
41
14.2 Unable to Resolve. If a dispute has not been resolved within 60 days
after the notifying party's notice, either party may continue to operate under
this agreement and ▇▇▇ the other party for damages or seek other appropriate
remedies as provided in this agreement. If, and only if, this agreement does
not provide a remedy (as in the case of Sections 3.4 and 4.5, where the parties
are supposed to reach an agreement), then either party may give the other party
written notice that it wishes to resolve the dispute or claim arising out of the
parties' inability to agree under such Sections of this agreement by using the
arbitration procedure set forth in this Section 14.2. Such arbitration will
occur in Kansas City, Missouri, unless the parties otherwise mutually agree,
with the precise location being as agreed upon by the parties or, absent such
agreement, at a location in Kansas City, Missouri selected by Sprint PCS. Such
arbitration will be conducted pursuant to the procedures prescribed by the
Missouri Uniform Arbitration Act, as amended from time to time, or, if none,
pursuant to the rules then in effect of the American Arbitration Association (or
at any other place and by any other form of arbitration mutually acceptable to
the parties). Any award rendered in such arbitration will be confidential and
will be final and conclusive upon the parties, and a judgment on the award may
be entered in any court of the forum, state or federal, having jurisdiction.
The expenses of the arbitration will be borne equally by the parties to the
arbitration, except that each party must pay for and bear the cost of its own
experts, evidence, and attorneys' fees.
The parties must each, within 30 days after either party gives notice to
the other party of the notifying party's desire to resolve a dispute or claim
under the arbitration procedure in this Section 14.2, designate an independent
arbitrator, who is knowledgeable with regard to the wireless telecommunications
industry, to participate in the arbitration hearing. The two arbitrators thus
selected will select a third independent arbitrator, who is knowledgeable with
regard to the wireless telecommunications industry, who will act as chairperson
of the board of arbitration. If, within 15 days after the day the last of the
two named arbitrators is appointed, the two named arbitrators fail to agree upon
the third, then at the request of either party, the third arbitrator shall be
selected pursuant to the rules then in effect of the American Arbitration
Association. The three independent arbitrators will comprise the board of
arbitration, which will preside over the arbitration hearing and will render all
decisions by majority vote. If either party refuses or neglects to appoint an
independent arbitrator within such 30-day period, the independent arbitrator who
has been appointed as of the 31st day after the notifying party's notice will be
the sole independent arbitrator and will solely preside over the arbitration
hearing. The arbitration hearing will commence no sooner than 30 days after the
date the last arbitrator is appointed and no later than 60 days after such date.
The arbitration hearing will be conducted during normal working hours on
Business Days without interruption or adjournment of more than 2 Business Days
at any one time or 6 Business Days in the aggregate.
The arbitrators will deliver their decision to the parties in writing
within 10 days after the conclusion of the arbitration hearing. The arbitration
award will be accompanied by findings of fact and a statement of reasons for the
decision. There will be no appeal from the written decision, except as
permitted by applicable law. The arbitration proceedings, the arbitrators'
decision, the arbitration award, and any other aspect, matter, or issue of or
relating to the arbitration are confidential, and disclosure of such
confidential information is an actionable breach of this agreement.
42
Notwithstanding any other provision of this agreement, arbitration will not
be required of any issue for which injunctive relief is properly sought by
either party.
14.3 Attorneys and Intent. If an officer intends to be accompanied at a
meeting by an attorney, the other party's officer will be given at least 3
Business Days prior notice of the intention and may also be accompanied by an
attorney. All negotiations under Section 14.1 are confidential and will be
treated as compromise and settlement negotiations for purposes of the Federal
Rules of Civil Procedure and state rules of evidence and civil procedure.
14.4 Tolling of Cure Periods. Any cure period under Section 11.3 that is
less than 90 days will be tolled during the pendency of the dispute resolution
process. Any cure period under Section 11.3 that is 90 days or longer will not
be tolled during the pendency of the dispute resolution process.
15. REPRESENTATIONS AND WARRANTIES
Each party for itself makes the following representations and warranties to
the other party:
15.1 Due Incorporation or Formation; Authorization of Agreements. The
party is either a corporation, limited liability company, or limited partnership
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. Manager is qualified to do business and in
good standing in every jurisdiction in which the Service Area is located. The
party has the full power and authority to execute and deliver this agreement and
to perform its obligations under this agreement.
15.2 Valid and Binding Obligation. This agreement constitutes the valid
and binding obligation of the party, enforceable in accordance with its terms,
except as may be limited by principles of equity or by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally.
15.3 No Conflict; No Default. Neither the execution, delivery and
performance of this agreement nor the consummation by the party of the
transactions contemplated in this agreement will conflict with, violate or
result in a breach of (a) any law, regulation, order, writ, injunction, decree,
determination or award of any governmental authority or any arbitrator,
applicable to such party, (b) any term, condition or provision of the articles
of incorporation, certificate of limited partnership, certificate of
organization, bylaws, partnership agreement or limited liability company
agreement (or other governing documents) of such party or of any material
agreement or instrument to which such party is or may be bound or to which any
of its material properties or assets is subject.
15.4 Litigation. No action, suit, proceeding or investigation is pending
or, to the knowledge of the party, threatened against or affecting the party or
any of its properties, assets or businesses in any court or before or by any
governmental agency that could, if adversely determined, reasonably be expected
to have a material adverse effect on the party's ability to
43
perform its obligations under this agreement. The party has not received any
currently effective notice of any default that could reasonably be expected to
result in a breach of the preceding sentence.
16. REGULATORY COMPLIANCE
16.1 Regulatory Compliance. Manager will construct, operate, and manage
the Service Area Network in compliance with applicable federal, state, and local
laws and regulations, including Siting Regulations. Nothing in this Section
16.1 will limit Manager's obligations under Section 2.2 and the remainder of
this Section 16. Manager acknowledges that failure to comply with applicable
federal, state, and local laws and regulations in its construction, operation,
and management of the Service Area Network may subject the parties and the
License to legal and administrative agency actions, including forfeiture
penalties and actions that affect the License, such as license suspension and
revocation, and accordingly, Manager agrees that it will cooperate with Sprint
PCS to maintain the License in full force and effect.
Manager will write and implement practices and procedures governing
construction and management of the Service Area Network in compliance with
Siting Regulations. Manager will make its Siting Regulations practices and
procedures available upon request to Sprint PCS in the manner specified by
Sprint PCS for its inspection and review, and Manager will modify those Siting
Regulations practices and procedures as may be requested by Sprint PCS. Every
six months, and at the request of Sprint PCS, Manager will provide a written
certification from one of Manager's chief officers that Manager's Service Area
Network complies with Siting Regulations. Manager's first certification of
compliance with Siting Regulations will be provided to Sprint PCS six months
after the date of this agreement.
Manager will conduct an audit and physical inspection of its Service Area
Network at the request of Sprint PCS to confirm compliance with Siting
Regulations, and Manager will report the results of the audit and physical
inspection to Sprint PCS in the form requested by Sprint PCS. Manager will bear
the cost of Siting Regulations compliance audits and physical inspections
requested by Sprint PCS.
Manager will retain for 3 years records demonstrating compliance with
Siting Regulations, including compliance audit and inspection records. Manager
will make those records available upon request to Sprint PCS for production,
inspection, and copying in the manner specified by Sprint PCS. Sprint PCS will
bear the cost of production, inspection, and copying.
16.2 FCC Compliance. The parties agree to comply with all applicable FCC
rules governing the License or the Service Area Network and specifically agree
as follows:
(a) The party billing a customer will advise the customer that service
is provided over spectrum licensed to Sprint PCS. Neither Manager nor Sprint
PCS will represent itself as the legal representative of the other before the
FCC or any other third party, but will
44
cooperate with each other with respect to FCC matters concerning the License or
the Service Area Network.
(b) Sprint PCS will use commercially reasonable efforts to maintain
the License in accordance with the terms of the License and all applicable laws,
policies and regulations and to comply in all material respects with all other
legal requirements applicable to the operation of the Sprint PCS Network and its
business. Sprint PCS has sole responsibility, except as specifically provided
otherwise in Section 2.2, for keeping the License in full force and effect and
for preparing submissions to the FCC or any other relevant federal, state or
local authority of all reports, applications, interconnection agreements,
renewals, or other filings or documents. Manager must cooperate and coordinate
with Sprint PCS' actions to comply with regulatory requirements, which
cooperation and coordination must include, without limitation, the provision to
Sprint PCS of all information that Sprint PCS deems necessary to comply with the
regulatory requirements. Manager must refrain from taking any action that could
impede Sprint PCS from fulfilling its obligations under the preceding sentence,
and must not take any action that could cause Sprint PCS to forfeit or cancel
the License.
(c) Sprint PCS and Manager are familiar with Sprint PCS'
responsibility under the Communications Act of 1934, as amended, and applicable
FCC rules. Nothing in this agreement is intended to diminish or restrict Sprint
PCS' obligations as an FCC Licensee and both parties desire that this agreement
and each party's obligations under this agreement be in compliance with the FCC
rules.
(d) Nothing in this agreement will preclude Sprint PCS from permitting
or facilitating resale of Sprint PCS Products and Services to the extent
required or elected under applicable FCC regulations. Manager will take the
actions necessary to facilitate Sprint PCS' compliance with FCC regulations. To
the extent permitted by applicable regulations, Sprint PCS will not authorize a
reseller that desires to sell services and products in only the Service Area to
resell Sprint PCS wholesale products and services, unless Manager agrees in
advance to such sales.
(e) If a change in FCC policy or rules makes it necessary to obtain
FCC consent for the implementation, continuation or further effectuation of any
term or provision of this agreement, Sprint PCS will use all commercially
reasonable efforts diligently to prepare, file and prosecute before the FCC all
petitions, waivers, applications, amendments, rule-making comments and other
related documents necessary to secure and/or retain FCC approval of all aspects
of this agreement. Manager will use commercially reasonable efforts to provide
to Sprint PCS any information that Sprint PCS may request from Manager with
respect to any matter involving Sprint PCS, the FCC, the License, the Sprint PCS
Products and Services or any other products and services approved under Section
3.2. Each party will bear its own costs of preparation of the documents and
prosecution of the actions.
(f) If the FCC determines that this agreement is inconsistent with the
terms and conditions of the License or is otherwise contrary to FCC policies,
rules and regulations, or if regulatory or legislative action subsequent to the
date of this agreement alters the permissibility of this agreement under the
FCC's rules or other applicable law, rules or
45
regulations, then the parties must use best efforts to modify this agreement as
necessary to cause this agreement (as modified) to comply with the FCC policies,
rules, regulations and applicable law and to preserve to the extent possible the
economic arrangements set forth in this agreement.
16.3 Marking and Lighting. Manager will conform to applicable FAA
standards when Siting Regulations require marking and lighting of Manager's
Service Area Network cell sites. Manager will cooperate with Sprint PCS in
reporting lighting malfunctions as required by Siting Regulations.
16.4 Regulatory Notices. Manager will, within 2 Business Days after its
receipt, give Sprint PCS written notice of all oral and written communications
it receives from regulatory authorities (including but not limited to the FCC,
the FAA, state public service commissions, environ-mental authorities, and
historic preservation authorities) and complaints respecting Manager's
construction, operation, and management of the Service Area Network that could
result in actions affecting the License as well as written notice of the details
respecting such communications and complaints, including a copy of any written
material received in connection with such communications and complaints.
Manager will cooperate with Sprint PCS in responding to such communications and
complaints received by Manager. Sprint PCS has the right to respond to all such
communications and complaints, with counsel and consultants of its own choice.
If Sprint PCS chooses to respond to such communications and complaints, Manager
will not respond to them without the consent of Sprint PCS, and Manager will pay
the costs of Sprint PCS' responding to such communications and complaints,
including reasonable attorneys' and consultants' fees, investigation costs, and
all other reasonable costs and expenses incurred by Sprint PCS.
16.5 Regulatory Policy - Setting Procedings. Manager will not intervene in
or otherwise participate in a rulemaking, investigation, inquiry, contested
case, or similar regulatory policy setting proceedings before a regulatory
authority concerning the License or construction, operation, and management of
the Service Area Network and the Sprint PCS business operated using the Service
Area Network.
17. GENERAL PROVISIONS
17.1 Notices. Any notice, payment, demand, or communication required or
permitted to be given by any provision of this agreement must be in writing and
mailed (certified or registered mail, postage prepaid, return receipt
requested), sent by hand or overnight courier, or sent by facsimile (with
acknowledgment received and a copy sent by overnight courier), charges prepaid
and addressed as described on the Notice Address Schedule attached to the Master
Signature Page, or to any other address or number as the person or entity may
from time to time specify by written notice to the other parties.
All notices and other communications given to a party in accordance with
the provisions of this agreement will be deemed to have been given when
received.
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17.2 Construction. This agreement will be construed simply according to
its fair meaning and not strictly for or against either party.
17.3 Headings. The table of contents, section and other headings contained
in this agreement are for reference purposes only and are not intended to
describe, interpret, define, limit or expand the scope, extent or intent of this
agreement.
17.4 Further Action. Each party agrees to perform all further acts and
execute, acknowledge, and deliver any documents that may be reasonably
necessary, appropriate, or desirable to carry out the intent and purposes of
this agreement.
17.5 Counterpart Execution. This agreement may be executed in any number
of counterparts with the same effect as if both parties had signed the same
document. All counterparts will be construed together and will constitute one
agreement.
17.6 Specific Performance. Each party agrees with the other party that the
party would be irreparably damaged if any of the provisions of this agreement
were not performed in accordance with their specific terms and that monetary
damages alone would not provide an adequate remedy. Accordingly, in addition to
any other remedy to which the non-breaching party may be entitled, at law or in
equity, the non-breaching party will be entitled to injunctive relief to prevent
breaches of this agreement and specifically to enforce the terms and provisions
of this agreement.
17.7 Entire Agreement; Amendments. The provisions of this agreement, the
Services Agreement and the Trademark License Agreements (including the exhibits
to those agreements) set forth the entire agreement and understanding between
the parties as to the subject matter of this agreement and supersede all prior
agreements, oral or written, and other communications between the parties
relating to the subject matter of this agreement. Except for Sprint PCS' right
to amend the Program Requirements in accordance with Section 9.2 and its right
to unilaterally modify and amend certain other provisions as expressly provided
in this agreement, this agreement may be modified or amended only by a written
amendment signed by persons or entities authorized to bind each party and, with
respect to the sections set forth on the signature page for Sprint, the persons
or entities authorized to bind Sprint.
17.8 Limitation on Rights of Others. Except as set forth on the signature
page for Sprint, nothing in this agreement, whether express or implied, will be
construed to give any person or entity other than the parties any legal or
equitable right, remedy or claim under or in respect of this agreement.
17.9 Waivers.
17.9.1 Waivers - General. The observance of any term of this
agreement may be waived (whether generally or in a particular instance and
either retroactively or prospectively) by the party entitled to enforce the
term, but any waiver is effective only if in a writing signed by the party
against which the waiver is to be asserted. Except as otherwise provided in
this agreement, no failure or delay of either party in exercising any power or
right under this
47
agreement will operate as a waiver of the power or right, nor will any single or
partial exercise of any right or power preclude any other or further exercise of
the right or power or the exercise of any other right or power.
17.9.2 Waivers - Managers. Manager is not in breach of any covenant
in this agreement and no Event of Termination will have occurred as a result of
the occurrence of any event, if Manager had delegated to Sprint Spectrum under
the Services Agreement (or any successor to that agreement) responsibility for
taking any action necessary to ensure compliance with the covenant or to prevent
the occurrence of the event.
17.9.3 Force Majeure. Neither Manager nor Sprint PCS, as the case
may be, is in breach of any covenant in this agreement and no Event of
Termination will have occurred as a result of the occurrence of the event, if
such party's non-compliance with the covenant results primarily from:
(i) any FCC order or any other injunction issued by any
governmental authority impeding the party's ability to comply with the
covenant;
(ii) the failure of any governmental authority to grant any
consent, approval, waiver, or authorization or any delay on the part of any
governmental authority in granting any consent, approval, waiver or
authorization;
(iii) the failure of any vendor to deliver in a timely manner
any equipment or services; or
(iv) any act of God, act of war or insurrection, riot, fire,
accident, explosion, labor unrest, strike, civil unrest, work stoppage,
condemnation or any similar cause or event not reasonably within the
control of such party.
17.10 Waiver of Jury Trial. EACH PARTY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
17.11 Binding Effect. Except as otherwise provided in this agreement,
this agreement is binding upon and inures to the benefit of the parties and
their respective and permitted successors, transferees, and assigns, including
any permitted successor, transferee or assignee of the Service Area Network or
of the License. The parties intend that this agreement bind only the party
signing this agreement and that the agreement is not binding on the Related
Parties of a party unless the agreement expressly provides that Related Parties
are bound.
17.12 Governing Law. The internal laws of the State of Missouri (without
regard to principles of conflicts of law) govern the validity of this agreement,
the construction of its terms, and the interpretation of the rights and duties
of the parties.
48
17.13 Severability. The parties intend every provision of this agreement
to be severable. If any provision of this agreement is held to be illegal,
invalid, or unenforceable for any reason, the parties intend that a court
enforce the provision to the maximum extent permissible so as to effect the
intent of the parties (including the enforcement of the remaining provisions).
If necessary to effect the intent of the parties, the parties will negotiate in
good faith to amend this agreement to replace the unenforceable provision with
an enforceable provision that reflects the original intent of the parties.
17.14 Limitation of Liability. NO PARTY WILL BE LIABLE TO THE OTHER PARTY
FOR SPECIAL, INDIRECT, INCIDENTAL, EXEMPLARY, CONSEQUENTIAL OR PUNITIVE DAMAGES,
OR LOSS OF PROFITS, ARISING FROM THE RELATIONSHIP OF THE PARTIES OR THE CONDUCT
OF BUSINESS UNDER, OR BREACH OF, THIS AGREEMENT, EXCEPT WHERE SUCH DAMAGES OR
LOSS OF PROFITS ARE CLAIMED BY OR AWARDED TO A THIRD PARTY IN A CLAIM OR ACTION
AGAINST WHICH A PARTY TO THIS AGREEMENT HAS A SPECIFIC OBLIGATION TO INDEMNIFY
ANOTHER PARTY TO THIS AGREEMENT.
17.15 No Assignment; Exceptions.
17.15.1 General. Neither party will, directly or indirectly, assign
this agreement or any of the party's rights or obligations under this agreement
without the prior written consent of the other party, except as otherwise
specifically provided in this Section 17. Sprint PCS may deny its consent to
any assignment or transfer in its sole discretion except as otherwise provided
in this Section 17.
Any attempted assignment of this agreement in violation of this Section
17.15 will be void and of no effect.
A party may assign this agreement to a Related Party of the party, except
that Manager cannot assign this agreement to a Related Party that is a
significant competitor of Sprint, Sprint PCS or their respective Related Parties
in the telecommunications business. Except as provided in Section 17.15.5, an
assignment does not release the assignor from its obligations under this
agreement unless the other party to this agreement consents in writing in
advance to the assignment and expressly grants a release to the assignor.
Except as provided in Section 17.15.5, Sprint PCS must not assign this
agreement to any entity that does not also own the License covering the Service
Area directly or indirectly through a Related Party. Manager must not assign
this agreement to any entity (including a Related Party), unless such entity
assumes all rights and obligations under the Services Agreement, the Trademark
License Agreements and any related agreements.
17.15.2 Assignment Right of Manager to Financial Lender. If Manager
is no longer able to satisfy its financial obligations and other duties, then
Manager has the right to assign its obligations and rights under this agreement
to its Financial Lender, if:
49
(a) Manager or Financial Lender provides Sprint PCS at least 10 days
advance written notice of such assignment;
(b) Financial Lender cures or commits to cure any outstanding material
breach of this agreement by Manager prior to the end of any applicable cure
period. If Financial Lender fails to make a timely cure then Sprint PCS may
exercise its rights under Section 11;
(c) Financial Lender agrees to serve as an interim trustee for the
obligations and duties of Manager under this agreement for a period not to
exceed 180 days. During this interim period, Financial Lender must identify a
proposed successor to assume the obligations and rights of Manager under this
agreement;
(d) Financial Lender assumes all of Manager's rights and obligations
under the Services Agreement, the Trademark License Agreements and any related
agreements; and
(e) Financial Lender provides to Sprint PCS advance written notice of
the proposed successor to Manager that Financial Lender has identified
("Successor Notice"). Sprint PCS may give to Financial Lender written notice of
Sprint PCS' decision whether to consent to such proposed successor within 30
days after Sprint PCS' receipt of the Successor Notice. Sprint PCS may not
unreasonably withhold such consent, except that Sprint PCS is not required to
consent to a proposed successor that:
(i) has, in the past, materially breached prior agreements with
Sprint PCS or its Related Parties;
(ii) is a significant competitor of Sprint PCS or its Related
Parties in the telecommunications business;
(iii) does not meet Sprint PCS' reasonable credit criteria;
(iv) fails to execute an assignment of all relevant documents
related to this agreement including the Services Agreement and the
Trademark License Agreements; or
(v) refuses to assume the obligations of Manager under this
Agreement, the Services Agreement, the Trademark License Agreements and any
related agreements.
If Sprint PCS fails to provide a response to Financial Lender within 30
days after receiving the Successor Notice, then the proposed successor is deemed
rejected. Any Financial Lender disclosed on the Build-out Plan on Exhibit 2.1 is
-----------
deemed acceptable to Sprint PCS.
17.15.3 Change of Control Rights. If there is a Change of Control of
Manager, then:
50
(a) Manager must provide to Sprint PCS advance written notice
detailing relevant and appropriate information about the new ownership interests
effecting the Change of Control of Manager.
(b) Sprint PCS must provide to Manager written notice of its decision
whether to consent to or reject the proposed Change of Control within 30 days
after its receipt of such notice. Sprint PCS may not unreasonably withhold such
consent, except that Sprint PCS is not required to consent to a Change of
Control in which:
(i) the final controlling entity or any of its Related Parties
has in the past materially breached prior agreements with Sprint PCS or its
Related Parties;
(ii) the final controlling entity or any of its Related Parties
is a significant competitor of Sprint PCS or its Related Parties in the
telecommunications business;
(iii) the final controlling entity does not meet Sprint PCS'
reasonable credit criteria;
(iv) the final controlling entity fails to execute an
assignment of all relevant documents related to this agreement including
the Services Agreement and the Trademark License Agreements; or
(v) the final controlling entity or its Related Parties refuse
to assume the obligations of Manager under this agreement.
(c) In the event that Sprint PCS provides notice that it does not
consent to the Change of Control, Manager is entitled to either:
(i) contest such determination pursuant to the dispute
resolution procedure in Section 14; or
(ii) abandon the proposed Change of Control.
(d) Nothing in this agreement requires Sprint PCS' consent to:
(i) a public offering of Manager that does not result in a
Change of Control (i.e., a shift from one party being in control to no
party being in control is not a Change of Control); or
(ii) a recapitalization or restructuring of the ownership
interests of Manager that Manager determines is necessary to:
(A) facilitate the acquisition of commercial financing and
lending arrangements that will support Manager's operations and
efforts to fulfill its obligations under this agreement; and
51
(B) does not constitute a Change of Control.
(e) "Change of Control" means that in any one transaction or series
of related transactions occurring during any 365-day period, the ultimate parent
entity of the Manager changes. The ultimate parent entity is to be determined
using the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976 rules. A Change
of Control does not occur if:
(i) a party changes the form of its organization without
materially changing their ultimate ownership (e.g., converting from a
limited partnership to a limited liability company); or
(ii) one of the owners of the party on the date of this
agreement or on the date of the closing of Manager's initial equity
offering for purposes of financing its obligations under this agreement
ultimately gains control over the party, unless such party is a significant
competitor of Sprint PCS or its Related Parties in the telecommunications
business.
17.15.4 Right of First Refusal. Notwithstanding any other provision
in this agreement, Manager grants Sprint PCS the right of first refusal
described below. If Manager determines it wishes to sell an Offered Interest,
upon receiving any Offer to purchase an Offered Interest, Manager agrees to
promptly deliver to Sprint PCS an Offer Notice. The Offer Notice is deemed to
constitute an offer to sell to Sprint PCS, on the terms set forth in the Offer,
all but not less than all of the Offered Interest. Sprint PCS will have a
period of 60 days from the date of the Offer Notice to notify Manager that it
agrees to purchase the Offered Interest on such terms. If Sprint PCS timely
agrees in writing to purchase the Offered Interest, the parties will proceed to
consummate such purchase not later than the 180th day after the date of the
Offer Notice. If Sprint PCS does not agree within the 60-day period to purchase
the Offered Interest, Manager will have the right, for a period of 120 days
after such 60th day, subject to the restrictions set forth in this Section 17,
to sell to the person or entity identified in the Offer Notice all of the
Offered Interest on terms and conditions no less favorable to Manager than those
set forth in the Offer. If Manager fails to sell the Offered Interest to such
person or entity on such terms and conditions within such 120-day period,
Manager will again be subject to the provisions of this Section 17.15.4 with
respect to the Offered Interest.
17.15.5 Transfer of Sprint PCS Network. Sprint PCS may sell,
transfer or assign the Sprint PCS Network, including its rights and obligations
under this agreement, the Services Agreement and any related agreements, to a
third party without Manager's consent so long as the third party assumes the
rights and obligations under this agreement and the Services Agreement. Manager
agrees that Sprint PCS and its Related Parties will be released from any and all
obligations under and with respect to any and all such agreements upon such
sale, transfer or assignment in accordance with this Section 17.15.5, without
the need for Manager to execute any document to effect such release.
17.16 Provisions of Services by Sprint Spectrum. As described in the
Recitals, the party or parties to this agreement that own the Licenses are
referred to in this agreement as
52
"Sprint PCS." Sprint Spectrum will provide most or all of the services required
to be provided by Sprint PCS under this agreement on behalf of Sprint PCS, other
than the services to be rendered by Manager. For example, Sprint Spectrum is the
party to the contracts relating to the national distribution network, the
roaming and long distance services, and the procurement arrangements.
Accordingly, Sprint PCS and Manager will deal with Sprint Spectrum to provide
many of the attributes of the Sprint PCS Network.
17.17 Number Portability. Manager understands that the manner in which
customers are assigned to the Service Area Network could change as telephone
numbers become portable without any relation to the service area in which they
are initially activated. To the extent the relationship between NPA-NXX and the
Service Area changes, Sprint PCS will develop an alternative system to attempt
to assign customers who primarily live and work in the Service Area to the
Service Area. The terms of this agreement will be deemed to be amended to
reflect the new system that Sprint PCS develops.
17.18 Disclaimer of Agency. Neither party by this agreement makes the
other party a legal representative or agent of the party, nor does either party
have the right to obligate the other party in any manner, except if the other
party expressly permits the obligation by the party or except for provisions in
this agreement expressly authorizing one party to obligate the other.
17.19 Independent Contractors. The parties do not intend to create any
partnership, joint venture or other profit-sharing arrangement, landlord-tenant
or lessor-lessee relationship, employer-employee relationship, or any other
relationship other than that expressly provided in this agreement. Neither
party to this agreement has any fiduciary duty to the other party.
17.20 Expense. Each party bears the expense of complying with this
agreement except as otherwise expressly provided in this agreement. The parties
must not allocate any employee cost or other cost to the other party, except as
otherwise provided in the Program Requirements or to the extent the parties
expressly agree in advance to the allocation.
17.21 General Terms. (a) This agreement is to be interpreted in
accordance with the following rules of construction:
(i) The definitions in this agreement apply equally to both the
singular and plural forms of the terms defined unless the context otherwise
requires.
(ii) The words "include," "includes" and "including" are deemed to
be followed by the phrase "without limitation".
(iii) All references in this agreement to Sections and Exhibits are
references to Sections of, and Exhibits to, this agreement, unless otherwise
specified; and
(iv) All references to any agreement or other instrument or statute
or regulation are to it as amended and supplemented from time to time (and, in
the case of a statute or regulation, to any corresponding provisions of
successor statutes or regulations), unless the context otherwise requires.
53
(b) Any reference in this agreement to a "day" or number of "days"
(without the explicit qualification of "Business") is a reference to a calendar
day or number of calendar days. If any action or notice is to be taken or given
on or by a particular calendar day, and the calendar day is not a Business Day,
then the action or notice may be taken or given on the next Business Day.
17.22 Conflicts with Other Agreements. The provisions of the Management
Agreement govern over those of the Services Agreement if the provisions
contained in this agreement conflict with analogous provisions in the Services
Agreement. The provisions of each Trademark License Agreement governs over
those of this agreement if the provisions contained in this agreement conflict
with analogous provisions in a Trademark License Agreement.
17.23 Announced Transaction. Sprint Enterprises, L.P., TCI Telephony
Services, Inc., Comcast Telephony Services and Cox Telephony Partnership have
executed a Restructuring and Merger Agreement and related agreements that
provide for restructuring the ownership of Sprint Spectrum L.P., SprintCom,
Inc., PhillieCo Partners I, L.P., and ▇▇▇ Communications PCS, L.P. Upon
consummation of the transactions contemplated by those agreements, Sprint would
control each of the four entities. While Sprint and Sprint PCS anticipate the
proposed transactions will be consummated, there can be no assurances.
17.24 Additional Terms and Provisions. Certain additional and
supplemental terms and provisions of this agreement, if any, are set forth in
the Addendum to Sprint PCS Management Agreement attached hereto and incorporated
herein by this reference. Manager represents and warrants that the Addendum
also describes all existing contracts and arrangements (written or verbal) that
relate to or affect the rights of Sprint PCS or Sprint under this agreement
(e.g., agreements relating to long distance telephone services (Section 3.4) or
backhaul and transport services (Section 3.7)).
17.25 Master Signature Page. Each party agrees that it will execute the
Master Signature Page that evidences such party's agreement to execute, become a
party to and be bound by this agreement, which document is incorporated herein
by this reference.
54
Sprint PCS
Management Agreement
BETWEEN
SprintCom, Inc.
AND
AirGate Wireless, L.L.C.
July 22, 1998
ADDENDUM I
TO
SPRINT PCS MANAGEMENT AGREEMENT
Manager: Airgate Wireless, L.L.C.
Service Area: Anderson, SC BTA
Asheville-Hendersonville, NC BTA
Augusta, GA BTA
Charleston, SC BTA
Columbia, SC BTA
Florence, SC BTA
Goldsboro-Kinston, NC BTA
Greenville-Washington, NC BTA
Greenville-Spartanburg, SC BTA
Greenwood, SC BTA
Hickory-Lenoir-Morganton, NC BTA
Jacksonville, NC BTA
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇
Orangeburg, SC BTA
Roanoke Rapids, NC BTA
Rocky Mount-Wilson, NC BTA
Savannah, GA BTA
▇▇▇▇▇▇, SC BTA
Wilmington, NC BTA
Camden County, NC
Currituck County, NC
Dare County, NC
Pasquotank County, NC
This Addendum contains certain additional and supplemental terms
and provisions of that certain Sprint PCS Management Agreement (the "Management
Agreement") entered into contemporaneously with and by the same parties as this
Addendum. The terms and provisions of this Addendum control, supersede and amend
any conflicting terms and provisions contained in the Management Agreement.
Except for express modifications made in this Addendum, the Management Agreement
continues in full force and effect.
Capitalized terms used and not otherwise defined in this Addendum
have the meanings ascribed to them in the Management Agreement. Section and
Exhibit references are to Sections and Exhibits of the Management Agreement
unless otherwise noted.
The Management Agreement is modified as follows:
1. Microwave Relocation. Sprint PCS will bear all costs associated
with clearing spectrum under Section 2.7. The last sentence of Section 2.7 is
deleted.
2. Manager's Right to Request Review of Changes. The last sentence of
Section 9.3 is deleted. The following is added at the end of Section 9.3: "If
Sprint PCS still requires Manager to implement the change to the Program
Requirement, then Manager may either submit the matter for resolution under the
procedure set forth in Section 14 or implement the change to the Program
Requirement. If Manager does not submit the matter to resolution under Section
14 within 10 days after the Chief Officer's determination is communicated to
Manager and fails to implement the change, then Sprint PCS will have the rights
under Section 11."
3. Reimbursement. The following sentences replace the sentence in
Section 10.1.6: "If Sprint PCS pays an amount to Manager under this Section 10,
which amount is for the payment of a third party (e.g., a telecommunications
carrier), and Manager fails to make payment of such amount to said third party,
then Manager will pay to or reimburse Sprint PCS for any amounts that Sprint PCS
is subsequently required to pay to said third party, to the extent of such
previous payment made to Manager. If Manager pays an amount to Sprint PCS under
this Section 10, which amount is for the payment of a third party (e.g., a
telecommunications carrier), and Sprint PCS fails to make payment of such amount
to said third party, then Sprint PCS will pay to or reimburse Manager for any
amounts that Manager is subsequently required to pay to said third party, to the
extent such previous payment was previously made to Sprint PCS."
4. Taxes. The following sentence is added at the end of Section 10.3:
"Sprint PCS will remit to the governmental authority the amount that Sprint PCS
receives from Manager for such taxes or fees pursuant to this Section 10.3."
5. Sprint's Subsequent Acquisition of Additional Spectrum. If Sprint
PCS acquires additional spectrum in the Service Area, Sprint PCS may amend the
Service Area Exhibit to the Management Agreement in its sole discretion to add
--------------------
such newly acquired spectrum to said Exhibit. Such additional spectrum will,
-------
upon inclusion in the Services Area Exhibit, become part of the License, as such
---------------------
term is defined in the Schedule of Definitions. If additional spectrum is
included in the Service Area Exhibit and the License is then for 20 MHz or more
--------------------
of PCS spectrum in the Service Area, then the word "executed" is replaced by the
word "terminated" in Sections 11.2.1.2 and 11.5.2. Further, Sprint PCS and
Manager may exercise any and all rights under the Management Agreement, and in
particular Sections 11.2.2.2 and 11.6.2 thereof, that are available to the
parties when a Disaggregated License is sold to Manager. If the stipulations of
this paragraph are met then the reference in Section 11.5.1 to 80% will remain
80% (i.e., the change from 80% to [*] pursuant to paragraph 8 of this Addendum
is amended).
6. Manager's Action for Damages or Other Relief. The sentence in
Section 11.5.3 is replaced with the following: "Manager, in accordance with the
dispute resolution process in Section 14, may seek damages or other appropriate
relief."
_______________________
* Portions of the specified exhibit has been omitted pursuant to a request for
confidential treatment and filed separately with the Commission.
7. Sprint PCS' Action for Damages or Other Relief. The sentence in
Section 11.6.4 is replaced with the following: "Sprint PCS, in accordance with
the dispute resolution process in Section 14, may seek damages or other
appropriate relief."
8. Manager's Put Right. The reference in Section 11.5.1 to 80% is
changed to [*,] except as provided in paragraphs 5 and 10(b)(iii) of this
Addendum.
9. Limitation of Liability. The following is added to the end of
Section 17.14: "Notwithstanding the preceding sentence, a party may make a claim
for loss of profits in the limited case where a breach is directly attributable
to a revenue generating product or price and where the loss of profits is
directly attributable to such breach. Such a claim for loss of profits may
include only those potential profits that would have been generated during the
180-day period that begins no earlier than 90 days immediately preceding the
earlier of:
(a) the date on which suit for recovery of such lost profits is
filed, or
(b) if applicable, the date on which a dispute resolution
proceeding, pursuant to Section 14 of this agreement originates."
10. Manager's Spectrum. Manager represents that it owns the licenses
described on the attached Schedule 10.
-----------
(a) Utilization of Manager's Spectrum. Manager may not during the
Term of the Management Agreement utilize the spectrum described on Schedule
--------
10 or any other spectrum that Manager acquires or obtains the right to use
--
(collectively "Manager's Spectrum"), except as expressly permitted under
the Management Agreement.
(b) Manager's Right to and Ownership of Spectrum. The following
provisions apply if, upon termination of the Management Agreement, Manager
owns any Manager's Spectrum:
(i) Customers. If Sprint PCS does not purchase the Operating
Assets, (A) Section 11.4(d) will apply the same as if the Management
Agreement terminated because of Manager's purchase of a Disaggregated
License, and (B) subscribers of Sprint PCS may roam on Manager's
network at MFN prices and Sprint PCS may resell Manager's Products and
Services at MFN prices.
(ii) Termination Rights. Notwithstanding any provision to the
contrary, Sprint PCS may exercise any and all rights under the
Management Agreement that are available to Sprint PCS when it sells a
Disaggregated License to Manager.
________________________
* Portions of the specified exhibit has been omitted pursuant to a request for
confidential treatment and filed separately with the Commission.
(iii) Purchase Price of Manager's Put Right. The reference in
Section 11.5.1 to 80% will remain at 80% (i.e., the change from 80% to
[*] pursuant to paragraph 8 of this Addendum is amended).
11. Survival Upon Termination. The provisions of Sections 10, 11.4,
11.5, 11.6, 12.2, 13, 14, 16 and 17 of the Management Agreement and paragraphs
3, 4, 5, 6, 7, 8, 9, 10 and 11 of this Addendum will survive any termination of
the Management Agreement.
12. Local Telephone Exchange Build-out. Manager and Sprint PCS
acknowledge that Manager's Build-out Plan as detailed on Exhibit 2.1 to the
-----------
Management Agreement includes full (i.e., 100%) coverage of that portion of the
following local telephone exchanges located within the Service Area:
Exchange: Current NPA/NXX(s):
-------- ------------------
1) Catawba 704 or 828/241
2) Elm City 919/236
3) Farmville 919/753
4) ▇▇▇▇▇▇▇▇▇ 919/749
5) Greenville 919/355, 551, 557
6) ▇▇▇▇▇ Ridge 919/329
7) Jacksonville 919/340, 346
8) Litteton 919/586
9) Pinetops 919/827
10) Richlands 919/324
11) Rocky Mt. 919/442, 443, 446
12) Sherrills Ford 704 or 828/478
13) Sneads Ferry 919/327
14) Spring Hope 919/478
15) Swansboro 919/326, 354, 339
16) Tarboro 919/641, 823
17) ▇▇▇▇▇▇ 919/237, 243, 291, 293
Sprint PCS agrees to consider any proposals submitted by Manager to reduce the
coverage within the above listed exchange boundaries if Manager reasonably
demonstrates that such coverage is impractical or unfeasible due to extreme
conditions (i.e., impenetrable zoning restrictions, significantly low population
or traffic density, or uneconomic terrain). Sprint PCS agrees to not
unreasonably withhold consent to such proposals.
13. Ownership Retention.
(a) Manager represents and warrants that the attached Schedule 13
-----------
describes the existing ownership and voting rights of AirGate, L.L.C. and
the proforma organizational and ownership structure of Manager and the
entities labeled "Holding Company" and "Intermediate Wholly-Owned
Subsidiary" when the latter two entities are formed.
_________________________
* Portions of the specified exhibit has been omitted pursuant to a request for
confidential treatment and filed separately with the Commission.
(b) The following events will be an Event of Termination under
Section 11.3.3 of the Management Agreement:
(i) The sale, transfer, assignment, gift or pledge (each
being a "Transfer") by W. ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. Body, III, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and Associates,
L.P. (each being a "Principal," including ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
individually, and collectively being the "Principals"), of such
Principal's equity or voting interest in any of the entities described
on Schedule 13 for five years after the date of the Management
-----------
Agreement, except that the following Transfers are permitted so long
as and to the extent they are permitted under the Management
Agreement: (A) a Transfer of a direct or indirect ownership interest
in AirGate, L.L.C. to such Principal's spouse, child, adopted child,
stepchild, grandchild, parent or sibling, or to a trust established
for the benefit of any of the foregoing, provided that the Principal
retains control of the voting rights associated with the ownership
interest and remains bound by the terms of this paragraph 13 of this
Addendum; (B) a Transfer upon the death of a Principal, provided that
such Transfer is to another Principal or to a person whose interest is
subject to paragraph 13 of this Addendum; and (C) a Transfer of up to
30% of such Principal's equity interest in each such entity after the
third anniversary of the Management Agreement, so long as after any
such Transfer, the Principals control, directly or indirectly, the
right to elect or designate more than 50% of the managers of AirGate,
L.L.C.
(ii) For five years after the date of the Management
Agreement or until an initial public offering of equity in any of the
entities described in Schedule 13, whichever occurs first, the failure
-----------
of the Principals to elect or designate or to cause to be elected or
designated Principals or other individuals acceptable to Sprint PCS,
which acceptance will not be unreasonably withheld, to hold more than
50% of the manager positions of AirGate, L.L.C. and more than 50% of
the manager positions of Manager.
(iii) The failure of AirGate, L.L.C. during the five-year
period beginning on the date of the Management Agreement to meet the
FCC's minimum voting requirements to qualify as the control group for
C or F block PCS licenses as such voting requirements exist on the
date of the Management Agreement.
(c) Upon the occurrence of an Event of Termination under
paragraph 13(b) or a breach of a representation, warranty or obligation
under paragraphs 13(a) or 14(c):
(i) Manager will be deemed to be the breaching party;
(ii) Neither Manager nor any Principal or person will have
a right to cure the breach;
(iii) Sprint PCS will have the right to elect a remedy
under Sections 11.6.1 or 11.6.2, notwithstanding any of the
limitations set forth in Section 11.6 (e.g., Sprint PCS can exercise
its purchase right under Section 11.6.1 during the first two years of
the Initial Term); and
(iv) If Sprint PCS elects to purchase the Operating Assets
under Section 11.6.1, the purchase price will be the lesser of (A) an
amount equal to 72% (80% minus a 10% penalty) of the Entire Business
Value, and (B) the net invested capital directly expended on the
Service Area Network (i.e., the cash directly expended minus the cash
received in connection with the Service Area Network), adjusted to
reflect a 16% annual rate of return on the equity component thereof.
(d) The term "manager" as used in paragraphs 13(b)(i)(C) and
13(b)(ii) means a manager of Airgate Wireless, L.L.C. or of Manager, as the
case may be, elected, designated, or appointed under the terms of such
limited liability company's limited liability company agreement to manage
such limited liability company's business.
14. Noncompetition; Primary Business.
(a) Each Principal agrees that such Principal will not, for five
years after the date of the Management Agreement, directly or indirectly:
(i) engage in the wireless telecommunications
business within the Service Area, except that AirGate Wireless L.L.C.
may dispose of the four PCS licenses described on Schedule 10 in a
-----------
transaction in which the Principals receive a direct or indirect
minority interest in the acquiring company so long as no Principal is
directly or indirectly active in the management of such acquiring
company; or
(ii) engage in any other business activity that
causes such Principal's primary business activity to be other than
such Principal's involvement with Manager.
Manager will cause each Principal to enter into an agreement with
Manager that gives Manager the right to enforce the obligations of such
Principal as set forth in this paragraph 14(a).
(b) Manager will cause each person who becomes employed by
Manager at a level of senior vice president or higher, including the chief
executive officer, chief operating officer, chief financial officer, chief
marketing officer, chief network officer, chief business development
officer and chief legal officer (which refers to the top-ranking officer in
each of such areas of responsibility), or who owns directly or indirectly
at least one percent of the outstanding equity interest of AirGate, L.L.C.
or Manager, to execute an agreement with Manager that prohibits such person
from directly or indirectly engaging in the wireless telecommunications
business in the Service Area during the term of such person's employment by
Manager and for 18 months after such employee's termination or resignation.
(c) Upon a breach by a Principal or a person of his or her
obligations under paragraphs 14(a) or 14(b), Manager agrees to take
immediate legal action to enforce such Principal's or person's obligations
under such paragraph and the agreement that evidences such obligation to
Manager. If Manager fails to take such immediate legal action and to
diligently pursue its rights under such agreement, then Sprint PCS may
notify Manager that an Event of Termination under Section 11.3.3 of the
Management Agreement has occurred, and the rights set forth in paragraph
13(c) will apply.
15. Expiration Upon Change of Control. The restrictions set forth in
paragraphs 13(b) and 14(a)(ii) will expire upon a Change of Control of Sprint or
Sprint PCS, other than the Change of Control contemplated as described in
Section 17.23 of the Management Agreement, if within one year of such Change in
Control at least one-third of the corporate officers of Sprint or Sprint PCS, as
the case may be, leave such company.
16. Blue Penciling. If and only if a provision of the type contained
in this sentence is enforceable in the jurisdiction in question, if any
provision contained in paragraphs 13 and 14 of this Addendum is for any reason
held to be excessively broad as to duration, geographic scope, activity or
subject in its application to any person or circumstance, such provision will,
with respect to such person or circumstance, be construed by limiting or
reducing it so as to be enforceable in such jurisdiction. If a court exercises
its rights under the preceding sentence, paragraphs 13 and 14 of this Addendum
will not be affected with respect to their application to other persons or
circumstances, unless and except to the extent a court otherwise determines. If
a court does not exercise its rights under the first sentence in this paragraph
16, unless and except to the extent the court otherwise determines, its finding
that a provision contained in paragraphs 13 or 14 of this Addendum or the
application of a provision in such paragraphs to any person or circumstance is
invalid or unenforceable, will not affect the application of the remaining
provisions in such paragraphs with respect to such person or circumstances or
the application of such provision as is held invalid or unenforceable with
respect to its application to other persons or circumstances.
17. Change in Program Requirements. In Section 7.2, the second
parenthetical is changed to reference Section 9.1 instead of Section 7.3.
[The remainder of this page is intentionally left blank.]
ADDENDUM II
TO
SPRINT PCS MANAGEMENT AGREEMENT
Manager: AIRGATE WIRELESS, INC.
Service Area: Anderson, SC BTA
Asheville-Henderson, NC BTA
Augusta, GA BTA
Charleston, SC BTA
Columbia, SC BTA
Florence, SC BTA
Goldsboro-Kinston, NC BTA
Greenville-Washington, NC BTA
Greenville-Spartanburg, SC BTA
Greenwood, SC BTA
Hickory-Lenoir-Morgantown, NC BTA
Jacksonville, NC BTA
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇
Orangeburg, SC BTA
Roanoke Rapids, NC BTA
Rocky Mount-Wilson, NC BTA
Savannah, GA BTA
Sumter, SC BTA
Wilmington, NC BTA
Camden County, NC
Currituck County, NC
Dare County, NC
Pasquotank County, NC
This Addendum II (this "Addendum"), dated as of May 24, 1999, contains
certain additional and supplemental terms and provisions to that certain Sprint
PCS Management Agreement entered into as of July 22, 1998, by the same parties
as this Addendum, which Management Agreement was further amended by that certain
Addendum I entered into as of July 22, 1998 (the Management Agreement, as
amended by Addendum I, being the "Management Agreement"). The terms and
provisions of this Addendum control, supersede and amend any conflicting terms
and provisions contained in the Management Agreement. Except for express
modifications made in this Addendum, the Agreement continues in full force and
effect.
Capitalized terms used and not otherwise defined in this Addendum have the
meanings ascribed to them in the Management Agreement. Section and Exhibit
references are to Sections of, and Exhibits to, the Management Agreement unless
otherwise noted.
The Management Agreement is modified as follows:
1. Term. In the event AirGate PCS, Inc. completes an initial public
offering of stock during the Initial Term, the Management Agreement will
automatically renew for one 10 year renewal period (the "First Renewal Term")
unless an event occurs during the Initial Term that if not cured in the time
permitted under the Management Agreement, if any, or waived by Sprint PCS, will
become an Event of Termination. If the Initial Term would expire before the
applicable cure period has expired, the Initial Term will be extended for the
duration of the cure period. If Manager cures within the applicable cure
period, or the breach is waived by Sprint PCS, regardless of whether the Initial
Term has been extended, the Management Agreement will renew, and the First
Renewal Term is deemed to have commenced on July 22, 2018. If Manager does not
cure within the applicable cure period, Sprint PCS may terminate the Management
Agreement in accordance with its terms.
2. Revised Financing Plan. Exhibit 1.7 attached to this Addendum
supersedes and replaces in its entirety Exhibit 1.7 attached to the Management
Agreement.
3. Revised Build-out Plan. Exhibit 2.1 attached to this Addendum
supersedes and replaces in its entirety Exhibit 2.1 attached to the Management
Agreement.
4. Amendments to Section 13 of Addendum I to Management Agreement. (i)
Manager represents and warrants that it will enter into agreements with each of
the Principals (as defined below), pursuant to which each Principal is bound to
comply with the restrictions set forth in Sections 13 and 14 of Addendum I, as
modified by this Addendum; such agreements with the Principals will contain
penalty provisions acceptable to Sprint PCS.
(ii) If AirGate PCS, Inc. does not complete an initial public offering of
stock by December 31, 1999, the following amendments to Section 13 of Addendum I
will be of no force and effect. Unless AirGate PCS, Inc. does not complete an
initial public offering of stock by December 31, 1999, Section 13 of Addendum I
to the Management Agreement will be amended to read as follows:
"(a) Manager represents and warrants that the attached Schedule 13
describes the existing ownership rights of AirGate PCS, Inc. and the
organizational and ownership structure of Manager and entities labeled
"AirGate PCS, Inc.", "AirGate Wireless, Inc." and "AGW Leasing
Company, Inc.".
(b) The following events will be deemed a material breach of a
material term of the Management Agreement under Section 11.3.3 of the
Management Agreement when a party gives written notice to the other
party of the occurrence of such event:
The sale, transfer, assignment, gift or pledge (each being a
"Transfer") by W. ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. Body, III, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and Associates, L.P. (each
being a "Principal," including ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ individually, and
collectively being the "Principals"), of such Principal's equity or
voting interest in any of the entities described in Schedule 13
-----------
2
for five years after the date of the Management Agreement, except that
the following Transfers are permitted so long as and to the extent
they are permitted under the Management Agreement: (A) a Transfer of a
direct or indirect ownership in AirGate PCS, Inc. to such Principal's
spouse, child, adopted child, stepchild, grandchild, parent or
sibling, or to a trust established for the benefit of any of the
foregoing, provided that the Principal retains control of the voting
rights associated with the ownership interest and remains bound by the
terms of this paragraph 13 of the Addendum; (B) a Transfer upon the
death of a Principal, provided that such Transfer is to another
Principal or to a person whose interest is subject to paragraph 13 of
this Addendum; and (C) a Transfer of up to 30% of the such Principal's
equity interest in AirGate PCS, Inc. after the third anniversary of
the Management Agreement."
Sections (b)(ii) and (b)(iii) of Addendum I to the Sprint PCS
Management Agreement will be deleted in their entirety.
(c) Upon the occurrence of an Event of Termination under paragraph
13(b) or a breach of a representation, warranty or obligation under
paragraphs 13(a) or 14(c):
(i) Management will have an opportunity to cure pursuant to
Section 11.3.3 by taking immediate legal action to enforce such
Principal's or person's obligations under such paragraph and the
agreement that evidences such obligation to Manager. If Manager takes
such action immediately and pursues its rights diligently, Sprint PCS
will not terminate the Management Agreement. If Manager fails to take
such immediate legal action and to diligently pursue its rights under
such agreement, then Manager will be deemed to be the breaching party
and Sprint PCS may terminate the Management Agreement upon 30 days'
notice to Manager.
(ii) Sprint PCS will have the right to elect a remedy under
Sections 11.6.1 or 11.6.2, notwithstanding any of the limitations set
forth in Section 11.6 (e.g., Sprint PCS can exercise its purchase
right under Section 11.6.1 during the first two years of the Initial
Term).
(iii) If Sprint PCS elects to purchase the Operating Assets
under Section 11.6.1, the purchase price will be an amount equal to
72% (80% minus a 10% penalty) of the Entire Business Value.
5. Services Agreement. Section 2.1.3 of the Services Agreement is amended
to add the following paragraph:
"In the event AirGate PCS, Inc. completes an initial public offering of
stock prior to December 31, 1999, Sprint Spectrum will not provide Manager
with notice of the discontinuance of an Available Service until at least
March 31, 2001, with such discontinuance to be effective as of December 31,
2001.
3
IN WITNESS WHEREOF, the parties have cause this Addendum to be executed as
of this 24th day of May, 1999.
AIRGATE WIRELESS, INC.
BY: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------
Title: Corporate Secretary
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SPRINTCOM, INC.
BY: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------
Title: Chief Business Development Officer
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4
ADDENDUM III
TO
SPRINT PCS MANAGEMENT AGREEMENT
Manager: Airgate PCS, Inc. (formerly AirGate Wireless, Inc.)
Service Area: Anderson, SC BTA
Asheville-Henderson, NC BTA
Augusta, GA BTA
Charleston, SC BTA
Columbia, SC BTA
Florence, SC BTA
Goldsboro-Kinston, NC BTA
Greenville-Washington, NC BTA
Greenville-Spartanburg, SC BTA
Greenwood, SC BTA
Hickory-Lenoir-Morgantown, NC BTA
Jacksonville, NC BTA
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇
Orangeburg, SC BTA
Roanoke Rapids, NC BTA
Rocky Mount-Wilson, NC BTA
Savannah, GA BTA
Sumter, SC BTA
Wilmington, NC BTA
Camden County, NC
Currituck County, NC
Dare County, NC
Pasquotank County, NC
This Addendum III (this "Addendum"), dated as of August 2, 1999, contains
certain additional and supplemental terms and provisions to that certain Sprint
PCS Management Agreement entered into as of July 22, 1998, by the same parties
as this Addendum, which Management Agreement was further amended by Addendum I
entered into as of July 22, 1998, and further amended by Addendum II entered
into as of May 24, 1999 (the Management Agreement, as amended by Addenda I, II,
and III, being the "Management Agreement"). The terms and provisions of this
Addendum control, supersede and amend any conflicting terms and provisions
contained in the Management Agreement. Except for express modifications made by
this Addendum, the Agreement continues in full force and effect.
Capitalized terms used and not otherwise defined in this Addendum have the
meanings ascribed to them in the Management Agreement. Section and Exhibit
references are to Sections of, and Exhibits to, the Management Agreement unless
otherwise noted.
The Management Agreement is modified as follows:
1. Amendments to Section 13 of Addendum I and Addendum II to the
Management Agreement. Section 13 of Addendum I and Addendum II of the
Management Agreement are amended to read as follows:
(a) Manager represents and warrants that the attached Schedule 13
describes the existing ownership rights of AirGate PCS, Inc. and the
organizational structure of Manager and the entities labeled "AirGate PCS,
Inc." and "AGW leasing Company, Inc."
(b) As used in Section 13(b) the Principals' equity or ownership
interest in any of the entities described in Schedule 13 shall not include
any equity or ownership interest granted to a Principal after July 22, 1998
pursuant to an incentive stock option plan adopted by AirGate PCS, Inc. for
its employees.
2. Use of Loan Proceeds. Sprint PCS is entering into that certain Consent
and Agreement with Lucent Technologies, Inc. ("Lucent") (which Consent and
Agreement, as amended and modified from time to time, is referred to as the
"Lucent Consent and Agreement") to enable Manager to obtain loans (the "Loans")
from Lucent and its successors and assigns (collectively, the "Lenders").
Manager agrees that notwithstanding the permitted uses of the proceeds of the
Loans, it will not use the proceeds from any loan or other obligation to which
the Lucent Consent and Agreement relates or from any other loan or extension of
credit to which the Lucent Consent and Agreement relates for any purpose other
than to construct and operate the Service Area Network within the Service Area
(as may be amended form time to time) as contemplated under the Management
Agreement.
3. Consent and Agreement Not Assignable. Except as a expressly required
or permitted in the Lucent Consent and Agreement, Manager may not assign the
Lucent Consent and Agreement.
4. Notices. 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 Lucent 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 that Sprint PCS gives to any of such
persons.
5. Sale of Operating Assets. Manager agrees that in the event of a
purchase of its Operating Assets by Sprint PCS pursuant to the Management
Agreement, the Lucent Consent and Agreement, a foreclosure sale or a bankruptcy
proceeding, Manager will cause any Operating Assets owned by its Related Parties
to be transferred to Sprint PCS in connection with such purchase.
6. No Defaults Under Credit Documents or Sprint Agreements. Manager
warrants and represents that as of the date hereof, no Default or Event of
Default under any of the Credit Documents has occurred, and no Event of
Termination under the Management Agreement or event
that if not cured, or if notice were to be provided, would constitute and Event
of Termination under the Management Agreement, has occurred.
7. Revised Financing Plan. Exhibit 1.7 to this Addendum supersedes and
replaces in its entirety Exhibit 1.7 attached to the Management Agreement and
Addendum II.
8. Counterparts. This Addendum may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one agreement.
IN WITNESS WHEREOF, the parties have cause this Addendum III to be executed
by the respective authorized officers as of the date and year first above
written.
SPRINT SPECTRUM L.P.
BY: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Chief Business Development Officer
SPRINTCOM, INC.
BY: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
SPRINT COMMUNICATIONS COMPANY, L.P.
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President, Consumer
Market Strategy and Communications
AIRGATE PCS, INC.
BY: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President of Law